Farms aren’t just pieces of land; they’re livelihoods, legacies, and the bedrock of communities. In the state of Wisconsin, farming is more than an industry; it’s a way of life. When it comes to ensuring the seamless transition of a cherished farm from one generation to the next, proper valuation is a top priority. At Borakove Osman LLC, in Madison, Wisconsin, we understand the profound significance of valuating farms, not just as a business necessity, but as a familial responsibility.
One of our lead attorneys, Shayna W. Borakove, grew up on a family farm and has deep roots in this country’s farming culture. Therefore, for our legal team that specializes in small business planning, farms have a prominent position. We are acutely aware that the valuation process is not just about numbers. It is the first step in maintaining and protecting family assets, preserving legacies, and safeguarding farming communities.
Factors Affecting Farm Valuation
Because many factors play a part in valuating a farm’s worth, valuation can be a complicated process. That’s why you need a competent farm succession planning attorney to guide you. Contacting Borakove Osman LLC at the outset is a wise move. We will assist you in following appropriate protocol for this project by considering:
Property Size
The size of the farm plays a significant role in its valuation. Larger properties often command higher values due to economies of scale (cost advantages that result by increasing production to lower costs), potential for expansion, and diversified revenue streams.
Income
The farm’s annual income is a crucial metric in valuation. It encompasses revenue from crop yields, livestock sales, agritourism activities, and any other sources of income generated by the property.
Amenity Value
As defined by the USDA, amenity value encompasses nonagricultural features of the farm that contribute to its overall worth. These may include recreational opportunities, scenic landscapes, and potential for ecotourism, which can enhance the property’s market value.
Soil Productivity
Evaluated by agronomists, soil productivity is a key determinant of a farm’s value. Fertile soil with high agricultural potential commands higher prices, reflecting its capacity for sustained productivity and profitability.
Capitalization Rate
The capitalization rate, often used in income-based valuation methods, reflects the rate of return expected by investors on the farm’s net operating income. A higher capitalization rate may indicate greater risk or lower profitability, leading to a lower valuation.
Influence Factor
The influence factor evaluates external factors such as market trends, regulatory changes, and environmental concerns that, over time, could impact the farm’s value. It requires careful analysis and consideration by trained experts.
Infrastructure and Equipment
It’s important to evaluate the condition and functionality of infrastructure and equipment on the farm, including barns, silos, irrigation systems, and machinery to judge the farm’s overall value. Well-maintained assets enhance productivity and efficiency, increasing the farm’s value.
Location
The farm’s proximity and ability to access markets, transportation hubs, power grids, water supplies, telecommunications, and urban centers can influence its value. The greater the availability of goods, services, and markets, the higher the value of the farm is likely to be.
Contact Our Experienced Wisconsin Farm Succession Attorneys Now
Farm valuation is a multifaceted process, requiring knowledge, insight, and comprehensive familiarity with the agricultural realm. At Borakove Osman LLC, we recognize the intricacies involved in farm valuation and the pivotal role valuation plays in succession planning.
More than that, we are dedicated to protecting the vitality and growth of Wisconsin’s farms and the individuals and families that nurture and depend on them. Contact us today to prepare yourself, your family, and your farm for a productive future.