PR - To Be Or Not To Be Premium Pricing Of Swine Facility Farm Sales In A De Facto Moratorium Environment: The Case Of North Carolina (p427-436)

There exists a de facto moratorium on the expansion of swine farms in North Carolina stemming from 1997 legislation due predominantly to the waste management issue from these types of farms. Swine farm operators are required to maintain a manure land application permit which specifies a maximum allowable steady state live weight (SSLW) at each site. New or expanded swine production capacity is effectively prohibited. The only option available for farm expansion is to purchase an existing swine farm with a valid SSLW permit and operate as it is or convert the farm type within the SSLW permit constraints. This leads to questions of how to value the permit or if a premium for swine farm purchase has developed since the beginning of the moratorium. Farm sales data from 130 swine farms in Southeastern North Carolina are evaluated in an attempt to answer this question. Initial results seem to indicate that a premium is applied to swine farm sales over the time period under study. Analysis provides insights into divergent characteristics of subsets within the sample. Preliminary regression analysis yields strong correlations of premiums with swine production capacity, land area, and other characteristic of farms sold. Planned data acquisition and additional analysis are described.

Key words: moratorium, regression, steady-state live weight, premium, farm sales