BELLEVUE, Wash., Jan. 4, 2001

Penford Corporation's Food Ingredients Group Finalizes $30 Million Multi-Year Contract with Global Food Service Company

Penford's Food Group Continues Strong Growth

Penford Corporation (Nasdaq: PENX) announced today that its Englewood, Colorado-based food ingredients group signed a multi-year contract to supply their patented, starch-based coating system to a global food service company beginning the first quarter of calendar 2001. The deal is anticipated to increase the food ingredients group revenue by $15 million annually, boosting the compounded annual growth rate for specialty starches to approximately 39 percent over the past three years. The global food service company's name is not being disclosed at this time.

Penford is the market leader in clear, starch-based coatings. Its patented coating system is designed to create an invisible moisture barrier, which gives fried foods a delicate crispness, while enhancing the natural flavor. The micron-thin coating keeps fried foods hotter over a longer period of time.

Penford's food ingredients group specializes in meeting the ingredient and formulation needs of food companies with convenient, natural, and cost-effective solutions. The food ingredients group dedicates extensive time and resources to leading-edge, ingredient technology and applications research. Penford is a worldwide provider of specialty starch-based ingredient systems, dextrins, dextroses and dietary fibers.

"Forming this new strategic relationship with an important global customer underscores the strong growth profile we've established in food-based ingredient systems. While our initial efforts with this customer will be focused in North America, we are optimistic that our strategic relationships in Europe and our new asset base in the Pacific Rim will result in an expansion of this market segment during the next few years," said Jeffrey T. Cook, president and CEO of Penford Corporation.

Gregory C. Horn, vice president of Penford Corporation and president of its food ingredients group said, "Our food ingredients group has grown tremendously in a short time. This partnership clearly demonstrates the importance of our investment in applications research and our efforts to form close relationships with strategic global customers. We have been working on this proprietary food-coating project since 1997 with the entire value chain - restaurant operator, potato processor, flavor supplier, and ingredient blender. This technology provides a sustainable platform, which can be expanded to other coated convenience foods. "

About Penford
Penford Corporation develops, manufactures and markets specialty carbohydrate-based ingredient systems for various applications, including papermaking, textiles and food products.