valuation - agriculture

SWEDESURVEYArne Sundquist/Orsalheden

Valuation - agriculture

Valuation of agricultural units - a brief introduction

• Site and dwellings

• Arable land and pasture

• Farm buildings

• Forest

• Forest waste land

• Size influence

• Gravel-pits



Valuation of an agricultural unit• Valuation situation?• Which type of value is relevant?• Type of agricultural unit?• Relevant information about the object?

• Valuation method?•cost/income method (yield method)•sales comparison method

•direct comparison•à la carte-method

•Final estimation of the value• date/time for value• value

•Documentation- valuation report



Type of agricultural unit:• Forest-dominated units

• Agro-dominated units

• Vegetable production• grain

• potatoes

• oil plants, sugarroots

• others

• Animal production• milk

• beef, pork

• chicken/turkey/ostrich/egg-production

• sheep- and goat-farming

• others

• Small-farms (horse/recreation farms)

• Combined farms/family farms


• Market value

– The most probable price of a property on the open market

– Used in most cases

• Net income value

– The present value of future yearly net income

– Used e.g. for- investment decisions- market simulation

• Cost value

– Replacement costs minus depreciation

– Used e.g. for- insurance compensation - market simulation

Valuation Theory (4)


Valuation Methods

• Sales comparison approach

• Income capitalisation approach

• Cost approach

When searching for a market value, the income and cost methods are

market simulating methods!



Methods normally used:

• Sales comparison method

• Direct comparing method

• ”A la carte” method

• Cost/income method

• Valuation based on marginal calculation principles



The Sales comparison method means that one have to analyse representative purchases of similar real properties sold on an open and free market to find the market value of the valuation object in question.

For the subsequent analysis the different observed prices must be standardized to a comparable measure (e g SEK/hectare, Price coefficient = Price/Assessed value = P/T, SEK/m3sk etc).

In Sweden preferably price coefficients are used



Á la carte - method:• Value of site and dwellings is estimated by comparison with purchase of countryside sites and dwellings for permanent living apart from farming• Value of forest is estimated by comparison with purchase of pure forest units• Value of arable land is estimated by comparison with purchase of pure arable land units• Farm buildings is valued with a construction cost method often with a fargoing depreciation factor



Valuation factors for arable land:

Productivity, soil quality

Size, hectares

Running conditions•average field area•field form•obstacles

Drainage•planned drainage•self draining soils



Valuation factors for pasture:

• Productivity, soil quality

• Size, hectares

• Running conditions•average field area•field form•obstacles



Valuation factors for forest:• Productivity, m3/hectare and year

• Standing volume, m3 solid volume/hectare

• Type of trees•percentage needletrees

•pine-wood•spruce-wood

•percentage broadleaves•birch-wood•oak and beech-wood•other

• Running costs, SEK/ m3 • cutting• transport• silviculture



Valuation factors for farm buildings: Type of farm building

•stables•hay-barn•machine-hall•farm warehouse•grain store•ensilage silo•greenhouse

• Size•squaremeter building area (mostly)•cubicmeter storage volume (silos, grain stores)

• Age• Standard

•1 good design for modern farming

•2 sufficient design for modern farming

•3 unsufficient design for modern farming

valuation - agriculture

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