Land Value Trends Across the U.S.: California

There is a wide range in agricultural land values in California but SGMA will affect land values and tariffs will affect the profitability of agriculture if the current situation continues. ( Stock Image )

This analysis is provided by Steve Runyan ARA

Writing about California agriculture in two paragraphs is somewhat akin to trying to climing up a well rope, but we’ll see what happens. The following will primarily apply to the San Joaquin Valley but the Sustainable Groundwater Management Act (SGMA) and the tariffs apply to all of California. 

The two major factors affecting California agriculture at the present time are the Sustainable Groundwater Management Act (SGMA) and the tariffs. SGMA will eventually reduce groundwater extraction in most or all of California in the future.  The extent of the reduction is unknown at the present time, but there will be fallow ground in some areas because of the lack of water.  Other areas appear to be nearly in balance with sustainable groundwater and may not need to fallow much land. SGMA has had at least two effects on land values.  In areas where there is no water district and the water table is in critical overdraft land values have declined to $9,000 per acre and could possible decline even farther.  In areas where there is excellent water conditions land values have increased from $24,000 per acre to $27,000 per acre.  The effect of SGMA on agriculture will evolve over the next few years and the final result is anyone’s guess.

The tariffs are having a strong effect on agricultural exports.  Agricultural exports of fruits and nuts from California are affected to a significant degree.  For instance, the price of almonds has declined approximately $0.10 to $0.20 per pound.   Perhaps the most significant result of the tariffs is the decline in purchases from specific countries.  If the decline in exports to these countries continues the shortage will be filled by other countries to some extent and it will be difficult to gain access to these markets in the future.  While SGMA is affecting land values the tariffs do not appear to be affecting land values yet.  Changes in land values are slow to react to situations like the tariffs.

Some ranges in agricultural values include almond orchards in a range of $25,000 to $36,000 per acre; pistachio orchards in a range of $27,000 to $40,000 per acre; table grape vineyards in a range of $30,000 to $50,000 per acre.  Obviously, there is a wide range in agricultural land values in California but SGMA will affect land values and tariffs will affect the profitability of agriculture if the current situation continues.

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