California's Central Valley Farmland and Prices Not Immune to Recession

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The good news is for most of 2008 the agricultural land prices in California's Central Valley held steady. However, prices began to fall in the last quarter of 2008, according to Schuil & Associates, a leader in farm sales in Tulare, Fresno & Kings Counties.

Farmland prices typically follow the commodity prices. When the commodity prices are strong the farmland prices are also strong, but the when commodity prices fall, the price of farmland also decline.

The recession finally caught up to farm land prices in the Central Valley of California. For most of 2008 the agricultural land prices in California's Central Valley held steady. However, prices began to fall in the last quarter of 2008, according to Schuil & Associates, a leader in farm sales in Tulare, Fresno & Kings Counties.

According to Michael Schuil, broker for Schuil & Associates, "Farmland prices typically follow the commodity prices. When the commodity prices are strong the farmland prices are also strong, but the when commodity prices fall, the price of farmland also decline." Prior to the fall of 2008, milk, nuts, and feed prices were strong and kept the agricultural land prices high. Even though other commodities, such as peaches, plums, and nectarines were already low, there were enough buyers from the dairy and nut industries to keep the prices firm.

Now that milk, almond, walnut, and grain prices have dropped, the demand for farmland has also spiraled down. In California, Central Valley Agricultural Land that was in the $15,000 price range is now closer to $10,000 per acre. Schuil & Associates is working with buyers that have taken advantage of the lower prices. Many of the local farming companies that have been in the valley for generations have made the decision to sell and large corporate buyers have come in to fill the void.

A bright spot on the horizon is the citrus industry, in particular the mandarin growers. Although still in the midst of harvest, several citrus growers have contacted Schuil & Associates asking for additional farmland. The citrus grower's preference is existing citrus trees, but several are also willing to spill over into tree fruit areas and redevelop existing tree fruit orchards into productive citrus farms.

Two relatively new buyers to the area are blueberry growers and olive growers. Blueberry production is still relatively new for the Central Valley and olives are now being grown for the expanding olive oil industry in California. Every prospective buyer to the Central valley helps, and the newer commodities help shore up soft land prices. Farms for sale in Fresno County, Tulare County, and Kings County offer some of the most fertile land in the world, which make is adaptable to many types of crops.

Schuil & Associates has been selling agricultural real estate since 1983 and has seen these cycles before. Michael Schuil states, "Cycles are very typical in the agricultural industry. When one crop falls out of favor then another crop steps in until it too gets over planted. Then the cycle starts over again."

Schuil & Associates web page at http://www.schuil.com has a list of properties for sale in the Central Valley of California. Buyers may contact Schuil & Associates to locate specific properties for sale and Sellers may request a property evaluation from one of their real estate farm experts.

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Michael Schuil
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