Farmland valuations continued their downward trajectory in Kern County, in some cases dropping a whopping 47.6% over the first six months of 2024, according to the second quarter Kern County Ag Land Values report put out by brokerage firm Alliance Ag Services LLC.
Some farmland has dropped back to, or even below, 2005 prices.
“I don’t think we’re at the bottom yet, but it feels like it’s getting closer,” said Ag Alliance broker Michael Ming. Alliance Ag has been tracking the value of farmland in Kern County by water source for nearly two decades. Since the crippling 2012-2016 drought and passage of the Sustainable Groundwater Management Act (SGMA), the numbers have been mostly dismal.
The future value of farmland will all depend on water, he said.
“Properties with adequate supplies will do a lot better,” Ming said. “I see the footprint of ag in the valley shrinking just because of that.”
Reduced water supplies from the Sacramento-San Joaquin Delta and increased groundwater pumping restrictions under SGMA mean more than 900,000 acres in the Central Valley will likely have to go out of production.
The bulk of that fallowing – more than 625,000 acres – will be in Kern, Kings and Tulare counties, Ming said.
Of that, 250,000 acres in Kern County will have to be put to other, non irrigated, uses. That’s about 28% of Kern’s currently harvested acres, per the 2022 Kern County Crop Report
What that will mean for the local economy in general and government services, which rely on property taxes, is still unclear.
The valuation slide is a little more complicated when calculating county property tax, said Elsa Martinez, Kern County’s Interim Chief Administrative Officer.
“A lot of land in Kern is under what used to be called Williamson Act contracts,” she said, referring to lower property taxes given to landowners who agree to development restrictions for a set amount of time, typically 20 years. So the county’s tax assessments don’t always line up to assessed market valuations.
For right now, as properties come out of those contracts and are reassessed, the county is seeing some property taxes increase.
“But as farmers have to take land out of production and sell off properties, we will see changes and that will impact the county’s ability to provide services,” Martinez said. “So, yes, we are watching that closely.”
The valuation numbers are pretty stark even just comparing values from Alliance Ag’s 2023 fourth quarter report to the current report.
- Pistachio orchards are selling for between $38,000 and $11,000 an acre. That’s a drop of 15.5% and 47.6%, respectively, from the end of 2023 to the second quarter of 2024, a span of six months.
- Almond orchards are selling for between $21,000 and $8,000 an acre. A drop of 22% and 20%.
- Land in agricultural water districts with river rights is selling for $24,000-to $14,000 an acre. A drop of 11% and 12.5%.
- Land in districts with federal water contracts is selling for $18,000 to $13,000 an acre. A drop of 18% and 13%.
- Values for land in districts with State Water Project contracts remained relatively flat from the fourth quarter of 2023 through the second quarter of 2024 at between $5,000 and $2,000 an acre without groundwater (on Kern’s westside) and $14,000 and $2,000 an acre with groundwater.
“People have to understand this is a real and present threat,” he said of how water supplies are affecting property values. “And it’s not even a threat, it’s happening now.”
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