Plant Palatability Ratings Used for Adjusting NRCS Range Production to Forage Use Value:
The County Productivity Value for South Dakota Ag Land Assessments:
The data used to establish the productivity value is from official estimates published by the United States Department of Agriculture, National Agricultural Statistics Services (USDA-NASS). These official estimates are based upon surveys of farmers, ranchers and agribusinesses.
The productivity value formula multiplies the gross revenue by the landlord share percentages, and then divides this amount by the capitalization rate. The gross revenue for cropland is determined by using an 8-year Olympic average of yields and commodity prices. The gross revenue for non-cropland is determined by using an 8-year Olympic average of cash rents. The landlord share percentages are 35% for cropland and 100% for non-cropland. The capitalization rate is 6.6%.
Relevant Definitions from The Dictionary of Real Estate Appraisal (6th Edition):
Income capitalization approach
Specific appraisal techniques applied to develop a value indication for a property based on its earning capability and calculated by the capitalization of property income.
Highest and Best Use
The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. 2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset's existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid.
Use value assessment
An assessment based on the value of property as it is currently used, not on its market value considering its highest and best use. This sort of assessed value is sometimes used where legislation has been enacted to preserve farmland, timberland, or other open space land on urban fringes
Most Probable Use
1. The use to which a property will most likely be put based on market analysis and the highest and best use conclusion. The most probable use is the basis for the most probable selling price of the property. See also most probable selling price. 2. Highest and best use in the context of market value.
Relevant Standards of Appraisal (2018-2019 Uniform Standards of Professional Appraisal Practice):
the process of valuing a universe of properties as of a given date using standard methodology, employing common data, and allowing statistical testing.
Mass appraisal model
A mathematical expression of how supply and demand factors interact in a market.
Standards Rule 1-3b
Develop an opinion of the highest and best use of real estate. An Appraiser must analyze the relevant legal, physical, and economic factors to the extent necessary to support the appraiser's highest and best use conclusion(s).
Standards Rule 1-4c
When an income approach is necessary for credible assignment results, an appraiser must: analyze comparable rental data as are avaialable and/or the potential earnings capacity of the property to estimate the gross income potential of the property
We gratefully acknowledge that this project was supported by the South Dakota Agricultural
Experiment Station at South Dakota State University and by Hatch project accession No. 1006890 from the USDA
National Institute of Food and Agriculture.
Appraisal Foundation. Appraisal Standards Board. Uniform standards of professional appraisal practice. Appraisal Foundation, 2018.
Appraisal Institute (US). The dictionary of real estate appraisal. Appraisal Inst, 2015.
South Dakota Department of Revenue Property and Special Taxes Division. 'Productivity Valuation of Agricultural Land'. Available online at: http://dor.sd.gov/Taxes/Property_Taxes/PDFs/PRODUCTIVITY%20VALUATION%20EXPLANATION.pdf
Soil Survey Staff, Natural Resources Conservation Service, United States Department of Agriculture. Soil Survey Geographic (SSURGO) Database. Available online at: https://sdmdataaccess.sc.egov.usda.gov.
Soil Surveys Can Help You...Appraising Farmland. Natural Resources Conservation District, 2000, www.nrcs.usda.gov/Internet/FSE_DOCUMENTS/nrcs144p2_061995.pdf.
USDA National Agricultural Statistics Service Cropland Data Layer. 2008-2017. Published crop-specific data layer [Online]. Available at https://nassgeodata.gmu.edu/CropScape/ 10/1/2017. USDA-NASS, Washington, DC.
Wilson, Donald C. 'Highest and best use analysis: Appraisal heuristics versus economic theory.' The Appraisal Journal 63.1 (1995): 11.