Farmland values are tumbling in California’s Central Valley, reflecting a drop in key commodity prices as well as concerns over water shortages and the state’s enduring drought.
A study released Wednesday by agricultural lender Rabobank N.A. says the price of farmland in parts of the valley will decline by as much as 30 percent between now and the end of 2017, following several years of substantial gains.
The drop follows declines in the prices farmers are getting for important crops such as almonds and walnuts.
Almond prices, for instance, have fallen by around 50 percent in the past year and are dragging land values down with them. Values for almond orchards in Tulare County, one of the top almond-growing counties in the state, are expected to fall from an average of $34,500 in 2015 to $26,000 by the end of next year, a decline of nearly 25 percent.
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Rabobank economists Roland Fumasi and Vernon Crowder, who co-wrote the study, said the drought is playing a role, too: Land values are dropping more severely in parts of the state, particularly in the San Joaquin Valley, where water shortages are most acute.
“The areas that have water challenges tend to have a bigger hit,” Fumasi said in an interview.
Vineyard prices, meanwhile, are holding up better. Prime vineyards in Napa County, worth an average of $310,000 per acre last year, are expected to grow slightly in value by next year.