Fruit and Vegetable Processing
Fruit and vegetable processing is a wide field and can include from open air drying to canning plants, juicing facilities and even oil extraction.
PPE Valuations have valued several processing plants.
Depending on the size and complexity of the plant, the property can be classified as a specialised property and the Depreciated Replacement Cost approach can be used for the property, plant and equipment. Mostly, however, the plant is assembled in a standard industrial building and then the property is valued using the Comparable Sales approach or the Income approach while the plant and equipment is valued using the Depreciated Replacement Cost approach.
The Profits Approach can be used as a control method for the value of the plant and equipment.
Under the Profits Approach, the fair maintainable operating profit (FMOP) which would be achieved by a reasonable efficient operator (REO) is calculated from the financial statements of the client. The profit is then split into an operator’s profit and a rental component. The rental component is then capitalised to arrive at a market value.