THE VALUATION OF GAME / WILDLIFE FARMS
Game / wildlife farms become ever more popular as the challenges of profitability in the agricultural sector increase.
In 2000 there were already 9 000 game ranches in South Africa that covered 13% of the country’s total land area, compared to 5% for all national parks (Falkena, 2000).
The original concept of a game ranch or game farm has gradually been replaced by that of a wildlife ranch or farm because game animals are by definition only those that are hunted, while there is now a large component that caters for the full spectrum of biodiversity by including many other types of wildlife (Bothma, 2010).
In this article the two terms, game and wildlife, will be interchangeably used but will have the same meaning.
The following are some of the factors that influence the values of game / wildlife farms:
- Classification factors
Different types of farms or ranches usually have different value adding factors. Some of the different types include:
- Those used for hunting, breeding and live sales purposes.
- Those used solely for breeding purposes. Included with this type are small farms utilised for the breeding of exotic game in captivity. These are not considered game farming under natural conditions.
- Those used for conservation and ecotourism, with or without lodges.
- Combinations of the above, including farms and reserves with dropped fences which are open to National or Provincial Parks, for example the Kruger National Park.
- Location and access
The values of game farms and ranches within an hour to two hour’s radius around the metropoles have been upwardly influenced by buyers and investments from outside the agricultural sector. The motivation is often not driven by an economic perspective but rather by sentiment or by secondary motives such as private or business entertainment.
Good quality access roads, which also accommodates a standard passenger vehicle, are important.
Access by air via a nearby airport, or a landing strip on the farm, enhances value.
Internal roads and their condition are as important as access roads. There should be firebreak roads, winding game-viewing roads, private roads and walkways for game retrieval.
A right of way servitude over a game farm is not favourable, and will definitely affect the market value negatively.
- Farm shape and layout
Game farms should be as square as possible for the best movement of game and optimal utilization. Narrow farms or farms with pointed corners are less in demand and their values are usually lower. The layout of a farm influences the aesthetic value. Farmyards, worker houses etc should be located out of sight and away from major internal or entrance roads.
- Farm extent
Small farms tend to fetch higher prices per hectare than larger farms. The average game ranch size stays relatively constant at +/- 2 100 Ha (Falkena, 2000). The smaller game farms focus on a different market than the larger ranches. Smaller farms are often purchased by business persons with capital from outside the agricultural sector, as explained in point no 2.
- Natural resources that influence value
The veld, water and climate have an influence on the suitability of a farm to be utilised as a game farm or ranch. Diversity of veld is influenced by the soil, climate and topography and therefore the diversity of the natural occurrence of game is influenced. Natural water resources (rivers, dams and fountains) are always beneficial. They result in fewer artificial water points being necessary. Sustainable water sources are critical on a game farm.
- Game fence related factors
Game fences are expensive and vary much in cost per running metre. Game fences are classified as Class B improvements and are not valued separately, but the type of game fence determine the game species that can be kept and influence the value per hectare of a game farm.
As soon as the natural movement of game is restricted, a certificate of adequate enclosure is required. This certificate stipulates the type of game fencing required, and which game are allowed to be kept. To keep game confined out of their natural environment requires a specific permit.
The condition of a game fence will have an influence on the per hectare value of the farm. The shape and topography of a farm influence the length and the cost of a game fence and therefore the per hectare value of the farm. It should be kept in mind however, that an odd shaped farm’s fencing could cost more to erect than a square shaped farm, but the per hectare value of the odd shaped farm is expected to be lower than the square shaped farm.
- Buildings and other improvements
Buildings and other improvements are valued the same way as on any farm. Class A improvements (dwellings, sheds etc) are valued separately from the land, at depreciated replacement cost. Class B improvements (game fencing, water reticulation, roads etc) are valued as part of the land. Class S (specialised) improvements (lodge, hunting camp, boma, lion’s dens, holding camps etc) are also valued separately from the land.
** Consulted Source: Farm Valuations in Practice (Pienaar, 2013)
*This article was originally published on the Farmer’s Weekly website
