Farmland Prices Soar, but Soil Is Becoming Too Rich for Some

Ventura County farmland is now among the priciest in California, largely because of strong demand for the fertile soil of the Oxnard Plain, where growers have established the state’s fastest-growing strawberry industry.

Prime strawberry ground sold for as much as $49,000 an acre last year, nearly double the top prices recorded in 1994, according to a survey by the American Society of Farm Managers and Rural Appraisers.

That makes the county’s strawberry acreage the sixth-most valuable farmland in the state--behind the date palm orchards of the Coachella Valley, dairy land in the Inland Empire and the wine grape regions of Napa, Sonoma and Mendocino counties.

Of course, the value of most of the county’s other cropland also has increased in recent years, the study showed.

Farming officials say the solid land values reflect in part Ventura County’s agricultural prowess, noting that growers have flocked to the region because of its ideal growing conditions and the diversity of its year-round harvests.

And as long as farm income holds steady, officials say such values should bode well for the future of agriculture as a whole.

“It means we are going to be able to continue farming for quite a while,” said Earl McPhail, the county’s agricultural commissioner.

“Basically, we sit here on a part of the coast that allows us to do a lot of things that other places can’t do, so that makes our farmland attractive,” he added. “There is only so much ground to go around, and our ground is valuable because of what we can grow here.”

But it’s not all good news on the farmland front.

While landowners have benefited from a boost in values, the high price of Ventura County farmland has made it hard for newcomers--particularly small farmers--to break into the business.

Moreover, the higher values in many cases have translated into higher rents, making it increasingly difficult for tenant farmers to make a profit in an industry wracked by rising production costs and global competition.

Oxnard strawberry grower Humberto Candelario has seen both the benefits and drawbacks.

After years of working the fields for others, the 47-year-old farmer broke into the business in 1990 by leasing 35 acres of prime strawberry ground for from $600 to $800 an acre. A few years later, he teamed with others to purchase about 100 acres near Ventura for about $12,000 an acre.

He now leases about 200 acres, paying rent of more than $2,000 an acre. At the same time, the 100 acres he owns is now worth $35,000 to $40,000 an acre.

“It’s good and bad,” Candelario said about the county’s rising farmland values.

“Every year, there is less ground available and more demand to farm,” he said. “It’s good for the owners; they make more money. But for the farmers who are renting, sooner or later they are going to get to the point where they can’t afford to pay for the land.”

Farmland values are up nearly across the board in Ventura County.

Lemon groves were selling for up to $25,000 an acre five years ago. They are now fetching as much as $34,500 an acre, according to the survey compiled by the California chapter of the farmland appraisal group.

During that same period, avocado acreage went from up to $25,000 an acre in 1997 to a high of $28,000 an acre last year.

Those values were among the highest for any cropland in the state, the survey said.

Only the county’s orange industry, which is in a decades-long decline, has lost ground during the past five years.

Orange groves were selling for $15,000 an acre in 1997 compared with $14,000 last year. Meanwhile, high-end land values have dropped by half since 1994, when orange groves were selling for as much as $28,000 an acre.

The plummeting values reflect a series of setbacks for orange growers.

Although still a strong component of Ventura County’s farm economy, the crop has experienced significant losses in recent years, prompting growers to uproot thousands of trees in favor of lemons, avocados and other produce better able to turn a profit in California’s increasingly competitive fruit and vegetable markets.

Ventura County Farm Bureau President Edgar Terry, a fourth-generation vegetable farmer, said land values have held strong over the years in part because growers have been able to make the transition from money-losing crops to higher-value ones such as strawberries, nursery stock and cut flowers.

For example, strawberry growers on the Oxnard plain have 8,582 acres in production this year, a 10% increase over last year and double the acreage dedicated to strawberry production just a decade ago.

“If you don’t transition [to higher-value crops], you are out of business,” said Terry, who is currently growing bell peppers on 150 acres near Piru that a short time ago supported orange trees. “And higher-value crops are naturally going to increase farmland values.”

There are also other reasons for the increases, Terry said.

With its ideal soil and climate and plentiful water supply, Ventura County is a desirable place to farm, Terry said. Add to that the range of crops that can be grown locally--everything from asparagus to zucchini--and the county’s year-round growing season, and the land becomes even more attractive.

Terry said farmland values also have benefited from the upward surge in Ventura County’s overall real estate market, which in recent years has seen rents and housing prices skyrocket to record levels.

But he said perhaps the biggest reason that farmland is at such a premium is the migration of growers to Ventura Country from areas such as Orange County, where much of the farmland has been plowed under to make way for development.

“It basically becomes the law of supply and demand,” said Terry, who along with his brother farms about 600 acres countywide. “There is a finite amount of ground [in Ventura County] and the competition for that ground is escalating.”

The same holds true in other parts of the state, according to the farmland study.

In grape-rich Napa County, the value of high-end vineyard land has more than tripled over the past five years, selling last year for as much as $180,000 an acre.

Similarly, the price of dairy land in Riverside and San Bernardino counties--about $100,000 an acre on the high end--nearly doubled from 1997 to 2001, while the price of Coachella Valley date orchards has shot up 40%, to a high of $50,000 an acre, during that same period.

Mark Clarke, a Santa Maria-based farmland investment manager who helped present the survey at a conference last month, said the values in the study reflect sales prices recorded last year.

And ranges are presented in each farmland category, so that growers and others will know, for example, that the price of Napa Valley vineyards ranged from a low of $85,000 an acre to a high of $180,000 an acre in 2001.

Clarke said it is impossible to draw any generalizations about farmland values statewide, because growing conditions and other factors vary from region to region.

But in Ventura County, as well as the rest of the coastal farming region that stretches north to Monterey County, Clarke said the trend over the years has been toward strong if not increasing land values. And that points, to some extent, to the strength and diversity of the agricultural industry in the region, he said.

“I think five years ago, if I told you the values would be where they are today, most people in the industry would have said that was insane,” Clarke said. “By and large, I think that means [farmers] have been successful. If they were not making money, the values would collapse.”