With the exception of prime North Coast vineyard prices headed for the stratosphere, California's farm real estate values during 2000 remained much as they were the previous year.
Topping the list of virtually platinum properties are Napa County vineyards on resistant rootstocks tagged at $120,000 to $180,000 per acre.
As recently as 1998, the range for such properties was $40,000 to $88,000. Even more dramatic was rise in price for a vineyard homesite with a view: $3.5 million in 2000 vs. $1.2 million in 1998. Elsewhere in the region, vineyard values are on an “increasing” trend.
Members of the California Chapter of the American Society of Farm Managers and Rural Appraisers detailed values and sales activity of land major crops during the organization's recent Spring Forum in Sacramento.
Gary H. Rudolph of Fresno, who chaired the presentation, said good farmers will continue to find good soils and conditions and make them work. Land won't necessarily go out of production but what is grown on it will change.
Michael D. Pipkin of Ukiah said the North Coast region's land value situation focuses on Napa County's wine grape industry. “Professionals and executives who have made substantial wealth outside of the agriculture sector are today's major players in the market.
“These buyers want to take part in the glamorous stereotype of the wine industry and the country lifestyle that corresponds with it,” he reported.
Also in the market for the top value properties are wineries and larger acreage growers who have made considerable profits over the past several years.
However, Pipkin said, very few vineyards are openly listed for sale on the North Coast, and most real estate agents report many more qualified buyers than available properties.
For the Sacramento and Intermountain Valleys portion of the state, Russell W. Cremer of Sacramento said rice returns seem to be generally good, although more because of government support programs than strong prices. “Across the board, with few exceptions, there are low commodity prices.”
The closures of sugar beet processing plants idled 60,000 acres in the region. The processing tomato industry continues to adjust to the Tri Valley Growers bankruptcy and an estimated 20,000 acres fewer acres will be planted to that crop. Higher rates for energy affect the entire region, and higher wages impact labor-intensive crops.
“We came off a challenging year in 2000, and it appears we will be encountering greater challenges in 2001. We are probably looking a some price-negative impact on land prices,” he said.
Limited activity and a stable trend characterizes farmland in the Northern San Joaquin Valley region comprised of San Joaquin, Stanislaus, and Merced counties, said Don Bo of Acampo.
Bo cautioned that statistics may not reveal the entire picture and vigor and productivity of permanent crops need to be factored.
While ranges of values in Merced County remained the same, some for Stanislaus County did rise. Values for 2000 for almonds were $5,000 to $14,000, vs. $7,000 to $14,000 in 1999. The range for walnuts was $8,500 to $12,000 vs. $8,500 to $12,000, and for cling peaches $7,000 to $13,500 vs. $7,000 to $10,000.
For the Central San Joaquin Valley counties of Madera and Fresno, Richard Bambauer of Fresno said values for good to excellent quality properties are expected to remain fairly stable with slight downward pressures.
“All types of farm properties in Fresno and Madera counties are expected to be facing increasing costs for labor, fuel and energy in 2001,” he said.
One recurrent theme is the inability of smaller, less efficient operations to survive against larger, more efficient competitors. “The big packing and storage operations are going to become larger,” he said.
Another nagging problem will be energy costs. For example, he said, in the past a table grape grower might cold-store part of his crop to ride out a dip in the market. Nowadays that strategy may not work as it has in the past because of the costs for energy to operate cold storage.
Examples of declines in value ranges in Fresno County are: almonds, $5,000 to $10,000 in 2000 vs. $$6,000 to $10,000 in 1999 and wine grapes, $4,000 to $8,000 vs. $6,000 to $9,000. Similar declines were reported for Madera County.
For Kings, Tulare, and Kern counties, which make up the appraisers' Southern San Joaquin Valley region, Will Hutchison of Bakersfield said the market is little changed from a year ago, although more property is being offered. Values too remain the same.
Interest is sustained, however, in parcels that are versatile for several crops and have a stable water supply.
He cited a two-tiered trend at play for several years in Kern County: high quality properties continue to command interest, while marginal-production properties with high costs draw diminishing interest. The trend is especially strong in times of low commodity prices.
In contrast, values of row crop land in the Central and South Coast counties continue to move upward, according to Mark Clarke of Santa Maria, who said coastal properties have been on the increase for the past 30 to 40 years.
Although stable in other Monterey County districts, row-crop land around Salinas, which Clarke called “ground zero for the produce industry,” went from the $20,000 to $37,000 range of a year earlier to $20,000 to $39,000 in 2000. Ventura County row-crop land in the same period increased from the $30,000 to $38,000 range to $31,500 to $49,000.
Strong pressure for development of farmland to housing in Monterey and Ventura counties maintains a floor for values, he said.
Decline is the byword for values in western Riverside and San Bernardino counties, where dairy land went to the range of $50,000 to $100,000 from the previous year's $30,000 to $115,000 and citrus land slipped from a high of $25,000 to a high of $14,000.
Southern Inland Valleys presenter Robert Souza of Apple Valley said utility of land there was the most critical factor for the sale of properties in the rural sector.
“Steep properties with limited utility declined in value, while properties within a city's sphere of influence and level properties with good utility are in strong demand,” he said.