On the Ground

California agriculture enters 2025 facing a landscape marked by both familiar challenges and emerging uncertainties. While commodity prices have shown some stabilization after recent volatility, producers continue to grapple with high input costs and elevated interest rates that squeeze margins and complicate planning. At the same time, SGMA (Sustainable Groundwater Management Act) enforcement is reshaping water availability and land use across key regions, particularly in the Central Valley, influencing both short-term operations and long-term viability for many growers and landowners. Together, these forces are leading to a moderated pace in land value growth and shifting dynamics in the market.

Traditionally, farmland values have been tied closely to crop performance, soil quality, and property-specific features. Recently, however, broader economic forces and regulatory pressures have begun to play a larger role in shaping land values. More decisions are being driven by financial sustainability, water security, and operational adaptability rather than purely commodity-specific returns.

Despite these challenges, opportunities remain across California’s diverse agricultural landscape. From growers looking to expand or reposition operations, to families planning transitions, to agribusinesses seeking strategic acquisitions, the market still offers avenues for growth and resilience. Changing conditions are creating pockets of value where well-informed buyers, sellers, and operators can make decisions that align with both short-term needs and long-term goals.

Owning or operating farmland remains a deeply rooted connection to the state’s agricultural heritage and an essential foundation for livelihoods and local economies. Whether managing a family farm, exploring new crops, or navigating regulatory change, a thoughtful, informed approach is crucial to finding the right path forward.

As the agricultural landscape grows more complex, partnering with professionals who know the land and the numbers is more important than ever. The team at Terra West Group is dedicated to helping landowners, farmers, and agribusinesses understand these market dynamics, identify opportunities, and make decisions with confidence.

Land value information is derived from Terra West Group’s proprietary transaction database, in conjunction with the annual Trends® in Agricultural Land and Lease Values report from the California Chapter of ASFMRA, shared with permission. The full report is available at www.calasfmra.com.