For at least the last fifteen years in California, the amount of capital pursuing farmland investments has grown significantly and has vastly outstripped the supply of high-quality ag properties that are available for purchase.

This supply-demand imbalance has benefited sellers with increasing values and reduced marketing times. However, this has also created a very competitive marketplace where it is difficult for buyers – both owner-farmers and investors – to find suitable agricultural assets to acquire. 

We often hear complaints that good ag properties are almost always “overpriced,” never truly hit the open market, or sell very quickly when they do. While not universally true, there can be elements of truth in these complaints – sellers do want top dollar and the best farm assets do tend to move fast when made available. 

A wise man once said “you can control the market or the market can control you.” Buyers who sincerely want to expand their agricultural acreage really have two options: wait to see what properties hit the market and then compete with numerous other prospective buyers (market controls you), or they can take a proactive approach to bring the market to the buyers through targeted off-market acquisitions (you control the market). 

To effectively employ an off-market strategy, a buyer needs to:

• • define specific, narrow acquisition parameters (e.g., region, size range, commodity, water profile, etc.)
• • engage a qualified real estate services firm with the resources and ability necessary to execute on the defined acquisition mandate
• • be ready and able to perform when a property is found

Combing a market for suitable target properties to acquire (which can number in the hundreds) is very time and resource intensive – it is much more involved than just calling a handful of farmers you know in a specific area. The process is very data driven and it benefits greatly from a team with brokerage, appraisal, and research professionals who have the tools (powerful GIS capabilities, CRM and comps database with thousands of records, etc.) and abilities required to efficiently identify possible candidate properties, analyze asset value and farm economics, contact the appropriate decision makers, and negotiate and close a successful sale. 

Although we have simplified this process here, with the right real estate team and process in place, we have seen that buyers can effectively navigate the complexities of an off-market acquisitions strategy to find high-quality agricultural properties at times when no suitable listings are available. To discuss how this off-market farmland acquisitions strategy could work for you in California, please reach out to Curtis at curtis@peoplescompany.com.