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The business case for an IPPC permit

by 5m Editor
23 May 2007, at 8:28am

UK - How much is an IPPC permit worth when you sell a pig unit? Are pig-keepers who haven’t applied for a permit, missing a trick? Is there a case for applying for an IPPC permit before you sell, even if you are under the threshold?

The answer to these questions is clear. Anyone thinking of selling a pig farm would be well advised to apply for a permit before putting the property on the market, even if it is, say, 20 percent below the current IPPC threshold of 750 sows or 2000 pigs over 30 kilos.

Nobody really knows how many pig units should have applied for an IPPC permit. But the Environment Agency, and indeed many people in the pig industry, believe there are a number of units that are now operating illegally.

The latest figures from the Environment Agency are, 147 applications for grower-finisher units and 27 applications for sow units (but bear in mind that some of the applications are for aggregated units, so the actual number of units will be somewhat higher).

It seems clear there are some pig-keepers who have not applied for a permit. Some of these will have downsized or be in the process of downsizing, and some will be planning to retire and therefore don’t see a need for a permit.

Both groups may find it worthwhile to draw up a balance sheet of the pros and cons of applying for a permit, even if they are downsizing or retiring.

This also applies to those who feel their units are so tired they will have little value as pig units when they are sold. It is increasingly difficult to get planning permission for new pig units. So there may be potential purchasers who see a good business case for buying a worn-out unit, razing it to the ground and rebuilding.

It makes sense to get a permit before selling. Even if a unit is below the threshold – but has capacity for expansion to threshold levels – it will almost certainly be worth applying for a permit.

“If a pig producer is selling a livestock unit that is above the threshold for IPPC, and that unit does not have an IPPC permit, the freehold value will be discounted by the cost of compliance, and further discounted by the buyer’s estimate of the certainty or otherwise of being granted a permit,” says independent pig industry adviser Peter Crichton.

Home Information Packs will soon impose a legal responsibility on home sellers to declare relevant facts about the property, and to some extent an analogy can be drawn with selling a pig unit.

“There could a legal liability if a seller fails to disclose to a buyer that a unit that is above the threshold does not have the relevant permit. The seller will probably be unable to shelter under the caveat emptor umbrella,” says Peter Crichton.

5m Editor