John E. Simmons, Registrant's Chief Financial Officer, gave the
following address at Registrant's Annual Meeting of Shareholders on
December 26, 2002.



Under the federal rules that govern proxy voting, management's comments
prior to the voting must be limited to the information that's published
in the proxy statement. Now that the voting has been completed it is my
privilege to deliver to you management's report on the state of your
Company.


Before I begin, however, I must read a statement regarding our safe
harbor for forward-looking statements:

Certain statements contained in the following remarks regarding the
risks, circumstances and financial trends that may affect our future
operating results, financial position and cash flows may be forward-
looking statements within the meaning of federal securities laws.
These statements are based on management's current expectations,
assumptions, estimates and observations about our business and are
subject to risks and uncertainties.  As a result, actual results could
materially differ from the forward-looking statements contained herein.
These forward looking statements can be identified by the use of words
like "expects," "plans," "believes," "intends," "will," "assumes" and
other words of similar meanings.  These and other similar words can be
identified by the fact that they do not relate solely to historical or
current facts.  While we believe our assumptions are reasonable, we
caution that it is impossible to predict the impact of such factors
which could cause actual results to differ materially from predicted
results.  We intend these forward-looking statements to speak only at
the time of these remarks and do not undertake to update or revise
these projections as more information becomes available.  For these
statements, we claim the protection of the safe harbor for forward-
looking statements provided by the Private Securities Litigation Reform
Act of 1995.

_____


Many of you have been coming to these meetings for years.  Your
familiar faces are a testament to your staying power, and on behalf of
the management team, I want to thank you for your continuing confidence
in our efforts to manage Farmer Brothers for the long-term benefit of
our employees, customers, vendors and our many shareholders.

Most of you already know a lot about this company, its operations and
financial condition - in fact, I know that many of you, day in and day
out, play crucial roles in the efforts to build value for shareholders.
For everyone's benefit, however, I would ask that all of you bear with
me while I look at the business of your Company - past, present and
future.

Farmer Brothers is a disciplined, financially sound company that has
produced solid returns for shareholders precisely because of prudent
management in the face of a competitive environment. Honesty and
integrity are as important to our success as business discipline and we
strive to adhere to high standards of corporate conduct. We have plans
for the future, plans that require a sustained commitment to running
this business prudently.

_____

Let me begin with: What do we do?	We try to make money for our
shareholders.  We do this by serving the needs of the institutional
coffee market. Our customers include restaurants, hotels, convenience
stores, hospitals and other such establishments.

How?  With an off-truck delivery system that we think is the best in
the industry.  Each day 450 or so of our sales representatives load
their trucks and head out on routes that can cover 200 miles and bring
them face to face with 20 institutional customers throughout our 28
state marketing area. They stand for "Farmer Brothers" to our
customers.  At the foundation of this business is a strong commitment
to service - and we deliver service one person at a time, in the
kitchen or office or restaurant.

Our sales representatives work with the help of many people - including
many I see in this room.  These are the people who support our sales
organization: they buy and manufacture and package the products we
sell, ship the products to our branches, help account for the inventory
and receivables and otherwise provide the supporting information to
help those route salesmen do their jobs: taking care of our customers.

All of us are proud of our Torrance facility.  But it's only a part of
your Company.  In the field, in contrast to the scale of this facility,
our typical branch has 3 or 4 people.  Their only physical contact with
this head office comes when their semi from Torrance arrives weekly, or
every other week.  Yet, they - just as we have here in Torrance  - have
committed themselves to the same values and service that have been the
hallmark of Farmer Brothers for generations.

Competition? We have a lot.  First, we face the multinational
corporations (Proctor and Gamble owns Folgers, and General Foods owns
Maxwell House); companies so large that their annual report hasn't more
than a sentence about their coffee business, and rarely a single word
about their institutional coffee business.

Then we face the regional roasters, including non-public companies who
are among our most fierce competitors.  Guess what all our competitors
favorite reading matter is?  Our annual report!  The more they find out
about us, the tougher they can be.  How do we find out about them?  We
can't.

Now some have encouraged us to expand into the specialty coffee arena.
You - and we - have watched the growth of specialty coffees.  We have
responded with a line of specialty coffees, a good one, and many of our
customers are very content with those offerings.

While this new arena offers significant potential, we are proceeding
with care. Remember that the specialty coffee roasters, like Starbucks
or Peets, are, as a group, restaurant operators: they compete with our
customers.  We do not plan to become a restaurant chain.   For
starters, it would alienate our customers.   Instead, we continue to
focus on the goal that has worked for us for years: provide the right
mix of service and product that our customers really want and that our
customers rely on to serve their customers well.

_____


Your management team has been carefully taking other steps to invest
your Company's funds in the future of this business.


Recently, as a major step to improve our corporate infrastructure, we
began a two-year program to convert our 5 existing software systems to
a single, company-wide software.  Our new computing infrastructure will
tie the Company together in ways that have not been possible since the
Company was operating out of its much smaller and more intimate Main
Street location 60 years ago.

We are, all of us, intently focused on how to put to work these new
tools that  information technology brings us (and the acronyms that
industry is so fond of): IT (information technology). ERP (enterprise
resource planning), BI (business intelligence), CRM (customer
relationship management), etc.

This may be the most ambitious program of its type the Company has ever
attempted.  It is an expensive project: we expect to spend more than $5
million, and we are prepared to continue investing the untold man-hours
the program seems to require from all of us.

Every person at Farmer Bros. will be affected by this effort, every
person's job will change.  We are now designing the system along with
the education and training plan necessary to help our employees make
the transition from the past to the future.

We believe the power of these technologies is in enabling the users to
apply the new tools to known problems and finding new solutions,
savings and paths to profitability that come only through these new
ways of thinking.  These tools will help us to "think outside the box"
and to remain competitive in our business niche.  They will also serve
as a technology platform for future growth in the coffee business.
However, consistent with our disciplined business philosophy, we will
implement these new technologies carefully, ensuring that before we
run, we've learned how to walk.

Better and more timely information will, we believe, help us make
better and more timely decisions and to become more nimble as a
company, and more efficient and more responsive to our customers and,
we expect, more profitable.

Once we have consolidated the operations of our selling divisions -
Route Sales, Custom Coffee Plan, Brewmatic Company and Spice Products -
we expect to be prepared to launch the initiatives to grow our business
either organically or through acquisition.  But, as I said, we must
walk before we run - and we look forward to the opportunity to keep you
up to date on the progress of this major investment in our future.

The scope and scale of our information technology project stands as
evidence that this management is willing to embrace change and to take
actions that strengthen this business for the long term.  If you are
not involved in this project, I encourage you to speak with the people
who are devoting their energy to its success.  Team leaders here today
include Fran Rice, Ron Wansa, Hami Assadi and myself.

This is a team that is focused on prudently but actively preparing for
the future ... taking steps to extend this Company's proud record of 90
years ... a record that has included:

* 50 consecutive years of paying a dividend
* 7 consecutive years of increased dividend, and
* growth in the market value of the Company from $17 per share in 1980
to over $300 per share in 2002.

Sales today exceed $200 million.  We would like to make that grow.  Our
sales reflect larger trends in both the food service industry and the
economy.  You may have read the recent announcement from McDonald's, a
barometer of the industry, announcing their first quarterly loss ever.
And recent reports from Alan Greenspan make one wonder how long we can
expect our overall economy to be weak.

We have been working hard to improve our results in this area.  Our
sales force has been increasing training and developing programs
designed to improve their effectiveness, with a renewed focus on
further penetrating our existing marketing area.  We continue to seek
new products and programs to help us with these efforts: spiced teas,
flavored coffees & cappuccino.  Most recently we have turned to
technology to help us.  The new IT system has some tools we believe
will make our sales reps efforts more efficient.

_____


We will receive your questions about our operations at the end of these
remarks. But first,  I want to address the issues and proposals that
have been raised to the Board of Directors and the shareholders.

We have always managed this Company with a view of where we are in the
cycles of our highly competitive industry, the risks we have to bear
and
the path we have to take to ensure the long-term success that our
shareholders, employees, customers and vendors all expect.  That has
been the commitment of this management team in the past - and it
remains at the heart of our commitment to you as our shareholders.

Let me remind you of some of the challenges we're likely to have to
weather.


1) First: the weather itself.  We remember the great Brazilian frost of
1975, and the lesser frosts of 1994.  In 1975 we had to pay more than
$3.50/lb for green coffee (today green coffee sells for about $0.61).
Were that to happen today, it would require an investment of more than
$40 million merely to replace our existing inventory.  Of course when
prices go up that much, consumers stop buying your product, sales
volume plummets, and the price instability can last for years.  What
enables a Company our size - facing larger competitors with deep
pockets - to endure a crisis of this sort?  We call on all our
resources, and especially our cash.

a) In short, this is a commodity business. Our raw material is green
coffee beans. The price of coffee beans can be volatile. A strong cash
cushion protects the investment of every shareholder in this room from
periods of crisis.
b) Some of you in this room will remember the days when we had fewer
resources to weather the shifts in our business climate. When we had to
rely on debt, with its attendant interest expense and intrusive loan
covenants, to make it through troughs in the economic cycle.  The
lessons we learned in those challenging periods drive our fiscally
prudent strategies today.




2) Second, the ever rising cost of doing business.  Like a lot of other
businesses, we maintain our competitive advantages by striving,
constantly, to become more efficient while continuing to be a solid
employer and a good corporate citizen.  But our business is one with
significant costs that are, in essence, "fixed."

3) In addition to the funds we must set aside to comply with local,
state, and federal regulations and the funds we must set aside for a
wide array of taxes.  We, as a Company, invest in people, and to do so
we must set aside funds for employee benefits.

a) These include workers' compensation, health insurance, life
insurance, salary continuation, short term disability, long term
disability, 401k maintenance costs, pension plans, the ESOP.
b) What's more, we are proud to say that all our employees are paid at
competitive rates and we're pleased to have attracted and retained top-
notch people to your Company.

4) Insurance costs have sky-rocketed and are likely to continue to rise
in  coming years.  Thanks to our strong cash position, we have saved
hundreds of thousands of dollars in premiums by self-insuring for
earthquake and business interruptions, and are increasing deductibles
for other types of coverage.

5) Information technology: although a powerful tool, is an expensive
overhead cost - and it will be with us from now on.


How does a Company combat these firmly entrenched fixed costs in the
event of a protracted downturn squeezing margins?  A downturn that
could be triggered by forces as different as a drought half-way around
the world or a price war among the larger food-service companies?

We believe we are positioned to endure in part because of our strong
base of cash.

We will have other needs for our cash as well.  For starters, we are
always alert to the prospect that prudent acquisitions could enable our
business to grow.

We intend to watch for the "right" acquisition: which is the right fit
at the right price.  If and when an acquisition "fits",  we know it
could well require a substantial commitment of our resources. Because
we refused to overpay for acquisitions in the past, we haven't been
forced to write down our assets.   Since I've already explained why
leveraging our Company is a risky proposition, we would likely pay cash
for any acquisition. Thus our cash reserves are important to our
potential for future growth.

Of course, our most important resource is the more than 1,000 people we
employ.  Our ESOP requires a major commitment of resources.  In an
effort to help us attract and hold on to the right type of employee, we
devised the ESOP.  It is not a stock option plan, but for an employee
with a long-term perspective, it is a form of compensation that
provides a measure of ownership in the Company, it aligns our employees
with our shareholders interests and it provides a nice nest egg on
retirement.

* We have invested more than $30 million to date, and are likely to
invest an additional $50 million or more over time.  This process will
move forward at an unpredictable pace, for we refuse to pay unrealistic
prices for our stock (and no, I won't comment on our current stock
price).

* It is the nature of the ESOP that, as employees retire, they tender
their shares back to the ESOP. Thus, employees gain the benefit of a
cash payment upon their retirement.  The ESOP's sole source of cash,
however, is the employer.  Our obligation is to ensure the ESOP buys
those shares at the then-market price of the stock.  If the stock price
continues to rise this will turn into a substantial additional expense.
The only prudent way to finance this is through reliance on our
internal resources: cash.

By now you must have noticed that there is a theme running through this
commentary: the importance of our strong cash position to many of our
strategies and policies.

This cash position became an issue when it was suggested that our
company make changes so it would be regulated not as an operating
company, which it is, but under the Investment Company Act of 1940.

The argument, if I may paraphrase, is that our large cash position
makes us an investment company.  This argument was advanced even though
we are, as is so clearly the case, a coffee company - and even though
more than 50 public companies in California, alone, hold a higher
percentage of their assets in cash and equivalents than Farmer
Brothers; and, like us, are not registered investment companies.

Let me repeat that:  more than 50 public companies in California,
alone, hold a higher percentage of their assets in cash and equivalents
than Farmer Brothers, and, like us, are not registered investment
companies.

The Investment Company Act was signed into law in 1940 in response to
malfeasance during and before the Great Depression by unregulated
investment companies and mutual funds.  The 1940 Act was intended to
limit entities like mutual funds, as to what they can invest in and
requires extensive regulatory oversight.

From our perspective, however, it is clear that Farmer Brothers is not
an investment company.  Rather than review the details of the 1940 Act
- - and its interpretations by the SEC over the past 60 years - let me
summarize by saying, simply, that a company is not considered to be an
investment company if it is primarily engaged in another business - as
Farmer Brothers is, namely the coffee business. We do not present or
market ourselves as an investment company and our primary efforts are
the management of our coffee business, not investments.

Our cash is our working capital, our business interruption insurance  -
our life-line  -  and we have always made sure it is liquid and safe.
We've produced prudent returns on our liquid assets, but are not
"returns-driven," and 25-50% of our otherwise diversified portfolio
almost always included US Agency paper and lower yield US Treasury
instruments.  We resisted those who would have had us invest this hard-
earned cash in the dot-coms, the energy traders and the firms whose
mantra was "growth at any cost" - and how many of the regulated
investment companies avoided this trap?  The spectacular failures of
Tyco, Enron, World Com, and the like, created considerable concern
about the commercial paper market.  Therefore we elected to move out of
our diversified commercial paper portfolio to US Treasury instruments,
at least for a while.  In our opinion that action also removed any
lingering doubts about whether we are an investment company.  Again,
our investment goal has always been: LIQUID & SAFE.  Tomorrow may bring
a crisis or opportunity that would dissipate cash rapidly and we intend
to have the liquidity to meet that crisis or seize that opportunity.

In summary, in the view of the management of Farmer Brothers, good
corporate governance means accepting the burden to act responsibly in
managing, on behalf of the owners, the company's operations and actions
for the long-term benefit of our employees, customers and vendors as
well as shareholders.

We don't talk about what we might do, we just do it.  Our record is
there for everyone to see:

* We are profitable.
* We are out of debt and have an exceptionally strong balance sheet.
* We compete well and successfully against firms whose resources are
far beyond ours.
* We have attracted and motivated capable, skilled employees to keep us
going.
* We have sufficient financial reserves to withstand short-term
economic set-backs & disasters, and make the occasional acquisition.

And, we remain focused on the future.  When we meet again next year, we
will tell you about the progress of initiatives such as our information
technology project.

A second area of concern raised by some has been the suggestion that,
in various ways, Farmer Brothers should change its corporate governance
practices.  I am pleased to inform you that we have begun a search for
a new member of our Board of Directors in order to fully comply with
new federal regulations that require us to add additional independent
directors.  There have been a number of significant changes in
corporate governance in the past year, and we intend to comply fully
with the spirit and letter of these and any other new regulation.

In contrast to some of the companies whose unforgivable behavior
prompted these new federal safeguards of shareholder interests, let me
remind you that we don't pad our earnings, inflate our assets, or have
off balance sheet liabilities - we simply know our products and
operations and customers and we work every day to serve our customers
better.

Since we are in a volatile commodity driven business we don't attempt
to forecast our earnings, or manage our operating results to satisfy
short-term traders.  Rather, we manage Farmer Brothers with an eye to
enhancing shareholder value over the long term.  In fact, the interests
of our majority shareholders are directly aligned with the long-term
interests of all shareholders: that this company be managed in an
honest, prudent, disciplined manner.

Let me close with a quote from our chairman, one that all of us here in
front of you have heard many times:

"If we do our business well, the market will recognize the Value."

We are proud to say, the market has.

______


Thank you for coming.  We wish that your New Year is as bright as we
hope the new year will be for your Company, Farmer Brothers.

Now, we will entertain your questions.

Out of consideration for your fellow shareholders, we ask that all
speakers use the microphone, that questions be limited to five minutes,
and that remarks be focused on matters that are pertinent to this
meeting. Since this is a shareholder meeting at which we expect a
number shareholders will want to speak, let me remind you that this is
a meeting of shareholders and only shareholders will be allowed to
speak.




Submission of Matters to a Vote of Security Holders


The annual Meeting of Shareholders of Farmer Bros. Co. was held on
December 26, 2002.  Holders of the Company's common stock were entitled
to one vote per share of common stock held.

Six directors elected at the meeting with terms to continues for the
coming year and until any successors are elected and qualify.  The
following persons were elected as directors:  Roy F. Farmer, Roy E.
Farmer, Guenter W. Berger, John H. Merrell, John M. Anglin and Lewis
A. Coffman.

The proposal to appoint Ernst & Young LLP as the independent
accountants for the Company for the year ended June 30, 2003 was
approved with 1,719,876 shares for, 3,246 shares against and 1,513
shares abstaining.

The proposal to amend the Company's bylaws and require the Company to
register as an investment company under the Investment Company Act of
1940 was declined with 506,318 shares for, 1,163,944 shares against and
2,917 shares abstaining.