1. Principles of Livestock Valuation
Veterinary Services’ Class on Livestock Appraisal
February 24-26, 2009

2. Key Point
When doing appraisals don’t worry about getting the correct value, but instead worry about doing the valuation correctly, i.e. following standard appraisal principles

3. Introduction Objectives Basic: Advanced:
Ability to review & judge appraisal reports
An understanding of the compensation process and who to contact for help
An appreciation for non-traditional poultry
An understanding of dairy cow appraisal
Advanced:
Ability to appraise animals & write appraisal reports
Encouraged to seek additional appraisal training
American Society of Agricultural Appraisers

4. Introduction Outline Introduction to Appraisal
Compensation’s Role in Veterinary Services
Thus the need for appraisal
Appraisal Principles
Appraisal Reports
What makes for a good appraisal report
Group Exercise in critiquing appraisal reports
Poultry in America
What’s going on in the Western Region
Valuation of Dairy & Poultry
Appraisal Exercises

5. Why This Course APHIS needs to have appraisals that will pass audits
APHIS:MRPBS, USDA:OIG, GAO
Poorly done appraisals put APHIS’ ability to manage the compensation process at risk
If auditors don’t have confidence in valuations, then dollar amounts being spent on indemnity more likely will be questioned
If it appears that public funds are not being spent wisely the whole program could be at risk

6. Why This Course What do auditors desire in appraisals?
Not some much concerned about the actual value per se, but the process of how the value was determined
Consequently, auditors want enough information so that if they did the appraisal they would have arrived at a similar valuation
Good appraisal reports lead you to value, poor appraisal reports tell you value
This course is about good appraisal reports

7. What is an Appraisal? An Appraisal can be of the following
An estimate of cost
A determination of value
A forecast of earnings
A non-monetary opinion as to authenticity or quality of a property
Notice the use of the words estimate, determination, forecast, opinion

8. What is an Appraisal?
An appraisal is not a precise measurement, neither is it a guess; it is an estimate or an opinion based on supporting facts.
Yin-Yang of appraisal:
art vs. science
subjective vs. objective
To be in agreement appraisals should have similar, but not necessarily the same valuation
Ultimate goal of an appraisal is to convince others that your estimate of value is valid, not precisely correct
Thus, my critiques of Felicia’s appraisals haven’t focused on her values, but in improving the use of supporting facts and presentation of those facts.

9. Uniform Standards of Professional Appraisal Practice
Saving & Loan financial crisis of the early 1980’s demonstrated the need to improve appraisal practices
Valuations were based upon the needs of the client and not necessarily the value of the property
Properties were over-valued and eventually led to the demise of several savings & loans

10. Uniform Standards of Professional Appraisal Practice
Appraisal Foundation established in 1987 to develop and promote the Uniform Standards of Professional Appraisal Practice (USPAP)

11. USPAP
Has several rules and standards, we will focus on just a few now (more later)
Ethical no-no’s
Appraisal is expected to meet/exceed a predetermined value
Appraisal fee is a function of valuation provided
Failure to disclose conflict-of-interest
Doing appraisals where you have conflict-of-interest (more details later)
Not maintaining confidentiality
If seeking expert opinion, give only enough details for the individual to form an opinion

12. USPAP Competency Rule APHIS Perspective
Should only accept those assignments for which you have training and knowledge
However, can
Gain additional knowledge
Can gather much information from the internet
Consult with an expert
Hire another appraiser to assist you
APHIS Perspective
You have received appraisal training
My assistance is available
Therefore give it your best shot