MLA No. RIE089

                              MASTER LOAN AGREEMENT



      THIS MASTER LOAN AGREEMENT is entered into as of February 23, 2004,

between CoBANK, ACB ("CoBank") and DIAMOND WALNUT GROWERS, INC., Stockton,

California (the "Company").



                                   BACKGROUND



      CoBank and the Company are parties to a Master Loan Agreement dated March

12, 2001, as amended (the "Existing Agreement"). Pursuant to the terms of the

Existing Agreement, the panics entered into one or more Supplements thereto.

CoBank and the Company now desire to amend and restate the existing Agreement

and to apply such new agreement to the existing Supplements, as well as any new

Supplements that may be issued thereunder. For that reason and for valuable

consideration (the receipt and sufficiency of which are hereby acknowledged),

CoBank and the Company hereby agree that the Existing Agreement shall be amended

and restated to read as follows:



      SECTION 1. SUPPLEMENTS. In the event the Company desires to borrow from

CoBank and CoBank is willing to lend to the Company, or in the event CoBank and

the Company desire to consolidate any existing loans hereunder, the parties will

enter into a Supplement to this agreement (a "Supplement"). Each Supplement will

set forth the amount of the loan, the purpose of the loan, the interest rate or

rate options applicable to that loan, the repayment terms of the loan, and any

other terms and conditions applicable to that particular loan. Each loan will be

governed by the terms and conditions contained in this agreement and in the

Supplement relating to the loan. As of the date hereof, the following

Supplements are outstanding hereunder and shall be governed by the terms and

conditions hereof: (a) the Revolving Credit Supplement dated February 23, 2004,

and numbered RIE089S01; and (b) the Revolving Term Loan Supplement dated

February 23, 2004 and numbered RIE089T04.



      SECTION 2. AVAILABILITY. Loans will be made available on any day on which

CoBank and the Federal Reserve Banks are open for business upon the telephonic

or written request of the Company. Requests for loans must be received no later

than 12:00 Noon Company's local time on the date the loan is desired. Loans will

be made available by wire transfer of immediately available funds to such

account or accounts as may be authorized by the Company. The Company shall

furnish to CoBank a duly completed and executed copy of a CoBank Delegation and

Wire and Electronic Transfer Authorization Form, and CoBank shall be entitled to

rely on (and shall incur no liability to the Company in acting on) any request

or direction furnished in accordance with the terms thereof.



      SECTION 3. REPAYMENT. The Company's obligation to repay each loan shall be

evidenced by the promissory note set forth in the Supplement relating to that

loan or by such replacement note as CoBank shall require. CoBank shall maintain

a record of all loans, the interest accrued thereon, and all payments made with

respect thereto, and such record shall, absent proof of manifest error, be

conclusive evidence of the outstanding principal and interest on the loans. All

payments shall be made by wire transfer of immediately available funds, by

check, or by automated clearing house or other similar cash handling processes

as specified by separate agreement between the Company and CoBank. Wire

transfers shall be made to ABA



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Master Loan Agreement RIE089                                               - 2 -



No. 307088754 for advice to and credit of CoBank (or to such other account as

CoBank may direct by notice). The Company shall give CoBank telephonic notice no

later than 12:00 Noon Company's local time of its intent to pay by wire and

funds received after 3:00 p.m. Company's local time shall be credited on the

next business day. Checks shall be mailed to CoBank, Department 167, Denver,

Colorado 80291-0167 (or to such other place as CoBank may direct by notice).

Credit for payment by check will not be given until the later of: (a) the day on

which CoBank receives immediately available funds; or (b) the next business day

after receipt of the check.



      SECTION 4. CAPITALIZATION. The Company agrees to purchase such equity in

CoBank as CoBank may from time to time require in accordance with its Bylaws.

However, the maximum amount of equity which the Company shall be obligated to

purchase in connection with any loan may not exceed the maximum amount permitted

by the Bylaws at the time the Supplement relating to that loan is entered into

or such loan is renewed or refinanced by CoBank.



      SECTION 5. SECURITY. The Company's obligations under this agreement, all

Supplements (whenever executed), and all instruments and documents contemplated

hereby or thereby, shall be secured by a statutory first lien on all equity

which the Company may now own or hereafter acquire in CoBank. Except for

CoBank's lien on the Company's equity in CoBank, the Company's obligations

hereunder and under each Supplement shall be unsecured.



      SECTION 6. CONDITIONS PRECEDENT.



            (A)   CONDITIONS TO INITIAL SUPPLEMENT. CoBank's obligation to

extend credit under the initial Supplement hereto is subject to the conditions

precedent that CoBank receive, in form and content satisfactory to CoBank, each

of the following:



                  (i)   THIS AGREEMENT, ETC. A duly executed copy of this

agreement and all instruments and documents contemplated hereby.



            (B)   CONDITIONS TO EACH SUPPLEMENT. CoBank's obligation to extend

credit under each Supplement, including the initial Supplement, is subject to

the conditions precedent that CoBank receive, in form and content satisfactory

to CoBank, each of the following:



                  (i)   SUPPLEMENT. A duly executed copy of the Supplement and

all instruments and documents contemplated thereby.



                  (ii)  EVIDENCE OF AUTHORITY. Such certified board resolutions,

certificates of incumbency, and other evidence that CoBank may require that the

Supplement, all instruments and documents executed in connection therewith, and,

in the case of initial Supplement hereto, this agreement and all instruments and

documents executed in connection herewith, have been duly authorized and

executed.



                  (iii) FEES AND OTHER CHARGES. All fees and other charges

provided for herein or in the Supplement.



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Master Loan Agreement RIE089                                               - 3 -



                  (iv)  EVIDENCE OF PERFECTION, ETC. Such evidence as CoBank may

require that CoBank has a duly perfected first priority lien on all security for

the Company's obligations, and that the Company is in compliance with Section

8(D) hereof.



            (C)   CONDITIONS TO EACH LOAN. CoBank's obligation under each

Supplement to make any loan to the Company thereunder is subject to the

condition that no "Event of Default" (as defined in Section 11 hereof) or event

which with the giving of notice and/or the passage of time would become an Event

of Default hereunder (a "Potential Default"), shall have occurred and be

continuing.



      SECTION 7. REPRESENTATIONS AND WARRANTIES.



            (A)   THIS AGREEMENT. The Company represents and warrants to CoBank

that as of the date of this agreement:



                  (i)   COMPLIANCE. The Company and, to the extent contemplated

hereunder, each "Subsidiary" (as defined below), is in compliance with all of

the terms of this agreement, and no Event of Default or Potential Default exists

hereunder.



                  (ii)  SUBSIDIARIES. The Company has the following

"Subsidiary-(ies)" (as defined below): Diamond Walnut Capital Trust, Diamond of

Europe, and Diamond Nut Company of California, Inc. For purposes hereof, a

"Subsidiary" shall mean a corporation of which shares of stock having ordinary

voting power to elect a majority of the board of directors or other managers of

such corporation are owned, directly or indirectly, by the Company.



            (B)   EACH SUPPLEMENT. The execution by the Company of each

Supplement hereto shall constitute a representation and warranty to CoBank that:



            (i)   APPLICATIONS. Each representation and warranty and all

information set forth in any application or other documents submitted in

connection with, or to induce CoBank to enter into, such Supplement, is correct

in all material respects as of the date of the Supplement.



            (ii)  CONFLICTING AGREEMENTS, ETC. This agreement, the Supplements,

and all security and other instruments and documents relating hereto and thereto

(collectively, at any time, the "Loan Documents"), do not conflict with, or

require the consent of any party to, any other agreement to which the Company is

a party or by which it or its property may be bound or affected, and do not

conflict with any provision of the Company's bylaws, articles of incorporation,

or other organizational documents.



            (iii) COMPLIANCE. The Company and, to the extent contemplated

hereunder, each Subsidiary, is in compliance with all of the terms of the Loan

Documents (including, without limitation, Section 8(A) of this agreement on

eligibility to borrow from CoBank).



            (iv)  BINDING AGREEMENT. The Loan Documents create legal, valid, and

binding obligations of the Company which are enforceable in accordance with

their terms, except to the extent that enforcement may be limited by applicable

bankruptcy, insolvency, or similar laws affecting creditors' rights generally.



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Master Loan Agreement RIE089                                               - 4 -



      SECTION 8. AFFIRMATIVE COVENANTS. Unless otherwise agreed to in writing by

CoBank while this agreement is in effect, the Company agrees to and with respect

to Subsections 8(B) through 8(G) and 8(I-I)(vii) hereof, agrees to cause each

Subsidiary to:



            (A)   ELIGIBILITY. Maintain its status as an entity eligible to

borrow from CoBank.



            (B)   CORPORATE EXISTENCE, LICENSES, ETC. (i) Preserve and keep in

full force and effect its existence and good standing in the jurisdiction of its

incorporation or formation; (ii) qualify and remain qualified to transact

business in all jurisdictions where such qualification is required; and (iii)

obtain and maintain all licenses, certificates, permits, authorizations,

approvals, and the like which are material to the conduct of its business or

required by law, rule, regulation, ordinance, code, order, and the like

(collectively, "Laws").



            (C)   COMPLIANCE WITH LAWS. Comply in all material respects with all

applicable Laws, including, without limitation, all Laws relating to

environmental protection and any patron or member investment program that it may

have. In addition, the Company agrees to cause all persons occupying or present

on any of its properties, and to cause each Subsidiary to cause all persons

occupying or present on any of its properties, to comply in all material

respects with all environmental protection Laws.



            (D)   INSURANCE. Maintain insurance with insurance companies or

associations acceptable to CoBank in such amounts and covering such risks as are

usually carried by companies engaged in the same or similar business and

similarly situated, and make such increases in the type or amount of coverage as

CoBank may request. All such policies insuring any collateral for the Company's

obligations to CoBank shall have mortgagee or lender loss payable clauses or

endorsements in form and content acceptable to CoBank. At CoBank's request, all

policies (or such other proof of compliance with this Subsection as may be

satisfactory to CoBank) shall be delivered to CoBank.



            (E)   PROPERTY MAINTENANCE. Maintain all of its property that is

necessary to or useful in the proper conduct of its. business in good working

condition, ordinary wear and tear excepted.



            (F)   BOOKS AND RECORDS. Keep adequate records and books of account

in which complete entries will be made in accordance with generally accepted

accounting principles ("GAAP") consistently applied.



            (G)   INSPECTION. Permit CoBank or its agents, upon reasonable

notice and during normal business hours or at such other times as the parties

may agree, to examine its properties, books, and records, and to discuss its

affairs, finances, and accounts, with its respective officers, directors,

employees, and independent certified public accountants.



            (H)   REPORTS AND NOTICES. Furnish to CoBank:



                  (i)   ANNUAL FINANCIAL STATEMENTS. As soon as available, but

in no event more than 120 days after the end of each fiscal year of the Company

occurring during the term hereof, annual consolidated and consolidating

financial statements of the Company and its consolidated Subsidiaries, if any,

prepared in accordance with GAAP consistently applied. Such



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Master Loan Agreement RIE089                                               - 5 -



financial statements shall: (a) be audited by independent certified public

accountants selected by the Company and acceptable to CoBank; be accompanied by

a report of such accountants containing an opinion thereon acceptable to CoBank;

be prepared in reasonable detail and in comparative form; and (d) include a

balance sheet, a statement of income, a statement of retained earnings, a

statement of cash flows, and all notes and schedules relating thereto.



                  (ii)  INTERIM FINANCIAL STATEMENTS. As soon as available, but

in no event more than 45 days after the end of each fiscal quarter of the

Company (other than the last quarter in each fiscal year of the Company), a

consolidated balance sheet of the Company and its consolidated Subsidiaries, if

any, as of the end of such fiscal quarter, a consolidated statement of income

for the Company and its consolidated Subsidiaries, if any, for such period and

for the period year to date, and such other interim statements as CoBank may

specifically request, all prepared in reasonable detail and in comparative form

in. accordance with GAAP consistently applied and if required by written notice

from CoBank, certified by an authorized officer or employee of the Company

acceptable to CoBank.



                  (iii) NOTICE OF DEFAULT. Promptly after becoming aware

thereof, notice of the occurrence of an Event of Default or a Potential Default.



                  (iv)  NOTICE OF NON-ENVIRONMENTAL LITIGATION. Promptly after

the commencement thereof, notice of the commencement of all actions, suits or

proceedings before any court, arbitrator, or governmental department,

commission, board, bureau, agency, or instrumentality affecting the Company or

any Subsidiary which, if determined adversely to the Company or any such

Subsidiary, could have a material adverse effect on the financial condition,

properties, profits, or operations of the Company or any such Subsidiary.



                  (v)   NOTICE OF ENVIRONMENTAL LITIGATION, ETC. Promptly after

receipt thereof, notice of the receipt of all pleadings, orders, complaints,

indictments, or any other communication alleging a condition that may require

the Company or any Subsidiary to undertake or to contribute to a cleanup or

other response under environmental Laws, or which seek penalties, damages,

injunctive relief or criminal sanctions related to alleged violations of such

Laws, or which claim personal injury or property damage to any person as a

result of environmental factors or conditions.



                  (vi)  BYLAWS AND ARTICLES. Promptly after any change in the

Company's bylaws or articles of incorporation (or like documents), copies of all

such changes, certified by the Company's Secretary.



                  (vii) COMPLIANCE CERTIFICATE. Together with each set of

financial statements furnished to CoBank pursuant to Section 8(H) hereof, a

certificate of an officer or employee of the Company acceptable to CoBank

setting forth calculations showing compliance with the financial covenants set

forth in Section 10 hereof.



                  (viii) OTHER INFORMATION. Such other information regarding the

condition or operations, financial or otherwise, of the Company or any

Subsidiary as CoBank may from time to time reasonably request, including but not

limited to copies of all pleadings, notices, and communications referred to in

Subsections 8(H)(iv) and (v) above.



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Master Loan Agreement RIE089                                               - 6 -



            (I)   GUARANTEE AND RELATED DOCUMENTS. The Company agrees that on or

before April 15, 2004, it will provide to CoBank the following items: (1) A

guarantee of payment from. Diamond Nut Company of California, Inc. in a form and

with such content agreeable to CoBank in its sole discretion; and (2) certified

board resolutions, evidence of incumbency, and other evidence as CoBank may

require that the guarantee and all instruments and documents executed in

connection therewith have been duly authorized and executed.



      SECTION 9. NEGATIVE COVENANTS. Unless otherwise weed to in writing by

CoBank, while this agreement is in effect the Company will not and, with respect

to Subsections 9(B) through 9(G) hereof, will not permit its Subsidiaries to:



            (A)   BORROWINGS. Create, incur, assume, or allow to exist, directly

or indirectly, any indebtedness or liability for borrowed money (including trade

or bankers' acceptances), letters of credit, or the deferred purchase price of

property or services (including capitalized leases), except for: (i) debt to

CoBank; (ii) accounts payable to trade creditors incurred in the ordinary course

of business; (iii) current operating liabilities (other than for borrowed money)

incurred in the ordinary course of business; (iv) debt of the Company to other

lenders maturing within one year of the date created, provided that not more

than $25,000,000.00 of such debt is outstanding at any time and that the maximum

amount of all short-term indebtedness that may be outstanding at any one time to

such lenders and to CoBank, may not exceed $75,000,000.00; and (v) debt of the

Company to other lenders or finance companies in an aggregate amount not to

exceed $ 10,000,000.00.



            (B)   LIENS. Create, incur, assume, or allow to exist any mortgage,

deed of trust, pledge, lien (including the lien of an attachment, judgment, or

execution), security interest, or other encumbrance of any kind upon any of its

property, real or personal (collectively, "Liens"). The foregoing restrictions

shall not apply to: (i) Liens in favor of CoBank; (ii) Liens for taxes,

assessments, or governmental charges that are not past due; (iii) Liens and

deposits under workers' compensation, unemployment insurance, and social

security Laws; (iv) Liens and deposits to secure the performance of bids,

tenders, contracts (other than contracts for the payment of money), and like

obligations arising in the ordinary course of business as conducted on the date

hereof; (v) Liens imposed by Law in favor of mechanics, materialmen,

warehousemen, and like persons that secure obligations that are not past due;

and (vi) easements, rights-of-way, restrictions, and other similar encumbrances

which, in the aggregate, do not materially interfere with the occupation, use,

and enjoyment of the property or assets encumbered thereby in the normal course

of its business or materially impair the value of the property subject thereto.



            (C)   MERGERS, ACQUISITIONS, ETC. Merge or consolidate with any

other entity or acquire all or a material part of the assets of any person or

entity, or faun or create any new Subsidiary or affiliate, or commence

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