A new report on Kern’s agricultural real estate market suggests upcoming restrictions on groundwater pumping could drag down farmland values that have only recently stabilized after coming off peaks a few years ago.
The data and forecast by Bakersfield’s Alliance Ag Services LLC reflect broad expectations that local farming will slow overall as a result of the state’s ongoing efforts to bring rampant groundwater pumping under control.
The numbers make clear the county’s market for farmland is no longer the hot commodity it was as recently as 2015, when farmers and investors were paying top dollar for ag property across the Central Valley. What the report doesn’t spell out, because no one can say for sure, is how sharply local farming will slow under the Sustainable Groundwater Management Act, signed into law by former Gov. Jerry Brown in 2014.
Local ag appraiser and broker Mike Ming, who created the report for Alliance, said by email Wednesday it remains to be seen whether SGMA’s pumping restrictions will take full effect by 2025 or whether there’s a more gradual ramp-up through 2040. He said the timing will impact ag land prices and production.
“SMGA (the groundwater legislation) is a risk that the ag community can’t quantify,” he wrote.
Alliance reported farmland values across the county leveled out during the last three months of last year. Prices generally settled higher than they were before widespread increases began in 2009.
Almond orchards ranged between $20,000 to $30,000 per acre late last year, down from a high of $28,000 to $40,000 three years earlier. In 2005, they were valued at $10,000 to $15,000 per acre. Pistachio acreage, though generally more valuable than almond land, followed the same price trend.
The report showed the local market for farmland performed worse than anticipated in 2018. Across the board, prices slipped by larger-than-expected margins. Even Kern River water districts, a higher-end category Alliance forecast would maintain its value or appreciate by up to 10 percent, ended up declining last year by up to 5 percent in some cases.
Alliance predicted SGMA will have a heavy economic impact, with an estimated 185,200 acres losing irrigation.
It said 12,400 farm jobs will likely be lost, and that the toll will be almost twice that many positions when accounting for the impact on associated activities like ag supplies and food processing. The report predicted the county’s total ag income will fall by nearly $1.4 million per year.
Alliance forecast declining tax revenues as well, with property-tax receipts falling by $15 million per year, money from sales tax dropping $17 million and income tax generating $56 million less than current levels.