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FRESNO — The decline in nut prices is also hurting land values in the Central Valley according to a new report by the Food & Agribusiness Research (FAR) and Advisory unit of Rabobank Group. The price drops have erased some of the gains in land values made during the last decade according to the report.
“Agricultural land prices are giving back some of their increases, particularly in regions where tree-nut prices have had an impact on previously rising valuations,” said Roland Fumasi, a senior analyst with Rabobank’s FAR unit.
The setback is expected to be temporary. Limited land supply, global demand for specialty crops and producers’ expansions are expected to restore the state’s historical upward trend in the long term.
“Nut prices have since plummeted from their highs in the past year to 18 months,” said Fumasi. “But California remains among the most productive zones in the world for high-value, specialty crops, so impacted land valuations may rise again later in this decade.”
In the San Joaquin Valley, declines in nut prices have hurt land values. The amount of the drop depends on the specific area of the valley, crop type and water access. The drop comes on the heels of 6.5 percent increases from 1999 to 2010 and 15.5 percent increases from 2010 to 2015.
The Sacramento valley is expected to see land values drop up to 31 percent in 2016 and 15 percent in 2017. That will shave some of the gains that occurred from 2010 to 2015 when land values were appreciating at an average of 18.2 percent per year.