Donny Rocha | August 2025

If you’ve been farming in California for any length of time, you know the land market has always had its cycles. But what we’re seeing right now feels different.

California’s farmland market is undergoing one of the most significant shifts in decades. What was once a seller-driven environment is now tilting toward a buyer’s market, an inflection driven by a convergence of higher input costs, inflation, elevated interest rates, and consecutive years of low commodity prices. The effect has eroded operating margins, depleted working capital, and weakened many farm balance sheets.

Relationship Between Land Value and Farm Income/Commodity prices

The relationship between farm income and land values, once loosely correlated, has tightened. Land markets are now moving more in step with commodity cycles and operating profitability, reshaping both buyer activity and landowner psychology.

So what’s really driving the shift? Here are some of the key factors:

Rising Costs & Tight Margins. Inflation has driven up costs for fuel, fertilizer, labor, and financing. Interest rates remain elevated, compounding the strain on producers’ cash flow.
Commodity Price Pressure. Multiple years of softer tree nuts, dairy, and other key crops have cut into profitability.

Let’s take It Further

Balance Sheet Impact. Consecutive years of low returns have eroded equity positions and left growers with less working capital to reinvest or expand, and for some, this may be the cycle where they decide it’s time to step back and/or take chips off the table.
Credit Market Caution. Lenders are more conservative, scrutinizing collateral and cash flow capacity. This has slowed development acquisitions and put further pressure on valuations.

Land Market Activity and Dynamics Today

The supply of farmland on the market, both publicly and quietly offered, has grown meaningfully across the Central Valley and other key regions. This imbalance means supply is outpacing demand, creating downward pressure on prices and setting up an attractive entry point for those positioned to act.

Buyers Psychology / Seller Psychology

For those operators and investors who are still in the game, today’s market feels like an opening. It’s a chance to pick up quality farmland at more reasonable prices, especially across the Central Valley. At the same time, plenty of others are holding back, needing to recover financially before they can step into growth mode again.

On the flip side, landowners are asking themselves tough questions. Do you sell now, even if values are softer, or hold out and hope commodity prices rebound? For some, the pressure from lenders or the reality of consecutive years of thin margins makes that decision more urgent. Others are simply tired after pushing through tough cycles and see this as the time to step back, and/or explore alternative investment opportunities.

A Generational Buying Opportunity

Here’s the bigger picture: California farmland is still one of the most valuable agricultural assets in the world. Our crops, climate, and water resources can’t be replicated elsewhere. And while SGMA will limit irrigated acres in the years ahead, that may actually support long-term values by balancing supply with demand.

That’s why many believe we’re in the midst of a generational buying opportunity, the kind of moment that doesn’t come around often.

Bottom Line

If you’re a farmer thinking about growth, or a landowner weighing your options, now’s the time to pay close attention. The psychology of both sides, buyers who see opportunity and sellers under pressure, is shaping a land market that looks very different than it did just a few years ago.

This window won’t last forever. And like every cycle, those who step in with a long-term mindset are often the ones who look back and say, that’s when I made some of my best moves.

We invite you to connect with us for a deeper discussion about these market shifts and what they could mean for your operation. Whether you’re considering an acquisition, preparing for a sale, or simply weighing your options, our team can offer the perspective, insight, and strategies to help you move forward with confidence.

At Terra West Group, we work across all of California’s major farming regions and commodities. Our breadth of experience, market knowledge, and resources is second to none, and we’re committed to helping clients navigate farmland dispositions, acquisitions, investments, and consulting with clarity and results.

Terra West Group Disclaimer:

The information provided in this communication/newsletter is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. Terra West Group does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will Terra West Group be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.

About The Author

Donny Rocha is a seasoned agribusiness and finance professional whose knowledge and skills span from financial analysis to real estate, to operations, to sales and marketing. He has 20+ years of proven transactional experience executing real estate transactions and providing financial advisory services. With a foundational background in the farm credit system, commercial corporate banking, real estate, and on-farm experience, Donny brings a wealth of knowledge in agribusiness, real estate, risk management, and financial analytics.