California agricultural land sales values were mostly softer in 2017 as the gap narrowed between highs and lows commanded for some properties.

This year’s much-anticipated annual trends report, published by the California chapter of the American Society of Farm Managers and Rural Appraisers, showed some highs — wine grape properties in Napa, for instance — and some predictable lows as dairy values declined to levels not seen since 2000. In all, says Janie Gatzman, agricultural appraiser with Gatzman Appraisal in Oakdale, there were no surprises in this year’s report.

WATER CONCERNS

Perhaps the most interesting thing she saw when studying 2017 data was the relative concern over irrigation water around the state. While Sacramento Valley buyers and sellers were largely ambivalent to state water regulations and issues centered around the Sustainable Groundwater Management Act (SGMA), such was not the case in the San Joaquin Valley (SJV) and Central Coast, where those issues tended to drive land values.

In one south SJV sale, Gatzman says, a buyer thinking he would need to fallow significant acreage was unwilling to pay full asking price for an entire pistachio block, even though the seller assured him water supplies were sufficient for the entire orchard.

Similar instances are reported in areas elsewhere in the Valley with limited groundwater access. For properties with good wells and access to surface water, land prices are comparatively better. This was most evident in Tulare County, where cropland values ranged from a low of $15,000 to almost $30,000 per acre. This spread in values from low-to-high began to widen after 2013. Prior to that, the difference between low and high was well-under $5,000 year-over-year, and in 2003 and 2004 was about $1,000 between the extremes.

MUCH UNCERTAINTY

“There’s still a lot of uncertainty out there with respect to SMGA and the plans required by the state,” Gatzman says.

Water politics had a chilling effect on rangeland prices in the northern SJV from 2007-2009 after investors speculated up the price of rangeland for conversion to almonds. Rangeland in the northern SJV, which spiked above $5,000 an acre in 2009, fell to $2,000 the following year. But it has since rebounded to about $3,000 an acre as counties have restricted new well permits and surface irrigation supplies began to be cut by regulators.

For Central Coast properties, restrictions on groundwater development had the opposite effect. Areas with vested water supplies around Paso Robles rose in 2017 from $12,000 per acre to over $20,000 per acre.

VINEYARD VALUES RISING

With the build-out of Napa Valley virtually complete, land values on the margins are being impacted. This was seen most notably in the Lodi region last year, where vineyard values grew 5 percent over the previous year, and 16 percent from 2015. Much of the demand was attributed to Napa’s appetite for Lodi grapes.

Also noteworthy for Lodi in 2017 was the range in which vineyard properties traded hands. In 2016, that range spanned from a low of about $28,000 to a high of $35,000 per acre. In 2017 the range was almost $20,000 — from a low of almost $24,000 to nearly $43,000 per acre.

Though somewhat flat since 2016, premium vineyard acreage in Napa is now above $400,000 per acre, primarily in the heart of the valley. Cabernet vineyards in the best areas continue to command the highest prices as Cabernet returns run double those of other varieties. Though not as high-priced, Cabernet vineyards in the northern and southern ends of the Valley still brought from $230,000 to over $300,000 per acre.

Vineyard values in neighboring Sonoma County topped out at over $150,000 per acre, while Mendocino County vineyards flattened out at $100,000 per acre. Central Coast vineyard values from Monterey to Santa Barbara ranged from lows around $25,000 per acre to about $75,000 per acre, with the highest values in the Santa Lucia Highlands AVA.

Fresno-area vineyard values continued to slide in 2017, down to under $30,000 per acre, to levels similarly seen in 2014. These prices continue to soften as imported wine competes with San Joaquin Valley grapes and growers convert vineyards there to nut crops.

NUT CROPS

Though almond orchard prices slipped from record values in 2015 and 2016, Tiffany Holmes, senior appraiser with Edwards, Lien & Toso at Hilmar, says there’s more to the story. While sales prices did soften slightly in most cases, the band in which these properties traded narrowed.

Almond orchard prices were highest in the northern San Joaquin Valley, with a top price of $40,000 an acre. The top sales price in the Central SJV region was about $3,000 less, with the top sales price for almond orchards in the Sacramento Valley and South SJV tied at $30,000.

While the Sacramento Valley seems to be enjoying its highest-ever price for almond orchards, the remaining regions are off as much as 22 percent from their 2015 peak of $40,000 to $45,000 for a top orchard.

At between $20,000 and $30,000 per acre, Sacramento Valley almond orchards were the only nut category to see an increase in mean prices — up 4 percent from 2016 and up 14 percent from 2015. This happened as the price range shrunk to $10,000 between the highest and lowest price sold.

Walnut orchard prices remain almost the same across the state, at or near $35,000 per acre, with the highest values in the southern SJV, with orchards trading hands in 2017 anywhere from just over $15,000 per acre to just over $35,000 per acre.

Walnut orchard values across the state peaked in 2014 and 2015, at or above $40,000 an acre.

Pistachio orchard prices likewise declined after peaking at or above $40,000. Orchard prices in the central region ranged from about $16,000 to just over $35,000 an acre, while in the south SJV that range was a narrower $25,000 to $32,000.

CITRUS DEMAND GOOD

Demand for citrus groves is good, says Roy Pennebaker, senior vice president in the Farm Lands Department at Pearson Realty. Price for the commodity also remains good, he said at the annual Outlook 2018 Conference at Visalia.

However, grove establishment costs and costs of production continue to rise, with trees costing about $13 each, and with grove densities ranging from about 120 trees per acre for Navel oranges to about 200 per acre for mandarins.

Water continues to be a concern as some growing regions of the state have limited supplies of groundwater and no surface water. Pennebaker echoed the sentiments of SGMA, saying growers, appraisers, and the banking industry still don’t know the full impact it will have across the state as groundwater management plans are written and implemented.

The popularity of mandarins has helped push up acreage of the small, easy-peel fruit, though he says large citrus producers and packers like the Wonderful Company think overplanting could limit future profits.

Another unknown looming over the citrus industry remains the proliferation in southern California of Huanglongbing and the fear it could spread to commercial citrus in the state. Pennebaker noted that more than 500 residential citrus trees across southern California have been removed by state regulators after the trees testedpositive for the deadly bacterial disease.