California: farmland prices drop in fertile Central Valley

The price for California farm land, especially in the Central Valley, has fallen sharply since last fall, according to Michael Schuil, broker with Schuil & Associates, a real estate firm that specializes in ag properties in Tulare, Kings and Fresno Counties.

"When commodity prices are strong, the farmland prices are also strong, but the when commodity prices fall, the price of farmland also decline," says Schuil.

Prior to the fall of 2008, milk, nuts, and feed prices were strong and kept the ag land prices high, he adds. Even though other commodities, such as peaches, plums, and nectarines were already low, there were enough buyers from the dairy and nut industries to keep the prices firm.

But now that milk, almond, walnut, and grain prices have dropped, the demand for farmland has also spiraled down. Land that was in the $15,000 price range is now closer to $10,000 per acre, he estimates.

A bright spot on the horizon is the citrus industry, in particular the mandarin growers, he says. Schuil says that several citrus growers have been looking for additional farmland. The citrus grower's preference is existing citrus trees, but several are also willing to spill over into tree fruit areas and redevelop existing tree fruit orchards into productive citrus farms, he says.

Two relatively new buyers to the area, he says, are

• Blueberry growers, who are still relatively new in the Central Valley.
• Olive producers. Olives are now being grown for the expanding olive oil industry in California.

- Owen Taylor