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published on February 8, 2013 - 10:08 AM
Written by The Business Journal Staff
The Valley farm industry continues its insatiable hunger for productive farmland. The demand has even changed some of the Valley’s traditional crop areas. For instance, the area around Huron has been known for its row crops, including spring and fall lettuce. The town produces the bulk of Fresno County’s head lettuce that totaled 13,550 acres at a value of $88.3 million in 2011.

 

The Valley’s lettuce crops are harvested from late February to late April and from September to November, filling the gaps between the Salinas and Yuma, Ariz. lettuce seasons.
Valley’s Lettuce remains an important Huron crop, providing most of the nation’s fall and spring supplies. But now permanent tree crops are also being planted in the Huron area, including pistachios.
“There are permanent plantings in Huron,” said Dale Samuelian, senior vice president of Pearson Realty in Fresno. “They were annual row crops.”

Challenges in Huron
Water is not as readily available on the Westside of the Valley as it is on the east side, but crops like pistachios, which can handle heat and dry conditions, can do well in Huron area. Also much of the surrounding land is considered marginal.
With nut prices rising, farmers have made some sizable purchases in and around Huron, as they have across the Valley.
One example is a Dec. 27, 2012 purchase of 5,279 acres of farmland in Fresno County south of Huron for $43.1 million. Agents Jon Daggett and Bill Hopkins of Pearson Realty in Fresno brokered the deal that translates to a little more than $8,000 an acre.
It was the largest amount spent on farm real estate in the central San Joaquin Valley from Jan. 1, 2012 and Jan. 1, 2013, according to farm real estate information supplied by agents to The Business Journal.
But at the per-acre price it was considered a bargain even though pistachio trees will have to be planted and an irrigation system installed. Some growers would prefer to start from scratch and have a producing nut orchard for a longer period of time.

Variety of Valley areas represented
The second highest price paid was $20 million for 1,250 acres, or $16,000 an acre, for a young pistachio orchard on Road 9 in Chowchilla. Agent Al Mendrin handled the transaction for broker Patrick Conner with London Properties in Fresno.
Huron came up again scoring fourth on the list of high-priced purchases with a 1,028-acre open land property five miles southeast of Huron that sold on Sept. 27, 2012 for $8.2 million, or $8,000 an acre.
To the south, a 160-acre producing almond ranch with an electrically operated well on Avenue 152 in Tipton is up for sale at $4.8 million, or $30,000 an acre. The property is described as a premium operating almond ranch.
By comparison, operating vineyards, which are often pricy investments, now are in much in the same price range as nut orchards. For instance a 111.17-acre vineyard with chardonnay and merlot grapes with Highway 99 frontage in Tagus in Tulare County is up for sale for $3.7 million, or about $33,000 an acre.
A 20-acre Thompson grape vineyard in Kerman is advertised for sale for $364,500, or $18,225 per acre.
A 78-acre walnut orchard on Avenue 272 in Visalia is listed for sale in Visalia for $2.25 million, or about $28,846 an acre.

Prices no surprise
The high prices paid for usable farmland and orchards come as no surprise to local experts. And with a limited supply of good land available, interest among farmers and investors has grown.
Herb Hansen, owner of Herb Hansen Real Estate in Caruthers, said his phone has been ringing off the hook for a 453.16-acre almond orchard he has for sale in Helm. The listing price is $9 million, or about $19,986 an acre. It includes water, electricity, gas and a metal shop building.
“I can’t believe the inquiries,” Hansen said. “I own an almond orchard and I should be selling.”
He said almond orchards are generally selling for $20,000 an acre. Rising almond prices and strong demand have boosted the price per acre, Hansen said. “The price goes up every week, he said.
And investors have added to the demand for farm acreage. “Investors run the market,” Hansen said, adding that both Chinese and German investors are interested in almond acreage.

Locals the prime buyers
However, local farmers are the prime purchasers for much of the open land on the Westside, said Patrick Conner, president of London Properties.
Either way, Valley farmland is in demand and that trend is expected to continue.
“We’ve been experiencing a pretty good ride,” said Mechel Paggi, director of the Center for Agricultural Business at Fresno State, speaking at a recent symposium on agricultural valuation. “Values are going up.”
The U.S. Department of Agriculture reports that farmland values have jumped about 20 percent since 2005.
Good orchard land is particularly lucrative, selling at an average of about $20,000 per acre.  Value for prime pistachio and walnut orchard property could exceed $30,000 an acre this year, said Stanley Xavier Jr., president and chief executive officer of Correia-Zavier Inc., an appraisal firm in Valley’s Fresno, speaking at the recent Fresno Agricultural Valuation Symposium.
A big part of the jump in farmland pricing is that commodity prices have increased dramatically, Paggi said.
“Fruits and nuts have seen a steady upward tick,” he said. Prices for fruits and nuts have increased by about 10 percent in the last three years, Paggi said.

Expansion mode
Consequently, farmers want more land including open property previously used for row crops to plant fruit and nut crops. Ron Silva, owner of Ron Silva Realty, said the highest recent price jumps in Valley’s land have been for open land previously used for row crops.  
In terms of land purchases, interest rates have fallen while cash flow has been on an upward trend, he said. That includes marginal land where pistachio trees will be planted.
Silva currently has a 75-acre open land property for sale in Hanford. It is priced at $1.3 million.
He recently sold an 88-acre open land property at 15th and Houston avenues in Hanford for  $1.4 million. It will be planted in walnuts.
He also sold 92 open acres at 16th and Iona avenues in Hanford for about 1.2 million. It will be planted in almonds.
As for those purchasing Valley’s farmland, much of the sales have been to local farmers and investors. Less than 3 percent of the purchases are to foreign investors, Samuelian said.
He added that some Valley’s investors have local farmers do the farming for them.
One positive that Samuelian has noticed is that today’s farmers are willing to make adjustments to ensure they have the most profitable crop in the ground. That can mean removing a crop producing at its peak to be replaced by a higher-demand crop. “They will pull out and make money,” he said. “They are willing to change.”

Standards are key
Frank Plessmann, president of Agriworld Fund Inc. in Fresno, said that for farm investing to continue successfully, high ethical standards must be maintained among farmers and investors. “We have to work together as a community on a long-term basis,” he said.
He pointed out that California producers about 80 percent of the world’s almonds and demand for the crop has been growing in China. Plessmann expects almond demand to continue its surge.
“It would be wise to expand this sector with some outside money,” he said.
That would help maintain market share world wide, Plessmann said.
“It should allow investors to easily invest,” he said.

Chuck Harvey  |  Reporter can be reached at:
490-3466 or e-mail chuck@thebusinessjournal.com


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