Methodology to determine the value of a poultry farm

Abstract

Much uncertainty exists about the most useful method to value a poultry farm. The purpose of the research is to determine the method of valuation that is the most appropriate and reliable for the valuation of a broiler farm. A sample of 15 out of the 196 contract broiler farm valuations was selected in the Mpumalanga and North West provinces in South Africa. The size of the broiler houses was at least 1 000 m². Broiler units with a minimum of four houses were taken into account. Data was gathered by means of assessments of previous valuations as well as physical valuations done in the field and analysed statistically. Figures were tested for normality; differences between the overall means were determined by the analysis of variance using the ANOVA test; the correlation coefficients between the two different methods and the dependable variable were determined; and regression analysis was fitted. The differences in the coefficient of variance between the two sets of data used indicate that the cost approach has a smaller variation around the mean. The income approach, on the other hand, indicates a more realistic approach, because the basis is the net margin and not a norm for replacement and depreciation. Although differences do exist, a strong correlation exists between the two methods.