The most common grain milling plants are wheat and maize milling. PPE Valuations have valued both types of milling plants.
Grain milling is a very complicated and technical process with most the equipment being imported mostly from the USA, Europe and the Far East.
A grain mill is classified as a specialised property and therefore is the Depreciated Replacement Cost approach the preferred method of valuation.
The Profits Approach can be used as a control method.
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.
Care must be taken with the replacement cost as there is a vast difference in price between Swiss manufactured Buhler milling equipment which have an approximate 65% global market share in the supply of milling equipment and similar equipment manufactured in the Far East.