Flour and provender mills
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
This section applies to both flour and provender mills which reflects the fact that, historically, they were often linked, and that the two types of hereditament contain a number of similar features. Both types of hereditament are similar in that they contain storage facilities for the raw products they use; mill buildings where the raw product is ground, mixed and prepared into the finished format; storage facilities for that finished product; and administration offices. However developments in the industries have indicated the need for the two types of mill to be considered quite separately.
1.1. Flour mills
1.1.1 General description
Flour mills provide milled product for human consumption, the functions of a flour mill can be broken down into:
- to store a reserve of raw material (usually wheat)
- to eliminate all the impurities from wheat prepared for milling
- to mill wheat and separate flour from the bran and skins of the wheat
- to store the milled products before despatch.
1.1.2 Storage and initial cleaning
On arrival at the mill each load of wheat is tested against a contract specification for variety, moisture content, specific weight, impurities, enzyme activity associated with sprouting, protein content and quality. It may be passed through a preliminary cleaning process to remove coarse impurities, such as nails and stones before being stored in the silos. The wheat store or silo is usually a tall building housing a number of large cylindrical bins (often constructed in ferro-concrete). These are frequently 20-30 metres high and may each hold 250 tons of grain.
1.1.3 Cleaning, conditioning and blending
When wheat is drawn from the silos prior to milling, it is thoroughly cleaned. Machines, which separate by shape, remove barley, oats and small seeds, and magnets extract any remaining ferrous metal objects. Gravity separation removes stones and, throughout the cleaning process, air currents lift off dust and chaff.
The wheat is then conditioned to a suitable moisture content by tempering it with water and leaving it in conditioning bins for up to 24 hours. This conditioning softens the bran and enhances the release of the inner white endosperm during milling. Cleaned and conditioned wheat is then blended in a process known as gristing. This combines different wheats to produce a mix capable of yielding the required quality of flour.
1.1.4 The roller milling system
The grist is passed through a series of ‘break’ rolls rotating at different speeds. These rolls do not crush the wheat but split it open, in order to cause the inner white floury portions of the wheat to come away from their brown outer skin.
There are normally four stages of “breaks” in the system and after each break the endosperm is sifted from the torn open wheat grains by plansifters or centrifugals. This process is known as scalping. The first sieves of the plansifter remove the bran skins, which may still have flour particles adhering to them, and these are returned to another milling machine for re-treatment.
The various fragments of wheat grain are separated by a complex arrangement of sieves. White endosperm particles, known as semolina, are channelled into a series of smooth ‘reduction’ rolls for final milling into white flour.
The whitest flours are produced from the early reduction rolls, with the flour getting less white on later rolls as the proportion of bran particles increases. Brown flour is a mixture of white flour and a portion of the other streams. To produce wholemeal flour, all the streams must be blended back together in their original proportions.
In a typical mill, there may be up to four break rolls and 12 reduction rolls, leading to 16 flour streams, a bran stream, a germ stream and a bran/flour/germ wheat feed stream.
1.1.5 Storage and dispatch
The various grades of flour and coarse bran are collected and are brought either to bulk storage bins or to a packing floor where they are filled into sacks and weighed. The packed products are sent to the mill warehouse and stacked ready for dispatch.
1.2 Provender mills
1.2.1 General description
Provender mills provide animal feed stuffs. Historically some provender mills have formed part of a flour mill but today the two categories tend to be separate. Notwithstanding this the physical characteristics of the hereditament and the valuation approach are similar. Whilst many of the supporting items will be similar to those found in Flour Mills, it is likely that a wider range of process buildings will be encountered. These can include simple general purpose buildings at one end of the range and, at the other, high eaves buildings utilising sophisticated computerised plant. The functions of a basic provender mill can be broken down into:
- to store a reserve of raw material (usually wheat) and to eliminate impurities prior to processing
- to grind, micronize, flake or roll the raw material
- to blend ground raw materials together and to produce a pellet feed
- to store the finished product before despatch
1.2.2 Storage and initial cleaning
On arrival at the mill each load of raw material is tested against a contract specification for variety, moisture content, specific weight, impurities protein content and quality. The store or silo is can either be a tall building housing a number of large cylindrical bins (often constructed in ferro-concrete), or flat on floor grain storage with thrust walls. Prior to processing the raw material is cleaned normally all that is required is some form of scalper to remove gross oversize pieces, stalks, cobs, clods, stones, and the like. Magnetic protection ahead of the mill will insure a minimum amount of metal enters the process.
1.2.3 Milling pelleting
The purpose of pelleting is to take finely divided, sometimes dusty, unpalatable and difficult to handle feed material and by using heat, moisture and pressure form it into larger particles. Those ingredients which are of a coarse texture, such as whole grains, are ground into a fine material to aid the mixing process. Weighed quantities of each ingredient are thoroughly mixed and conveyed to a bin above the pellet mill. The mix is conditioned (softened) by the addition of heat and water in the form of steam. When sufficient controlled compression is applied to the “conditioned” feed they form a dense mass that is passed through a die to form pellets. The pellets are cooled and either stored or passed through crumb rollers to produce a relatively fine product.
Micronizing is the name given to a cooking process that uses infrared rays to cook cereals and pulses at lower temperatures and for shorter times than other heating methods. Gas burners are used to generate the infrared rays that are absorbed by the products. The raw materials are passed under the burners on variable speed belts to achieve the desired level of “cook”. The product is then passed through a roller mill to create flakes. These flakes can be used whole or ground into a meal.
Flaking and rolling Rather than grinding using a hammer mill the grain may be crushed or flaked using a rolling mill or flaking mill. The raw cereals may be steam cooked or micronized (see above) prior to them being rolled and flaked. Flaking and/or rolling improves the taste, texture and visual appeal making it attractive to livestock and the finished product is easily digestible thus enhancing the nutritional value in the diet.
1.2.4 Storage
Once the feed is finished it is stored in bulk containers either in the form of silos (larger mills) or tote bins. Any of the products produced at the mill may be blended together to form various coarse mixes. Mills may either supply feed in bulk or may bag certain products. The requirement to supply bagged product will have an impact on the amount of warehousing space required at the mill.
2.1 Flour mills
List description: mill and premises
Primary description code: IF1
Scat code: 103
Scat suffix: V for the larger properties S for smaller properties. G for mills valued by reference to a rentals comparison approach.
2.2 Provender mills
List description: mill and premises
Primary description code: IF1
Scat code: 222
Scat suffix: V for the larger properties S for smaller properties. G for mills valued by reference to a rentals comparison approach.
Responsibility for the valuation of these classes of property is split as follows:
- the larger more complex specialist flour and provender mills valued by reference to the contractor’s basis are dealt with by the Industrial, Commercial and Crown team within the National Valuation Unit (NVU)
- other flour and provender mills valued by reference to a rentals approach are dealt with by valuers within the non-domestic rating business units
Responsibility for ensuring effective co-ordination lies with the NVU Industrial, Commercial and Crown team. There may be some smaller, less specialised mills where comparison can be made with the local industrial tone. Where this is the case great care must be taken, both to distinguish from more specialised mills where such an approach could not be considered If in doubt advice must be sought from the NVU lead.
There are no separate legal considerations for this class.
All flour and provender mills should be measured to GIA in accordance with the VOA code of measuring practice.
The survey should be undertaken on the assumption a full contractors test valuation will be carried out. Comprehensive details of plant and machinery will be required.
The survey should contain detailed notes as to the construction, age, height and services of any structures on site together with any refurbishment details.
All site works should be individually surveyed and detailed separately.
In relation to raw material and finish product silo storage the following details should be recorded:
- a) The diameter is a factor in the cost of a bin, so it is important to obtain full size details. Information regarding the capacity of bins is often given in wheat or barley tonnes. As a rough guide, conversion to m3 (all costs in the Rating Cost Guide for bins are in m3) is as follows:
- wheat - 1 tonne of wheat takes up 1.30 m3
- barley - 1 tonne of barley takes up 1.45 m3
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b) Steel silos sometimes comprise a number (nest) of bins enclosed by a roof and cladding to the elevations giving the appearance of a building. The section, volume and number of bins need detailing as well as supporting features including cladding, cat walks and ladders etc.
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c) Even if silos of a smaller size than referred to in the plant and machinery regulations are found these should be fully referenced, having regard to full details of installation to enable an accurate view to be formed as to whether they could be removed without substantial demolition of the silo or the surrounding structure.
6.1 Plant and machinery
Flour and provender mills contain a considerable number of items of plant and machinery named in the relevant Valuation for Rating (plant and machinery) Regulations. Rateability should be tested in accordance with the principles set out in Rating Manual: section 6 part 5 - plant and machinery.
Survey details should be recorded electronically and stored in EDRM in the property file for the appropriate hereditament.
It is recognised that this is impractical for the larger mills consisting of hundreds if individual items. Accordingly survey details for the larger mills should be recorded manually in binders held by the NVU Industrial, Commercial and Crown team.
8.1 Flour mills
This class of property is seldom let and most buildings are of a highly specialised nature. Valuations should be by reference to the contractor’s basis of valuation (See Rating Manual: section 4 part 3 - the Contractor’s basis of valuation).
8.2 Provender mills
The range of buildings to be found within the industry needs to be reflected in the basis of valuation adopted. The vast majority of the hereditaments, especially the more modern specialised ones, should be valued on the contractor’s basis.
There may be some smaller, less specialised provender mills where a rental basis may be adopted through comparison with the local industrial tone. Where this is the case great care must be taken, both to distinguish from more specialised mills where such an approach could not be considered, and to fully reflect the value enhancement of any particular features that the buildings possess which are beneficial to the use as a provender mill.
As with flour mills the concentration of mills with a few occupiers heightens the need for co-ordination requirements to be followed. This is particularly important at the lower end of the industry where the interface between hereditaments valued on comparison and contractor’s basis occurs.
8.3 Valuation by reference to the Contractor’s basis
All valuations should be by reference to the contractor’s basis of valuation (See Rating Manual: section 4 part 3 - the Contractor’s basis of valuation).
8.3.1 Stage 1 – Estimated Replacement Cost (ERC)
Buildings within this category vary considerably, from Victorian multi storey buildings to modern steel framed ones. A typical, modern mill will have considerable height, insulated profiled metal walls and roof, intermediate concrete floors with special finishes on the milling floors and a lift. As there is a potential fire risk sprinklers are not uncommon. The valuer must ensure that the specification of the mill in question is fully reflected against the beacon cost provided at stage 1. All the buildings, civils and rateable items of plant and machinery commonly found in this type of property should be costed from the costing information provided in the Rating Cost Guide for the relevant revaluation period. Adjustments to the costs where appropriate, are required for location, contract size and fees. These should be in accordance with the advice contained in the appropriate Rating Cost Guide unless specifically stated in the relevant practice note for this class.
8.3.2 Stage 2 – Adjusted Replacement Costs (ARC)
The guidance for making adjustments to reflect obsolescence and age related disabilities (not made at stage 1) is set out in the Rating Manual Section 4 Section 3 for the relevant rating list.
8.3.3 Civils ancillary to plant items
All the civil works which are directly ancillary to plant items such as steel supports, concrete bases/foundations, bund walls and bund bases should generally follow the allowances made on the items to which they relate i.e. a concrete base for say an oil tank would receive a similar allowance to that given for the oil tank. This applies even if the item itself is not rateable because of its size.
8.3.4 Site works
Allowances for items of site works which serve the property such as yards, parking areas, landscaped areas, open storage areas, boundary fencing, underground site services and lighting should be based having regard to the following:-
Where the items of site works serve a particular building the allowance should follow the allowance made on the building to which they relate. Where the items of site works serve the property as a whole the allowance should be based on the overall average allowance derived from the allowance made for all the buildings, civil works, plant and machinery items present on the site.
8.3.5 Stage 3 - Estimation of cost of the land
The value to be adopted for the land should be on the basis of a cleared site with such services, as existed at the relevant date, available for connection and with planning permission for grain storage reflecting all advantages and disadvantages of the site and its location. This will normally follow general industrial value for the size of site in the locality where the flour mill is situated. “Ebdon Discount” allowances for the land, in accordance with the findings of Imperial College of Science and Technology v Ebdon (VO) and Westminster City Council [1987] 1 EGLR 164, should be based on an overall average allowance derived from the individual allowances made at Stage 2 for the buildings, civils, and rateable items of plant and machinery situated on the site.
8.3.6 Stage 4 -Decapitalisation rate
The relevant statutory decapitalisation rate for this class of property must be adopted.
8.3.7 Stage 5 – Overall consideration
This is often referred to as the “stand back and look” stage. At this stage of the valuation care must be taken to ensure that adjustments are only made for matters which have not already been allowed for at stages 2 and 3. Typically matters to be considered at this stage concern whether or not any end adjustment to the valuation should be made to reflect matters that affect the rental value but not necessarily the costs. Such matters for consideration at this stage would be in respect of disabilities that effect the site as a whole such as layout and access. Care should also be taken to avoid double counting where disabilities are already reflected in the site value.
8.3.8 Substitute approach
When valuations are carried out on the contractor’s basis it may be necessary to have regard to a substitute building approach. It should be noted that this approach only tests the value/cost of the actual item against that of a modern substitute. It is the actual item that has to be valued as part of the hereditament. Thus, in the case of plant and machinery, it is not correct to make any allowance if it is argued that the modern substitute for a silo in excess of 400m3 would be below 400m3, and therefore not rateable. It is stressed that the appropriate design of a substitute must have regard to the functional needs of the actual occupier. This is particularly relevant in the size, number and type of construction of storage bins or silos. In determining whether a concrete structure can be costed in steel, for example, in the modern substitute approach, regard must be had as to whether construction in some substitute material would be capable of providing an adequate mix of quality, durability and performance. There may be instances where it would not be possible to carry out the desired function in an alternative form of construction. In such cases it would not be appropriate to envisage a valuation based on a substitute in an alternative material.
8.4 Valuations by reference to rentals comparison
If a valuation on a rentals approach is adopted all buildings should be measured to GIA and the subsequent survey data entered into the Rating Support Application (RSA) using a bulk class of M and the sub location 3POV. Address-based matrices should be created, driven by sub location code and linked to scale VXFGIA1. Care should be taken to identify all items of rateable plant and machinery which should be valued using the non bulk server and the resultant figure entered into the RSA valuation.
If a full contractor’s basis is adopted. All valuations should be carried out using the ‘Generic Contractors Basis’ spreadsheet, which is available on the non-bulk server. VOA - Non bulk server manual If a valuation on a rentals approach is adopted valuations should be carried out using RSA. Additional Plant & Machinery should be valued using the non-bulk server and the resultant figure entered into the RSA valuation.
1. Market Appraisal
The number of flour mills remain static with the four largest companies accounting for the largest share of the UK’s flour production.
Official Statistics indicate that the UK flour milling industry produces circa 5 million tonnes of flour every year, utilising approximately 85% UK-grown wheat. Although energy and transport are significant costs for the milling sector the cost of wheat is the main input cost for flour.
As an essential industry mills were allowed to continue to operate during the COVID pandemic. Media reports indicate that loss of demand from food service outlets that were forced to close was offset by an increase in demand from retail outlets especially early in the pandemic due to the increased popularity of home baking.
2. Changes from the last Practice Note
With the exception of the market appraisal, there are no changes from the 2017 Practice Note.
3. Ratepayer Discussions
There have been no discussions with the flour industry.
4. Valuation Scheme
There is no scheme of valuation as Flour Mills are valued by a limited number of National Valuation Leads who are part of the Industrial, Commercial and Crown Team of the National Valuation Unit. The properties will be valued using the Contractor’s Basis of valuation with the majority of costs being derived from the VOA Rating Cost Guide (RCG). Where the contractor’s basis of valuation is deemed appropriate, it is to be applied in accordance with VOA Rating Manual Section 4: Part 3: The Contractors Basis of Valuation, using the guidance in relation to each stage of the valuation process.
Costs of more specialist buildings and plant and machinery which are particular to flour mills, and are not the subject of RCG entries, will be provided separately by the Industrial, Commercial and Crown Team.
1. Market Appraisal
Statistics relating to GB production of animal feed are now published by the Agricultural and Horticultural Development Board and are subject to copyright.
DEFRA still publish average compound feed prices: https://www.gov.uk/government/statistical-data-sets/animal-feed-prices
For the period Jan to March 2021 quarterly average prices of compound feedstuffs were reported as follows:-
- cattle and calf feed £248 te
- pig feed £273 te
- poultry feed £302 te
- sheep feed £258 te
(Source DEFRA – Commodity prices-compounds – updated 6 May 2021)
The above prices show a general increase in compound feed prices since 2015.
Only two companies operate nationwide however joint ventures and company acquisitions have been on the rise in the last five years.
2. Changes from the last Practice Note
With the exception of the market appraisal, there are no changes from the 2017 Practice Note.
3. Ratepayer Discussions
There have been no discussions with the Provender Industry.
4. Valuation Scheme
The range of buildings to be found within the industry needs to be reflected in the basis of valuation adopted. The vast majority of the hereditaments, especially the more modern specialised ones, should be valued on the contractor’s basis.
There may be some smaller, less specialised provender mills where comparison can be made with the local industrial tone. Where this is the case great care must be taken, both to distinguish from more specialised mills where such an approach could not be considered, and to fully reflect the value enhancement of any particular features that the buildings possess which are beneficial to the use as a provender mill.
The concentration of mills with a few occupiers heightens the need for co-ordination requirements to be followed. This is particularly important at the less specialised end of the industry where the interface between hereditaments valued on comparison and contractor’s basis occurs.
4.1 Contractor’s Basis
Where the contractor’s basis of valuation is deemed appropriate, it is to be applied in accordance with VOA Rating Manual Section 4: Part 3: The Contractors Basis of Valuation, using the guidance in relation to each stage of the valuation process.
Costs of more specialist buildings and plant and machinery, which are particular to provender mills but not the subject of Cost Guide entries, will be provided separately by the Industrial, Commercial and Crown Team.
4.2 Rentals Basis
Where the buildings are non-specialised (in terms of height and construction) and typical of those properties found in the locality on general industrial estates then comparison may be made with the local industrial tone.
1. Market appraisal
1.1 April 2015
The nabim (National Association of British and Irish Millers) UK Flour Milling Industry 2014 report states that in recent years the industry has seen an expansion in capacity with several new mills being built. The industry however continues to consolidate so that there are now 30 companies operating 51 mills, the four largest companies accounting for 65% of the UK’s flour production. 6.7m tonnes of wheat were milled year ending December 2014 producing 5.1m tonnes of flour (Source DEFRA – Cereal Usage by Flour Millers in the UK dataset). 84% of wheat processed in that year was UK grown.
Although energy and transport are significant costs for the milling sector the cost of wheat is the main input cost for flour. 2014 saw high milling wheat prices which peaked in April 2014 at £194.9 te before falling back to £146.2 te in September 2014. Current Ex Farm milling wheat prices (April 2015) are £156 tonne.
1.2 Comparison with April 2008
The 2008 nabim report refers to a continued consolidation in the industry with 32 companies running 60 mills. Total wheat milled for year ending December 2014 was 5.1 m tonnes producing 4 m tonnes of flour, 78% of wheat processed in that year was UK grown. Milling wheat prices in April 2008 were £198 te.
1.3 Overview
The industry has seen a consolidation in the number of mills and a greater reliance on home grown milling wheat. Increased wheat production for harvest July 2014 has seen wheat prices fall, this is combined with the fall in crude oil over the last 3 months (April 2015), suggests favourable conditions for the flour milling industry at April 2015.
2. Changes from last practice note
No 2010 practice note was issued for this class; however the fundamental approach to valuation remains unchanged between lists.
3. Ratepayer discussions
There have been no central discussions with representatives for the industry nor are there any identified agents for the industry. Consequently you are advised, in the absence of any agreement, to adopt the basis as outlined below.
4. Valuation scheme
Very few flour mills have ever been let in the market, and those that have will usually have been let under unusual terms. Therefore the valuation of flour mills is by reference to the contractor’s basis.
The contractor’s basis of valuation should proceed in accordance with the general advice contained in Rating Manual Section 4 Part 3 using the accepted five stages.
Reference should be made to the 2017 cost guide for costs, allowances and additions.
The appropriate statutory decapitalisation rate must be adopted at stage 4.
All valuations must be carried out using the generic contractor’s basis spreadsheet which is available on the non bulk server.
4.1 NVU advice
As in previous valuation lists the NVU lead valuer will provide a beacon valuation of a flour mill on the contractors basis to ensure consistency. This valuation will be of an actual hereditament and therefore should be treated as commercial in confidence. It should not be circulated outside the Valuation Office Agency.
1. Market appraisal
In January 2015 the total GB retail production of animal feed was up 0.3% compared with January 2014 and the total GB integrated poultry feed production was down 3.4% compared with January 2014.
For the period October to December 2014 quarterly average prices of animal feedstuffs were as follows:-
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Cattle and calf feed £218 te
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Pig feed £234 te
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Poultry feed £235 te
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Sheep feed £210 te
With the exception of 2014 quarter two, the above prices continue to show a decrease in compound feed prices since 2013 quarter two. (Source DEFRA – Animal feed Statistics for Great Britain – January 2015 – Published 5 March 2015) For comparison purposes the total production of compound blends and other processed feeding stuffs in Great Britain as at December 2007 was 9.65 million te compared to December 2014 at £10.65 million te.
In 2012 BOCM Pauls became a wholly owned subsidiary of ForFarmers and was rebranded in October 2014. ForFarmers acquired Weyfeed in July 2014.
In late 2012 a new bioethanol plant in Hull operated by Vivergo began production. At full production it is claimed that they will produce 420 million litres of bioethanol and 500,000 te pa of animal feed, making it the UK’s largest single source supplier of feed. The Ensus bioethanol plant on Teeside is designed to produce similar figures. The plant reopened in 2012. The effect of these plants and their impact on the viability of some mills is difficult to predict particularly as ethanol prices are linked to crude oil through the biofuel’s use as an alternative to gasoline. In Europe ethanol is traded in euros and as fuel prices have fallen in recent months UK plants have also been hit by the increase in sterling against the euro. The Ensus plant again has closed (Feb 2015) due to market conditions.
2. Changes from the last practice note
No 2010 practice note was issued for this class; however the fundamental approach to valuation remains unchanged between lists.
3. Ratepayer discussions
There have been no central discussions with representatives for the industry nor are there any identified agents for the industry. Consequently you are advised, in the absence of any agreement, to adopt the basis as outlined below.
4. Valuation scheme
The range of buildings to be found within the industry needs to be reflected in the basis of valuation adopted. The vast majority of the hereditaments, especially the more modern specialised ones, should be valued on the contractor’s basis.
There may be some smaller, less specialised provender mills where comparison can be made with the local industrial tone. Where this is the case great care must be taken, both to distinguish from more specialised mills where such an approach could not be considered, and to fully reflect the value enhancement of any particular features that the buildings possess which are beneficial to the use as a provender mill.
The concentration of mills with a few occupiers heightens the need for co-ordination requirements to be followed. This is particularly important at the lower end of the industry where the interface between hereditaments valued on comparison and contractor’s basis occurs.
4.1 Contractor’s basis
If valued by reference to the contractor’s basis, valuation should proceed in accordance with the general advice contained in Rating Manual Section 4: Part 3 using the accepted five stages.
Reference should be made to the 2017 cost guide for costs, allowances and additions.
The appropriate statutory decapitalisation rate must be adopted at stage 4.
All valuations must be carried out using the generic contractor’s basis spreadsheet which is available on the non bulk server.
4.1.1 NVU advice
As in previous valuation lists the NVU lead valuer will provide a beacon valuation of a provender mill on the contractors basis to ensure consistency. This valuation will be of an actual hereditament and therefore should be treated as commercial in confidence. It should not be circulated outside the Valuation Office Agency.
4.2 Rentals basis
Where the buildings are non specialised (in terms of height and construction) and typical of those properties found in the locality on general industrial estates then comparison may be made with the local industrial tone, taking into account 4.0 above.