HBU - what was, what is, what will be.

[Terrel L. Shields]

See some pretty lame HBU sometimes. Unfortunately, I am probably looking at my own work. Sometimes it takes a little explaining.

I did a poultry farm about 4 years ago. It went into Ch. 12 (reorganization farm) bankrupcty and finally the guy walked about 3 months ago. The dwelling is trashed, place is grown up and the poultry barns are deteriorating.

HBU 4 years ago was operating poultry farm with batch contract for birds.

Today the integrator (chicken co. to the uninitiated) refuses to talk about a current contract for bird except to say that out of the 5 houses, they would only consider placing a flock in the two newest. But they would not promise to do that even with their list of updates.

A potential buyer intends to take that risk and once he takes title, would approach the company to place a flock in the 2 houses and he proposes to demolish the other 3 barns...which will salvage about $50,000 but cost about that to do so.

My take is the as is HBU is a land tract with salavageble house and 2 barns that are potentially valuable but devalued in that lack of contract affects their "as is" value. The other 3 barns are a detriment to the property.

I won't speculate what the future use will be because the current interested party cannot get a promise from the integrator that they will place a flock. So the HBU was a poultry farm. The current HBU is a residence with surplus barns. The future HBU ?...maybe one or the other.

 

[Ray Miller]

See some pretty lame HBU sometimes. Unfortunately, I am probably looking at my own work. Sometimes it takes a little explaining.

I did a poultry farm about 4 years ago. It went into Ch. 12 (reorganization farm) bankrupcty and finally the guy walked about 3 months ago. The dwelling is trashed, place is grown up and the poultry barns are deteriorating.

HBU 4 years ago was operating poultry farm with batch contract for birds.

Today the integrator (chicken co. to the uninitiated) refuses to talk about a current contract for bird except to say that out of the 5 houses, they would only consider placing a flock in the two newest. But they would not promise to do that even with their list of updates.

A potential buyer intends to take that risk and once he takes title, would approach the company to place a flock in the 2 houses and he proposes to demolish the other 3 barns...which will salvage about $50,000 but cost about that to do so.

My take is the as is HBU is a land tract with salavageble house and 2 barns that are potentially valuable but devalued in that lack of contract affects their "as is" value. The other 3 barns are a detriment to the property.

I won't speculate what the future use will be because the current interested party cannot get a promise from the integrator that they will place a flock. So the HBU was a poultry farm. The current HBU is a residence with surplus barns. The future HBU ?...maybe one or the other.

I would agree.

Could the current use be for a storage of some type.

I know when the Greenwood Arena at Greenwood, Mo. closed as a horse operation, it became a boat storage business. I have seen other operation like hog barns turned into storage for different things. A place just north of me sold with a large number of building and became a storage place.

 

[Wayne Tomlinson]

I agree with your analysis.

The same applies to hog confinement market. If there is no contract available, there is no way an individual can afford the investment.

In fact every hog confinement operation that I ever appraised, I have conditioned on it having in place a long term agreement.

The largest "contractor" (I had not seen that word before in this context, but I like it) in the area just bought out the next nearly largest.

Consilidation is the name of the game.

Wayne Tomlinson

 

[Ray Miller]

I got a friend who is in the chicken contract busines with Tyson Foods. What they are finding it is costing more to get the feed delivered to the chicken barns and then the labor and fuel cost is killing him as well. The cost to get the chickens to the plant he says will eat up any of the profit that might have been left. He is talking about closing his chicken barns down. He is also in trouble trying to get last year corn to the shipping point for his contracts so he will have the bins for this years corn. His uncle is worried that he may be belly up by this time next year, even with row crops as high as they are.

 

[Terrel L. Shields]

For such operations, the only thing they can do is try to do some sort of premium bird, organic certified, whatever. I have seen one small operation where the fellow had contracts with organic food stores and he built a stainless steel kitchen to process his own birds. But it is capital intensive and he had to hire help to butcher the birds until he got enough volume that a small plant 60 miles away would process them for a fee. Start up in this environment and the process of certifying a farm as organic probably is an insurrmountable barrier to such conversions in the current economy.
Face it. We are losing not only our ability to find oil in America, we are losing our ability to feed ourselves.

 

[Tim The Enchanter]

we are losing our ability to feed ourselves.

I can always plant some fruit or veggies out back to help myself. But I don't have room for a hog confinement facility, and the California prison guards union might object. Or want jobs.

 

[Walter Kirk]

Is there any other use , Ag or not, that the land could be put to? Former poultry farms in my area are used for housing, horses and commercial.

 

[Terrel L. Shields]

No commercial uses - "ag" in this area is raising cows or a SFR with big site. In this case its 70 acres where it is very rural.

 

[Walter Kirk]

70 Acres in N.J. can be a whole town!