Applying Appraisal Principles in Practice Felicia Nelson, AIC USDA:APHIS:VS

APHIS Appraisal Process Subject to Federal Regulations and VS Memorandums  CFRs on the web (Title 9, Parts 50-56)  search.html#page1 search.html#page1 search.html#page1  VS Memos on the Web (No )  534_1.pdf 534_1.pdf 534_1.pdf  Includes guidelines for private appraisers  Updated guidelines for private appraisers as well as poultry values 

APHIS Appraisal Process According to USDA-OGC the appraisal process is NOT a series of negotiations between USDA and the owner, nor is any contract implied during discussion with owner  However, best not to use the word “offer” which can imply a contract  Better to use the word “proposed” or “proposal” and any values discussed must be approved by higher level officials  Make clear up front to the owner no contract is implied  Have contract when VS Form 1-23 is signed by all parties A fair offer based upon relevant information is what is desired

APHIS Appraisal Process The owner will claim above average quality animals, thus deserve above average compensation  Owners need to document above average quality Let the owner tell his story, especially in whole herd/flock depopulations  Identify top quality within the herd & owner’s valuation  Identify average quality within the herd & owner’s valuation  Identify bottom quality within the herd & owner’s valuation

APHIS Appraisal Process Work with the owner to document quality / value  Good cop / bad cop routine  You’re the good guy gathering information to convince the evil “bean counter” in Fort Collins that the owner has high valued animals  Includes both production and financial records  Receipts of sales and purchases  It is a “red flag” when owners either claim they don’t have or are unwilling to share their records and yet claim high value animals

APHIS Appraisal Process Locate relevant markets for quality/type of animals, may not be the local auction  Owner can help with this Analyze market prices of comparable (similar quality) animals to determine appraisal value  It is very important to document how you arrived at your values in order to pass any OIG audits

APHIS Indemnity Process Once value has been determined, calculate indemnity  Indemnity = appraisal value x indemnity rate (%)  Sometimes there is a maximum payment limit

Example of Appraisal

APHIS Indemnity Process Present appraisal value & indemnity amount to owner on VS Form 1-23   form1-23.pdf   Use correct version: Apr 2002   If indemnity rate is less than 100%, show the full appraisal value, not the indemnity value in the appraisal columns. Otherwise owner may feel his animals were not properly appraised. Once signed, send to Regional Office  Regional Epidemiologist can help with this (more later)

If the Owner Refuses to Sign Remind the owner that USDA assumes healthy animals and thus there is a high probability he will receive more than what he could earn in trying to sell diseased or exposed animals at a market Can the owner document and justify additional value?  If there appears to be a reasonable justification / additional documentation, then USDA can reappraise the animals  Otherwise formal appeal to VS Deputy Administrator, which is final  Remind the owner that current federal law prohibits APHIS being sued on its valuation

Appraiser-to-Owner Experience Owner's Records Owner's Memory Owner's Acceptance

Your experience determining dairy values with limited cow data Available data  Lactation  Date bred or due  Average daily milk produced  Normal days dried off Extrapolated data  Days carried calf  Days in milk  Annual milk production