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For wine grapes and tree nuts land values still all about location

Land values in California agriculture, as elsewhere, are all about location. Nobody knows this better than wine grape and almond growers.

Even the wine grape associations can’t avoid talking nuts.

This year’s annual San Joaquin Valley Winegrowers Association annual gathering in Fresno once-again spent a considerable amount of time discussing how tree nuts – almonds in particular – continue to dominate the scene, though the softening of almond prices may slow vineyard conversions, according to one expert.

Ben Slaughter, senior appraiser with Fresno-based Correia-Xavier, Inc., spends much of his time evaluating North Coast vineyards. While he knows well the economics of agricultural real estate, farming and wine making, he’s also an almond grower.

Slaughter’s land values and trends presentation to Central Valley grape growers recognizes that many of them may also have tree nuts, and that most are still looking for ways to improve vineyard margins in a wine grape growing region that lags behind other California regions in perception and price.

Popular as tree nuts are, Slaughter says wine grapes continue to be the most widely-planted crop in California. This could continue as nut prices appear to have stabilized after falling significantly from record highs.

Agricultural land sales across California appear to be leveling off after peaking in 2015. Even the “seller’s market” conditions in North Coast vineyards appear to be becoming more buyer and seller neutral.

For appraisers like Slaughter, this neutrality can be seen in a slow-down of land sales.

Even open land in the Central Valley is not trading hands as much as it was in recent years, he says.

Prices taper a bit

The price buyers were willing to pay in 2016 dipped some from 2015 levels, though Slaughter says there remain some sellers still seeking 2015 prices. For those sellers potential buyers are simply walking away.

Data show that the price commanded for almond orchards rose steadily from 2005 through about 2013 before that trend line steepened a bit. 

Prices peaked in 2016 with the larger properties selling for between $25,000 and $40,000 an acre.

Also noteworthy to Slaughter was the lowest prices asked for orchards over the past two years were now no longer under $10,000 an acre, but had “floored” at closer to $15,000.

Land price trends followed commodity prices, suggesting an economically-driven marketplace, rather than a more speculative “bubble” previously seen in non-agricultural markets.

“I never saw a bubble in farm values,” he said. “I maybe saw a bubble in commodity prices, but not in farm values.”

Pistachio land prices appear to be on the same trend with the bulk of the larger sales happening at the end of 2015, according to Slaughter’s statistics. Data show that several large pistachio property sales took place in a short time frame at the end of 2015 and the beginning of 2016 before quickly tapering off in number.

The price trend line in pistachios shows a peak in land prices during 2015 to an average just above $25,000 per acre before slipping back to levels commensurate with 2014 prices.

For walnuts, those larger sales also appear to have hit a high in late 2015 and early 2016 before quickly ceasing.

“The shine is definitely off of the nut crops,” Slaughter says.

Almond prices that on the spot market peaked at over $4.50 per pound are now below $3 per pound with the early December range, depending on kernel size, between $2.10 and $2.90 per pound.

Even though the current range is less than half that of the peak pricing, Slaughter says almond prices remain profitable as they trend at levels above the long-term average.

Walnuts seem to be in a more severe “correction” than the other popular nut crops, Slaughter continued.

“Walnuts are more dependent on exports to China than the others,” he said.

Slaughter spoke briefly about hazelnuts, which he says can be a competing nut for almond growers.

Farmers are planting additional acreages of hazelnuts in Oregon as the country of Turkey appears to be a big foreign competitor in that market, he says.

Slaughter defended his considerable talk on tree nuts as something San Joaquin Valley grape growers need to know.

“You need to know what your competition for land is,” he said.

Central Valley grape growers – among which Slaughter’s audience was – benefitted in recent years from the economic recession as wine drinkers “traded down” to lower price-point bottles of wine. That tends to be the place where San Joaquin Valley grapes land.

Now that the economy seems to have turned, wine drinkers are “trading up” again.

That means that wine from California regions like Lodi, the Central Coast and Napa should once-again grow in favor. This could leave San Joaquin Valley grape growers looking harder to find a home for their grapes unless they have long-term contracts.

North Coast

For regions like Napa, which has seen land trade for as high as $400,000 an acre, averages are still climbing. Statistics show mid-percentile land values above $200,000 an acre.

“In the Napa Valley proper it’s all about Cabernet,” Slaughter says.

He’s also seeing direct-to-consumer sales increasing and the demand for tasting rooms on the rise – so much so that there is now beginning to be public pressure to limit these venues because of the traffic and noise they bring.

In neighboring Sonoma County Slaughter divides his data in warm and cool climates.

There he likewise sees positive price trends in land values with the warm climate zones on a slightly steeper climb than cool-climate zones.

In both cases, warm and cool climate Sonoma vineyards are trading hands now at about $100,000 an acre.

Further down the state, Central Coast vineyard sales remain on a somewhat flat trend line averaging a little over $30,000 an acre. Since about 2013 a “floor” developed that kept most prices above about $25,000. Some properties traded hands at over $40,000 with the highest prices hitting about $60,000 an acre.

In the nearby Central Valley vineyard sales capped out at near $30,000 an acre in 2015.

Another of the trends Slaughter sees are land prices becoming more homogenous in the regions, particularly the Central Valley.


On the raisin front Slaughter says acreage has declined by about 100,000 to around 175,000 acres, and still likely “has not reached equilibrium” with the marketplace.

Sales data show raisin vineyard sales that peaked at about $30,000 an acre in late 2015 have since fallen back to between $20,000 and $25,000 an acre.

Though the conversion from grapes to nut crops has caused some concern among Central Valley grape industry leaders, Slaughter still believes that well-managed vineyards selling grapes on contract to wineries can make money in the San Joaquin Valley. He further believes there may be a slowing of conversions from wine grapes to tree nuts if nut prices remain stable.

Slaughter predicts the larger concern looming for growers of permanent crops will be the access to adequate water supplies. This has already been seen as some San Joaquin Valley growers moved into the Sacramento Valley, where water availability is better than it is south of the Delta.

Another trend he’s seen is the willingness to plant tree nuts – almonds and walnuts mostly – on rice ground in the southern Sacramento Valley.

“When you see guys planting trees on rice ground you know something is going on,” he said.

According to rice industry leaders and growers, that move came about as the price for rice fell below the cost of production.

Risky planting decisions like planting trees in heavy rice ground where drainage is slow at best, planting in other marginal soils and in areas where water availability is challenged could cease as growers face water restrictions under the Sustainable Groundwater Management Act and through other regulatory measures.

Where growers were more willing to plant tree nuts on marginal properties when nut prices were in the $4 range, he believes price softening in nuts will cause growers to be more selective in where they choose to plant or replant permanent crops – particularly tree nuts.

In the end Slaughter sees definite “winners” and “losers” in the farming industry because of water availability.

“I can envision a day where we no longer value farms per acre, but will value them per acre foot of water,” he said.


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