Sometimes an idle hog facility seems too good to pass up. However, Allan Lines, Ohio State University, cautions against making a bid that exceeds better than average management for the facilities.
First, determine the facility’s value by using average management results in your assessment.
Second, determine the building’s value by using performance levels that represent better than average management for you. But do this only if your production records support the changed assumption.
The “average management value” will provide you with a price or value that your competitor might be willing to pay. If you really want or need the facility.
The better-than-average-management value will provide you with your top breakeven price. It also will provide some guidance in “outbidding” the competition without giving away your management returns.
Lines has developed a worksheet for the National Pork Board to help you determine the fair-market value of facilities, depending on your specific operation and situation. The worksheet will be available as part of NPB’s Pork Information Gateway, which is in development. For more information contact NPB at (515) 223-2600.