California Farmland – A Buyer’s Market

California’s farmland market is in the midst of a generational buying opportunity.

For investors with conviction in well-developed agricultural investment strategies, a disciplined approach, and an ability to truly hold for the long-term, the opportunity to assemble a high-quality California farm portfolio of scale has never been better.

Over the past few years, poor commodity pricing for many crops has led to declining farmland, orchard, and vineyard values. Grower economics suffered as did institutional investment performance, particularly for assets aggressively purchased on “the way up” with cheap financing. Many previously active buyers have moved to the sidelines…or worse. Several sizable distressed portfolio dispositions have been anxiously watched by the entire industry to see if completed sales reset the market to an even lower value tier. The quantity of farmland assets available for sale both publicly and privately across America’s most valuable agricultural state has ballooned. All of this has created a buyer’s market.

Although some commodities like wine grapes remain challenging, some bright spots do exist today – almond pricings' rebound is real, pistachio prices have remained strong, some fruit crops are performing well, etc. Additionally, the Sustainable Groundwater Management Act (SGMA) has forced the industry to be more measured and realistic about its water supply – ultimately, SGMA will put a ceiling on the amount of irrigated acreage that can be sustainably farmed in California, which should lead to more balanced supply-demand characteristics in the future.

Today, many growers need more time to rebuild their finances before they can think about making meaningful acquisitions. And investment groups are being cautious after years of challenging returns. This means relatively few buyers are currently taking advantage of this uniquely attractive investment window.

California agriculture is essential to the United States’ domestic food security, and the quality and quantity of commodities grown in the state cannot be replicated anywhere else. Investors with conviction, disciplined strategies and long-term horizons should take advantage of today’s buying window before it closes. Peoples Company’s team covers all of California’s major farming regions and commodities – the breadth of our experience, skill sets, service offerings, and resources is unmatched – and we look forward to assisting you with your California farmland disposition, acquisition, appraisal, investment or consulting needs.