The latest report on agricultural land valuations in Kern County shows water security continues to be a driving force and the direction is mostly downward.
Alliance Ag Services LLC, a brokerage and appraisal firm, has been tracking the value of farmland in Kern County by water source, or sources, for nearly two decades. For about the past eight years, since the crippling 2012-2016 drought and passage of the Sustainable Groundwater Management Act (SGMA), the numbers have been flat to dismal.
Even for land with productive orchards and vineyards, values are down, said Alliance Ag Broker Michael Ming.
“Ag is not very healthy right now,” he said. “We’re predominantly seeing declines in Kern County but it’s happening to varying degrees up the valley and, really, it has to do with water security.”
Water security means multiple sources.
If land is in a district that has a strong groundwater banking program, federal or state supplies and access to river water, that’s the best position and, consequently, the land will hold more value.
“It goes down the ladder from there,” Ming said.
According to Ming’s fourth quarter report on Kern County:
- Land in districts with river rights is selling for $27,000-to $16,000 an acre.
- Land in districts with State Water Project contracts and little to no groundwater is selling for $5,000 to $2,000 an acre.
- Land in districts with State Water Project contracts with groundwater is selling for $16,000 to $2,000 an acre.
- Land in districts with federal water contracts is selling for $21,000 to $15,000 an acre.
- Land outside of any districts that’s groundwater reliant (known as “white lands”) is selling for $3,500 to $2,000 an acre.
“We’re also seeing land values for orchards coming down dramatically,” Ming said. “That’s a combination of everything, a down market, high interest rates, low commodity prices, oversupply and demand has just not been there. So, it’s not strictly water.”
Kern County officials, whose budgets are made or broken on property taxes, are well aware of the situation.
“We’re keeping an eye on it, but no one’s hitting the panic button,” said Jim Damian, Kern’s Chief Economic Development Officer. ”
Prices per acre are hovering around $16,000-$18,000, which is well off from $25,000-$30,000 an acre back in 2015, Damian said.
“And anecdotally, we’re seeing the volume of sales is down,” he added. But that’s no where near the doldrums experienced in 2008 after the housing bust when ag land was selling for $6,000-$8000 per acre.
“There are some definite headwinds with water,” he agreed. “But I’d never bet against Kern County.”
Jenny Holtermann, president of the Kern County Farm Bureau and a longtime family almond farmer, attributed much of the decline in land values to SGMA and other regulatory issues.
But, “As a farmer, we tend to be optimistic that commodity pricing and land values will take a turn upward in the future,” she wrote in an email.
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