The real estate bust that caused housing values to plummet hasn’t had much of an effect on agricultural land values in Southern California.
Many farmers in Orange County left the business long before the current economic crisis struck, said Matt Kawamura, partner in Orange County Produce LLC, Irvine, Calif., one of the county’s few remaining strawberry growers.
Kawamura considers the company fortunate because it has been able to keep going despite a host of challenges.
One positive aspect of the current economic situation is that the housing slowdown probably will give the company another three- to five-year window where it can continue to farm on the land it leases.
Orange County Produce has long enjoyed a niche growing strawberries and beans, but thanks to the locally grown movement, the company is bringing back some items — like celery — that it stopped growing years ago.
“The only thing that’s helping us now is finding a locally grown niche and selling more direct to the public,” Kawamura said.
Land prices in Southern California have stayed constant, said Doug Ranno, chief operating officer and managing partner at Colorful Harvest LLC, Salinas, Calif., which has growing operations in Orange and Ventura counties as well as Salinas/Watsonville.
“The good ranches still cost money in Southern California,” he said.
There really aren’t any agricultural land transactions to speak of in Ventura County, home of a handful of Oxnard growers, said Scott Deardorff, partner in Oxnard, Calif.-based Deardorff Family Farms.
“The sellers out there are very few and far between,” he said. “They’re just waiting it out.”
Many growers continue to lease, but lease rates “have definitely not gone up,” he said.
Landowners are under pressure to hold rates steady or even drop them a bit on marginal ground. Occasionally, there’s talk of land prices dropping below earlier levels, but none of those deals have actually materialized, he said.
“It’s kind of stagnant as far as activity and pricing go,” he said.
Growing remains a challenge in Southern California, Deardorff said, and farmers tend to be in a “hovering mode” rather than increasing or decreasing production.
The soft real estate market may have affected local home values, said Russ Widerburg, sales manager for Boskovich Farms Inc., Oxnard, but good agricultural ground still is very much in demand, and buyers must pay a premium for it.
“You don’t see idle ground around here,” he said. “Demand definitely exceeds the supply of open ground in this area.”
Jim Nahas, owner of Success Valley Produce LLC, Oxnard, has observed the same thing.
“Conventional strawberry ground is very expensive in Oxnard because good ground to grow on is limited due to the population booms,” he said.
Locating land for organic strawberries also is a challenge because growers can’t afford to go through the three-year transition like they used to, he said. They must find fallow ground that has not been used in years or pay a premium for existing organic ground.
The company recently moved its organic program from Mexico to Oxnard, and Nahas said it took him two or three months to find affordable land in a suitable location.
Land costs aren’t the only issues Southern California growers face.
“We have very big issues with water,” Kawamura said.
Growers in Orange County pay more for water than anywhere in the U.S., he said. Growers also face high insurance costs, and they will have labor issues to deal with until Congress addresses the migrant worker issue.
“It’s been very difficult,” Kawamura said, and that’s without the environmental issues.
“We have so many environmental constraints on us in Orange County that it’s difficult to keep farming,” he said.
And that pressure is only getting worse since, without new construction projects to inspect, officials focus more on farming operations.
“We’re under the microscope pretty much all the time,” he said.