Trends in Agricultural Land and Lease Values

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3 Legend Trends in Agricultural Land and Lease Values REGION 1 Sacramento and Intermountain Valleys REGION 2 North Coast REGION 3 Northern San Joaquin Valley REGION 4 Central San Joaquin Valley REGION 5 Southern San Joaquin Valley REGION 6 Central and South Coast REGION 7 Southern Inland Valleys Table of Contents About ASFMRA California Chapter, ASFMRA A Message from the President Chapter Officers Trends Chairmen Fresno Madera Farm Credit Highlights REGION 1 Sacramento and Intermountain Valleys Survey Overview Land & Lease Values Historical Value Range per Acre REGION 2 North Coast Survey Overview Land & Lease Values Historical Value Range per Acre REGION 3 Northern San Joaquin Valley Survey Overview Land & Lease Values Historical Value Range per Acre REGION 4 Central San Joaquin Valley Survey Overview Land & Lease Values Historical Value Range per Acre REGION 5 Southern San Joaquin Valley Survey Overview Land & Lease Values Historical Value Range per Acre REGION 6 Central and South Coast Survey Overview Land & Lease Values Historical Value Range per Acre REGION 7 Southern Inland Valleys Survey Overview Land & Lease Values Historical Value Range per Acre Glossary of Terms Advertisers Index & Web Sites California Chapter, American Society of Farm Managers and Rural Appraisers 2007 Trends in Agricultural Land & Lease Values 1

4 California Chapter, American Society of Farm Managers and Rural Appraisers About ASFMRA The American Society of Farm Managers and Rural Appraisers (ASFMRA) is the premier organization for professionals who provide management, consultation and valuation services on agricultural and rural assets. The Society, founded in 1929, has grown to nearly 2,500 members in 36 chapters throughout the U.S., Mexico and Canada. Society members manage over 40% of the absentee farmland in the country; provide approximately 175,000 appraisals a year on 30 million acres of land and provide consulting services for over 5,500 clients who collectively represent over 7 million acres of rural real estate. Agricultural production requires an understanding of the land, the single most valuable component of most agricultural enterprises. Understanding the interaction between the land, the forces that influence its markets, and production is a job for specialists. Those specialists are the members of ASFMRA. The California Chapter, established in 1949, ranks second in the organization in total membership. The chapter supports all activities and ideals of the American Society, providing opportunities for professional advancement through timely courses and conferences on topics of importance to appraisers, managers, consultants and agriculture. The ASFMRA includes distinct levels of membership, each with educational standards, ethical requirements, field experience, thorough testing, and continuing education. At the top is a group of highly educated, thoroughly seasoned and experienced experts who have taken years of training to earn the ASFMRA designations of Accredited Agricultural Consultant (AAC), Accredited Farm Manager (AFM), Accredited Rural Appraiser (ARA) and Real Property Review Appraiser (RPRA). Many members of the California Chapter have earned one or more of these distinguished designations and are highly sought after in the agricultural business arena for their experience and expertise. Mission of the ASFMRA The mission of the American Society of Farm Managers and Rural Appraisers is to represent professionals in financial analysis, valuation, and management of agricultural and rural resources. The American Society will provide its members with the opportunity to: Achieve the highest level of professional competency and ethics. Achieve financial success. Shape public policy affecting the agricultural and rural environment and the American Society professions. Accredited Designations AAC (Accredited Agricultural Consultant) members provide consulting services to: Financial institutions, agricultural producers, attorneys, CPAs, and other clients Furnish advice and counsel clients on their financial status and the reasons for it Advise clients on business decisions about the current operation and future opportunities Focus on financial matters, business structure, human relations and personnel management, business planning, or production and operational issues AFM (Accredited Farm Manager) members are trained to provide professional assistance to: Owners of farms and ranches held as investments Banks, trustees, attorneys, and others responsible for rural property belonging to others Prospective purchasers desiring professional help in selecting and acquiring farms and ranches Owners needing consultation or special services on problems involving management of rural properties Farm owners desiring accounting assistance 2 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

5 ARA (Accredited Rural Appraiser) members are experts in developing rural property values for: Buyers and sellers needing an estimate of market value Mortgage loan purposes Banks and other trustees handling rural real estate belonging to others Attorneys handling cases where the value of rural property is involved Owners of rural lands involved in: - Eminent domain takings (by negotiation or condemnation) - Inheritance - Estate, gift or real estate questions - Partition or division of land ownership - Litigation concerning land valuation - The process of incorporating their holdings - Anyone who needs an accurate measurement of the value of rural real estate RPRA (Real Property Review Appraiser) members perform technical review of appraisals for: Banking institutions in federalrelated transactions Government agencies Independently owned appraisal firms California Chapter, ASFMRA The California Chapter of the American Society of Farm Managers and Rural Appraisers was chartered in 1949 as an affiliate of the national organization. It is a non-profit mutual benefit corporation under California law. The California Chapter supports the educational, ethical and professional standards set by the national organization and is the second largest chapter in the ASFMRA. Friends of the Chapter The California Chapter provides an important link for professionals through an affiliate membership category Friends of the California Chapter. The Chapter invites anyone with an interest in agriculture to join this affiliate group. It is intended for those who do not qualify for membership in the ASFMRA as a rural appraiser, farm manager, or agricultural consultant. As an affiliate, Friends will enjoy all benefits the California Chapter offers its other members, except voting rights. Friends are listed in the Chapter s annual membership directory and receive the California Chapter Newsletter and Trends publication. Friends qualify for discounted member rates on all Chapter-sponsored courses and events. And friends enjoy an ongoing relationship with a strong networking organization that focuses on the agriculture industry. For More Information To learn more about our many informational and educational opportunities, seminars, and news about the California Chapter, ASFMRA, please visit our website at or call the chapter office at When quoting this publication You may, on an occasional basis, disseminate portions of the Trends in Agricultural Land & Lease Values (California Land Value Survey), for noncommercial purposes, to a limited number of individuals, provided you include all copyright and other proprietary rights notices with such portion of the California Land Value Survey in the same form in which the information appears. The phrase "Used with permission from The California Chapter of the American Society of Farm Managers and Rural Appraisers, must be included. You may not modify the California Land Value Survey and you shall be fully responsible for any consequences resulting from such use of The California Land Value Survey. Trends in Agricultural Land & Lease Values is published by The California Chapter of the American Society of Farm Managers and Rural Appraisers, Inc. (ASFMRA) P.O. Box 838 Woodbridge, CA (209) 368-FMRA (3672) Website: secretary@calasfmra.com California Chapter, American Society of Farm Managers and Rural Appraisers 2007 Trends in Agricultural Land & Lease Values 3

6 California Chapter, American Society of Farm Managers and Rural Appraisers A Message from the President The California Chapter ASFRMA is pleased to present the 2007 Trends in Agricultural Land and Lease Values. Keeping with tradition, the publication has once again been elevated to include significant and timely commodity features, which present in-depth information on livestock, dairy, almonds, wine grapes, 1031 Exchanges and conservation easements. The publication is the result of many participants who have donated their time and expertise to this endeavor. Out thanks and gratitude goes out to Allan Barros, ARA and Fresno-Madera Farm Credit as chair of the survey. Allan and his group oversee Trends from cover to cover. In addition, many thanks go out to the various regional chairmen and their committees who have tirelessly compiled and presented the land and lease information in their respective regions. This annual publication would not be possible without our advertisers. We have the utmost appreciation for their contributions and we appreciate their continued support. Nancy Clemmensen, our Trends designer, deserves our thanks, whose efforts shine again in this year's publication. And, as always, Suzie Roget, our Chapter Administrator, has played an integral part in all aspects of Trends. We are proud of the 2007 Trends publication. The information contained here is unique and not readily available elsewhere. We hope it will be of value to you, your clients, and your organizations. I am always impressed by the positive reaction of agricultural professionals who see Trends for the first time. Their sentiments are that Trends is nothing short of spectacular. We encourage all of you to share this publication with those who may have not seen it. Wider distribution of this invaluable tool benefits all involved in agriculture and agribusiness. My best regards go to you all. We hope you enjoy this year's publication! Randy Edwards, ARA President, California Chapter ASFMRA 2007 California Chapter Officers Randal H. Edwards, ARA President Edwards & Lien, Inc. Hilmar David L. Moore, AFM President-Elect Hartford Agri Finance Fresno Michael G. Ming, ARA First Vice President Alliance Ag Services Bakersfield John Meek, AFM, AAC Second Vice President JMeek Agribusiness Management Lodi Ralph F. Pavey, ARA 2nd Year Board Member Wilton David Gracia, ARA 1st Year Board Member Citizens Business Bank Visalia Erik C. Roget, ARA Treasurer Rabo AgriFinance Stockton Lorrain J. Friant, AFM, CAC Immediate Past President Cushman & Wakefield of California, Inc. Yuba City 2007 TRENDS IN AGRICULTURAL LAND & LEASE VALUES COMMITTEE CHAIRMAN Allan Barros, ARA Fresno-Madera Farm Credit Fresno REGION ONE CHAIRMAN Russell Cremer Bank of America Lower Lake REGION TWO CHAIRMAN Michael D. Pipkin, ARA American AgAppraisal Service Ukiah REGION THREE CHAIRMAN Randal H. Edwards, ARA Edwards & Lien, Inc. Hilmar REGION FOUR CHAIRMAN Susan Der Manouel, ARA FLBA of Kingsburg Kingsburg REGION FIVE CHAIRMAN Lynn Rickard, ARA Rickard Appraisal Bakersfield REGION SIX CHAIRMAN R. Anthony Brigantino, MAI Brigantino & Co. Salinas REGION SEVEN CHAIRMAN Coleman Anderson American AgAppraisal Service Riverside 2007 LAND VALUES DATA COORDINATED BY The appraisal staff at Fresno Madera Farm Credit. 4 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

7 Fresno Madera Farm Credit Thank you for your interest in this survey of sales, rents, and trends. This is the product of many hours of effort from volunteers located throughout the state. Working without compensation, these contributors donate their time and talent for the profession and the communities they serve. The same is true for those that took time to research and write the articles covering Beef, Dairy, Almonds, Wine, Conservation Easements and 1031 Exchange Impacts. The results have been spectacular, as you will see. The California Chapter of the American Society of Farm Managers and Rural Appraisers has compiled this information for years, with each edition supplying more information than its predecessor. We find the information valuable and want to share it with those who need it most, people like you. We are the only non-governmental organization to do this every year, and with your continued support, we hope to be able to do it for years to come. This work would not have been accomplished without the dedication of our regional chairmen: Russ Cremer; Mike Pipkin, ARA; Randy Edwards, ARA; Susan Der Manouel, ARA; Lynn Rickard, ARA; Anthony Brigantino, MAI; and Coleman Anderson. These professionals, along with those who served on their committees, deserve our collective thanks. We would also like to thank our advertisers. Without advertising support we simply can not do what we do. Compiling the information is one thing, presenting it in the format that you hold in your hands is quite another. As you read through this book, please remember that the value and lease data presented represents a general range of sales and rental data for each stated market. Specific sales or leases may be higher or lower than the ranges noted. Due to the many factors that characterize agricultural properties in the state, one should not assume that all properties in a certain area-or of a particular crop-will fall within the ranges shown. We strongly recommend that you consult with a trained professional to secure an accurate value estimate for a specific parcel. Such a professional can and will provide much more specific and detailed information than this publication can. You will find contact information for a good number of professionals in this publication. Designated members of the American Society of Farm Managers and Rural Appraisers have completed a rigorous training program in the valuation of agricultural properties. Also remember that the ASFMRA is the only appraisal organization that offers a curriculum specifically based on the appraisal of agricultural real estate. California Chapter, American Society of Farm Managers and Rural Appraisers Finally, the views and opinions expressed in the spotlighted crops and articles found in this book are those of the authors and do not necessarily reflect the views of the California Chapter of the ASFMRA or its members. This entire publication is copyrighted by the California Chapter ASFMRA. All Rights Reserved. Do not reproduce without the expressed written consent of the authors or the Chapter. Thanks again for your interest and support. Sincerely, The appraisal staff at Fresno Madera Farm Credit, Chairmen for the 2007 LVS 5

8 California Chapter, American Society of Farm Managers and Rural Appraisers 2007 HIGHLIGHT Conservation Easements by Tony Correia, ARA Conservation Easements (CE) can be powerful tools for the preservation of agricultural and rural properties, allowing landowners to continue farming and ranching while preserving their property for future generations. Recent changes in tax laws have increased the potential tax benefits to be gained by donations of such easements to qualifying land trusts or other agencies or non-profit organizations. These changes greatly enhance benefits to those landowners qualifying as "active" farmers or ranchers. However, today, these benefits apply only to contributions made in this calendar year. New legislation is pending which may make these benefits permanent, but until that legislation becomes law, many landowners are scurrying to complete charitable contributions in calendar year Such contributions require "qualified appraisals" of the value of the donated easement in order for the landowner/taxpayer to claim the potential tax benefit. Hence, the demand for such appraisals can be expected to increase as we approach year-end. Any landowners considering such transactions should consult with their tax advisors soon, and investigate obtaining a "qualified appraisal" in a timely manner. Appraisals must be "made" not earlier than 60 days before the date of the donation, and must be received by the taxpayer before the due date of the tax return claiming the charitable contribution. Conservation Easement Valuation for Charitable Contributions In those cases where CEs are donated and the donor plans to claim a charitable contribution for the value of the contribution, the Internal Revenue Code calls for the value of the contribution to be determined by a "Qualified Appraisal" performed by a "Qualified Appraiser". The new law defines these terms, basically, as follows: The term 'qualified appraisal' means an appraisal of property which is treated as a qualified appraisal under regulations or other guidance prescribed by the Secretary of the Treasury, and is conducted by a qualified appraiser in accordance with generally accepted appraisal standards and any regulations or other guidance. The term 'qualified appraiser' means an individual who has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements set forth in regulations prescribed by the Secretary, regularly performs appraisals for which the individual receives compensation, and meets such other requirements as may be prescribed by the Secretary in regulations or other guidance. An individual shall not be treated as a qualified appraiser with respect to any specific appraisal unless the individual demonstrates verifiable education and experience in valuing the type of property subject to the appraisal, and the individual has not been prohibited from practicing before the Internal Revenue Service by the Secretary under section 330(c) of title 31, United States Code, at any time during the 3-year period ending on the date of the appraisal. The new law also carries stiffer penalties for abuses of the process by overstatements of valuations. The ASFMRA has recently joined with the Appraisal Institute, the American Society of Appraisers, and the Land Trust Alliance in developing a new body of appraisal courses specifically addressing the valuation of conservation easements. These courses are expected to be offered for the first time this summer, at locations throughout the US. The value of a conservation easement is typically determined by a "Before and After" method of appraisal and equals the amount of diminution of the property's value resulting from the easement restrictions. The effect of the easement must be addressed based upon the actual anticipated impact upon the property, i.e., any loss in use of, and consequent diminution in value of, the subject property, suffered by the imposition of the easement. The crux of this exercise is the Highest and Best Use of the property, both before the imposition of the easement, i.e., the "Before" condition, and after the easement is imposed upon the property, i.e., the "After" condition. The Highest and Best Use of the property will, most probably, be changed by the imposition of the easement. The value of the property under each Highest and Best Use, then, will be estimated by the appraiser using appropriate methodology, with the difference in those two values equating, by definition, to the value of the easement. It is important to note that the appraiser must measure the loss in value caused by the easement, as a result of the change in Highest and Best Use resulting from the restrictions of the easement, and NOT the value of the easement for the conservation purpose. Generally, the highest and best use for a property is estimated after considering four factors. These factors are, in sequence (1) the subject use is legally permissible, (2) the subject use is physically possible, (3) the subject use is financially feasible, and (4) the subject use is maximally productive. Conservation easements can change the legally permissible uses of the property by virtue of the restrictive language of the easement document, which may exclude or limit some uses of the property. Most conservation easements constrain the future uses of properties, as they will restrict the partition, or sale, of discrete, individual parcels and will often preclude development to more intensive uses, residences, or other building improvements. Thus, the imposition of the CE creates a significant diminution in the value of the property. Thus, the landowner will, in fact, lose, or give up, his rights to higher use of those areas with potential for partition or development to more intensive uses. Hence, the answer to the question: "What reasonably probable loss will the property owner sustain from the taking of an easement?" It is, the owner will lose all, or some, future developmental rights and the potential to partition, or resell, smaller individual parcels. The valuation of the CE should address this loss. 6 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

9 To accomplish these valuations, the appraiser must consider the three traditional approaches to value, as defined by traditional appraisal discipline. The process begins with the valuation of the subject in the "Before" condition, or as the property exists, with no restrictive easement in place. The "Before" valuation may employ a subdivision, or development, analysis, (exploring the current value of the property if it were to be subdivided into smaller parcels, if such a use is determined to be the highest and best use of the property), in the "Before" condition. However, this analysis should be undertaken only if the property is actually physically and legally a prospect for such development, and such development is financially feasible and reasonably probable. The appraiser must then consider the valuation of the subject in the "After" condition, as the property exists, with the restrictive easement in place. Here, again, the crux of this exercise is the Highest and Best Use of the property in the "After" condition, as restricted by the CE. The restrictions imposed by the CE will likely cause a change in the Highest and Best Use of the property, which will, then, effect a change in the sales selected as "comparables" for the property in the "After" condition, or as restricted by the CE. In some markets, the appraiser will enjoy the luxury of comparable sales, encumbered by similar easements, which will allow the appraiser to effect direct comparisons of similarly restricted properties. These comparisons will then allow relevant valuation of the property, as encumbered, in the "After" condition. The resulting difference between the two values, then, equates to the value of the CE. In some cases, the contribution of a CE may actually enhance the value of the owner's property. In these cases, the incremental enhancement of value to the total property must also be considered as an offset to the value of the charitable contribution. If the property is encumbered by an existing mortgage loan, the lender will be required to subordinate their interest to the new easement. To this end, the lender may also require an appraisal to ensure their collateral remains sufficient after the easement is imposed upon the property. And we should remember that the IRS has publicly announced CEs have been specifically targeted as one of the "Dirty Dozen" of top tax abuses. Landowners must also consider that easements for charitable contributions must be perpetual, which means forever, and ever. We cannot predict the future, of course, but it IS possible forever could be a very long time. Families should consider future family members may wish to build homes on the property, and so they may want to reserve future building rights on certain portions of the eased property. Landowners should consult with their families, and their tax advisors, and/or consultants, to determine if a CE is the right choice for them. In any case, the CE process will likely take some time, and landowners considering these should start the process sooner rather than later. Tony Correia, ARA President, Correia-Xavier, Inc. tonyc@c-x.com References Additional, and updated, information can be found at : The Land Trust Alliance American Farmland Trust For a listing of a Land Trust in your area of California: California Chapter, American Society of Farm Managers and Rural Appraisers 2007 Trends in Agricultural Land & Lease Values 7

10 California Chapter, American Society of Farm Managers and Rural Appraisers 2007 HIGHLIGHT Almonds 2006 by Kirk Sagouspé, ARA History Almonds are known to have existed for thousands of years, having been traced to areas of central and southern Asia. Biblical scriptures made reference to almonds as a valuable food and symbol of hope. It is speculated that the tree species later migrated to the lower elevations of China, then west to northern Iran, and eventually to areas of the Middle East and Mediterranean. As time went on, Italy and Spain became the first countries to grow almonds commercially, due to the more ideal climatic conditions in those areas of Europe. Today, almonds continue to be an important food in the "Old World." Even though almonds are known to have existed for several millennia, they are relatively new to the United States, first introduced to California by Spanish missionaries in the mid 1700s. The first orchards were planted along California's coastal regions, however, due to less than ideal growing conditions along these cooler areas, almond production migrated to the inland valleys of central California in the late 1800s. As the industry and science evolved, more suitable varieties were bred for the warmer climates of today's primary growing regions. Today, California is the only state in the union that produces almonds commercially, making up over 80% of the world supply. Almond production spans over 500 miles, reaching north to the Sacramento Valley down through the southern reaches of the San Joaquin Valley. Listed in order from north to south, the following counties produce the vast majority of almonds grown in California: * NASS 2005 California Almond Acreage Report Clearly, almond acreage is dominated by the major counties of the San Joaquin Valley, with nearly 82% of the state's acreage. The remaining 18± percent is located in several counties north of Sacramento. As the industry has evolved and matured, production areas have moved south as a result of more ideal climatic conditions, especially during bloom. Industry Structure The Almond Board of California (ABC) was established in 1950 by the USDA to administer the federal marketing order for almonds. The ABC structure consists of ten board members, five of whom are almond growers and five who are almond processors. The board is served by a staff appointed by the board. The purpose of ABC is to promote almond consumption domestically and internationally, in an effort to support almond production in California. The ABC is funded by assessments paid by growers based on their annual almond production. A portion of the funding has been directed toward research and development in an effort to improve production techniques, food safety, and value added products. As a part of product promotion, the industry is touting the healthful benefits of almonds. This effort has increased consumption dramatically, both domestically and internationally. Another significant participant in the almond industry is Blue Diamond Almonds. Blue Diamond was formed in 1910 as a grower cooperative, and represents nearly three thousand almond growers today. The cooperative is the world's largest almond processor and marketer and covers the largest percentage of the California almond industry. The remainder of the almond crop is handled by numerous small to large capacity processors and marketers. Varieties The almond is a very versatile nut which may be sold and used in numerous end products. Common utilization includes inshell, whole, processed, and ingredient products. Modern machinery and equipment has allowed almonds to be processed with the brown skin on, blanched (skinned), roasted, slivered, diced, mealed, and pasted. There are over thirty almond varieties grown in California. These varieties fall into four classifications consisting of Nonpareil, Carmel, Mission type, and California type. Nonpareil is the primary variety grown, making up approximately 38% of the state's total almond acreage. The Nonpareil nut has a soft outer shell with a smooth surface nut, making it the easiest nut to hull, shell, and process into a wide range of almond products. The Carmel variety has very similar characteristics as, and was a common pollinating partner with, the Nonpareil variety. Currently, only 16% of California's planted acres consist of Carmel. This variety has fallen out of favor due to its susceptibility to crazy top (non-infectious bud failure), a genetic disorder which perpetuates bud failure. The Nonpareil variety is also susceptible to crazy top, although more careful clone selection has help alleviate the problem. The Mission type category consists of a family of hard shell almonds, which are characterized as small, wide, dark skinned nuts with plump nut meats. Varieties within this category are Butte, Padre, and Mission, which make up approximately 20% of the State's planted acreage. The final category is the California type family of almonds, which makes up the remaining 26% of California's almond acreage. This family of almonds includes nearly 30 varieties, commonly utilized for blanching and processing into manufactured products. California type nuts vary with respect to shell hardness, nut shape, skin color, and kernel surface. 8 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

11 Common varieties are Butte and Padre, which are commonly grown in tandem in the same orchards for pollination purposes. Historically, almond orchards have had finite economic lives, generally ranging from 20 to 25 years. Today's orchard developments, however, are planted to higher tree densities with the ability of producing crops well in excess of historical averages. These higher density orchards have yet to complete their economic life cycles and some speculate that orchard lives may be reduced as a result of these factors. However, reduced orchard life cycles may be a positive aspect to the industry, given the significant crop increases anticipated in the near future. Pollination Because most commercial almond varieties are not self pollinating, they require the introduction of honey bees during the crucial bloom period. Bees are critical in transferring pollen from one compatible almond variety to another. Sticky pollen grains are produced in the anthers (male part) of a flower where they are picked up, transported and introduced by bees to the pistil (female part) of a compatible almond variety flower. The introduction of pollen is critical in fertilizing an almond crop, which is the primary reason all orchards must include at least two compatible almond varieties. Bloom generally occurs in the month of February. Plant breeders are striving toward the development of self-pollinating varieties. With the rapid expansion in almond acreage in California, demand for bees has increased commensurately. Just a few short years ago, growers could contract the service of bees for approximately $50 per hive. Unfortunately, however, the apiary industry has been plagued with a rise in bee mortality rates as a result of tracheal mite parasite. Consequently, while demand for bees has increased, their availability has dwindled, causing a classic supply/demand imbalance. As a result, pollination costs have risen to approximately $150 per hive in Mature orchards typically require a density of two and one-half hives per acre, thus, growers are now faced with an input cost of $375 per acre for pollination, a 200 percent increase from several years ago. Industry wide, over 1.2 million bee hives are required to pollinate California's almond crop each year. Economics Almonds are California's leading exported agricultural commodity, with approximately 70 percent of the crop sold abroad to over 80 countries. The remaining 30 percent is sold domestically, with the United States being the largest consumer of almonds. Other leading consumer countries are Spain, Germany, India, Japan, Italy, and France. The industry has done a tremendous job promoting almonds to consumers in the international and domestic markets. The Almond Board of California has funded clinical medical research studies which have revealed the health benefits of almonds. These results have translated into increased demand by consumers who have made almonds a more common part of their diet. In addition to their traditional use as in-shall and whole nut products, the industry has also made almonds more readily available as ingredient products in the form of slices, slivers, dices, flour, paste, and oil products. Now, almonds are used in a wide variety of consumer products such as salad toppings, confectionary ingredients and toppings, and flavor enhancers, to mention a few. These efforts have translated to very favorable returns to growers and processors of California almonds. These encouraging economic results have been the catalyst to the increase in acreage of almonds in traditional almond producing areas of the state. Historical information relating to almond acreage, production, yield, and average grower returns per pound and per acre over the past decade may be summarized as follows: The productive capacity of the industry has expanded dramatically over the past decade, with a 31 percent increase in bearing acreage during this time period. Almonds, like many commodities, are subject to the principles of supply and demand. Over the past several years, global demand for almonds has outpaced supply as a result of the successful promotion of the product, resulting in very favorable grower returns. California produced its first, second, and third one billion pound crops in the three consecutive years from 2002 through Ironically, average prices rose significantly in each of these years, nearly 100 percent overall. The market had California Chapter, American Society of Farm Managers and Rural Appraisers 2007 Trends in Agricultural Land & Lease Values 9

12 California Chapter, American Society of Farm Managers and Rural Appraisers absorbed most of these record crops and was clamoring for more, signaling that global demand is in excess of one billion pounds. In 2005, California experienced severely adverse weather conditions during bloom, and with this news, the almond market was sent into a frenzy. Initial crop estimates were below 900 million pounds, resulting in skyrocketing of nut prices. Some growers reported selling portions of their crops at prices in excess of $4 per pound, although, the overall 2005 crop settled at a record average price of $2.81 per pound to the grower. Prices moderated in 2006 after the market was well aware of another impending record crop of nearly 1.1 billion pounds. In addition, buyers became increasingly price sensitive after the record prices paid in Current data indicates that the 2006 crop will result in an average unit price of just over $2 per pound, with average grower returns near $3,900 per acre, similar to that of As a result of the vagaries of supply, demand, weather, and emotion, almond production has emerged as one of the most profitable commodities in California agriculture. Reviewing the statistical data available, we see the following upward trend in gross revenue per acre to the grower. Revenues generated by many of the traditional permanent crops grown in central California pale in comparison to those of the almond industry. Agriculturalists have historically had the propensity to pursue and overproduce crops with the highest financial returns, and the almond industry does not appear to be immune to such overproduction in the future. The positive performance of the industry has resulted in a profound upward trend in market values for almond orchards. We see this trend in the following chart, which depicts the ranges of unit values found in the various almond producing markets of California. With the favorable economic conditions, existing and new almond growers have developed thousands of acres of almond orchards throughout the traditional almond producing regions of the state. Attempts to quantify the number of non-bearing or proposed almond acreage have become increasingly difficult. Non-bearing acreage has historically been estimated by surveying nurseries that propagate and sell the majority of almond trees in the state. More recently, however, numerous large scale almond growers have entered into the nursery business, propagating their own supply of almond trees, and selling their excesses to other orchard developers. As a result, the traditional sources of information pertaining to non-bearing acreage has become less scientific and, perhaps, more speculative in nature. The most recent data indicates approximately 100 thousand acres of non-bearing trees in 2005, which translates to approximately 680 thousand acres which are now, or will soon be, in production. The industry is girding for the anticipated yield increase, with continued marketing efforts and the expansion and increase of processing and marketing facilities. With the massive almond production anticipated in the near future, almond prices are expected to moderate from current levels. This industry has been faced with similar excessive supply challenges in the past, aggressively responding with increased marketing programs and product awareness. These efforts have been extremely successful in strengthening global demand for almond products. As the market moderates, as anticipated, the level of orchard development is expected to slow, thus, stabilizing market supply. In addition, with lower prices; older, non-economical orchards will likely be removed, resulting in a decrease in the potential supply of almonds. In conclusion, the California almond industry appears to be in a favorable position to balance its impending supply challenges. Global demand and nut prices continue to be strong, with California controlling a vast majority of the world's supply of almonds. Competition from other almond producing countries does not appear to threaten California's position as a leader in the industry. Sales of almonds have been propelled by the continued weakness of the US dollar, increasing the purchasing power of foreign buyers. 10 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

13 2007 HIGHLIGHT California Beef Industry 2006 by Mark R. Thompson The beef industry faced challenges throughout 2006, but ended up in the slightly better shape than when the year started. In California, the market was seasonally slow in early '06 however; prices for the "run" (calves born in the fall of '05 and marketed in the spring of '06) remained fairly steady and reasonably profitable, primarily for the cow/calf producer. In the early going, overall fed cattle numbers were approximately 16% higher than they were at the end of 2005, yet prices remained about the same due to continued strong demand for lean red meat from the domestic consumer market. Residual effects from the Atkins Diet continued to be felt. During this same time period the Japanese government called USDA reports on veal insufficient and continued to keep their doors relatively closed to that sector of the market. As negotiations continued, the US Beef market pressed forward and courted other Asian markets in an attempt to raise exports overall. In February the "cattle on feed" or "feds" (cattle in feed lots) market started to weaken. At this same time the prices of slaughter cows (culled cows) was up and feeders (young animals ready to go to the feedlots) dropped slightly. These trends continued through March. At the consumer level there were large volumes of meat on hand, impacting the boxed beef market in a negative way. However, the demand for high-end meat cuts remained strong as demand outstripped supply. By the end of the 1st quarter the courtship of the Asian market started to look like it was going to be fruitful as South Korea stated that they would be accepting more US beef. This good news was offset somewhat by the fact that on March 10th 2006, Japanese inspectors found bone chips in beef products from the US and became further reluctant to open their doors to the West. As exciting as the first quarter was, it was just a foreshadowing of what lay ahead. One of the major factors that kept US beef prices as stable as they were was the fact that Canada was having troubles of its own and was not able to ship large numbers of cattle into the US in the first quarter. The return of Canadian cattle was set to begin in force on March 7, 2006 (live cattle only with the brand "CAN" on them. Canadian cattle still cannot pass over the border and be let out to pasture). The impact of the increased supply of feeder cattle on the US market was expected to have a negative short-term impact on the industry, but was needed to keep the industry healthy over the long term. Nonetheless, in early March a Federal Judge in Montana granted a temporary injunction against the USDA (R-Calf vs. USDA) that would keep the border completely closed to live Canadian beef. Even with the R-Calf injunction the market was starting to become unbalance with more animals in place than was needed. In fact, the number of US cattle on feed and feeders grew to the highest level ever reported in the United States. During this same time frame Cargill made an offer to purchase all of Beef Packers' west coast operations and their subsidiaries. This offer was eventually accepted, further consolidating the packing industry into fewer and fewer hands. At the same time a fifth reported find of Bovine spongiform encephalopathy (BSE) commonly known as "mad cow disease" was made in Canada. This further impacted the call to keep the US border closed to Canadian cattle. BSE is a fatal, neurodegenerative disease of cattle, which causes the degeneration of physical and mental abilities of the infected animal and then ultimately cuases death. While never having killed cattle on a scale comparable to other livestock diseases, such as foot and mouth, BSE has attracted wide attention because it seems possible that the disease can be transmitted to humans. The public is rightfully concerned about BSE and news agencies broadcast the news of any BSE find. If this wasn't enough excitement for one industry to handle, the national concern over illegal immigration landed in the heartland. The US Government began investigations into the use of illegal immigrants in meat packing plants throughout the Midwest. In one case more than 1,200 people were arrested in plants in six states during raids, which the federal officials called the largest-ever workplace crackdown on illegal immigration. The arrested workers were from Mexico, Guatemala, Honduras, El Salvador, Peru, Laos, Sudan, Ethiopia and other countries. One impacted company estimated that the raid on their facilities removed up to 40 percent of its 13,000 workers. Meat packing companies are attempting to hire legal workers, but are finding challenges in doing so. Nonetheless having 40% of an entire work force taken away in one day caused a great deal of consternation on the processing and cost of meat products. June brought a "roller coaster" market as prices bounced up, then down as Japan admitted to finding their own 26th case of BSE. The finding of another case of BSE in Japan further frustrated US beef growers, as Japan continued to decline taking US beef "for safety reasons". Negotiations finally turn fruitful in July when Japan agreed to take meat from cattle that are 20 months old or younger. Even though Korea indicated at the first of the year that they would be buying US beef, they stalled and have not imported as much meat as would have been desired. Cattle on Feed prices remain steady through this period, while the number of animals on feed are up by almost 7% in mid August. The industry was still showing signs of concern with the continued consolidation of meat packers throughout the country. The third quarter ended with another perceived hit to the beef industry, though it was not a direct link. In late September an outbreak of E. coli linked to Salinas Valley spinach killed three people and made hundreds ill in 25 states. Investigators found "situations of concern" at farms and food processing plants in California, but cleared spinach grown elsewhere in the country. Further investigations hinted that the E. coli that contaminated the Salinas Valley spinach could have come from run off from neighboring cattle ranches. Though the meat industry was not to blame for the particular outbreak of E. coli, the fact that the contamination might be traced back to neighboring ranches put an unwanted spotlight on the beef industry. California Chapter, American Society of Farm Managers and Rural Appraisers 2007 Trends in Agricultural Land & Lease Values 11

14 California Chapter, American Society of Farm Managers and Rural Appraisers In the final quarter of 2006, Korea began taking beef shipments on a limited basis. Japan overcame their hesitation in taking US beef and shipments began. Feed on hand for the industry was already in place in the last quarter of 2006, yet corn futures began to rise to the point that concerns over higher feed prices in 2007 began to set in. As more and more ethanol plants come on line, corn prices were expected to remain high until an alternative crop could be found from which ethanol can be extracted. The rise in feed prices will continue to put pressure on profit margins, which could impact animal numbers throughout the industry. Feeder cattle prices were already beginning to drop by December, due in part to the higher corn prices and in part to higher fuel costs for transportation. How this plays out into the future is yet to be seen. In December, investigators indicated that wild hogs were to blame for the E. coli in the Salinas Valley spinach outbreak and that the neighboring ranch was not the main problem. The impact of this news has yet to infiltrate into the general public. Renewed Federal immigration raids on Midwest plants were a minor disruption in late 2006, but is something that will continually have to be addressed. The first cold storms of the winter season hit in December, but were not severe enough to impact cattle numbers overall. The January storms were much larger and more severe, yet so far have had little impact on overall production. Meat prices remained stable to slightly stronger at the end of 2006 as compared to the beginning, in spite of all of the happenings. The general underlying current is the stable demand for lean red meat by the general public, supported by the continued education of said public about the positive qualities of beef by the industry itself. After all, Beef is what's for Dinner. 12 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

15 2007 HIGHLIGHT California Dairy Industry 2006 by Edwards & Lien, Inc. The economics of the dairy industry took its toll on California dairyman in 2006, as it was a year that many dairyman were happy to see end. Low milk prices, high feed costs and the continuing saga of environmental pressure were a few of many difficult challenges facing the dairy industry. Even Mother Nature had her hand in the equation of hardship with waves of record hot temperatures hitting central California in July and August. Despite the mid-summer heat wave, and the sharp decline of dairies in the state by 68 facilities, the industry showed its resilience as the total on-farm milk production continued to surpass the previous year's record high. By year's end California reached a production level of 38.8 million pounds. This was a 3.4 percent increase over 2005 totals. With such capacity California's milk production continued to lead the nation in 2006, exceeding the combined milk production of the second and third highest producing states of Wisconsin and New York. California also continues to lead the nation in the production of butter, nonfat dry milk, Mozzarella cheese and whey protein concentrate. Even though Wisconsin is still the nation's number one producer of total cheese, California is quickly catching up. In 2006 an additional record was hit as California produced 2.2 billion pounds of cheese. If the trend continues industry experts project that the state will pass Wisconsin in total cheese production in just a short few years. At present California is already the home of 4 of the world's 10 largest cheese plants, including the largest single site cheese processor, Hilmar Cheese Company. The 2006 state's milk crop was produced in a total of 36 counties, with the bulk being in just a handful of counties. Indeed, the top ten counties account for 91% of California's total milk production and 20% of the nation's production. Tulare County is by far the largest milk producer in the state contributing 26% of the state's total supply, followed consecutively by Merced, Stanislaus and Kings counties (which produce a combined 33.0% of the states supply). As stated previously, the landscape of California production continues to change as dairies continue to relocate within and outside of California or shut down completely. In 2006, California recorded a net loss of 68 dairies. The counties recording the majority of decreases came from Merced (-22), Stanislaus (-20), Humboldt (-16) and San Bernardino (-15). These losses clearly outweigh the counties recording the largest increases in dairy operations with Glenn County (+8) and both Fresno and Tulare Counties (+7 each). The record production of 2006 is attributed to the increase of total cows within the state in addition to the ability of California dairymen to increase milk production per cow. In 2005, the average dairy farm in California consisted of 860 head. The report for 2006 indicates an increase of average herd size to 903 head. Milk production increased from 21,404 pounds per animal milked in 2005 to 21,815 pounds in All of this is occurring on approximately 1,960 licensed dairy farms in California, housing a total of 1.78 million milk cows. Approximately one out of every five cows in the U.S. continues to be from California. Facilities in the northern San Joaquin Valley of California are centered in smaller scale dairies (300 to 750 milking). The average dairy herd size of the South Valley counties of Kern, Kings, Madera and Tulare exceed the 1,000-cow mark with some as great as 8,000 to 10,000 milking head. Although increased production for an individual producer may be beneficial for solvency purposes, this increased production is not best for the entire group. Especially as an oversupply of milk products nation wide is already a concern and industry experts report that demand for California dairy products will likely grow only 2 percent annually. This compared to the 5- year average increasing rate of California milk production at 3.2%. As a result, supply of raw milk continues to exceed the demand for end products, thus dairymen were once again faced with a plunge in milk prices in Below average milk prices dominated the dairy industry for most of the year and is comparable with the lower 2002 price levels. The twelve-month average price paid to producers for 2006 is reported at $11.59 per hundredweight. This was a significant decrease from the 2005 price at $13.93 cwt and 2004 prices at $14.60 cwt. Not only was remaining solvent a challenge for producers due to low commodity prices, farmers were also hit with high costs of labor, feed, energy and construction materials. With the growth of ethanol plants creating competition and demand for grain, corn prices had risen approximately 50% in Furthermore, alfalfa prices had also risen as a heavy spring rain reduced the 2006 crop. The extreme heat wave of late July was reported to kill at least 30,000 dairy farm animals including cows and calves. Not only had dairyman lost livestock, the reproduction cycles and production capacity of many surviving animals were damaged with full recovery not expected until the end of The hardship of economic conditions for dairyman in 2006 was reflected in the transactions of dairy facilities and supplementing irrigated cropland required for feed production and effluent management. Although land and facility prices remained stable, the occurrences of transactions were few as compared to the previous optimistic years of 2004 and California Chapter, American Society of Farm Managers and Rural Appraisers 2007 Trends in Agricultural Land & Lease Values 13

16 California Chapter, American Society of Farm Managers and Rural Appraisers In 2004 strong milk prices stimulated optimism in the industry, as demonstrated by increased sales activity for real estate and higher sale prices in general. The demand for dairy facilities, both small and large, was very strong and pushed real estate sale prices to all time highs. Sales of larger-scale facilities were impacted the most and were dominated by dairymen relocating from Southern California or by solvent producers who wanted to consolidate their smaller operations into much more economical ones. This trend continued into The demand for said large scale facilities continues to hold interest has focused on areas that have not historically been dairy producing regions, such as Earlimart in southern Tulare County, the Red Top and Dos Palos area of western Madera and Merced counties, and the Riverdale / Helm areas of southern Fresno County. Strong real estate prices within the urban areas of California continue to place pressure on dairymen to relocate to the central and northern parts of the state where there are larger parcels with fewer neighbors. The scarcity of large, modern dairies in the marketplace supported strong market values. More people were interested in buying and securing large dairy facilities than there was capacity to build such units. This same demand existed for open land associated with dairies. There is an increasing industry and public awareness recognizing the need for sufficient land to appropriately feed the increasing dairy herds and to manage the solid manure and effluent waste generated by those same herds. Due to this dual need for land, coupled with some competition from permanent planting developers and field-row crop farmers, immense upward pressure has been placed on land and dairy values. As low milk prices of 2006 forced some dairymen out of the industry, there was an abundance of smaller facilities available throughout California by year s end. Values for these smaller, typically older and less functional facilities, remained strong, especially those associated with an abundance of supporting land. The availability of accompanying land creates potential for herd expansion, which seems to always be on the minds of most dairymen. The typical buyer is an existing dairyman who is expanding his or her operation by purchasing a facility rather than build one from scratch. It is very difficult and time consuming to obtain permits to construct a facility in today's political environment. Dairy facilities with permits in place and abundant supporting land to support larger herds are in higher demand than those that have simply been grand fathered in, are short on acreage and are operating without any official permission from the county or state. Dairymen have become increasingly aware of the urgency to remain compliant with county and state regulations as environmental pressures continue. In an effort to regulate the California dairy industry, and in response to the recent enforcements of the California Environmental Quality Act (CEQA), the State of California Regional Water Quality Control Board has adopted a monitoring process for proper nutrient management of animal confinement facilities. Despite receiving building permits and remaining compliant with county authorities, dairyman must also obtain Authority to Construct (ATC) permits as well as Authority to Operate (ATO) permits from the California State Air Pollution Control District. As a result, dairymen have experienced an increase in cost and time involved in obtaining permits to expand or build a new dairy facility. Furthermore, some dairymen have experienced restrictions to a capacity less than the physical capacity of the facility mainly due to lack of supporting land and the inability to offset nitrates and salts generated on the facility. These regulations have created scarcity in the marketplace, which is expected to continue to fuel market values of existing dairy facilities. This increase in demand for compliant dairy facilities is expected to continue regardless of the fluctuation in milk prices paid to producers. The 2007 outlook for the California dairy industry will continue to be effected by supply and demand. The USDA projects a moderate rise in milk prices for 2007, thanks to only a small increase in nationwide production and strong demand for dairy products. Furthermore, in the spring of 2007 another round of herd retirement is to be implemented by the Cooperatives Working Together (CWT) program in an effort to impact the surging increase in milk production. The latest herd retirement program implemented in 2005 removed 64,050 cows from the marketplace, effectively reducing the national milk production by an estimated 1.2 billion pounds. Despite the low milk prices, high input costs and extreme weather of 2006, California's dairymen prove to be some of the most optimistic individuals in the region. Volatile milk prices remain a huge concern for dairy producers within the state, especially as the years of extremely low milk prices drive some producers out of business. Decreasing the cost of production in an effort to remain solvent has become an increasing challenge for the California dairy industry. Some dairyman will remain successful within the state while others will succumb to the pressure or look to relocate their business to Idaho, New Mexico, Texas and other states with lower production costs. 14 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

17 2007 HIGHLIGHT California Wine Industry 2006 by Ben Slaughter California wine has long been romanticized in literature, song, the small screen, and the big screen. Images of rolling vineyards and prose of the virtues of wine are now commonplace in modern American culture. But California is still a small cog as it attempts to compete in the wine business against the European giants and the upstarts from the New World. Since the 1976 Paris Tasting in which two Napa Valley wines bested their renown French competition, the United States has slowly chipped away at France and Italy as wine producers, nearing 8% of world supply by Source: OIV California produces 90% of the total wine in the United States and is tops in agricultural product retail value at over $45 billion. Cycles During the modern era, the California wine industry has displayed a tremendous propensity to be highly cyclical, even manic depressive, as some observers have termed it. The first major evidence of this was in the early 1970s, when massive amounts of vineyard were developed on the Central Coast. As grower returns shrank due to the influx of new production, new development ceased by the mid 70s. The '76 Paris Tasting kick started the revival as prices rose in the late 70s. Much like a loaded down eighteen wheeler, the wine industry is slow to start and even when the brakes are applied fully, is hard to slow. This lag in response to demands of consumers is inherent in the grape vine itself. From the time of planting, it takes several years before the vine will produce a full crop. This inherently slow response time contributes to cycles of overproduction and underproduction, excess and shortage. Prices cycled again through the 80s, as the wine industry struggled along side its sister crops through the agri-recession, cycled again through the 90s, and finally through the latest roller coaster ride upon which we currently find ourselves. There is no more obvious demonstration of these cycles than the study of California Chardonnay, now the industry work horse. Source: CDFA Grape Crush Reports In each trip through the cycle, two themes have appeared. First, in each time of oversupply, an entrepreneur or two have designed a product to soak up the excess supply. In the 80s it was Gallo's Bartles & Jaymes lines of wine coolers or flavored wines. Fueled by the front porch television advertising personas of "Frank Bartles" and "Ed Jaymes" "thanking you for your support" the beverage was a hit, particularly with younger audiences. The line eventually fell victim to the introduction of malt-based coolers, a direct result of new volume-based taxes on wine introduced in As this article is written, we acknowledge the accomplishments of the late Ernest Gallo, the marketing genius of E & J Gallo wine company, who passed away on March 6, In the latest cycle, the incarnation has been the "extreme" or "super value" wine, led by Bronco Wine Company's ubiquitous "Two Buck Chuck." Bronco, led by Fred Franzia, had resurrected a Napa Valley label called "Charles Shaw" and marketed his super-value wine at a price point of $1.99 per bottle, solely through Trader Joe's stores. Most other large wineries also entered the $2 to $3 per bottle price range, with a strong presence felt by the "critters" from Australia (bottles with cute little animals on the label), with a large percentage of the market garnered by Yellowtail. The second theme that has appeared is some sort of media event that reaches out to the general public and promotes wine. In November 1991, 60 Minutes television article presented the "French Paradox" which linked the low incidence of coronary heart disease of the French people to their relatively high intake of red wine. This came at a time when grower returns were falling, but helped to fuel the renaissance and the unprecedented gains seen in grape prices and vineyard values during the mid to late 90s. The run up of the 90s eventually became glut, as California produced more grapes by the turn of the millennium than consumers could drink. By 2003, grower returns had sunk, and we had perhaps seen the bottom of the barrel. But in 2004, a film called Sideways rein- California Chapter, American Society of Farm Managers and Rural Appraisers 2007 Trends in Agricultural Land & Lease Values 15

18 California Chapter, American Society of Farm Managers and Rural Appraisers vigorated interest in wine, and in particular, the Burgundy variety, Pinot Noir. Whether these events had a causation effect or were merely coincidence, they certainly shaped the direction of the recovery. For instance, the 1991 "French Paradox" article particularly pointed to red wine and the compound found in grape skins known as resveratrol, as having a health benefit. Thus, the vineyard developments that occurred in the 90s were focused on red varietals, particularly Merlot and Cabernet Sauvignon. These "varietals" (grapes that go into a bottle carrying the name of the grape variety) were heavily planted in California's Central Valley which had traditionally favored "generic" varieties such as French Colombard (white) and Rubired (red). Source: CDFA Grape Crush Reports While the lasting effects of the Sideways film are yet to be seen, the short term effect are evident, as the price of Pinot Noir increased an average of more than 15% across the state in 2006, more than any other major variety. Anecdotally, conversations with California grape vine nurseries indicate that orders for new vines are dominated by Pinot Noir. The Pinot Noir craze also bodes well for California's closest competitor, Oregon, which is dominated by Pinot Noir production from the Willamette Valley. Conversely, a few tiny lines of dialogue in Sideways had the opposite effect on Merlot, the price of which slipped nearly 10% in Regions California is segmented by the California Department of Food and Agriculture (CDFA) into seventeen (17) pricing districts for reporting of grape prices and production. Source: CDFA Grape Crush Reports These districts are typically grouped by the industry into four regions, 1. North Coast (Districts 1 through 4), 2. Central Coast (Districts 7 and 8), 3. Lodi/Delta (Districts 11 and 17), and 4. Central Valley (Districts 12, 13, and 14). Each region plays a role in the larger scheme of the state, and all the districts are interrelated. While the relationships are there, the characteristics vary between the regions, and price is generally inversely correlated with volume. For instance the Central Valley has produced the bulk of the load over the past ten years, but has steadily lost market share since the early 1990s. Source: CDFA Grape Crush Reports Conversely, the total value of the Central Valley crop has nearly been equaled by the Lodi/Delta region, on only about one-third (1/3) the tonnage. 16 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

19 Source: CDFA Grape Crush Reports The North Coast on the other hand has continued to gain a greater share of the total value (49% of state total in 2006), while only increasing slightly in tonnage and still producing the fewest grapes of the major growing regions (12% of state total in 2006). Thus, we have the North Coast on one side of the spectrum producing a low volume of high value grapes, and the Central Valley on the other side producing a high volume of low value grapes. The Central Coast and Lodi/Delta are somewhere in between with the Central Coast a rung higher than the Lodi/Delta area. Naturally, then, we can assume that the highest grower returns per acre are seen on the North Coast. Source: CDFA Grape Crush Reports The segments of quality are evident in the display of grower returns. Quality, in the wine business, is the great insulator to the slings and arrows of the market. In each iteration of the wine business cycle, the Central Valley has been the first market to show weakness, the hardest hit, and the slowest to recover, while the North Coast tends to be only marginally impacted and is quick to recover. Today, in the spring of 2007 as the industry hopes to leave the doldrums in the past, it again appears to be the case. Wineries and bulk wine buyers appear to be actively looking for North Coast fruit and juice, especially Chardonnay and Pinot Noir, while Cabernet Sauvignon, Merlot, and Syrah from Paso Robles, Lodi, and Madera sit in tanks, and the phone is not ringing. Vineyard Value So, to borrow a line from Tony Correia, who borrowed it from Dave Matthews, who borrowed it from Jimi Hendrix, who borrowed it from Bob Dylan, "Businessmen they drink my wine; plowmen dig my earth. None of them along the line, know what any of it is worth." The question at this point remains, what do all of the cycles, quality segments, varieties, acres, and regions mean to the value of a vineyard? The answer is fairly dramatic as seen in the following chart: Source: ASFMRA As reported by this publication, the highest value of a Napa County vineyard is nearly 25 times higher than the highest value seen in the Central San Joaquin Valley. The highest reported value in Napa is over three times as high as its nearest competitor and neighbor, Sonoma. The next logical question is, why? The answer is logical: quality of the wine creates demand for the grapes and the vineyards that produce those grapes, and the supply of the grapes is limited by the geography of the region. Napa is, by far, the most limited area, geographically, with most of the production limited to the Napa Valley proper which encompasses a very small chunk of the county itself. Napa also produces the highest quality wine, therefore, strong demand plus limited supply equates to high prices. On the flip side, the major production areas of the Delta, Central Coast, and Central Valley, have thousands upon thousands of acres that are, or could be planted to vineyard. Therefore, supply is unchecked. Unchecked supply plus varying degrees of demand equals varying prices, which appear to have a direct correlation to the quality, and thus, average grower returns. It's a very simplistic attempt to explain a very complicated industry. So, finally, who is buying these vineyards? Whose values appear to run through manic depressive cycles, are subject to the fickle hand of Mother Nature, and cost thousands of dollars per acre to develop and farm. The answer is, lots of people. The major buyers over the past few years have generally been established industry participants looking to expand capacity; or investors, attracted to the potential for long-term gains. The investment buyer has shown a new incarnation in recent years, the real estate investment trust (REIT). REITs are not new to real estate, but they are to the wine business as one major REIT has purchased several properties in the state and others are just getting underway. Not to be outdone, the rural residential buyers soaked up much of the inventory of small parcels, throughout the state, as residential real estate markets boomed. Thus, with multiple types of buyers, each with their own special motivations, the numbers don't always make sense. But while the wine business sings its siren song attracting participants from far and wide, the economics do appear to work themselves out, eventually. California Chapter, American Society of Farm Managers and Rural Appraisers 2007 Trends in Agricultural Land & Lease Values 17

20 California Chapter, American Society of Farm Managers and Rural Appraisers 2007 HIGHLIGHT 1031 Tax Deferred Exchanges by Mike Iliff, ARA The 1031 Tax Deferred Exchange has reshaped the agricultural real estate market in California in many different ways. For the past several years appraisers have discovered that an increasing number of sales have been a part of this type of transaction. Understanding what a 1031 Tax Deferred Exchange does is essential to discussing it's affects on the agricultural real estate market and property values. This article is a brief description of what a 1031 is; helps point out some of the ways the exchange works; show the advantages and disadvantages of using a 1031 Exchange; and then looks at some of the impacts 1031 Exchanges have had on the agricultural market. This is by no means a definitive or complete discourse on the topic. For further details please contact a professional who works with 1031 Exchanges on a regular basis, a few of whom are listed in this article. Simply put, a 1031 Tax Deferred Exchange is a legal transaction that allows an owner to buy and sell properties while deferring taxes on the capital gains from those sales. In a 1031 Exchange, an owner, or exchanger, sells their original (or relinquished property) and transfers the net proceeds (the difference between the sales price and the purchase price) to a newly acquired property (or the replacement property) in an orderly and controlled manner. In so doing the exchanger defers the payment of any capital gain taxes that might have been owed on the profits from the sale of the relinquished property if the exchange had not occurred. Very briefly, the difference between the original purchase price of the relinquished property (known as the basis) and its selling price is the gain on which the taxes are applied. Currently Capital Gain Taxes are 15 percent for federal and 9 percent for California, thus any gain from the sale of a property could be taxed at 24 percent. But, if an exchanger uses a 1031 transfer, both the federal and state capital gain taxes are deferred. This process can continue to occur and gains can be deferred indefinitely, as long as all of the rules and regulations of a 1031 Tax Deferred Exchange are followed with each subsequent sale. The guidelines and requirements, set up by the Internal Revenue Code, are particular, precise and specific. To meet the requirements for a tax deferred exchange, the entire transaction must be overseen by an Intermediary. The Intermediary is a disinterested third party that facilitates the transfer of funds from the relinquished property to the replacement property keeping the funds out of the hands of the seller, or exchanger. Under 1031 laws the exchanger can not "touch" any of the proceeds from the sale. Any monies that the exchanger does have access to are not considered tax deferred, and must be taxed. For this 18 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

21 reason it is important that the Intermediary (also known as Exchange Accommodators) handle the transfer of monies. It should be noted that once the exchanger has found a buyer for the relinquished property, and puts said property into escrow, he/she has 45 days to find, and properly identify, a replacement property into which the 1031 money can be invested. The exchanger also has only 180 days to close the purchase, which includes the 45 day identification period. For a replacement property to qualify, it must have utility similar to the relinquished property but does not have to be an identical property type. For example, an appropriate exchange property for a rental house, or a farm, might be a commercial building, as all provide rental income to the owner. There are actually three ways to formally identify replacement properties with the 45 day identification period. These include 1) The 3 property rule. The exchanger can identify up to 3 properties and choose one, two, or all three. 2) The 200% rule. The exchanger can identify any number of properties as long as the total value of the identified properties does not exceed 200% of the value of the relinquished property. 3) The 95% rule. The exchanger can identify any number of properties with no cap on the value, but must close on at least 95% of those properties by the end of the 180 day period. To get an accurate portrayal of the effects of a 1031 Tax Deferred Exchange on the agricultural market, several realtors throughout California were interviewed. All indicated that the use of 1031 Tax Deferred Exchanges is more prevalent today than it was just a few short years ago. Anywhere between 20 to 75 percent of the total number of transactions that are currently handled use 1031 Tax Deferred Exchange money on at least one side of the transaction. Five years ago only 10 to 30 percent of all transactions used 1031 Exchange money, and ten years ago the number was very low. Those interviewed indicated several reasons for the increased use of 1031 Tax Deferred Exchange transactions. First, the rules for 1031's have changed and have become less cumbersome. The relinquished and replacement properties always had to be of like kind in order to qualify, yet the definition of "like kind" has become a gray area and wide open to interpretation. The interpretation of exchanging a property for a like kind was the most often mentioned change in the rules that have caused the increase in its use. Next, the rise in the value of almost all types of properties over the last four to five years has given exchangers more money on which to either be taxed or on which to buy a replacement property. Third, the agricultural market attracts a great deal of 1031 money because buyers see land as more of a divisible property type. This is desirable as they perceive there is an ability to sell off portions of the ranch if need be, instead of an entire commercial or residential property type. Many buyers also like the ability to give each heir their own divided interest in a large property as opposed to an undivided percentage in a relatively small property. Another reason for the increase of 1031Exchanges is that agricultural properties are typically priced lower than other land uses, on a per acre basis, and are thought of as being a base California Chapter, American Society of Farm Managers and Rural Appraisers 2007 Trends in Agricultural Land & Lease Values 19

22 California Chapter, American Society of Farm Managers and Rural Appraisers value property type. Buyers feel agricultural properties have much more upside because of their growth potential to a higher use in the future. Lastly, many users of a 1031 Tax Deferred Exchanges are looking for portfolio diversification. One interviewee pointed out that the majority of the exchangers were coming out of commercial or industrial properties located in larger metropolitan areas and exchanging into agricultural properties. Even agricultural exchangers are looking to move into other crop types; from vineyards to almonds, from larger parcels located away from urban areas to smaller parcels that might be located next to a growing town. In addition to the tax deferral there are many other advantages in using a 1031 Tax Deferred Exchange. One advantage for the exchanger is the ability to purchase more, because of the tax deferral benefits, adding leverage in procuring a more desirable property. Another advantage for the agricultural market is that the exchanger keep their investments in real estate (where they are comfortable) instead of going into other types of investments (where they perceive the presence of more risk). This desire to stay with land provides opportunities for realtors, property managers, appraisers and consultants as they advise and assist buyers and sellers. An added bonus for realtors involved in a 1031 Tax Deferred Exchange is they get two sales, both the original sale and then the subsequent purchase of the replacement property. There are also some disadvantages in using a 1031 Tax Deferred Exchange. The time restraints, especially the 45-day identification period, is very difficult for some buyers. This limited amount of time can put pressure on an exchanger to make hasty decisions that have long reaching effects. The time constraints could also lead an exchanger to buy a property for which they have no previous experience. Instead of stepping in and making money from the close of escrow, the exchangers are forced to go through a learning curve or hire a property manager. Because a buyer is focused on other things, such as not paying taxes, meeting time constraints, or facing a limited number of available properties, users of a Tax Deferred Exchange sometimes pay above current market value for the replacement properties. This has been seen time and again by local appraisers. Indeed, it could be said that 1031 Exchange buyers could be classified as being under some financial pressure as they might have the perception that the entire transaction has to be completed in a very rapid manner. While not affecting the exchanger, several interviewees indicated that the use of 1031 Tax Deferred Exchange money could eliminate other non-1031 buyers from competing for any one particular parcel as they do not have the same leverage. The buyer using a 1031 Exchange has more buying power. They have use of 100% of the proceeds from their relinquished property rather than losing 24% of the sale to tax erosion. If a bidding situation arises the non-1031 buyer typically looses out. It is unclear what long term impact this will have, if any, on the overall agricultural market in California. All of the interviewees said that the use of 1031 Tax Deferred Exchanges has increased property values. This is the belief by most appraisers as well. In a market with a limited number of good available properties the exchanger has the advantage. There is no question that 1031 Tax Deferred Exchanges have altered the agricultural real estate market over the past several years. Exchanges have increased values, caused an increase in the number of transactions, and allowed investors to stay within the agricultural market. The author would like to thank Roderic "Cork" McIsaac, Agriculture Industries in Sacramento, Mike Ming, ARA, Alliance Appraisal in Bakersfield; Jim Olivas, AAC, of Pearson Realty in Visalia; Tom Pettitt of Pettitt Lands, Inc., King City; Jim Rickert, ARA, AFM, of Western Agricultural Services, Fall River Mills; Ron Silva of Ron Silva Realty, Fresno; and Eric Wegner from the Wellborn Group, Burnsville, MN; for their time and input in helping formulate this article. 20 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

23 Region 1 Russ Cremer Chair Jim Rickert, ARA, AFM Doug White John Maus, ARA Russ Takata Bill Sbara SACRAMENTO & INTERMOUNTAIN VALLEYS 21

24 SACRAMENTO & INTERMOUNTAIN VALLEYS Region 1 Region One Overview 2006 saw a general slowdown in sales activity across the region. While prices remained stable with some increases, the number of sales was significantly fewer. The reasons varied from a slowing residential market to strong demand but reduced offerings by sellers. Conditions did vary from the north end of the region to the south end. Rural residential prices and sales were more negatively impacted at the south end near larger urban areas than in the mostly rural north. North Intermountain Valleys Livestock operations continued to enjoy strong demand and land prices. Cattle ranches, rangeland, irrigated and dry pasture all showed price increases throughout the region. There are several reasons for this continually strong market. First, the cattle market continued to be very strong with high calf prices and demand. Second, influential recreational buyers continued to invest in ranch properties with hunting, fishing and other recreational attributes. Last, smaller units continue to be desirable for rural residential homesites. The fourth quarter saw cattle prices soften in response to rising corn and other feed prices. Irrigated row and field cropland also continued to enjoy a strong demand. Strawberry nursery crops dominated the market in areas such as Siskiyou County's Butte Valley as well as having large areas of plantings in the Fall River Valley and Susan River area of Lassen County. Nurseries have been buying large tracts of land and supplementing them with leased parcels in these areas. They have been willing to pay premiums for sites that meet their climate and soil requirements. Other specialty row crops such as mint, onions and garlic along with field crops such as wild rice, high quality grass and alfalfa hay are also seeing increased popularity. All are competing for somewhat limited quantities of suitable acreage and contributing to the strong demand for available properties. Investors with 1031 Exchange funds also continued to contribute to both cattle ranch and farmland property demand. Sacramento Valley Rice Ground Prices continued strong with limited land available for sale. As in the past, properties with waterfowl hunting potential demand a price premium. Properties with a stable district water source generally command price premiums that ranged between $500 and $1,000 per acre over those with well water sources. Those properties that receive Federal water also saw some impacts on prices in Fields leveled to straight checks command price premiums over those with contour checks. 22 California Chapter, American Society of Farm Managers and Rural Appraisers

25 Vegetable and IFC Ground In the northern portions of the Valley (Tehama, Glenn, Butte, Yuba and north Sutter) both vegetable (Class I) and IFC (Class II & III) land have stabilized in price in The upper end of the range continues to be dominated by orchard development, especially for almonds and walnuts. As with rice, the source of irrigation water, well or district, has affected price. High bonded indebtedness in some districts does not appear to be a major factor affecting market value although those with higher water costs have a lower demand. Demand is stable to strong for large parcels with orchard potential with limited properties available. Overall, prices were stable for a limited number of transactions of medium to large size parcels. The supply of properties for sale was limited with few listings. In the southern portion of the Valley (Yolo, Solano, western Placer & south Sutter) vegetable and IFC land generally softened in These categories are both greatly influenced by urban development, either directly for potential homesite use or indirectly as mitigation land. Thus the general slowdown in residential development in 2006 had a major negative impact on these land prices as well. Walnuts and Almonds Both of these crops continue to enjoy very strong prices. Although almond prices fell from the level of 2005, they remain at near record levels. As a result, new development of both orchard types continues at an unprecedented pace. In the case of walnuts, nurseries are sold out of trees through 2007 with just limited numbers still available for Due to excellent profitability, few orchards were offered for sale in Prices within the ranges were dependent upon age, yield averages, variety mix, soil type, water source and irrigation systems. Generally young, highdensity orchards with drip or micro-sprinkler irrigation systems commanded the highest prices in both almond and walnut orchards. Older low producing orchards represent the low end of the range and generally were at or near bare land value. Prunes The market has been stable throughout the region with just a limited number of sales. Crop prices have been relatively strong the past two years after several years of depressed prices. Few properties have been offered for sale. Prices within the sales range are dependent upon orchard age and condition, orchard size and yield averages. As in past years, prices in the Yuba/Sutter area continue to generally be higher than in the more northern and western portions of the Valley. Pears The pear industry continued to be depressed although crop prices were stronger in Sales in the area (generally delta areas of Sacramento and Solano Counties) increased moderately. The increase, however, can be attributed mostly to increasing underlying land prices rather than a strengthening of pear prices. Peaches Peach orchard sales continue to be relatively slow with stable prices. As in past years, demand for peach orchards is directly related to the existence of a canning contract for the crop. Without a contract there is little if any demand for the orchard. Vineyards Sales activity was very limited in the area. Prices remain stable after the declines of past years. Olives Olives are limited to areas near Corning in Tehama County and a small area near Oroville in Butte County. Most plantings are relatively small (less than 30 acres). There have been few sales of commercial sized orchards with demand considered soft due to uncertainties in the commodity market. Pressure from foreign markets has further complicated these uncertainties. Demand for smaller properties has remained strong as use for rural residential homesites. These smaller parcels were selling in the $10,000 - $17,000 per acre range. Rural Residential Residential uses continue to influence smaller acreage parcels in all of the preceding crop categories, generally the upper end of the range. At the south end of the region it is the primary factor influencing prices. The soft housing market in 2006 impacted the upper end prices in all but rice, walnuts and vineyard prices in the south Sutter, western Placer, Solano and Yolo district. In the other districts of the region, prices remained stable although numbers of sales declined. Region 1 SACRAMENTO & INTERMOUNTAIN VALLEYS 2007 Trends in Agricultural Land & Lease Values 23

26 SACRAMENTO & INTERMOUNTAIN VALLEYS Region 1 Land & Lease Values LAND USE VALUES PER ACRE ACTIVITY / TREND RENT RANGE ACTIVITY / TREND COLUSA, GLENN, BUTTE & TEHAMA (NORTHWESTERN COUNTIES) Rice $2,500 - $5,000 Few Sales, Stable-Increasing $200 - $250/Acre Stable Vegetable Crops- Class I Soil $3,000 - $6,000 Stable $150 - $250/Acre Stable Irrigated Field Crops $2,500 - $5,000 Stable $100 - $150/Acre Stable Rangeland - 1,000+ Acres $500 - $1,000 Stable/Increasing $100 - $180/Hd. Stable, Sl. Increasing Almonds $4,000 - $12,000 Few sales/stable 20% - 33% Share Stable, Few Rented Walnuts $4,000 - $15,000 Few sales 20% - 33% Share Stable, Few Rented Prunes $4,000 - $8,500 Few Sales 20% - 33% Share Limited Olives $3,500 - $8,000 Few Sales, Weak Demand 20% - 33% Share Few Rented Rural Residential $50,000 - $250,000 Stable, StrongDemand N/A N/A YUBA SUTTER AREA (FEATHER RIVER BASIN & SUTTER BASIN) Rice $3,500 - $6,000 Increasing $200 - $300/Acre Stable Vegetable Crops - Class I/II $3,500 - $4,000 Stable $150 - $200/Acre Stable Irrigated Field Crops $3,500 - $4,000 Sl. Increasing $150 - $175/Acre Stable Walnuts $8,000 - $15,000 Stable 25% - 33% Share Limited, Few Rented Prunes $7,000 - $9,000 Sl. Increasing 20% - 25% Share Limited Peaches $5,000 - $12,000 Stable/Slow 25% Share Limited Rural Residential $250,000 - $400,000 Stable N/A N/A SOUTH SUTTER, WESTERN PLACER, NORTH SACRAMENTO & YOLO COUNTIES Rice $3,000 - $5,000 Slow/Stable $200 - $250/Acre Stable Vegetable Crops - Class I/II $3,500 - $12,500 Moderate/Stable-Increasing 12% - 30% Share Stable Irrigated Field Crops - Class II/III $2,900 - $10,700 Moderate/Stable-Increasing $125 - $200/Acre Stable Rangeland $900 - $3,500 Slow/Stable-Increasing $10 - $25/Acre Limited/Stable Walnuts $8,000 - $14,000 Slow/Stable-Increasing 20% - 25% Share Limited Pears $8,700 - $12,500 Slow/Stable-Increasing 20% - 25% Share Limited Vineyards $8,000 - $18,500 Slow/Stable-Increasing 15% - 25% Share Limited Rural Residential $300,000 - $750,000 NORTH INTERMOUNTAIN VALLEY AREAS (LASSEN, MODOC, SHASTA, SISKIYOU COUNTIES) Irrigated Vegetable Crops $1,750 - $5,000 Limited/Increasing $100 - $325/Acre Stable/increasing Irrigated Field Crops $1,750 - $5,000 Limited/Increasing $75 - $175/Acre Stable/increasing Irrigated Pasture/Meadow $1,750 - $3,500 Limited/Increasing $12 - $25/AUM Stable/increasing Rangeland $150 - $750 Limited/Increasing $8 - $20/AUM Stable/increasing Dry Pasture $350 - $1,250 Limited/Increasing $8 - $20/AUM Stable/increasing Rural Residential $50,000 - $500,000 Limited/Stable N/A N/A CATTLE RANCHES ($ PER AU) Inside Operation (0-15% public) $4,500 - $10,000 Limited/Increasing $125 - $200/AU Stable/increasing Range Operation (>15% public) $2,500 - $5,000 Limited/Increasing $100 - $200/AU Stable/increasing 24 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

27 Region 1 SACRAMENTO & INTERMOUNTAIN VALLEYS 2007 Trends in Agricultural Land & Lease Values 25

28 SACRAMENTO & INTERMOUNTAIN VALLEYS Region 1 Historical Value Range Per Acre COLUSA, GLENN, BUTTE & TEHAMA COUNTIES (Northwestern Counties) LAND USE: VEG/ROW CROPS IRRIG FIELD RURAL RES RICE RANGELAND WALNUTS PRUNES OLIVES ALMONDS 2006 $3,000 - $6,000 $2,500 - $5,000 $50,000 - $250,000 $2,500 - $5,000 $500 - $1,000 $4,000 - $15,000 $4,000 - $8,500 $3,500 - $8,000 $4,000 - $12, $3,000 - $6,000 $2,500 - $5,000 $50,000 - $250,000 $2,500 - $4,500 $300 - $1,000 $4,000 - $15,000 $4,000 - $8,500 $3,500 - $8,000 $4,000 - $12, $3,000 - $5,000 $2,000 - $4,500 $8,000 - $15,000 $2,500 - $4,000 $275 - $750 $4,000 - $10,000 $2,500 - $6,500 $3,500 - $6,500 $4,000 - $8, $3,000 - $4,500 $2,000 - $3,500 $8,000 - $15,000 $2,500 - $3,600 $270 - $600 $4,000 - $9,000 $2,500 - $6,000 $3,500 - $5,500 $2,500 - $8, $2,500 - $4,500 $2,500 - $3,500 $2,000 - $3,600 $350 - $600 $4,000 - $9,000 $3,000 - $6,000 $3,700 - $7,000 $2,500 - $8, $3,000 - $4,500 $1,500 - $3,000 $2,000 - $3,200 $150 - $1,000 $4,000 - $7,700 $3,500 - $6,500 $3,500 - $5,200 $2,000 - $8, $3,000 - $4,000 $1,400 - $2,600 $1,500 - $3,300 $200 - $1,100 $4,000 - $8,000 $3,000 - $7,500 $3,900 - $6,000 $2,500 - $8,000 YUBA-SUTTER AREA (Feather River Basin & Sutter Basin) LAND USE: VEG/ROW CROPS IRRIG FIELD RURAL RES RICE WALNUTS PRUNES PEACHES 2006 $3,500 - $4,000 $3,500 - $4,000 $250,000 - $400,000 $3,500 - $6,000 $8,000 - $15,000 $7,000 - $9,000 $5,000 - $12, $3,500 - $4,000 $3,000 - $3,500 $250,000 - $400,000 $3,500 - $5,000 $8,000 - $15,000 $6,500 - $8,500 $5,000 - $12, $3,000 - $4,000 $2,500 - $3,000 $200,000 - $400,000 $3,000 - $4,500 $6,000 - $10,000 $6,500 - $8,500 $5,000 - $12, $3,000 - $4,000 $2,400 - $2,800 $100,000 - $300,000 $2,500 - $4,500 $6,000 - $10,000 $4,000 - $6,500 $5,000 - $10, $2,400 - $2,800 $2,400 - $2,800 $2,400 - $3,500 $6,000 - $8,000 $3,000 - $6,500 $8,000 - $11, $2,200 - $3,000 $2,200 - $3,000 $2,200 - $3,000 $7,000 - $8,000 $4,500 - $6,500 $8,000 - $13, $2,200 - $3,200 $2,200 - $3,200 $2,200 - $3,200 $5,000 - $8,000 $5,000 - $7,000 $3,000 - $11,000 SOUTH SUTTER, WESTERN PLACER, NORTH SACRAMENTO & YOLO COUNTIES LAND USE: VEG CROPS IRRIG FIELD RURAL RES RICE RANGELAND WALNUTS VINEYARDS PEARS 2006 $3,500 - $12,500 $2,900 - $10,700 $300,000 - $750,000 $3,000 - $5,000 $900 - $3,500 $8,000 - $14,000 $8,000 - $18,500 $8,700 - $12, $3,000 - $15,000 $3,100 - $6,900 $250,000 - $1,100,000 $3,000 - $5,000 $1,000 - $4,500 $6,000 - $14,000 $8,000 - $18,500 $6,600 - $10, $4,000 - $6,500 $2,500 - $4,000 $200,000 - $500,000 $2,700 - $4,500 $500 - $1,000 $6,000 - $14,000 $12,000 - $18,000 $4,500 - $6, $4,000 - $6,500 $2,500 - $4,000 $200,000 - $500,000 $2,700 - $4,500 $500 - $1,000 $6,000 - $12,000 $4,300 - $12,500 $4,500 - $6, $3,500 - $4,500 $2,500 - $3,500 $2,500 - $4,500 $300 - $1,000 $6,000 - $8,000 $4,000 - $15,000 $4,500 - $6, $2,000 - $5,000 $2,000 - $4,000 $2,000 - $4,500 $300 - $1,000 $5,000 - $7,000 $12,000 - $20,000 $4,000 - $7, $1,800 - $4,500 $1,900 - $4,000 $1,500 - $4,000 $350 - $700 $5,000 - $7,000 $12,000 - $20,000 $4,000 - $8,000 NORTH INTERMOUNTAIN VALLEY AREAS (Lassen, Modoc, Shasta, & Siskiyou Counties) LAND USE: IRRIG VEG IRRIG FIELD RURAL RES RANGELAND DRY PASTURE IRRIG PASTURE/MEADOW 2006 $1,750 - $5,000 $1,750 - $5,000 $50,000 - $500,000 $150 - $750 $350 - $1,250 $1,750 - $3, $1,500 - $4,000 $1,500 - $4,000 $40,000 - $500,000 $100 - $600 $300 - $1,000 $1,500 - $3, $1,200 - $3,000 $1,200 - $2,500 $40,000 - $300,000 $75 - $500 $200 - $750 $1,000 - $2, $1,200 - $2,500 $1,100 - $2,500 $40,000 - $250,000 $75 - $250 $200 - $500 $1,000 - $2, $1,200 - $2,500 $700 - $2,500 $50 - $200 $100 - $500 $800 - $2, $1,200 - $2,500 $700 - $2,500 $50 - $200 $100 - $500 $500 - $2, $2,000 - $2,700 $700 - $2,500 $50 - $150 $100 - $400 $500 - $2,000 CATTLE RANCHES ($ per AU) LAND USE: INSIDEOP RANGEOP 2006 $4,500 - $10,000 $2,500 - $5, $4,000 - $8,000 $2,500 - $4, $3,500 - $5,000 $1,700 - $3, $1,500 - $4,000 $1,200 - $2, $2,000 - $4,000 $1,250 - $2, $1,500 - $4,000 $1,250 - $2, $1,500 - $3,500 $1,000 - $1, California Chapter, American Society of Farm Managers and Rural Appraisers 2007

29 Region 1 SACRAMENTO & INTERMOUNTAIN VALLEYS 2007 Trends in Agricultural Land & Lease Values 27

30 NORTH COAST Region 2 Michael D. Pipkin, ARA Chair David Holt Hal Forcey, ARA Russ Forsburg, ARA Mark Gregg, ARA 28

31 Region Two Napa County: Vineyards - Resistant Sales of Napa County vineyard properties for 2006 increased over 2005 due to very few vineyards offered for sale. The predominant buyers were successful wineries and individuals entering the industry. The strong demand for vineyards in prime areas pushed values over $250,000 per acre. The secondary areas of Napa County (Pope Valley) had the low-end prices of around $55,000 per acre. The market for small vineyard parcels is heavily influenced by the rural estate site component. The vineyard on the smaller properties is often a secondary consideration. Vineyards on these types of properties set the upper end of the value range in this market as buyers are often wealthy individuals looking for second homes. The reputation of the Napa Valley has resulted in relative price stability of wine grapes in an otherwise soft national market. The prime Napa Valley appellations continue to see above average grape prices. However, demand for un-contracted fruit was weak with reduced prices being paid on the spot market. Wineries typically did not accept tonnage above what was contracted. Demand for fruit in secondary markets continued to lag. Lifestyle Properties (Homesites) Rural estate site components have a significant value range depending upon the specific attributes of each property (view, access, parcel size). Site values increased last year and demand remains very strong. Open Land / AxR1 Vines Demand for plantable land was good and values increased slightly. The hill ground parcels with permits have had the largest increase in value due to the restriction of a 2-3 year time-frame in obtaining permits. Most of the developments are smaller in size. Most new plantings are redevelopment of old vineyards. AXR vineyards are few and far between. Sonoma, Mendocino and Lake Counties: Grape prices remained generally stable, with the exception of Pinot Noir and Merlot. The Pinot Noir market was exceptionally strong throughout Mendocino and Sonoma Counties. Russian River and Anderson Valley Pinot Noir prices were extremely strong, while Chardonnay was moderately strong. Merlot prices and demand were very weak, with some crop not even being harvested. The Cabernet market for lower-quality fruit was also a tough sale. Grapes from premium vineyards and some appellations continue to command very strong prices. The demand and sales activity for vineyards in Sonoma County has been very active. Vineyards with long-term contracts or in the Russian River Valley are typically in the strongest demand and commanding the highest prices. There continues to be a full spectrum of buyers (investors, wineries and vineyardists). Wineries are typically only interested in buying specialty or Pinot Noir vineyards. The market activity in Mendocino and Lake Counties has been very limited. Most of the sales have been smaller part-time vineyards, with strong homesite influence. The vineyard listings are at all-time highs in both counties, with very few buyers. Lifestyle Properties (Homesites) Sonoma County: There was increased activity and an increasing value trend for estate quality sites. Location, views, and privacy influence site values more than size. Vineyard and plantable land allocations on these parcels remained stable to slightly increasing. The site or residential component values have also slightly increased, with strong demand. Typical homesite values on otherwise commercial vineyards range from $0 to $400,000. Site values for estate sites (less than 20 acres of vineyard) are from $400,000 to $2,500,000. Mendocino County: Most of the vineyard sales in the county over the past year were smaller estate parcels. These sales were mostly purchased by out-of-the-area buyers, who were looking to relocate. Many of these buyers placed a homesite value of $200,000 to The demand and sales activity for vineyards in Sonoma County has been very active. Region 2 NORTH COAST 2007 Trends in Agricultural Land & Lease Values 29

32 NORTH COAST Region 2 The demand for Humboldt County pasture remains strong. $400,000 on the site, plus the value of the vineyard. Most of the vineyard values were in the $30,000 to $37,000 per acre range. Open Land / AxR1 Vines Sonoma, Mendocino & Lake Counties: The value trend for commercial open land/obsolete vineyards/interim AxR1 vineyards has remained generally stable. AxR1 vineyards with interim viability were allocated value but at a substantial discount in comparison to resistant vineyards. While the sales activity in Sonoma County would be considered moderate, the sales activity of open land properties in Mendocino and Lake Counties was minimal. The demand and value of plantable land in the Russian River Valley and Anderson Valley is very strong, due to the demand for Pinot Noir. counties continues to decline, with no new plantings being developed. The 2006 crop production was average, but with slightly below average prices. The lack of an adequate labor force, resulted in a large percentage of the crop being picked to late or not at all. The outlook of most growers remains fairly pessimistic. Dairy Pasture The demand for Humboldt County pasture remains strong, with increasing values and increasing rents. A large percentage of the dairies in the area have or are considering converting to organic milk. This has resulted in a higher demand for the limited available pastureland. Typically, sales activity of pastureland has been limited. Listings continued to be few with very short marketing times. Typical buyers were local dairymen looking for additional pasture. While the smaller parcels attracted interest from rural home site buyers. Most new plantings in the three counties have been limited to redevelopment of old vineyards and some boutique acreages. Pre-plant contracts are scarce, with the exception of Russian River Valley. Pears Lake & Mendocino Counties: The trend for pears could best be described as stable. Most orchards in the region contribute little to no value over open land. The sales activity for commercial pear orchards was virtually non-existent. Nearly all of the sales have been smaller properties purchased for rural home sites and ranchettes. The planted acreage in the two Summary of Marin County The number of farm and ranch sales in Marin County dropped off in 2006 from the previous year's all-time highs. Land prices that reached $10,000 and more per acre, priced traditional grazing and hay farming operators out of the market. With the successful packaging and marketing of niche commodities a new agricultural boom could develop in sleepy Marin County. These markets would feature specialty wine, olive oils, organic cheeses and creams as well as organic beef, lamb and goat production. These commodities would give additional utility to the many 100 to 2,000 acre private estates that have been used primarily for week-end homes and retreats. 30

33 Land & Lease Values LAND USE VALUES PER ACRE ACTIVITY / TREND RENT RANGE ACTIVITY / TREND NAPA Vineyards - Resistant Rootstock $50,000 - $275,000 Limited-Sl Increasing N/A N/A Open Land (or AXR Vines) $30,000 - $160,000 Limited/Increasing N/A N/A Homesite Contribution $0 - $3,500,000 Moderate/Increasing N/A N/A SONOMA COUNTY Vineyards - Resistant Rootstock $65,000 - $85,000 Strong/Stable-Sl Increasing N/A N/A Vineyards - AXR $45,000 - $60,000 Limited/Stable N/A N/A Open Land (or poor AXR Vines) $40,000 - $50,000 Strong/Stable-Sl Increasing N/A N/A Homesite Contribution $0 - $2,500,000 Strong/Stable-Sl Increasing N/A N/A MENDOCINO COUNTY Vineyards - Resistant Rootstock $28,000 - $55,000 Limited/Stable-Sl Increasing N/A N/A Vineyards - AXR $15,000 - $25,000 Very Limited/Stable N/A N/A Open Land (or Pears) $11,000 - $24,000 Very Limited/Stable N/A N/A LAKE COUNTY Vineyards - Resistant Rootstock $24,000 - $35,000 Very Limited/Stable N/A N/A Vineyards - AXR $10,000 - $18,000 Very Limited/Stable N/A N/A Open Land (or Pears) $6,000 - $12,000 Limited/Stable N/A N/A Humbolt County Dairy Pasture $5,500 - $8,000 Limited/Increasing N/A N/A Region 2 NORTH COAST 2007 Trends in Agricultural Land & Lease Values 31

34 NORTH COAST Region 2 Historical Value Range Per Acre NAPA COUNTY LAND USE: VINES: RES RTS-CK OPEN LAND (AXR) HOMESITE CONTRIB 2006 $50,000 - $275,000 $30,000 - $160,000 $ $3,500, $55,000 - $200,000 $30,000 - $145,000 $ $3,500, $55,000 - $180,000 $30,000 - $120,000 $ $3,500, $50,000 - $180,000 $30,000 - $120,000 $ $3,500, $50,000 - $180,000 $30,000 - $120,000 $ $3,500, $85,000 - $180,000 $55,000 - $120,000 $ $3,500, $70,000 - $180,000 $55,000 - $120,000 $ $3,500,000 SONOMA COUNTY LAND USE: VINES: RES RTS-CK AXR VINES OPEN LND ( AXR) HOMESITE CONTRIB 2006 $65,000 - $85,000 $45,000 - $60,000 $40,000 - $50,000 $ $2,500, $65,000 - $85,000 $45,000 - $58,000 $37,500 - $45,000 $ $2,500, $65,000 - $85,000 $40,000 - $58,000 $37,500 - $45,000 $ $2,500, $65,000 - $85,000 $40,000 - $63,000 $40,000 - $50,000 $ $2,000, $70,000 - $85,000 $50,000 - $70,000 $40,000 - $50,000 $ $2,000, $85,000 - $105,000 $65,000 - $75,000 $50,000 - $65,000 $ $2,000, $85,000 - $105,000 $60,000 - $65,000 $55,000 - $65,000 $ $1,900,000 MENDOCINO COUNTY LAND USE: VINES: RES RTS-CK AXR VINES OPEN LND (PEARS) 2006 $28,000 - $55,000 $15,000 - $25,000 $11,000 - $24, $28,000 - $45,000 $15,000 - $25,000 $10,000 - $20, $25,000 - $45,000 $15,000 - $25,000 $8,000 - $18, $25,000 - $45,000 $18,000 - $28,000 $8,000 - $18, $28,000 - $50,000 $20,000 - $30,000 $10,000 - $21, $35,000 - $65,000 $25,000 - $35,000 $12,500 - $26, $35,000 - $65,000 $25,000 - $35,000 $12,500 - $26,000 LAKE COUNTY LAND USE: VNES: RES RTS-CK AXR VINES OPEN LND (OR PEARS) HMBLT DRY PAST 2006 $24,000 - $35,000 $10,000 - $18,000 $6,000 - $12,000 $5,500 - $8, $24,000 - $35,000 $10,000 - $18,000 $6,000 - $10,000 $4,500 - $7, $20,000 - $32,000 $8,000 - $18,000 $5,500 - $8,000 $4,500 - $6, $20,000 - $32,000 $10,000 - $20,000 $6,000 - $10,000 $4,500 - $5, $23,000 - $32,000 $12,000 - $20,000 $5,000 - $10,000 $4,500 - $5, $23,000 - $32,000 $12,000 - $20,000 $5,000 - $10,000 $3,000 - $5, $23,000 - $32,000 $12,000 - $20,000 $5,000 - $10,000 $3,000 - $5, California Chapter, American Society of Farm Managers and Rural Appraisers 2007

35 Region 2 NORTH COAST 2007 Trends in Agricultural Land & Lease Values 33

36 NORTH COAST Region 2 34 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

37 Randal H. Edwards, ARA Chair Mary Anne Dores Brian Sousa Tony Toso Jerry A. Furtado Richard Bell Stacey Meneses Region 3 NORTHERN SAN JOAQUIN VALLEY 35

38 NORTHERN SAN JOAQUIN VALLEY Region 3 Region Three: General Market Conditions Merced County Cropland- (Well Water including ENID & CWD)- Per acre sales prices continued to increase during 2006, up in most areas from 2005 levels and considerably stronger than in 2004 and prior years. The strong demand for acreage suitable for permanent planting development, primarily almonds, remained strong driving the market in most areas. Demand for parcels which provide utility as part-time farm/rural homesites remains good with limited inventory available for purchase. These parcels appear to have leveled off as to value, as the housing market has made a considerable correction in There were generally few listings and demand generally exceeded available supply. Cropland- (District Water including MID & TID)- Unit prices for cropland in this category, with superior surface water rights, indicated an upward trend in There was very limited activity especially of good quality units suited for permanent plantings. Demand appears to far exceed supply, it is reported there are some willing buyers, if properties become available to utilize 1031 Exchange money to trade into good quality farming units, but very few have been available. Cropland- (West County Exchange Contractor Water Districts)- Acreage located within the desirable Exchange Contractor Water Districts showed a continued strengthening in Very limited activity, properties with better drainage, which provide permanent planting potential, have reached a new level as to per acre values. Very limited listings available and those properties, which are available, are often highly priced. Local row crop farmers continue to diminish in numbers as a buying force in this market as buyers are often comprised of farmers from other areas or investors who are looking to exchange into properties. Cropland- (West County Federal Water and Other Water Districts)- The trend in this category suggests strengthening in Like most all of the areas the adaptability for permanent plantings drives this market. Buyers have purchased in areas, which have not historically been utilized, extensively for permanent plantings with the intention to develop properties for almonds and pistachios. Limited market activity occurred for this land type. Rangeland- (West County)- There were limited sales of Westside grazing acreage; values appear to be stable to strengthening with good demand for properties, which have some recreational influence from hunting. 36 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

39 Rangeland- (East County including Mariposa County)- Although limited market sales occurred, values for this rangeland category were observed to be strengthening. Buyers motivated by a 1031 Tax Deferred Exchange purchased most of the sales discovered. Demand was not driven by the property's economic viability, but rather, their aesthetic appeal, recreational influence or potential for other uses in the long-term. Almonds- In 2006 there were limited sales of good quality almond orchards in Merced County, less than the surrounding Madera and Stanislaus County. However, the limited sales activity indicated stronger unit prices for almond orchards. Excellent grower returns were seen as the primary motivation for buying and owning almonds. Very few high quality orchards were sold, thus, the high end of the market value range remains somewhat undefined in Merced County. Although significant orchard development is obvious in the almond growing markets, considerable optimism remains that future large crops will be marketed in an orderly fashion. Walnuts- Unit prices for walnuts were difficult to measure, due to a very limited number of sales in However, sales of land suitable for walnut orchard development, in traditional walnut producing areas, indicated an upward trend in values, suggesting continued strength in demand for walnut orchards. Stanislaus County Cropland- General market conditions for Stanislaus County cropland were observed to be stable to slightly increasing, a trend that has been occurring over the past several years. Increased demand by dairy operators, motivated to comply with wastewater management requirements, fueled the trend in this market. Many of the buyers were dairymen close to the purchased property. The Turlock/Hilmar market area was especially active due to the high concentration of dairies. Other influences in this market were smaller parcels with attractive home site appeal and/or land suitable for development to permanent plantings, primarily almond orchards. Most buyers were aware of the increased demand and values in this marketplace, thus market resistance was not observed. There were few if any sales of land in federal water districts. However, sales with only well water on the west side were observed and experienced increases, especially for ground suitable for almond development. Rental rates within these markets remained generally unchanged. Almonds- Again, demand for almond orchards in Stanislaus County was strong even with the volatile nut prices seen in A limited number of orchard sales occurred in the western region of this market. Good quality orchards, primarily in the northern county markets of Modesto, Riverbank, and Ceres, indicate strength in values. With land values increasing in most markets, orchard developers are now pursuing ancillary areas, with inferior soil quality. Modernization in the industry has allowed the matching of appropriate rootstocks with inferior soils. Furthermore, more efficient irrigation systems have enabled increased production for orchards developed on marginal soils. Rental rates for almond orchards remained stable during Tree Fruit & Vineyards- Sales of tree fruit orchards have historically been limited, with 2006 being no exception. The federal program to remove approximately 4,000 acres of cling peaches is in the early stages and the affect of the value on orchards is yet to be determined. Very few wine grape vineyard sales were observed in 2006, especially those of commercial size. Older vineyards, with less desirable varieties, continue to be removed, which has had a positive impact on the former grape supply glut. Ancillary wine grape market sales are indicating an upward trend in values, which are perceived to translate into higher values for Stanislaus County vineyards. Rental rates remained stable in Rangeland- The greatest sales activity and interest was centered on rangeland properties located in both Stanislaus and Tuolumne Counties. In most cases, increases were fueled from investor and recreational interests as value levels exceed typical mortgage repayment abilities of commercial cattlemen. Growth of foothill communities, especially in Tuolumne County, resulted in a demand for larger, rural lifestyle, type ranches. Rents have stabilized as prices for livestock in 2006 have come down from near record levels in Ranches with rougher terrain, generally those on the Westside, gather more interest from hunters or recreational users than cattlemen. The growth of Patterson and Diablo Grande has created interest from investors, in addition to Bay Area businessmen whose motivations are toward hunting and weekend get-a-ways. San Joaquin County Cropland - Lodi Region Very few open land sales occurred within the northern area of San Joaquin County, which includes the Lodi- Woodbridge-Acampo wine grape growing region. There continues to be significant influence of urban encroachment, as developers continue to incorporate and subdivide land into the city of Lodi. Smaller parcels with rural homesite appeal continue to show significant increases in value, with indications of some stabilization in the last quarter of Cropland - South Central This category includes cropland in the East Stockton, Linden, Waterloo, Manteca, and Ripon areas of San Joaquin County. Few documented sales have occurred, however activity indicates a stable market. One large transaction that occurred mid-year showed a per-unit price slightly below the cited range, however this sale consists of significantly larger acreage than other area transactions, and the property received no market exposure as the buyer was the long-time tenant. Urban development and development of land to almonds and walnuts continue to be the primary motivations for buyers within this market. Region 3 NORTHERN SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 37

40 NORTHERN SAN JOAQUIN VALLEY Region 3 Cropland - Westside Increases in per unit values were noted in this category, which includes cropland in the Tracy-Banta-Vernalis areas of San Joaquin County. Sales transactions of both large and small sized properties are trending upward. Market activity has been for continued utilization as row and field cropland; however sales in outlying areas are being purchased by area dairyman for feed production. Land near urban centers continues to skew the value of properties, as there continues to be a great demand for properties suitable for more intensive uses including rural home site development. Cropland - Eastside Dairymen who are in need of additional land for wastewater management requirements, as well as herd expansion impact this particular market, located between Farmington and Escalon. Additionally, demand for development to permanent plantings, primarily almonds, has increased due to the favorable state of the industry. Rural residential influences are predominant in the market area, and most transactions that occurred within 2006 consisted over parcels less than fifty acres in size, all showing per unit prices above the cited values in this report. Delta Lands Sales transactions within the Delta region appear to be trending upward. Increasing commodity prices for traditional row crops, including corn and wheat, have stimulated demand. Additionally, alfalfa/hay plantings are on the rise, as well as corn and forage production for valley dairymen. Almonds - South Central Few sales of almond orchards were found in the Manteca-Ripon-Escalon area. This area is considered to be a superior area for almond production within San Joaquin County; however the rural residential market also has a heavy impact on values. Two sales, consisting of and acres, respectively, indicate a range from $21,500 to $22,500 per acre for productive orchards. Smaller parcels indicate a much higher range in values, from $28,000 to $32,000 per acre. Nut prices continue to be above average and outlook for the industry remains positive. The current state of the industry is perceived to have a direct correlation with the lack of market transactions, as producers are holding on to their orchards (hesitant to sell or redevelop) in order to reap the benefits of a good market for their product. Almonds - Other Areas As with the primary almond growing area, almond orchard sales in the ancillary markets were not found. Few sales of smaller parcels for home site development were found, which indicate a slightly increasing trend but are not conclusive. Walnuts With the exception of a few smaller parcels as rural home sites, there were no walnut sales transactions found. Commodity prices for walnuts continue to be stable and historically, the walnut market does not share the same volatility found among other crops grown in the area. A few large developments of orchards can be found in the area, likely the result of the outlook for the industry, which remains positive. Cherries There have been no significant changes in the cherry market since 2005, and sales transactions remain infrequent. Although there is significant orchard acreage and large-scale grower/packer operations found in the area, operators are looking to other locations to expand production. Cheaper land values and early fruit maturity are allowing for expanded marketing seasons and increasing profits. Vertically integrated cherry operations have concentrated on expanded their holdings in the south valley (in Tulare and Kern counties), as well as into the Sacramento Delta. Wine Grapes (District 11) The wine grape vineyard market showed stable sales activity with the few transactions that occurred in Prior to the 2005 harvest, the supply of wine appeared to be coming into balance, the result of the removal of significant vineyard acreage in the San Joaquin Valley over the last few years coupled with a growing demand for wine. However, after the large, nearrecord, harvest in 2005, there were large inventories of unsold bulk wine carried over into the 2006 harvest. The preliminary reports on the 2006 grape harvest indicate a smaller crop, potentially as much as 20% below average. This would result in an improved balance in supply and demand as the industry heads into There continues to be little demand by wineries for most grape varieties without contracts, with the exceptions being Zinfandel and Pinot Noir. The outlook for the District 11 wine grape vineyard market is favorable, as this area produces much of the moderately priced premium wine ($8 to $15 per bottle range), which is considered to have the greatest demand. Rangeland Rangeland properties of San Joaquin County are generally located in the eastern foothills and the southwestern portion of the county, near Tracy and Livermore. Sales indicate an increasing market, as land suitable for orchard development is spurring land values in some areas. Though almonds and walnuts have traditionally been grown on more level farmland in the central portions of the valley, high land prices in those areas coupled with strong demand for nuts has encouraged more producers to develop parcels in the eastern foothill areas, assuming a water source can be obtained (primarily wells). This shifting of lands is more predominant in eastern Stanislaus County, however the trend is moving north to San Joaquin County. Additionally, there are more large rural homesite developments occurring on rangelands, with buyers paying premiums for sites up to 80 acres in size. Dairies The dairy industry has weakened, as early 2006 milk prices fell from record highs experienced in 2004 and 2005, challenging many area producers to remain profitable. In response to the slump in prices, many dairymen expanded herd size to increase milk revenue, in turn creating strong demand for additional land needed for 38 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

41 both feed production and effluent management. Concurrently, dairymen continue to migrate to the San Joaquin Valley from the crowded and expensive areas in Southern California. However, difficulty in obtaining permits for new dairies due to wastewater and air quality concerns has created strong demand for existing dairies with current use permits. These factors placed significant upward pressure on prices of existing dairy facilities and supporting cropland. In addition, a July 2006 heat wave significantly impacted dairies in the San Joaquin Valley. Approximately 16,500 dairy cows died due to heat exhaustion, and milk production loss in surviving cows was estimated at 15 to 25 percent. Dairy producers also were faced with the related costs of carcass disposal, overtime pay, increased electrical use, and veterinarian bills. Additionally, many cows could not be bred during cycles that corresponded with the heat wave. Cows that were milking at peak production during the heat wave suffered a significant loss in milking capacity, and are not expected to return to normal milk production levels until next year. These losses coupled with already low milk prices and escalating feed and input costs were devastating to the California dairy industry. Industry experts have estimated monthly losses averaging $100 per milk cow for north valley operations. The occurrences of dairy facility sales in 2006 were limited as compared to the past lucrative two years. Nonetheless, sales data available did demonstrate continued strong market prices. The true impacts on facility sale prices and rental rates have yet to be realized in the market, weighing on low milk prices, higher feed and operational costs. Several larger and smaller scale facilities remained on the market at high listing prices (reflecting or exceeding 2005 levels) at the close of There was also notable bankruptcies and foreclosures occurring or in process, mostly relating to smaller scale, minimally managed properties. Some industry reports cited in excess of twenty herds for sale near the end of It appears the market is poised for a downward correction, unless a recovery in milk prices and reduction in feed costs (primarily corn) ensues in the near future. Region 3 NORTHERN SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 39

42 NORTHERN SAN JOAQUIN VALLEY Region 3 40 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

43 Land & Lease Values LAND USE VALUES PER ACRE ACTIVITY / TREND RENT RANGE ACTIVITY / TREND MERCED COUNTY Cropland - Well Water Including ENID & CWD $5,000 - $10,000 Limited/Stable - Sl. Increasing $100 - $175 Stable/Stable Cropland - MID $10,000 - $20,000 Limited/Increasing $130 - $225 Stable/Stable Cropland - TID $15,000 - $20,000 Limited/Stable $175 - $300 Stable/Sl. Increasing Cropland - West County Exchange Contractor Water $4,500 - $7,800 Limited/Sl. Increasing $150 - $200 Stable/Stable Cropland - West County Federal Water & Other $3,500 - $5,500 Limited/Stable $100 - $160 Stable/Stable Rangeland - West County $500 - $1,200 Limited/Stable $6 - $20 Stable/Stable Rangeland - East County & Mariposa County $700 - $1,600 Limited/Strengthening $12 - $22 Stable/Stable Almonds $12,000 - $22,000 Limited/Strong Demand 20-30% share Stable/Stable Walnuts $10,000 - $18,000 Very Limited/Sl. Increasing 20-30% share Stable/Stable STANISLAUS COUNTY Cropland - Well & Federal Water on the Westside $6,500 - $11,000 Stable/Increasing $150 - $250 Stable/Sl. Increasing Cropland - Well & OID Water on the Eastside $8,000 - $14,000 Stable/Sl. Increasing $150 - $250 Stable/Stable Cropland - MID & TID $15,000 - $20,000 Sl. Increasing/Increasing $200 - $300 Stable/Stable Almonds - Well & minor irrigation districts $10,000 - $17,000 Limited/Stable 20-30% share Stable/Stable Almonds - MID & TID $15,000 - $25,000 Limited/Sl. Increasing 20-30% share Stable/Stable Walnuts $9,000 - $15,000 Limited/Stable-Sl. Increasing 20-30% share Stable/Stable Cling Peaches $8,000 - $15,000 Limited/Sl. Increasing 25-30% share Stable/Stable Wine Grapes - District 12 $10,000 - $15,000 None/Increasing 25-35% share Limited/Stable Rangeland - Westside $600 - $1,300 Limited/Sl. Increasing $5 - $20 Sl. Increasing/Sl. Decreasing Rangeland - Eastside & Tuolumne County $2,500 - $4,000 Sl. Increasing/Increasing $20 - $30 Sl. Increasing/Sl. Increasing SAN JOAQUIN COUNTY Cropland - Lodi Region $8,000 - $10,000 Limited/Stable $175 - $250 Stable/Stable Cropland - South/Central $8,000 - $11,500 Limited/Stable $175 - $250 Stable/Stable Cropland - Westside $8,000 - $11,500 Limited/Increasing $150 - $200 Stable/Stable Cropland - Eastside $8,000 - $11,000 Limited/Stable $125 - $150 Stable/Stable Delta Lands $2,500 - $6,000 Fairly Active/Sl. Increasing $150 - $175 Stable/Stable Almonds - South/Central $16,000 - $22,000 Limited/Increasing 25-30% share Limited/Stable Almonds - Other $10,000 - $15,000 Very Limited/Increasing 25-30% share Limited/Stable Walnuts $12,000 - $17,000 Limited/Stable 25-30% share Limited/Stable Cherries $13,000 - $18,000 None/Stable 25-30% share Limited/Stable Wine Grapes (Dist. 11) $13,000 - $18,000 Limited/Stabilizing 25-35% share Limited/Stable Rangeland $3,000 - $6,000 Stable/Increasing $14 - $25 Stable/Stable DAIRIES (MERCED, STANISLAUS, & SAN JOAQUIN COUNTIES) Dairies $1,300 - $2,900 Active/Stabilizing $10 to $22/milk hd./mo. Active/Sl. Increasing per milking cow w/ equip. Region 3 NORTHERN SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 41

44 NORTHERN SAN JOAQUIN VALLEY Region 3 Historical Value Range Per Acre MERCED COUNTY CROPLAND-WLL WTR CROPLAND-WST CNTY CROPLAND-WST CNTY RANGLAND -EST CNTY LAND USE: INC ENID & CWD CROPLAND-MID CROPLAND-TID EXCHG CNTRCT WTR FED WTR & OTHR ALMONDS RANGLAND -W COUNTY & MARIPOSA COUNTY WALNUTS 2006 $5,000 - $10,000 $10,000 - $20,000 $15,000 - $20,000 $4,500 - $7,800 $3,500 - $5,500 $12,000 - $22,000 $500 - $1,200 $700 - $1,600 $10,000 - $18, $4,500 - $9,250 $8,000 - $20,000 $15,000 - $23,000 $4,200 - $7,600 $3,500 - $5,500 $11,000 - $20,000 $500 - $1,200 $700 - $1,200 $9,000 - $16, $3,000 - $5,500 $5,000 - $9,000 $11,000 - $15,000 $3,500 - $7,000 $2,500 - $4,500 $7,000 - $12,500 $500 - $800 $500 - $1,400 $5,500 - $9, $2,500 - $4,000 $3,500 - $6,000 $9,000 - $12,000 $2,500 - $6,000 $2,500 - $4,500 $5,000 - $8,500 $500 - $800 $500 - $1,400 $5,500 - $9, $1,750 - $3,800 $2,500 - $5,000 $2,500 - $6,000 $5,000 - $7,500 $400 - $700 $5,000 - $8, $1,750 - $3,800 $2,500 - $5,000 $2,500 - $6,000 $5,000 - $7,500 $400 - $700 $5,000 - $8,500 STANISLAUS COUNTY CROPLAND-WELL CROPLND-WELL & OID ALMONDS-WELL & RANGLAND -ESIDE & LAND USE: & FED WTR-WSIDE WTR ESIDE CROPLAND-MID & TID CLING PEACHES MINOR IRRIG DIST ALMONDS-MID & TID RANGLAND -WSIDE TUOLUMNE CNTY 2006 $6,500 - $11,000 $8,000 - $14,000 $15,000 - $20,000 $8,000 - $15,000 $10,000 - $17,000 $15,000 - $25,000 $600 - $1,300 $2,500 - $4, $6,500 - $9,500 $7,500 - $10,000 $12,000 - $20,000 $7,000 - $14,000 $10,000 - $15,000 $15,000 - $25,000 $500 - $900 $1,000 - $2, $3,000 - $5,000 $5,000 - $7,000 $9,000 - $15,000 $7,000 - $14,000 $5,000 - $9,000 $9,000 - $15,000 $900 - $1,200 $1,000 - $2, $2,500 - $4,500 $5,000 - $6,500 $9,000 - $12,000 $7,000 - $14,000 $4,000 - $6,000 $9,000 - $14,000 $900 - $1,200 $1,000 - $2, $3,000 - $6,000 $7,000 - $13,500 $4,000 - $14, $3,000 - $6,000 $7,000 - $13,500 $5,000 - $14,000 STANISLAUS COUNTY (con t) LAND USE: WALNUTS WINE GRPS - DIST $9,000 - $15,000 $10,000 - $15, $8,500 - $14,000 $9,000 - $12, $8,500 - $14,000 $9,000 - $12, $8,500 - $14,000 $9,000 - $12, $8,500 - $14, $8,500 - $14,000 SAN JOAQUIN COUNTY LAND USE: CRPLND-LODI REG CROPLND-S/CENTRAL CROPLND-WSIDE CROPLND-ESIDE ALMONDS - S/CENTRAL ALMONDS - OTHER RANGLAND DELTA LANDS 2006 $8,000 - $10,000 $8,000 - $11,500 $8,000 - $11,500 $8,000 - $11,000 $16,000 - $22,000 $10,000 - $15,000 $3,000 - $6,000 $2,500 - $6, $8,000 - $10,000 $8,000 - $11,500 $7,000 - $9,500 $8,000 - $11,000 $16,000 - $20,000 $8,000 - $12,000 $2,000 - $6,000 $2,200 - $6, $8,000 - $10,000 $8,000 - $11,000 $5,500 - $8,000 $6,000 - $7,000 $16,000 - $19,000 $8,000 - $12,000 $1,500 - $4,000 $2,400 - $5, $8,000 - $10,000 $7,000 - $9,000 $5,500 - $8,000 $4,000 - $6,000 $12,000 - $16,000 $8,000 - $12,000 $450 - $1,800 $2,400 - $4, $350 - $1,750 $2,000 - $4, $350 - $1,750 $2,000 - $4,200 SAN JOAQUIN COUNTY (con t) LAND USE: WALNUTS WINE GRAPES (DIST. 11) CHERRIES 2006 $12,000 - $17,000 $13,000 - $18,000 $13,000 - $18, $12,000 - $17,000 $13,000 - $18,000 $13,000 - $18, $12,000 - $17,000 $11,000 - $18,000 $13,000 - $18, $12,000 - $17,000 $8,000 - $15,000 $11,000 - $16, $10,000 - $14,000 $12,000 - $18,000 $11,000 - $15, $9,400 - $11,000 $14,000 - $22,000 $11,000 - $15,500 DAIRIES (MERCED, STANISLAUS & SAN JOAQUIN COUNTIES) LAND USE: DAIRIES 2006 $1,300 - $2, $2,000 - $3, $1,200 - $2, $1,000 - $2, $775 - $2, $750 - $1,800 (per milk cow w/ equip.) 42 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

45 Region 3 NORTHERN SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 43

46 4/13/2007 9:55 AM Page 44 NORTHERN SAN JOAQUIN VALLEY Region _CCA_GUT.qxd 44 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

47 Region 4 Susan Der Manouel, ARA Chair Robert Souza, ARA David Lehrman, ARA Beth Wesling Martin Seanez CENTRAL SAN JOAQUIN VALLEY 45

48 CENTRAL SAN JOAQUIN VALLEY Region 4 Prices for wine grapes appeared weak throughout the entire 2006 year. Region Four Almonds Demand for almond orchards in Region 4 was very high in 2006, with an extremely limited supply of orchards available to the market. These types of properties continue to be retained by their owners due to the extremely favorable commodity prices. Even older orchards, with declining yields, were profitable at the 2006 nut prices, attracting motivated buyers to these inferior properties. With the lack of orchards available for sale, buyers have ventured into ancillary markets where almond production has not been prevalent historically. These ancillary markets tend to suffer from inferior soil and irrigation water conditions. The demand for existing orchards or for land which may be suitable for almond development has driven prices upward in most market areas. Growers have increased their desire for expansion, which has also driven unit prices upward. A shortage of almonds in 2006 has kept demand high. Contracts for almonds increased in 2006 due to the projected shortage of good quality meats. This trend is not expected to continue as the industry is girding for significant supply increases. Raisin Grapes The raisin vineyard market stabilized in Values for the traditional raisin varieties were observed to remain generally stable throughout the year. As these varieties may be used for raisin or wine production, growers closely monitor the most beneficial prices offered by both industries. Prices offered by wineries were generally lower in 2006 caused by the increase in supply of wine variety grapes available in the market, thus, many growers opted to produce raisins. Strong unit prices, however, were the result of general demand for land and not necessarily the income component of raisin vineyards. Many of the sales discovered throughout 2006 were to buyers who intended to remove the vineyards and develop alternative permanent plantings (mostly almond orchards). Smaller size vineyards, generally 40 acres or smaller, represented most of the sales activity in These types of properties are typically purchased by buyers motivated by a rural lifestyle, and not necessarily the farming aspect. Many commercial raisin growers have moved to an alternative vineyard development known as "dried-on-the-vine" or DOV. These developments typically consist of high density and strong producing raisin varieties which require less manual labor. DOV developments are increasing throughout this marketplace yet little sales activity for DOV vineyards was discovered. Wine Grapes Market conditions for wine grape vineyards were similar to those of the raisin markets. These markets continued to build, with the strength derived more from the demand for land than the vineyard component. Prices for wine grapes appeared weak throughout the entire 2006 year. Wineries were seldom offering purchase contracts, except in rare cases with certain varieties. Few sales of wine grape vineyards were found in these markets. Table Grapes Few sales of table grape vineyards were discovered in region 4 in 2006, which has been the historical trend. Unit prices, however, vary significantly, depending on table grape variety, location, water conditions, trellis improvements, and vineyard productivity. 46 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

49 Sale properties with desirable varieties and with modern trellis improvements set the high end of the value range, while older, conventional vineyard with inferior varieties set the low end. Consolidation of the industry by packers and markets continues to constrict the grower's ability to affect commodity prices. Pistachios Sales activity was again limited in the Madera and Fresno County markets in However, new pistachio orchard developments have been observed in these same markets as a result of stable to increased commodity prices. Pistachio developments have traditionally been exclusive to patient investors with significant financial resources, as these developments require seven to 10 years of growth before economic production levels occur. With the real estate boom in California over the past several years, investors, mostly through 1031 Exchanges, have recognized pistachio production as a good investment. This has subsided throughout the year; however, there was still interest by insurance companies and other such investment companies. Like the almond orchard markets, demand is high for pistachio orchards, with a tightly held, limited supply. Unit prices for pistachios are typically higher in western Fresno County, where modern, high yielding, orchard developments are prevalent. Values in the lower tier of the value range are typically represented by the Madera County orchards. The Madera County market prevalently includes older orchard developments on inferior soils, developed on a rootstock that is susceptible to disease. Open Land - Exchange Contractors Sales of open, irrigated cropland in the Exchange Contractor districts indicated an upward value trend in Land in these markets has historically been, and continues to be, tightly held, thus, few properties have been available to the market. Demand for said land, however, remains strong. The Exchange Contractor districts have superior surface water rights, which may also be transferable outside of their district boundaries. On the other hand, these markets tend to suffer from inferior soil and drainage conditions. Demand in this The Exchange Contractor districts have superior surface water rights. Region 4 Asset Appraisals Machinery & Equipment Valuation Patrick L. Hinton, A.S.A. Senior Member American Society of Appraisers CENTRAL SAN JOAQUIN VALLEY (800) FAX (559) (559) pat@sti.net P.O. Box 1120 Coarsegold, California Trends in Agricultural Land & Lease Values 47

50 CENTRAL SAN JOAQUIN VALLEY Region 4 Limited sales activity was observed for rangeland properties. market is dominated by growers with large operations in the USBR districts, such as Westlands Water District, with significantly inferior surface water rights but very fertile soils. The ability to transfer water from Exchange Contractor land to USBR land is an attractive alternative for these larger outside growers Open Land - Westside USBR Open Land Open, irrigated cropland values in the USBR districts continue to strengthen, with increased market activity observed in These districts include highly fertile land, well suited for permanent planting development, as well as poorly drained land with inferior soils. Demand and market activity for both land categories has been strong; however, primary demand has been for permanent planting development (almonds and pistachios). Most of the sales discovered did not receive market exposure, but, rather, were negotiated directly between the buyers and sellers. Further optimism of a greater surface water supply has assisted in the upward trend in the USBR districts. Rangeland - Westside Limited sales activity was observed for rangeland properties in the Westside market. Activity, however, has been driven by buyers seeking properties with hunting and recreational uses. This market is within close proximity to the larger metropolitan areas, which is attractive to professionals from these population centers with the resources to acquire larger rangeland properties. Traditional cattlemen are no longer buyers in this market, as values have exceeded economic feasibility for cattle grazing. Rangeland - Eastside The eastside rangeland market is dominated by rural homesite buyers and buyers motivated by the recreational resources of these properties. Secluded homesite ranches have increased in demand as the population of the San Joaquin Valley floor continues to grow. With these non-traditional elements prevalent in the market, cattle grazing use has become exceedingly difficult. Though higher land prices have excluded traditional cattlemen from expanding their operations, cattle grazing 48 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

51 continues to be the predominant use of land in this market around the rural homesites. Small Acreage Parcels Demand and sales activity of small acreage land stabilized from sizeable increases in 2004 and 2005, driven by buyers seeking rural home sites. These properties are not necessarily purchased for their income potential; but rather the lifestyle and tax benefits they offer. Historically low interest rates have also been a significant factor in the demand and activity for these types of properties. As the valley population continues to grow, smaller parcels within close proximity to expanding cities are commanding the highest end of the value range. Many buyers are seeking to relocate from urban areas to rural areas for a change in quality of life. Tree Fruit The tree fruit orchards markets improved in 2006, with better production, quality and grower returns. These markets are dominated by large, vertically integrated operations that control a larger percentage of the production and marketing of tree fruit. Consumer preferences for stone fruit continue to changed, which has necessitated the removal of older orchards and the redevelopment to newer fruit varieties at a very rapid pace. The higher end of the value range was represented by an orchard with desirable varieties in the good production areas. The lower end of the range consisted of older orchards with antiquated varieties or properties in less desirable production areas. Market consolidation is anticipated to continue to impact market values in this sector. Citrus Unit values for Valencia and mid-season Navel groves rebounded significantly in 2006 as a result of increased commodity prices. Demand remained high for good quality early and late Navel varieties, however, few groves of this type were exposed to the market. Many acres of Valencia's have been removed over the past several years, replaced by early and late maturing varieties of Navels, as well as specialty citrus. The remaining Valencia groves became desirable as fewer such groves were available. Desirable citrus trees were once again in limited supply as a result of the trend toward new developments. Growers have also migrated to non-traditional areas to develop the desirable varieties and specialty citrus in an effort to prolong the harvest season and alleviate cross-pollenization issues among the varieties. Mandarin varieties continued to be the specialty fruit in vogue, as marketers attempt to attract more consumers to the easy peeling fruit. Unit values for Valencia and mid-season Navel groves rebounded significantly in 2006 as a result of increased commodity prices. Region 4 CENTRAL SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 49

52 CENTRAL SAN JOAQUIN VALLEY Region 4 Member FDIC 50 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

53 Region 4 CENTRAL SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 51

54 CENTRAL SAN JOAQUIN VALLEY Region 4 52 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

55 Land & Lease Values LAND USE VALUES PER ACRE ACTIVITY / TREND RENT RANGE ACTIVITY / TREND FRESNO COUNTY Almonds $8,500 - $15,000 Moderate/Increasing 20% - 30% Limited /Stable Pistachios $8,000 - $15,000 Limited/Stable n/a n/a Tree Fruit $9,000 - $14,000 Active/Increasing $300 - $650 Active/Increasing Citrus $8,500 - $15,000 Active/Increasing n/a n/a Raisins - West of Hwy 99 $6,500 - $12,000 Active/Increasing 20% - 25% Limited/Stable Raisins - East of Hwy 99 $6,500 - $12,000 Active/Increasing 20% - 25% Limited/Stable Table Grapes $10,000 - $13,400 Limited/Increasing n/a n/a Wine Grapes $6,750 - $11,250 Limited/Increasing 20% - 25% Limited/Stable Cropland - USBR (West) $2,500 - $5,500 Active/Increasing $100 - $250 Moderate/Stable Cropland-Exchange Contractors $4,000 - $8,000 Limited/Increasing $150 - $250 Strong/Stable Cropland-District-East of Hwy 99 $7,500 - $12,000 Active/Increasing $125 - $250 Active/Stable Cropland-District-West of Hwy 99 $5,000 - $10,000 Active/Increasing $150 - $250 Moderate/Stable Cropland - Well Water $2,700 - $7,000 Moderate/Increasing $125 - $200 Moderate/Stable Small Acreage Parcels (less than 40 acres) $10,000 - $25,000 Active/Increasing n/a n/a Rangeland (West) $150 - $700 Limited/Stable $2 - $8 Moderate/Stable Rangeland (East) $400 - $1,200 Limited/Stable $4 - $15 Moderate/Stable MADERA COUNTY Almonds $8,500 - $15,000 Moderate/Increasing 20% - 30% Limited /Stable Pistachios $8,000 - $15,000 Limited/Increasing n/a n/a Raisin Grapes $6,500 - $10,000 Limited/Increasing 20% - 25% Limited /Stable Table Grapes $6,000 - $11,000 Limited/Stable n/a n/a Wine Grapes $6,000 - $9,000 Limited/Increasing 20% - 25% Limited /Stable Cropland - Madera Irrigation District $5,000 - $8,000 Limited/Increasing $125 - $175 Moderate/Stable Cropland - Chowchilla Water District $4,000 - $8,000 Limited/Increasing $125 - $175 Moderate/Stable Cropland - Well Water $3,000 - $5,500 Limited/Increasing $75 - $150 Moderate/Stable Rangeland $650 - $3,200 Limited/Stable $6 - $16 Limited/Stable Native Pasture - Valley Floor $1,000 - $2,000 Limited/Stable $12 - $22 Limited/Increasing DAIRIES (Fresno and Madera Counties) Dairies, Newer *$2,500 - $4,000/milk cow Active/Increasing $16 - $22/milking head./mo. Active/Stable Dairies, Older *$2,000 - $2,650/milk cow Active/Increasing $10 - $16/milking head./mo. Stable/Stable * Including milk barn equipment but excluding land and residential improvements. Region 4 CENTRAL SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 53

56 CENTRAL SAN JOAQUIN VALLEY Region 4 Historical Value Range Per Acre FRESNO COUNTY LAND USE: ALMONDS PISTACHIOS TREEFRUIT CITRUS RAISINS-W HWY 99 RAISINS-E HWY 99 TABLE GRAPES WINE GRAPES CROP-USBR - W 2006 $8,500 - $15,000 $8,000 - $15,000 $9,000 - $14,000 $8,500 - $15,000 $6,500 - $12,000 $6,500 - $12,000 $10,000 - $13,400 $6,750 - $11,250 $2,500 - $5, $7,000 - $13,000 $8,000 - $15,000 $9,000 - $14,000 $8,000 - $14,000 $5,500 - $11,000 $5,000 - $10,000 $7,500 - $15,000 $4,000 - $8,000 $2,200 - $5, $6,500 - $10,000 $8,000 - $15,000 $6,000 - $9,000 $6,000 - $9,000 $4,000 - $8,500 $3,500 - $8,000 $6,000 - $11,000 $3,500 - $7,500 $1,900 - $3, $5,000 - $9,000 $8,000 - $15,000 $5,000 - $9,000 $5,000 - $9,000 $4,000 - $6,000 $3,500 - $5,500 $6,000 - $11,000 $3,500 - $5,000 $1,200 - $3, $5,000 - $8,000 $5,000 - $9,000 $5,000 - $9,000 $6,000 - $10,000 $2,000 - $4,500 $750 - $3, $5,000 - $8,000 $5,500 - $9,000 $5,000 - $9,000 $6,000 - $9,000 $4,000 - $6,000 $1,000 - $3, $5,000 - $9,000 $5,500 - $9,000 $5,000 - $9,000 $6,000 - $9,000 $4,000 - $8,000 $1,000 - $3,000 FRESNO COUNTY (con t) LAND USE: CROP-EXCH CROP-DIS E - H 99 CROP-DIS W - H 99 CROP-WELL WTR SMALL ACRG <40 RANGELAND (W) RANGELAND (E) 2006 $4,000 - $8,000 $7,500 - $12,000 $5,000 - $10,000 $2,700 - $7,000 $10,000 - $25,000 $150 - $700 $400 - $1, $3,500 - $5,500 $4,500 - $10,000 $4,500 - $8,000 $2,500 - $6,500 $8,000 - $25,000 $150 - $450 $400 - $1, $2,500 - $4,000 $3,500 - $5,500 $2,000 - $5,500 $1,500 - $4,500 $4,500 - $15,000 $150 - $450 $400 - $1, $2,500 - $4,000 $3,500 - $5,500 $2,000 - $5,500 $1,500 - $3,500 $4,000 - $15,000 $150 - $400 $300 - $ $2,500 - $3,500 $1,000 - $3,500 $125 - $250 $300 - $ $2,300 - $3,500 $1,000 - $3,500 $125 - $250 $300 - $ $2,300 - $4,000 $1,000 - $5,000 $125 - $250 $300 - $750 MADERA COUNTY LAND USE: ALMONDS PISTACHIOS RAISIN GRAPES TABLE GRAPES WINE GRAPES CROP-MADERA IRRIGD CROP-CHOW WTRD CROP-WELL WTR 2006 $8,500 - $15,000 $8,000 - $15,000 $6,500 - $10,000 $6,000 - $11,000 $6,000 - $9,000 $5,000 - $8,000 $4,000 - $8,000 $3,000 - $5, $7,000 - $13,000 $8,000 - $12,000 $5,000 - $9,000 $6,000 - $11,000 $4,500 - $8,500 $4,000 - $6,000 $4,000 - $6,200 $3,000 - $5, $5,000 - $10,000 $5,000 - $11,500 $5,000 - $8,000 $6,000 - $11,000 $4,500 - $7,500 $3,000 - $5,000 $3,500 - $5,000 $2,000 - $4, $4,500 - $8,500 $4,000 - $10,500 $3,500 - $5,000 $6,000 - $11,000 $2,500 - $4,500 $3,000 - $4,000 $3,000 - $4,000 $2,000 - $3, $4,000 - $7,500 $5,000 - $10,000 $3,000 - $5,000 $6,000 - $8,500 $1,250 - $3,250 $2,500 - $3,500 $2,500 - $3,800 $1,500 - $3, $3,500 - $7,500 $5,000 - $10,000 $5,000 - $6,000 $6,000 - $8,500 $3,500 - $5,000 $2,500 - $4,000 $2,500 - $3,500 $1,500 - $3, $3,500 - $8,500 $5,000 - $10,000 $5,000 - $8,000 $6,000 - $8,500 $3,500 - $8,000 $2,500 - $4,500 $2,500 - $3,500 $1,500 - $3,000 MADERA COUNTY (con t) LAND USE: RANGELAND NTV PAST (VAL) 2006 $650 - $3,200 $1,000 - $2, $400 - $1,300 $1,000 - $2, $400 - $1,300 $1,000 - $2, $400 - $1,000 $800 - $1, $400 - $800 $800 - $1, $500 - $8,50 $800 - $1, $500 - $8,50 $800 - $1,000 DAIRIES (Fresno & Madera Counties) LAND USE: DAIRIES, NEWER DAIRIES, OLDER 2006 $2,500 - $4,000 $2,000 - $2, $2,200 - $3,000 $1,500 - $2, $2,200 - $2,900 $1,300 - $2, n/a n/a 2002 n/a n/a 2001 n/a n/a California Chapter, American Society of Farm Managers and Rural Appraisers 2007

57 Region 4 CENTRAL SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 55

58 CENTRAL SAN JOAQUIN VALLEY Region 4 56 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

59 Region 4 CENTRAL SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 57

60 CENTRAL SAN JOAQUIN VALLEY Region 4 58 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

61 Region 4 CENTRAL SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 59

62 SOUTHERN SAN JOAQUIN VALLEY Region 5 Lynn Rickard, ARA - Chair Steve Runyan, ARA Mike Ming, ARA Jim Olivas, AAC Vicki Dungan 60

63 Region 5 Region Five Overview Almonds - All The market for almond orchards remained very strong in Although the sales activity remained steady, the number of sales decreased slightly from previous years. All growers had profitable crops thus no real reason to sell unless a grower was experiencing financial difficulty from other sources. Nonetheless, there were several very good orchards sold in 2006 because the owners decided that now was a good time to sell. Near the end of 2006, it appeared as if almond orchard prices had stabilized, and possibly declined slightly. Sales of immature almond orchards continue. The pace of new plantings remained aggressive throughout 2006 and additional orchards were developed in the winter of It remains to be seen if the pace of new orchard plantings continues. Table Grapes - All The table grape industry had a fairly decent year in There were a few sales of good vineyards with the right varieties at strong prices. The prices for table grape vineyards reflect the increased values for all agricultural properties. Citrus - All The market for citrus groves is increasing and continues to represent an extremely wide range in value because of the profitability differences between varieties, location and market timing. The demand is still primarily for early and late fruit; however, mid season navels have recovered some of the strength they lost in prior years. The sale of good quality groves with the right varieties in southern Kern County and in areas of Tulare County still indicate good sale prices per acre. At the end of 2006, navel commodity prices were holding fairly strong. The citrus market has benefited from the overall demand for agricultural property and from a recent cooperative marketing effort by some of the major packers. No impact for the early 2007 freeze, if any, has been incorporated into the numbers reported in this publication. Tree Fruit - All Profitability within the deciduous tree fruit market has varied dramatically over the past few years. Demand and prices for deciduous tree fruit vary from year to year depending on a number of factors including overall production and fruit quality as well as desirability of varieties. The market for deciduous tree fruit have been marginal for the past two years but returns rebounded somewhat in 2006 and land values improved correspondingly. Yet, volume was down in 2006 due to early heat which impacted the crop. Walnuts - All The demand is good for the desirable walnut varieties, especially Chandler and Tulare. Walnuts are benefiting as a market substitute for almonds. Pistachios - All The demand for pistachio orchards is very strong. These orchards are closely held and there are only one or two sales per year; therefore, year-to-year comparisons are difficult to make. Over the past five years values may SOUTHERN SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 61

64 Region 5 SOUTHERN SAN JOAQUIN VALLEY There are very few sales of true grazing properties on the east side of Kern and Tulare Counties. have strengthened somewhat. The most recent sale in this area indicates a value in the $11,000 to $13,000 per acre range for an immature orchard. It is reported that pistachio growers are being offered $20,000 per acre for orchards but there is no sales activity to support these claims. KERN COUNTY Cropland - Northeast and Central This area of Kern County experienced limited sales activity in The few sales that occurred indicate a stable to slightly increasing market. Cropland - Southeast Sales activity in the area south and southeast of Bakersfield was steady during Prices indicate increasing values. Cropland - State Water Districts The real estate activity in land that receives water from the State Water Project began to slow in Values in the Wheeler Ridge- Maricopa Water Storage District, south of Bakersfield and in the Semitropic Water Storage District, west of Wasco appear to have stabilized. The limited sales activity in the state water project districts on the west side of the San Joaquin Valley indicates stable to slightly increasing values. Rangeland - East There are very few sales of true grazing properties on the east side of Kern and Tulare Counties. As has been the case in the past several years, the market for small grazing land properties on the east side of the valley continues to be driven by rural home site influence and a number of small parcels were purchased as potential home sites or "weekend" ranches at significantly higher prices than the range shown for grazing land. In recognition of this continuing trend, we have broken out a separate category for grazing-type properties up to 2,000 acres in size, entitled "Recreation Land." Rangeland - West There was little rangeland sold for grazing purposes on the west side of Kern County. The economics of grazing land on the west side of the valley does not vary much from one year to the next. There is no home site influence and limited recreational potential, but the limited market evidence indi- 62 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

65 Region 5 cates that values are increasing in line with other types of agricultural properties in the southern San Joaquin Valley. TULARE COUNTY Cropland - There was continued demand for cropland in Tulare County for both field crop and permanent planting development including almonds, citrus, and pistachios. Dairymen continued to buy land near or adjacent to existing dairy facilities to mitigate waste water and nutrient regulations. Buying by dairymen, however, slowed toward the end of 2006 due to marginal dairy income and higher feed prices. During the last half of 2006 builder/developers slowed their buying and optioning habits as potential subdivision properties started to glut the market and prices began to drop. However, there was continued vigorous activity and increasing values for suburban residential properties that range from 10 to 30 acres. Some parcels sold for as high as $20,000 to $25,000 per acre without existing residences or entitlements. Buyers of these properties are not developers or builders but individuals seeking a rural homesite and country lifestyle. KINGS COUNTY Cropland - There was continued good demand for cropland in Kings County. Lands suited to field crop production or for development to higher income crops, including nut crops were in demand. Land in the northern and western portions of the county, particularly within the Westlands Water District saw a large increase in values. Dairymen also continued to buy land near their existing dairy facilities to mitigate waste water and nutrient regulations. Buying by dairymen, however, slowed toward the end of 2006 due to marginal dairy income and higher feed prices. During the last half of 2006 builder/developers that had been buying and optioning potential subdivision properties, stopped their aggressive buying habits and began to walk away from options entered into earlier. However, there was continued vigorous activity and increasing values for suburban residential properties from 10 to 30 acres without existing residences or entitlements. Again, this specialty market was driven by homeowners who want to live in the country. SOUTHERN SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 63

66 SOUTHERN SAN JOAQUIN VALLEY Region 5 64 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

67 Land & Lease Values LAND USE VALUES PER ACRE ACTIVITY / TREND RENT RANGE ACTIVITY / TREND KERN COUNTY Cropland -NE & Central $6,000 - $8,000 Slow/Increasing $150 - $230 Steady/Stable Cropland - Southeast $6,500 - $8,000 Steady/Increasing $200 - $230 Steady/Stable Cropland - State Water $4,000 - $8,000 Active/Increasing $125 - $175 Steady/Stable Rangeland - East (2,000 acres or more) $600 - $1,200 Slow/Increasing $8 - $14 Steady/Stable Rangeld - Recreation (2,000 acres or more) $2,500 - $4,000 Active/Increasing N/A N/A Rangeland - West $200 - $500 Steady/Increasing $3 - $7 Steady/Stable Almonds $12,000 - $15,000 Steady/Stable 20% - 25% Share Steady/Stable Table Grapes $8,000 - $10,500 Steady/Sl. Increasing $400 - $600 Steady/Sl. Increasing Citrus $8,000 - $11,000 Slow/Increasing 25% -Share Steady/Stable Pistachios $15,000 - $18,000 Slow/Increasing 20% - 25% Share Steady/Stable TULARE COUNTY Cropland $5,000 - $10,000 Steady/Increasing $150 - $230 Steady/Stable Rangeland $750 - $1,500 Steady/Steady $10 - $15 Active/Stable Walnuts $9,000 - $15,000 Steady/Increasing 20% - 30% Share Slow/Stable Almonds $10,000 - $15,000 Steady/Steady 20% - 30% Share Slow/Stable Table Grapes (South) $7,500 - $12,000 Steady/Increasing 20% - 30% Share Steady/Stable Table Grapes (North) $7,000 - $12,000 Steady/Sl. Increasing 20% - 30% Share Steady/Stable Citrus (South) $6,000 - $9,000 Steady/Increasing 20% - 30% Share Steady/Stable Citrus (North) $8,000 - $12,000 Steady/Increasing 20% - 30% Share Steady/Stable Tree Fruit (South) $7,000 - $9,000 Steady/Increasing $200 - $400 or 20% - 25% Share Steady/Decreasing Tree Fruit (North) $9,000 - $14,000 Steady/Increasing $200 - $450 or 20% - 25% Share Steady/Decreasing Olives $6,000 - $7,500 Increasing/Sl. Increasing N/A N/A KINGS COUNTY Cropland (General) $2,500 - $8,500 Active/Increasing N/A N/A Cropland (North & Central) $6,000 - $10,000 Active/Increasing $125 - $250 Steady/Stable Cropland (West) $3,250 - $4,500 Active/Increasing $100 - $350 Steady/Stable Cropland (Lake Bottom) $1,000 - $2,000 Slow/Sl. Increasing $50 - $125 Steady/Stable Walnuts $6,500 - $11,000 Steady/Stable 20% - 30% Share Steady/Stable Grazing $250 - $500 Steady/Sl. Increasing $5 - $10 Steady/Stable Tree Fruit $7,000 - $12,500 Steady/Stable $200 - $400 Steady/Stable DAIRIES (Kings, Tulare, and Kern Counties) Dairies, Newer $3,250 - $4,000 Steady/Sl. Increasing $18 - $22/milking head./mo. Active/Stable Dairies, Older $2,200 - $3,250 Steady/Sl. Increasing $12 - $18/milking head./mo. Stable/Stable SOUTHERN SAN JOAQUIN VALLEY Region Trends in Agricultural Land & Lease Values 65

68 Region 5 SOUTHERN SAN JOAQUIN VALLEY Historical Value Range Per Acre KERN COUNTY LAND USE: ALMONDS RANGELAND (E) RANGELAND (W) TABLE GRAPES PISTACHIOS CROPLAND-NE & CENTRAL CROPLAND-SE CROPLAND-ST WTR CITRUS 2006 $12,000 - $15,000 $600 - $1,200 $200 - $500 $8,000 - $10,500 $15,000 - $18,000 $6,000 - $8,000 $6,500 - $8,000 $4,000 - $8,000 $8,000 - $11, $10,000 - $15,000 $500 - $1,000 $175 - $350 $7,000 - $10,000 $13,000 - $16,000 $4,500 - $6,500 $4,500 - $6,500 $3,000 - $6,500 $5,500 - $10, $7,000 - $9,500 $300 - $900 $125 - $225 $5,500 - $7,500 $13,000 - $16,000 $3,500 - $4,000 $3,000 - $4,000 $1,300 - $3,000 $4,500 - $9, $5,500 - $7,500 $300 - $900 $125 - $225 $4,500 - $6,500 $3,000 - $3,600 $3,000 - $3,600 $1,300 - $2,500 $4,500 - $9, $5,000 - $7,000 $300 - $800 $125 - $225 $4,500 - $6,500 $3,000 - $3,600 $3,000 - $4,000 $1,400 - $2,400 $4,500 - $9, $5,000 - $7,000 $250 - $700 $100 - $200 $4,500 - $7,000 $3,000 - $3,700 $3,000 - $4,000 $1,400 - $2,400 $4,500 - $9, $5,000 - $8,000 $250 - $700 $100 - $200 $5,000 - $7,500 $2,200 - $3,800 $5,000 - $9,000 TULARE COUNTY LAND USE: ALMONDS WALNUTS RANGELAND TABLE GRAPES (S) TABLE GRAPES (N) CROPLAND TREE FRUIT (S) TREE FRUIT (N) 2006 $10,000 - $15,000 $9,000 - $15,000 $750 - $1,500 $7,000 - $12,000 $7,000 - $12,000 $5,000 - $10,000 $7,000 - $9,000 $9,000 - $14, $10,000 - $15,000 $7,500 - $14,000 $750 - $1,500 $5,000 - $8,000 $5,000 - $8,000 $4,500 - $7,500 $6,000 - $7,000 $7,500 - $11, $6,500 - $9,500 $6,000 - $9,500 $500 - $1,200 $5,000 - $7,500 $4,000 - $7,000 $2,600 - $5,000 $3,500 - $4,500 $4,500 - $7, $4,500 - $7,500 $4,500 - $7,500 $300 - $1,000 $4,500 - $7,000 $4,000 - $7,000 $2,300 - $4,500 $4,500 - $6,500 $4,500 - $8, $4,500 - $7,000 $4,500 - $7,500 $250 - $900 $4,500 - $7,000 $4,000 - $7,000 $2,300 - $4,500 $4,500 - $7,000 $4,500 - $8, $4,500 - $6,500 $4,500 - $8,000 $200 - $800 $4,500 - $7,000 $4,000 - $7,000 $2,000 - $5,000 $4,500 - $7,500 $5,000 - $9, $5,000 - $8,000 $4,500 - $7,500 $200 - $700 $5,000 - $7,500 $5,000 - $8,500 $2,000 - $5,500 $4,500 - $7,500 $5,000 - $9,000 TULARE COUNTY (CON T) LAND USE: CITRUS (SOUTH) CITRUS (NORTH) OLIVES 2006 $6,000 - $9,000 $8,000 - $12,000 $6,000 - $7, $6,000 - $9,000 $7,000 - $11,000 $4,500 - $6, $5,000 - $7,500 $7,000 - $10,000 $3,000 - $5, $4,000 - $7,000 $6,000 - $8,000 $3,000 - $5, $4,000 - $7,500 $6,000 - $8,000 $4,000 - $6, $4,000 - $7,000 $5,000 - $9,000 $4,000 - $6, $4,000 - $7,000 $5,000 - $9,000 $4,500 - $6,500 KINGS COUNTY LAND USE: GRAZING WALNUTS CROPLAND (GEN) CROPLAND (N & CEN) CROPLAND (W) CROPLAND (LK BOTM) TREE FRUIT 2006 $250 - $500 $6,500 - $11,000 $2,500 - $8,500 $6,000 - $10,000 $3,250 - $4,500 $1,000 - $2,000 $7,000 - $12, $150 - $500 $6,500 - $11,000 $1,750 - $7,000 $5,500 - $9,000 $2,500 - $4,000 $1,000 - $1,750 $7,000 - $12, $150 - $350 $5,000 - $8,500 $1,000 - $6,000 $4,000 - $5,500 $1,500 - $3,500 $600 - $1,300 $4,000 - $6, $150 - $300 $4,500 - $7,000 $700 - $5,000 $3,500 - $5,000 $1,000 - $2,400 $600 - $1,300 $4,500 - $7, $150 - $250 $4,500 - $7,000 $700 - $5,000 $3,500 - $5,000 $1,000 - $2,400 $600 - $1,300 $4,500 - $7, $75 - $125 $4,500 - $7,000 $700 - $5,000 $3,500 - $5,000 $1,000 - $2,400 $600 - $1,300 $4,500 - $7, $75 - $125 $5,000 - $7,000 $700 - $5,500 $3,000 - $5,500 $1,200 - $2,650 $600 - $1,600 $4,500 - $7,000 DAIRIES (KINGS, TULARE AND KERN COUNTIES) LAND USE: DAIRIES, NEWER* DAIRIES, OLDER* 2006 $3,250 - $4,000 $2,200 - $3, $3,000 - $4,000 $2,000 - $2, $2,200 - $2,900 $1,300 - $2, *(per cow basis, including milk barn equipment but excluding land and residential improvements) 66 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

69 Region 5 SOUTHERN SAN JOAQUIN VALLEY 2007 Trends in Agricultural Land & Lease Values 67

70 CENTRAL & SOUTH COAST Region 6 R.Anthony Brigantino, MAI Chair Dee Dee Dunstan, MAI Thomas H. Pettitt Rick Mercier Mark Clarke Dave Hamel, ARA 68

71 Region Six Monterey Row Crops The overall trend for row crops in Monterey County was stronger due to continued good commodity prices and a limited supply of land. The sales activity for 2006 was average with sales occurring between landlords and their tenants as well as market exposed sales. An anticipated change in the General Plan for the county is expected to impact future transactions as buyers are motivated to buy land for reasons other than for agricultural purposes. Growers continue to improve their efficient use of the land. Improved seed varieties, use of GPS systems on tractors, better drip irrigation systems are all helping get the most out of very costly land. There was continued interest in good water quality and clean air in this part of the state. Recent e-coli outbreak's have fresh vegetable producers scrambling to improve food safety measures. Santa Cruz and San Benito Row Crops The overall trend for land values in the Santa Cruz area was strong in Again, lower interest rates combined with a static to shrinking supply of suitable land on the Central Coast, placed considerable upward pressure on land values and rents in the area. The shrinking supply of land was brought on by encroaching urbanization. Primary support for rents and values is coming from strawberry growers constantly on the lookout for ground to purchase. Transaction levels for 2006 remained typical. San Luis Obispo, Santa Barbara and Ventura Row Crops The trend for open land in the San Luis Obispo and Santa Barbara areas was strong to slightly increasing in Market participants were eager to expand their holdings and/or needed to "park" money earned from other investments. Market activity in this area was strong with numerous sales seen, especially in the Santa Maria and Lompoc Valley areas. Current land prices are presently ranging between $25,000 to $41,000/acre in the Santa Maria Valley, assuming good adaptability to crops along with a good water supply. The current market for the best farmland in the Santa Maria Valley is strong to increasing. Currently, there is very little inventory of land offered for sale. Rents in the Santa Maria Valley have increased fairly steady over time with the current vegetable crop rents ranging from $1,000 to $1,500/acre, and the strawberry rented higher at $1,500 to $2,000/acre or more. Market levels for good vegetable cropland in the Lompoc area had remained in the value range of $11,000 to $13,500 per acre for the past seven to eight years. During the 2003/2004 year there had been some small acreage sales in the $31,000 to $35,000/acre range. In July 2006 there was a sale of a acre parcel of good IFC land for $28,505/acre. Current land rents have remained in the range of $750 to $1,100/acre. Rangeland The general trend for most rangeland in Region 6 was stable in Market activity was average with only a few sales taking place. Demand for ranches that could be used for beef production or for recreational uses was strong because more buyers had the funds to invest. Growing equity from higher commercial and residential real estate sales, combined with lower interest rates, fueled the continued demand for rangeland parcels. Monterey Wine Grapes Real estate prices were stable throughout Grape prices themselves stabilized which was a positive sign for the area industry. There was an above average number of sales in 2006, including two winery/vineyard operations. San Luis Obispo and Santa Barbara Wine Grapes Good quality vineyards with modern spacing and trellising in San Luis Obispo County and northern Santa Barbara County ranged from $21,000 to $31,000 per acre in 2004 and There has continued to be an increase in vineyard sales in 2006 and prices for average sized vineyards now range from approximately $25,000 to $50,000 per acre. The lower sale price is for an eastside Paso Robles area vineyard that was in fair condition and the higher price is for a good quality vineyard located on the "Westside." Ventura Oranges and Avocados The trend for oranges in Ventura County is stable overall. Many of the marginal and average producing orange groves are being pushed out and replanted to lemons, avocados or used as vacant land for nursery products and irrigated field crops. Open land value has increased to a point that CENTRAL & SOUTH COAST Region Trends in Agricultural Land & Lease Values 69

72 Region 6 CENTRAL & SOUTH COAST The struggle between agriculture and urban sprawl continues. improved orchards and vacant land are the same. The value of avocados saw a slight increase in 2006, due to strong crop prices for a number of years. There were only a few commercial avocado orchards that sold in 2006, but those that did sell indicated slightly increasing values per acre. The expansion of imports from Mexico and South America should have some impact on the local avocado crop, which in turn could impact orchard values. Again, only time will tell. Overview The struggle between agriculture and urban sprawl continues. While communities recognize the extreme housing shortages that exist, they struggle to meet this housing need within the requirements of agriculture and natural resource conservation. Demand for housing continues to pressure agricultural land supplies as more and more farmland is converted to housing at a slow but steady pace. Shorter farmland supplies result in higher land prices as farmers compete for remaining available farmland. While farmland prices continue to increase, the rate of appreciation is generally less than the increases earned on commercial and residential real estate. However, farmland prices have been positively impacted by these alternative markets as some farmers also own commercial property and or convert farmland to residential uses. The gains made from sales of commercial and residential investments have shown up in several exchanges for farmland. This comprehensive and radically increasing real estate cycle has been fueled by a concentration of people investing in real estate, motivated by record low interest rates, fear of alternative investments like the stock market, and high equity levels that were easily attained from property appreciation over the past several years. 70 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

73 Region 6 Land & Lease Values LAND USE VALUES PER ACRE ACTIVITY / TREND RENT RANGE ACTIVITY / TREND MONTEREY COUNTY Row Crops $12,000 - $50,000 Normal/Stable $900 - $2,500 Normal/Increasing SANTA CRUZ COUNTY Row Crops $12,000 - $50,000 Normal/Stable $1,800 - $2,400 Normal/Increasing SAN BENITO COUNTY Row Crops $11,000 - $42,000 Normal/Stable $500 - $1,000 Normal/Increasing SAN LUIS OBISPO AND SANTA BARBARA COUNTY Row Crops/Strawberries $25,000 - $41,000 Strong/Increasing $800 - $1,600 Stable/Increasing VENTURA COUNTY Row Crops/Strawberries $45,000 - $75,000 Strong/Increasing $1,200 - $3,200 Strong/Increasing MONTEREY COUNTY Rangeland $700 - $2,500 Normal/Sl. Increasing $7 - $20 Normal/Stable SAN LUIS OBISPO COUNTY Coastal Rangeland $3,000 - $9,000 Stable to strong $6 - $20 Stable to strong Inland Rangeland $300 - $4,800 Stable to strong $6 - $12 Stable SANTA BARBARA COUNTY Rangeland $500 - $12,500 Stable to strong $6 - $22 Stable MONTEREY COUNTY Wine Grapes $15,000 - $35,000 Increasing N/A N/A SAN LUIS OBISPO AND SANTA BARBARA COUNTY Wine Grapes $25,000 - $50,000 Stable N/A N/A VENTURA COUNTY Lemons $20,000 - $55,000 Stable N/A N/A VENTURA COUNTY Oranges $20,000 - $55,000 Stable/Sl. Increasing N/A N/A VENTURA COUNTY Avocados $25,000 - $47,000 Strong N/A N/A CENTRAL & SOUTH COAST 2007 Trends in Agricultural Land & Lease Values 71

74 Region 6 CENTRAL & SOUTH COAST Historical Value Range Per Acre MONTEREY COUNTY LAND USE: ROW CROPS RANGELAND WINE GRAPES 2006 $12,000 - $50,000 $700 - $2,500 $15,000 - $35, $12,000 - $50,000 $500 - $2,000 $15,000 - $32, $12,000 - $38,000 $400 - $1,800 $15,000 - $27, $10,000 - $38,000 $400 - $1,500 $15,000 - $25, $10,000 - $38,000 $400 - $1,500 $17,000 - $27, $10,000 - $39,000 $400 - $1,000 $17,700 - $25, $9,000 - $39,000 $400 - $1,000 $9,000 - $28,000 SANTA CRUZ COUNTY SAN BENITO COUNTY LAND USE: ROW CROPS ROW CROPS 2006 $12,000 - $50,000 $11,000 - $42, $10,000 - $42,000 $8,000 - $30, $20,000 - $44,000 $7,000 - $17, $20,000 - $26,000 $7,000 - $16, $20,000 - $26,000 $7,000 - $16, $20,000 - $26,000 $7,000 - $16, n/a SAN LUIS OBISPO AND SANTA BARBARA COUNTY LAND USE: ROW CROPS WINE GRAPES 2006 $25,000 - $41,000 $25,000 - $50, $22,000 - $41,000 $21,000 - $32, $22,000 - $29,000 $21,000 - $31, $17,000 - $26,000 $12,000 - $30, $10,000 - $23,500 $22,000 - $33, $11,000 - $21,000 $22,000 - $33, $11,000 - $20,000 $12,100 - $34,000 SANTA BARBARA COUNTY SAN LUIS OBISPO COUNTY LAND USE: RANGELAND COASTAL INLAND 2006 $500 - $12,500 $3,000 - $9,000 $300 - $4, $500 - $10,000 $2,500 - $8,000 $300 - $2, $300 - $8,500 $3,000 - $8,500 $300 - $2, $300 - $8,500 $1,000 - $7,000 $300 - $1, $500 - $8,500 $1,100 - $5,000 $300 - $ $500 - $8,500 $1,000 - $4,000 $250 - $ $500 - $8,500 $900 - $2,100 $175 - $600 VENTURA COUNTY LAND USE: ROW CROPS LEMONS ORANGES AVOCADOS 2006 $45,000 - $75,000 $20,000 - $55,000 $20,000 - $55,000 $25,000 - $47, $45,000 - $75,000 $20,000 - $55,000 $19,000 - $51,000 $25,000 - $47, $40,000 - $65,000 $20,000 - $36,000 $19,000 - $35,000 $20,000 - $34, $32,000 - $53,000 $18,000 - $45,000 $17,000 - $25,000 $20,000 - $35, $29,000 - $49,000 $24,000 - $34,500 $12,000 - $16,000 $20,000 - $32, $30,000 - $49,000 $24,000 - $34,500 $10,000 - $14,000 $17,000 - $28, $31,500 - $49,000 $25,000 - $30,000 $11,000 - $15,000 $15,000 - $25, California Chapter, American Society of Farm Managers and Rural Appraisers 2007

75 Region 6 CENTRAL & SOUTH COAST 2007 Trends in Agricultural Land & Lease Values 73

76 SOUTHERN INLAND VALLEYS Region 7 Coleman J. Anderson Chair Myron Fortin, ARA David Read Kathy Wing Jim Wheyland, ARA, AAC 74

77 Region Seven San Bernardino, San Diego and Western Riverside County Dairies The Chino Valley Dairy Area has been very desirable to developers as it is located in a pivotal region where Los Angeles, Orange, San Bernardino and Riverside Counties come together. Land values have doubled, tripled, and in some cases quadrupled since The market appears to have peaked for now but, according to Data Quick, sales of new single-family homes in the region have slowed by 28 percent compared to the same period a year ago. It is now becoming fairly common for developers to request extensions on existing purchase contracts, with rumors of a few actually canceling contracts in spite of substantial non-refundable down payments having been made. Those projects already approved are progressing at a fairly rapid pace. Most of the dairy farms in Riverside County have been razed and replaced with new homes, big box industrial parks, and regional commercial centers. The first of over 9,000 residential units planned within the City of Chino were completed in 2005 and builders continued the brisk pace in The City of Ontario in the northern part of the valley is experiencing very little development due to the lack of necessary infrastructure. The Chino Valley has about 150,000 cows remaining, half of what there were five years ago. Citrus Sales activity of citrus groves in the counties of San Diego, San Bernardino and Western Riverside were minimal. Those transactions that did occur were largely due to transitional pressures with the major use being the conversion to residential development. A general concern with most citrus growers in this region, who plan to continue to farm, is the increasing water and cultural costs per acre combined with lower fruit prices. Many groves not in the direct path of urban encroachment are being converted to specialty citrus or alternative crops such as container nurseries. The prices paid for citrus groves vary within the area depending upon the cost of water and extent of urban pressures. Avocados In the face of record fruit supply, the year's market proved to be remarkably resilient. The 600,906,000 pound crop exceeded the previous record crop of 504,728,000 pounds in Although prices fell sharply due to larger yields, revenue has improved from last year's poor returns and is remaining at levels that, while reduced, should be sufficient to cover most, if not all variable costs on average quality groves. A caveat to this assessment is that for many growers, returns were adversely affected by poor fruit quality and size due to avocado thrip in near epidemic proportions on a number of groves in the spring of Three structural changes are influencing and reshaping grove value. On January 31, 2007, the USDA's Final Rule of the Mexican Avocado Imports Program allowed the importation of Mexican avocados into all 50 States. The California Avocado Commission (CAC) estimates annual Mexican imports will fall between 150 and 250 million pounds, with 180 to 250 million pounds becoming the norm. It is generally agreed that the volume of fruit that will be presented to the market which is not sufficient to destroy the prevailing price structure. However, weekly product flow into the market must be carefully managed in order not to destroy established price structures and margins, turn off consumers with poor quality, or lose valuable retail shelf space. The extended avocado industry, including Mexican, South American, New Zealand and Caribbean producers have the necessary tools in place to accomplish this goal. Whether or not there is sufficient discipline to meet their mutual goals will be revealed over time. The second change is the increased acceptance of organic avocados. Traditional growers and packers have accepted the fact that organic fruit can be a viable option. Increased grower participation is helping provide a consistent presence of organic fruit in traditional retail markets. Avocados identified as certified organic have been successful in developing and maintaining product identification and favored price discrimination. Perhaps, and more importantly, the organic appellation helps differentiate domestic fruit from imported fruit. A third structural change is the growing Many groves not in the direct path of urban encroachment are being converted to specialty citrus or alternative crops. SOUTHERN INLAND VALLEYS Region Trends in Agricultural Land & Lease Values 75

78 The area's agriculture continues to evolve toward greater specialization. acceptance of Lamb Hass as an acceptable Hass variety. If this trend continues, the Lamb may become a major variety in the overall market. As of this writing the market for avocado groves is yet to process the effect of the freeze, a slowing of the real estate market, and the evolution of ongoing structural changes. A trend is difficult to identify, but the absence of market activity leads to the conclusion that as sales occur, activity will be moving downward. There have been too few sales to discern the magnitude, if any, of lower grove prices, but as the year progressed, reductions in asking prices began to appear. In the past asking prices have had less influence on market activity than the specific location of the ranch in question as prospective purchasers desire to fill their particular needs with little regard to the price. Occasionally, this trend is off-set by deep discounts in the listing price, at which time the buyer is motivated to buy no matter the local. Wine Grapes The Temecula Valley viticulture area, despite its travails with Pierce Disease, has recovered sufficiently to be an important contributor to Region 7's agriculture. Boutiques and larger wineries, are popular tourist destinations, integrating wine sales, food, weddings and banquets into their market. The success of the area has increased interest in vineyard development in San Diego County. Development is limited to small vineyards, with the resurgence of the area s wine grape industry fitting well into the increasingly important agritourism industry. Non-traditional and Specialty Crops High land and water costs force growers to search for new crops to take advantage of emerging markets or market niches as the area's agriculture continues to evolve toward greater specialization. The number and diversity of floral and foliage crops that make up the nursery segment of the region's agricultural sector typify this trend. Successfully introduced crops are few in number and are being produced on limited acreage. A barrier to entry and success is the skill levels of those managing the operations as well as the capital necessary to produce and market minor or non-traditional crops. Often the economic life of Region 7 SOUTHERN INLAND VALLEYS The Bank Business Banks On 76 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

79 minor and non-traditional crops is short, due to the delicate balance of supply and demand required to maintain prices sufficient to sustain production. Examples of successful non-traditional crops are bush berries, subtropical fruits and specialty vegetables directed to ethnic markets. agricultural production value of 40 of the 58 counties in California. In most cases, there is little difference in value (per acre) between permanent plantings and open land. An exception to this generality is date gardens where the trees have value for landscaping. Open Land Nursery and floral crops continue to relocate from southern coastal areas to inland areas within San Diego County, as well as to other inland areas of Region 7. This trend is expected to continue as growers look for any advantage in keeping their industries viable. Over the past twenty years, indoor flowering and foliage plants continue to be the number one crop for San Diego County, although the value and growth of this crop remains flat. Acquisition of land for this purpose has become highly selective as the inventory of suitable and sufficient acreage shrinks. Conversion of citrus groves to mostly open field nurseries remains one of the more viable sources available. Greenhouse area is decreasing as a result of the older coastal houses being replaced by residential development. Overall, the nursery sector is experiencing a cost/price squeeze from the "big box" stores as well as a decline in new construction, which serves to reduce the desire for land. Demand for row and field cropland is limited due to declining competition as the number of growers declines. Coachella Valley After several years of frenzied activity, the Coachella Valley's housing market slowed in Due to the softer residential market, demand for land ready for development, as well as for speculative holding, decreased. Farmland sales activity was limited with sellers willing to hold properties longer in anticipation that the housing inventory will decrease, which will lead to a renewed demand and higher sale prices per acre for development land. The major commodities produced in this desert valley are table grapes, citrus, vegetables, dates, and nursery stock. As reported in the 2005 Coachella Valley District Agricultural Production Report, Agricultural Commissioner's Office, Riverside County, California, the total Coachella Valley harvested acreage in 2005 was 56,922. The production value exceeded $500 million, which is more than the entire Palo Verde Valley The major commodities produced in this desert valley along the Colorado River are cotton, alfalfa, small grains, leaf vegetables and melons. There were few sales of true farmland in 2006, due to concentration of ownership and financial stabilization resulting from the Land Fallowing Program of the Palo Verde Irrigation District (PVID) and the Metropolitan Water District of Southern California (MWD). While sales of farmland are limited, there is considerable interest in land along the Colorado River at significantly increased prices. The Land Fallowing Program entered its second full year on August 1, There were a limited number of farm sales in the valley with the low being $7,627 and the high being $9,785 per water toll acre. The buyer of the low sale property participated in the Land Fallowing Program after acquiring the property and received $913 per water toll acre for the MWD sign up payment, shortly after the sale closed. The seller of the highest sale had already received the sign up payment, therefore the buyer did not receive any funds from the MWD. There is some indication that the upward trend may continue into The upward trend may be attributed to two issues. The first issue is the financial strength of the local landowners due to the Land Fallowing Program. The second issue is the general demand for farmland in the area. The landowners continue to have the same overhead, yet their farming acreage has been reduced due to the Land Fallowing Program. The need to keep economies of scale has placed a positive impact on the demand and value of available land. Imperial Valley The major commodities produced in the Imperial Valley are alfalfa, sudan, bermuda and other grass hays, sugar beets, small grains, cotton, and a wide variety of winter vegetables and melons, citrus and a few dates. Sales of good adaptable farmland (produce quality) slowed in 2006, remaining The major commodities produced in this desert valley are table grapes, citrus, vegetables, dates, and nursery stock. SOUTHERN INLAND VALLEYS Region Trends in Agricultural Land & Lease Values 77

80 SOUTHERN INLAND VALLEYS Region 7 generally stable in trends and value. Land of average adaptability (alfalfa quality) has also slowed with purchasers being mostly local. The market for limited adaptability farmland is extremely slow. Imperial County is making a concerted effort to attract dairies to the region, which could have an impact. Values for land surrounding the communities where residential development is occurring have also slowed as the housing market softens. In the past, two important sources of demand for residential property have been San Diego County residences looking for more affordable housing and speculators. The run-up in gasoline prices has substantially increased the cost of a 120-mile or longer commute and has dampened the demand. Accompanying the slowdown, or decline in the home price increases, is a loss of enthusiasm of speculators which at one time were reported to account for as much as 20 percent of homebuyers. Values appear to have stabilized in range of $50,000 to $80,000 per acre for land with near term development potential. The Imperial Irrigation District (IID) developed and implemented a 15-year fallowing plan, allowing the transfer of water to the San Diego Water Authority and preservation of the Salton Sea's ecology. Originally this was a voluntary plan, which provided for owners to lease their land to the district for a maximum of 6-acre feet per acre, in turn the IID would pay $60 per acre-foot for participation. IID increased the payment to $75 per acre-foot in Actual payments have averaged upwards to $400 per acre based on actual historical water usage on the designated fields. The price increase caused an excess number of applications and IID is now considering implementing a lottery system to select applications. There has been no measurable change in land values as a result of these activities. OVERVIEW Region 7 agriculture is best analyzed by the area and commodity group. San Bernardino County agriculture is limited to the dwindling number of dairies, remaining citrus, alfalfa in the desert valleys, and agri-tourism. While agriculture continues to be an important contributor to the economy in Western Riverside County, it is increasingly affected by urban pressures. Coachella Valley real estate activity is dominated by residential and recreational development, with agriculture limited to the southerly portion of the Valley. The 12th largest agricultural county in the nation, San Diego County, has a median farm size of 5 acres producing $5,612 per acre, the highest dollar value in California. This is due to the floral and nursery industries that contribute 65 to 70 percent of the county's total crop value. Fruit, mostly avocados, contributes 15 to 20 percent. Land values in the Imperial Valley for more versatile land have been strongly influenced by demand from the re-entry of interregional produce firms using 1031 Exchange funds. Although having slowed, local residential development continues to be a significant influence on land values near the cities. In Region 7, the Palo Verde Valley continues to be the least affected by urbanization, however there was an upward trend in the land values in The lingering uncertainty of immigration reform and two new issues could have a significant effect on agriculture throughout Region 7. The first issue is the January 2007 freeze with the full impact on the nursery, avocado and citrus industries in both Western Riverside and San Diego County remaining unknown. Estimates range upwards to 30% loss of fruit and permanent tree damage for avocado and citrus. Nursery losses are greater, with field flowers, subtropical decoratives, shrubs and trees incurring losses. The last major freeze of the early 1990's resulted in the abandonment of portions of low lying avocado groves accompanied with stagnation of sales activity due to a loss of purchasing power by growers and lingering adverse publicity chilling prospective investors. A more serious and long lasting issue is the introduction and spread of the Diaprepes Root Weevil (Diaprepes abbreviatus) which is also called Citrus Root Weevil or West Indian sugar cane root borer. At the present time there are six quarantine areas: La Jolla, Del Mar and Carmel Valley, La Jolla South, Encinitas, Carlsbad, Fairbanks Ranch, Rancho Santa Fe and Oceanside. This pest has caused serious losses in Florida and Texas. Should this pest spread and nurseries become quarantined, two immediate consequences occur. Expensive treatment must be undertaken and the shipment of plants is halted for a minimum of 5-weeks until re-inspected and released by USDA and State inspectors. So far the weevil has been mostly limited to landscape plants in quarantine areas, although it has been discovered in a small lemon grove in Rancho Santa Fe and two commercial nurseries on Del Mar Mesa. It is costly and difficult to control the pest in groves. Should the pest spread to the commercial grove areas, the cost to control could be so burdensome that some growers may elect to abandon their groves. The California Farm Bureau, along with industry groups and organizations, are aggressively putting forth to policy makers and the public the probable ramification of precipitous or ill-conceived immigration reform on California agriculture, consumers and trade. An aspect of reform that is not readily understood by those outside the avocado industry is the unique roll of younger workers. Harvesting tall trees planted on steep slopes requires considerable physical effort and agility. Historically, younger members of the work force have performed this task, since older workers move on to less physically demanding work. Should the flow of younger, entry-level labor be greatly slowed or halted, the ability to harvest avocados will be significantly impaired. 78 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

81 Land & Lease Values LAND USE VALUES PER ACRE ACTIVITY / TREND RENT RANGE ACTIVITY / TREND WESTERN RIVERSIDE AND SAN BERNARDINO COUNTIES Dairies (Transitional Land) $150,000 - $600,000 Transitional/Stable $10 - $12 Per Milk Cow Moderate/Stable Citrus $12,000 - $60,000 Transitional/Stable N/A N/A SAN DIEGO COUNTY Citrus $22,000 - $170,000 Transitional N/A N/A Avocados* $23,000 - $62,000 Minimal/Stable N/A N/A Crop Land $15,000 - $170,000 Minimal/Stable ** N/A N/A *Includes Southwestern Riverside County / ** Increasing for Nursery Sites COACHELLA VALLEY Citrus $30,000 - $100,000 Minimal/Stable N/A N/A Dates $30,000 - $100,000 Minimal/Stable N/A N/A Table Grapes (Young) $30,000 - $100,000 Minimal/Stable N/A N/A Table Grapes (Mature) $30,000 - $100,000 Minimal/Stable N/A N/A Table Grapes (Old) $30,000 - $100,000 Minimal/Stable N/A N/A Open Land $30,000 - $100,000 Minimal/Stable $175 - $500 Moderate/Stable PALO VERDE VALLEY Irrig. Field Crops/Produce $7,600 - $9,700 Minimal/Stable $125 - $225 Moderate/Stable IMPERIAL VALLEY Good Adaptability (Produce) $6,000 - $12,000 Minimal/Stable $200 - $225 Moderate/Stable Average Adaptability (Alfalfa) $4,000 - $6,000 Minimal/Stable $125 - $200 Moderate/Stable Limited Adaptability $2,000 - $4,000 Limited/Stable $75 - $125 Moderate/Stable SOUTHERN INLAND VALLEYS Region Trends in Agricultural Land & Lease Values 79

82 Region 7 SOUTHERN INLAND VALLEYS Historical Value Range Per Acre WESTERN RIVERSIDE AND SAN BERNARDINO COUNTIES LAND USE: CITRUS DAIRIES 2006 $12,000 - $60,000 $150,000 - $600, $12,000 - $60,000 $150,000 - $600, $10,000 - $60,000 $110,000 - $300, $6,500 - $35,000 $100,000 - $250, $6,500 - $35,000 $54,000 - $120, $6,500 - $16,000 $60,000 - $100, $6,500 - $14,000 $50,000 - $100,000 SAN DIEGO COUNTY LAND USE: CITRUS CROP LAND AVOCADOS* 2006 $22,000 - $170,000 $15,000 - $170,000 $23,000 - $62, $22,000 - $31,000 $15,000 - $110,000 $23,000 - $62, $22,000 - $30,000 $9,000 - $90,000 $23,000 - $61, $19,000 - $26,000 $9,000 - $90,000 $21,000 - $61, $7,000 - $25,000 $8,800 - $87,600 $10,750 - $27, $7,000 - $20,000 $12,000 - $20, $6,100 - $12,000 $9,000 - $16,600 *Includes Southwestern Riverside County COACHELLA VALLEY LAND USE: CITRUS OPEN LAND TABLE GRAPES, YNG TABLE GRAPES, MATR TABLE GRAPES, OLD DATES 2005 $30,000 - $100,000 $30,000 - $100,000 $30,000 - $100,000 $30,000 - $100,000 $30,000 - $100,000 $30,000 - $100, $30,000 - $100,000 $30,000 - $100,000 $30,000 - $100,000 $30,000 - $100,000 $30,000 - $100,000 $30,000 - $100, $13,000 - $15,000 $14,000 - $20,000 $14,000 - $20,000 $14,000 - $20,000 $14,000 - $20,000 $27,000 - $50, $7,000 - $14,000 $6,000 - $10,000 $9,000 - $14,000 $9,000 - $14,000 $9,000 - $12,000 $27,000 - $50, $7,000 - $14,000 $6,000 - $8,000 $7,000 - $12,000 $7,000 - $14,000 $5,500 - $7,500 $28,000 - $50, $7,000 - $14,000 $5,000 - $20,000 $7,000 - $12,000 $7,000 - $14,000 $5,500 - $7,500 $10,000 - $50, $5,500 - $14,000 $4,000 - $8,250 $7,000 - $12,000 $6,500 - $14,000 $5,500 - $7,500 $11,500 - $28,000 PALO VERDE VALLEY LAND USE: IRRG FLD CROPS/PROD 2006 $7,600 - $9, $2,900 - $4, $3,800 - $4, $2,300 - $4, $2,200 - $3, $2,200 - $3, $2,250 - $3,200 IMPERIAL VALLEY LAND USE: GOOD ADAPT (PROD) AVG ADAPT (ALF) LTD ADAPT 2006 $6,000 - $12,000 $4,000 - $6,000 $2,000 - $4, $5,000 - $8,000 $3,000 - $5,000 $2,000 - $3, $4,000 - $6,500 $2,200 - $4,000 $1,200 - $2, $3,800 - $5,500 $2,300 - $3,800 $1,200 - $1, $3,800 - $5,400 $2,500 - $3,800 $800 - $1, $3,500 - $4,200 $2,500 - $3,500 $800 - $1, $3,500 - $4,000 $2,500 - $3,200 $800 - $1, California Chapter, American Society of Farm Managers and Rural Appraisers 2007

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84 California Chapter, American Society of Farm Managers and Rural Appraisers _CCA_GUT.qxd 82 4/13/ :01 AM Page 82 Glossary of Terms California Chapter, American Society of Farm Managers and Rural Appraisers 2007

85 Advertiser Index and Web Sites Advanced Appraisal Service...25 AEGON USA Realty Advisors, Inc. Ag Lending Institute (ALI)...58 Agribusiness Credit & Services Corp. Agriculture Industries, Inc. Allan Barros, ARA Fresno-Madera Farm Credit Alliance Appraisal, LLC/Alliance Ag Services 70 Alphagraphics American AgAppraisal Back Cvr Asset Appraisals...47 Avila Ag Land Investments...46 Baker Manock & Jensen Baker, Peterson & Franklin, CPA, LLP Bank of the West Blakeslee & Crain Bolen, Fransen, & Russell, LLP Bowman & Company, LLP California Chapter, ASFMRA Charles Hoyt Company Chicago Title Company Citizens Business Bank...76 Cogdill & Giomi...41 Commerce Printing CORE Realty Holdings Correia-Xavier, Inc. County Bank Cushman & Wakefield of California Daniel A. Leith Bank of America David Hamel, ARA...30, 69 Edwards & Lien, Inc. Farmland Management Services Frank H. Virtue, ARA, MAI, ASA, SRA Fresno-Madera Farm Credit Gary H. Rudolf, ARA...46 Greenleaf Farms, Inc. H.R. Macklin & Sons, Inc. California Chapter, American Society of Farm Managers and Rural Appraisers California FarmLink Cal Poly Agribusiness Department Capital Agricultural Property Services, Inc. Hartford Investment Management Co. Agrifinance 56 Hein Ranch Company...61 House Agricultural Consultants Trends in Agricultural Land & Lease Values 83

86 California Chapter, American Society of Farm Managers and Rural Appraisers Advertiser Web Sites Jim Olivas, AAC Pearson Realty Jmeek Agribusiness Management K.R. McBay Company Karpe Fisher Merriman Inc. Kensington Realty Group, Inc. Landmark Valuation...30 Lent-Burden Farming, Inc London Properties, Ltd. Lynn E. Rickard, ARA M. Green and Company, LLP CPA s Mark Grant Appraisals...49 Merrill Real Estate & Consulting...59 MetLife Ag Investments Michael K. Van Horn, ARA Bank of America Mike Bennett Home Realty and Land Co. Monte Vista Farming Company Front Cover Moore Stephens Wurth Frazer and Torbet, LLP NCFC Business Consulting Pacific AgriVest Pearson Realty Peter M. Holmes Company, Inc. Premier Ag Appraisal...53 Prudential Agricultural Investments Rabo Agrifinance, Inc. Cover Robb M. Stewart, AFM Pearson Realty Reeve-Associates Real Estate...39 Runyan Appraisal Service...65 Russell Cremer Bank of America S & J Ranch Sacramento Valley Farm Credit Sagouspé Real Estate, Inc. San Joaquin Bank Shasta Land Services, Inc. Sunridge Nurseries, Inc. 64, 70 Ten Haken Hinz & Company...25 The Ranch Co...62 Wellborn Group Wells Fargo Bank Westchester Group, Inc. Western Agricultural Services Yosemite Farm Credit 84 California Chapter, American Society of Farm Managers and Rural Appraisers 2007

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