Hog operation due diligence

Once a hog operation is under a letter of intent, due diligence moves from evaluating the opportunity to verifying it document by document. Because so much of the operation’s value sits in a contract that may not transfer, a herd priced separately from the real estate, and compliance obligations tied to herd size, the checklist here looks different from due diligence on a typical small business.

The contract file

Get the processor or integrator contract itself, not a summary, and read the assignment clause directly — most require the processor’s written consent before the contract can move to a new owner, and that consent is a separate approval running on the processor’s own timeline. Confirm price terms, remaining length, and whether the arrangement is exclusive, since a contract-grower structure that limits the operation’s independence is worth pricing differently than an open marketing arrangement, even where both currently pay similarly.

The herd file

Genetics and breeding-stock records, herd health history, and any documented disease events belong in their own file, reviewed separately from the barns and land. A herd with clean, complete records supports the price the seller is asking; gaps in that documentation are a legitimate reason to ask for a price adjustment or an independent herd assessment before closing, since the buyer is otherwise taking the seller’s word for an asset that’s hard to verify after the fact.

The compliance file

Manure storage capacity and nutrient-management plans should be checked against both the current herd size and the province’s confined-feeding or intensive-livestock permitting threshold, since that threshold determines what approvals apply and whether there’s room to grow the herd at all. In Manitoba, this runs through the province’s environmental-approvals process; the specific regime differs in Ontario and Quebec, so confirm the local requirement rather than assume it matches. Barns should also be checked against the National Farm Animal Care Council’s code of practice for pigs — an inspection that flags ventilation or animal-care shortfalls is one of the more common findings that leads to a price adjustment.

The biosecurity infrastructure file

Biosecurity infrastructure — entry protocols, shower-in or line-of-separation facilities, and controlled access for visitors and vehicles — is worth verifying on its own, separate from the general barn inspection and separate from disease-history disclosure. Ask for whatever documentation exists behind the seller’s description: visitor and vehicle-access logs, any biosecurity audit results, and records of how consistently the protocols are actually followed rather than just posted. This isn’t a formality. A buyer’s insurer will often ask about biosecurity infrastructure directly when pricing coverage, and a gap between what the seller describes and what the records actually show is the kind of finding that’s easy to miss if diligence treats biosecurity as part of the general disease-history conversation rather than as its own file. Where the documentation is thin, that’s not automatically a dealbreaker, but it is a reason to get an independent read on the barns’ actual biosecurity practice before relying on the seller’s account of it. Where the operation has changed hands before, it’s also worth asking whether protocols were reviewed and updated at that transition or simply carried over unchanged, since practices that haven’t been revisited in years are less likely to reflect current recommended standards.

The land file

Where the operation’s land base is material to manure spreading or future growth, confirm title and, in Quebec, whether the parcel falls under the province’s agricultural-land preservation framework, which can restrict what the land may be used for. In Manitoba, confirm whether the buyer’s residency status triggers the province’s farmland-ownership cap, since that can affect not just the deal’s timeline but whether the buyer is eligible to hold the land at all.

Findings that actually kill a deal

Four findings tend to end a hog operation deal rather than just adjust its price: the processor or integrator refusing to consent to the contract assignment; a manure storage or nutrient-management shortfall the buyer can’t resolve within the herd size they’re planning to run; barns that fail a structural or ventilation inspection outright; and a disease-history liability the buyer’s insurer won’t cover. Each of these is specific enough that it’s worth confirming directly rather than assuming a clean answer.

Reading a finding correctly

Not every finding carries the same weight. A manure storage shortfall that only affects a planned herd expansion, rather than the current operation, might simply mean scaling back growth plans rather than walking away. A processor’s initial hesitation on assignment is not the same as an outright refusal — many processors run a standard vetting process for a new owner that takes time rather than signalling a problem. Sizing a finding correctly, rather than treating every issue as equally serious, is as much a part of due diligence as finding the issue in the first place.