Terms like “stable,” “slow,” and even “declining” crept into appraisals of farmland values throughout California in 2002, reflecting a leveling off after gains during the last several years.

For the most part, stable was the general tone of reports by the California Chapter of the American Society of Farm Managers and Rural Appraisers (ASFMRA) for its recent 2003 Spring Outlook Forum in Sacramento.

In comments on Central Valley counties, Fresno appraiser Tony Correia said two major recurrent themes influencing values are globalization, particularly in view of Central and South American produce penetrating U.S. markets, and strong international competition in wines.

Prevalent too are impacts from consolidation of market outlets leading to fewer processors and growers, urban pressure for water supplies, higher operating costs, and more governmental regulations to erode already slim profit margins.

Scarcity of land in the face of urbanization, Correia said, caused many markets to be “driven by residential and/or recreational demand and not agricultural uses.”

Numerous small vineyards around Fresno are being sold, not for the vines but for home sites, he said. “They just happen to have vineyards on them, and buyers can get them for less than lots in town.”

To abate glut

Notably dim prospects continue to track the oversupply of wine grapes and raisins in the Central Valley, but Correia said removal of old or un-contracted vineyard acreage equivalent to an estimated 300,000 tons of production has occurred recently and will abate some of the glut.

And he cited some other bright spots: lower interest rates, better times for the almond industry, and the farm program “life preserver” for rice and cotton.

In an overview of values in the state's coastal and inland valley counties, Santa Maria appraiser Mark Clarke noted several of the same conditions at work. While labor in coastal counties is presently plentiful, he said mechanization is increasing where possible. Regulation, such endangered species issues preventing conversion of pasture to vineyards, is most pronounced there.

“There is not a lot of ‘new’ news this year,” Clarke said. “Values are generally stable. There is little volatility except for re-zoning of land. Sales activity continues to decline, although demand is still strong.”

The produce industry, he said, normally does well in recessionary or slow economic periods, and landlords and tenants alike are optimistic that once the general economic situation in the nation and world stabilizes, demand will again grow.

More stability

Clarke predicted, however, that he expects a year from now to be reporting another year of generally stable markets.

He termed Napa County “The Disneyland of the North,” where values should be declining but aren't. “Demand has fallen, but it is still sufficient to maintain values.”

Using the familiar real estate phrase, he said, “It's location, location, location. It's not just the grapes, it's the place.”

The chapter again compiled extensive tables of per acre values for properties throughout the state, which showed only a few changes from 2001. Among declines are vineyards in the South Sutter area, which sank from the $12,000-$20,000 range to $4,000-$15,000, and canning peach orchards in the Yuba-Sutter area declined from $8,000-$13,000 in 2001 to $8,000-$11,000 in 2002.

In Napa County, vineyards on resistant rootstock held their peak value at $180,000, although the low end slipped from $85,000 in 2001 to $50,000. Properties with potential for construction of home sites maintained their $3.5 million peak reached in 2000. Similar vineyards in Sonoma County were valued at a peak of $85,000, down $20,000, and in Mendocino County they peaked at $50,000, down $15,000.

Northern SJV

In northern San Joaquin Valley counties, values were stable for nearly all categories of cropland, although in San Joaquin County top values for walnuts increased by $3,000 to $14,000, while the peak for vineyards there was $18,000, down $4,000 from a year before.

In Fresno and Madera counties most values were constant with 2001, but appraisers reported strong demand for open land. They said such properties with dairy permits suggest increases to values comparable with irrigated open land and potential use of land formerly in vineyards.

Although values of citrus land in Tulare and Kern counties remain the same, those groves of varieties having high production either near the beginning or end of the navel season are in strong demand. Smaller properties with home site potential are also strong.

Coastal values

On the coast, values in Monterey, Santa Barbara, and San Luis Obispo counties have held steady. While sales in Monterey County have been few, appraisers point to rents of from $2,100 to $2,400 per acre as proof that values are strong. Both in southern Monterey County and San Luis Obispo County some “rural parcels are becoming highly prized for home sites.”

In the southern inland valleys, dairy acreage values in western Riverside and San Bernardino counties were in the $54,000-$120,000 range, compared to the $60,000-$120,000 of a year earlier.

Among shifts in the region are greater interest in avocados near Temecula, movement toward produce and nursery crops in the Coachella Valley, and some appreciation in value of produce land in the Imperial Valley.

Land-fallowing negotiations continue in the Palo Verde Valley for a plan to provide water for metropolitan users, but to date appraisers have seen no effect on land values there.