VALUATION OF…

Intensive Agriculture

Dairies, poultry houses, piggeries, feedlots and greenhouses — specialised production plant where the property line and the business line must be kept apart.

Methodology

Intensive agricultural property has more in common with trade-related property than with farmland: the value resides in specialised improvements whose worth depends on the enterprise they serve. The approach is accordingly twofold. The Income Approach values the property on the sustainable rent or earnings its production capacity can support; the Cost Approach — depreciated replacement cost of the specialised improvements over the underlying land value — provides the check, and is often the primary method where the market for the enterprise is thin. Direct comparison at a rate per hectare is rarely meaningful for these properties and should not be forced.

Under the Big Five framework the income-generating unit is production capacity — cow places, bird places, sow units, standing capacity, growing area — not floor area or extent. The central discipline is the separation of property income from business income: the return earned by the operator’s skill, working capital and stock is not rent, and capitalising enterprise profit as though it were property income overstates value. Potential gross income should be expressed as the sustainable rental or margin attributable to the facility itself; normalisation must deal with production cycles, disease events and the condition of the plant; and expenses must distinguish the property’s costs from the enterprise’s.

The dominant drivers are functional adequacy and compliance: the configuration and age of the production plant against current industry practice, biosecurity status, effluent and environmental authorisation, and water and power security. Obsolescence in intensive agriculture is commonly functional rather than physical — a structurally sound facility of an outdated configuration may be worth little more than its land. Published industry statistics for the dairy, poultry, pork and feedlot sectors provide the production and price context against which capacity assumptions should be tested.

Caselaw

Case law, regulatory rulings and expert-determination disputes relevant to valuing this asset class. Each entry cites its source and summarises the practice implication for valuers — this is not investment, financial, or legal advice.