FARM VALUATIONS: HOW TO DETERMINE WHAT YOUR FARM IS WORTH

Placing a rand value on a farm is a very complex process. Often having provided livelihoods and homes to multitudes of families across generations, they’re steeped in personal history and strong attachments. This makes it particularly difficult for owners to be objective in determining a selling price, and this is where agricultural property specialists Home & Hectare Real Estate can assist with a realistic, objective and accurate market value.

Home & Hectare principal Rubé Bradfield stresses the importance of evaluating a farm as you would a business. “An array of factors should be taken into account, including the current market, the location of the farm, its assets and infrastructure, current performance and future potential.”

Market Trends

Home & Hectare’s close affiliation with agri-giant BKB, provides agents with in-depth knowledge of the agricultural sector. In the last 10 months, R490 million in farm sales have been recorded across Home & Hectare sales platforms: auctions (in person, online and hybrid), tenders and traditional sales. According to Rubé, these figures – when compared to 2021/2022 – reflect a consistency in the market.

Within this overall trend, agents will refine their valuation by looking at market conditions for the specific farm type; as factors like supply and demand, prices, and government policies may influence each farm differently depending on what it produces.

Location

The location of the farm plays a significant role in its value. Farms in highly-desirable areas or close to major cities or transportation hubs command higher prices. Our agents – each an agricultural expert in their region – will look at the farm’s size, topography, soil quality, water resources, and climate as well as recent sales in the region to arrive at a comparable land price per hectare and to identify possible expansion opportunities.

Infrastructure

The farm’s physical characteristics and infrastructure directly affect its productivity and profitability. Buildings, fences, roads, irrigation systems … all improvements, their quality, their age and their condition, are taken into consideration. Currently of great significance in South Africa, are improvements that help provide reliable water and energy supplies, and those that ensure farmers’ safety.

Business performance and potential 

From here, agents will analyse the farm’s production history. Highly knowledgeable when it comes to livestock and crops, input costs and potential yield, they will look at factors such as crop rotation, types of livestock raised, any past issues with pests or disease, etc. to assess the farm’s past performance and its future potential.

The assistance of an experienced agricultural real estate agent is invaluable in pinning a realistic price tag onto a farm – one that pleases the seller and attracts the right buyer. “Our agent experts pride themselves in adding immeasurable value to the sales process, and are focussed on all parties walking away from the transaction having had a positive experience,” says Rubé. She invites you to contact Home and Hectare for an honest, expert valuation of your farm.