The California Chapter of the American Society of Farm Managers and Rural Appraisers documented a decline in agricultural real estate values, attributing it to rising interest rates and low commodity prices for crops such as almonds and walnuts. The Trends Report highlighted a shift from a stable agricultural land market in 2022 to a downturn by the first quarter of 2023. Factors like irrigation water scarcity and the California Sustainable Groundwater Management Act have contributed to this trend, alongside agricultural bankruptcies involving large farm holdings in central California.
Michael Ming, from Lee & Associates in central California, noted a change in buyer behavior due to increasing interest rates and agricultural bankruptcies, leading to a surplus of agricultural properties on the market and a subsequent drop in land prices. The report also contrasts the varying fortunes of different crops; while almond orchards saw a decrease in value, pistachio land values in the central San Joaquin Valley have risen significantly since 2020.
With the projection of further agricultural land losses, particularly in the central Valley, due to irrigation restrictions, Ming advises clients to wait and see how the market evolves. This advice comes amid expectations of significant farmland reduction in California's major agricultural counties due to water delivery cuts from the State Water Project.
Source: farmprogress.com