Physical improvements are the manmade components of the farming system. Rural physical improvements are only a small part of the total market value of broadhectare farming but are the most important part of intensive farm systems such as piggeries and broiler farms. Since the physical improvements for such intensive land uses are very
specialised, the value of the improvements for broadhectare farms only will be considered here. For broadhectare farms the most common physical or structural improvements in order of importance (generally) are:
The above order applies to a property with little or no urban influence but whose value is determined largely, by agricultural factors. For example, a 2.5 ha hobby farm near a large provincial city would have the homestead as the major physical improvement and on some hobby farms near Sydney rural improvements such as an orchard's packing shed may even be detrimental to the property's value because they will not be used by the hobby farmer and have little value for alternative uses.


The components of the farm system can be subdivided into two broad classifications:
The major distinction between the two is that physical improvements depreciate in value from date of completion whereas the land component generally, does not depreciate in an expanding economy. That is, in an expanding economy the owner enjoys capital gains
or an unearned increment in value.


The value of a just completed physical improvement is equal to its
cost so long as it represents or is part of the highest and best use of the land. Its value at any time after that date is always less than cost and is equal to its cost of construction less any accrued depreciation. In valuation practice the cost of construction is the true cost being the sum of:
Therefore, the cost of construction is substantially more than the contract price alone. Real cost can be tested in the market place by comparing sales of sites with and without (or obsolete) improvements.

The rate of depreciation of an improvement is a function of:

The highest rate of depreciation for physical rural improvements is for intensive uses such as a piggery. Piggeries generate corrosive waste products that affect particularly galvanised steel parts of the building or yards. On the other hand there are examples of old hay sheds in dry inland areas that were built in the 1890s (with imported galvanised steel) and in the 1910s that are in good condition.



Physical depreciation is the loss in value caused by wear and tear and the use of the improvement. It is tangible and observable on inspection. Accrued physical depreciation can be either curable (for example, in need of painting) or incurable (for example, expensive damage to the footings).


Functional depreciation or obsolescence is the loss in value of the improvement caused by poor, inefficient and/or obsolete design. For example, old shearing sheds designed around the need to accommodate an engine room and belt driven shearing equipment.


A loss in value caused by some external economic or legal factor. The most important economic depreciation is caused by technological change. For example, the use of ringlock (packaged) fencing largely replacing old net fencing. The use of high tensile steel in fencing has made older fences with a higher number of strainer posts less valuable.
Arguably, the use of "pour on" drenches has made dip trenches obsolete.

Economic depreciation is also be caused by legal factors. For example, when the local authority disallows an intensive the land use for environmental reasons or the loss in value of dairy improvements when a dairy is not allowed for environmental reasons.

Whether, or not such an improvement has some value will depend on whether or not it can be converted to the higher and better use. If it can, then the improvement has a base or in situ salvage value. If it cannot, then it has demolition value only.

See fencing

See water improvements

See yards

See woolshed

See sheds

See silos

See homestead