How Did We Get Here: GFC to Post-COVID History
Coming out of the Global Financial Crisis (GFC) in the late 2000s, California farmland was on a strong run. During the GFC, most investment funds with real estate allocations had investments in traditional commercial property types, which experienced significant losses. As a result, we saw a huge influx of investment capital into the agricultural sector, particularly permanent plantings in California, which were touted as generating some of the highest returns across all of U.S. agriculture.
Billions of dollars chased California farmland assets and often the pressure to deploy huge chunks of capital overshadowed investors' instincts to maintain discipline. Years of extremely low interest rates and favorable commodity prices poured fuel on the fire, leading to steady appreciation – across all tiers of asset quality – that often made the performance of even poor investments look relatively good.
With cheap and abundant capital being aggressively deployed not only into existing orchards and vineyards, but also into greenfield developments over the years, California predictably headed toward being overplanted. Additionally, the Sustainable Groundwater Management Act (SGMA) began to take hold heading into Covid.
Covid significantly impacted many California farm commodity sectors, not only through the well-documented global supply chain disruptions, but also by changes to consumer trends that ranged from short-term (increased wine consumption) to longer-term (restaurants largely abandoning lemons in water).
In the post-Covid era, with overproduction depressing commodity prices, interest rates resetting to higher levels, and SGMA continuing to season, California’s farmland market began to experience serious headwinds. Most commodity sectors were performing poorly simultaneously. The lack of profitable crops prevented farmers from moving to alternative crops. Removing unprofitable trees and vines costs money, so many folks persisted in farming even though removals would have helped crop prices back toward profitable levels sooner.
Values and demand declined for not only orchards and vineyards, but also irrigated farmland, which had previously been sought for permanent planting developments. Over the last few years, nearly all California permanent planting properties sales took place below their replacement costs. Bankruptcies have occurred, and while these never seem to materialize at the volumes that prognosticators exaggerate in their early sky-is-falling prediction pieces, the scale of some of these notable cases has been eyebrow-raising.
Where Are We Today?
While this recent history sounds bleak, some encouraging trends have also emerged.
Almond and pistachio orchards rebounded in 2026 as nut prices improved dramatically and supply-demand concerns eased. Many investors have returned to fundamentals, and orchards with the best water and production characteristics are generating strong demand and top prices. However, these A+ orchards are rarely available, so we are again seeing demand for greenfield almond developments return in certain areas where the numbers can justify “building” it if you can’t buy it.
In the run-up from the GFC to Covid, values got frothy. The massive amount of capital chasing a finite number of deals inflated the values of every tier of farmland, usually with lower quality tiers being the largest gainers. In the early 2020s, most sellers remained stubbornly fixated on getting yesteryear’s high-watermark value for their properties, regardless of quality.
More recently, sellers have become more realistic with pricing expectations, and we have seen values across most of the market stratify back to value tiers that reflect water, production, and other logical drivers. Well-informed buyers can once again make smart deals.
The composition and size of the buyer pool has changed dramatically. Fewer institutional investment groups are actively deploying capital today. Some previously active operators no longer exist. There is displacement in the market. New capital is circling but has yet to enter the market in a major way. All of this means a real opportunity window is open today for groups with defined strategies grounded in fundamentals, the discipline to execute, and a long-term horizon to acquire quality agricultural real estate in California.
Not all crop sectors are performing equally, and risks still exist. But the fact remains that California is a singular agricultural force capable of growing crops of a quality and variety that cannot be replicated anywhere else.
Reach out to our California team if you want to learn more about local farmland opportunities.
