San Joaquin Valley Wine & Grape Industry Forum
November 21, 2014
Fresno, CA
Rory RobertsonWestchester Ag Asset Management
Dan KevorkianPearson Realty, Farm Lands Dpt
Ben SlaughterCorreia-Xavier, Inc.
What does this mean?
• Good vineyard with good contracts remained profitable
• Un-contracted grapes were a challenge
• Thompsons look less viable
– The bulldozers are rolling
• Almonds continue to be attractive alternative
• The (water) game is changing
Why keep vineyard?
• If the economics look like this:
Almonds Grapes
Yield 2,500 15
Price $3.00 $350
Gross $7,500 $5,250
Cost $3,000 $2,700
Net $4,500 $2,550
Why keep vineyard?
• Diversification
• Price stability
• What goes up (almond price) must go down
• Domestic use (wine) vs. export (almonds)
• Limited labor cost
• Risk in switching to unknown crop
• New equipment
• Water use/cost
0
20
40
60
80
100
120
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Nu
mb
er o
f T
ran
sact
ion
sTransaction Volume
WG Vineyard
Raisin Vineyard
Real Estate Factors
• §1031 Exchange, a ripple effect
• High Speed Rail impact
• Return of Urban Developers
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
Pri
ce P
er A
cre
Wine Grape Vineyard Sales
Real Estate Factors
• Vineyard
– Older
– Not contracted
– Less desirable varieties
• Target for redevelopment
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
Pri
ce P
er A
cre
Central Valley Raisin Vineyards
Land Value
$0
$2,500
$5,000
$7,500
$10,000
$12,500
$15,000
$17,500
$20,000
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
SJV Open Land
Water
• What’s going to happen?
• Will it rain?
• Will we build a dam?
• Will we build a “peripheral tunnel”?
• Will groundwater pumping be restricted?
• Will water be rationed?
Water
• Nobody really knows
• What we do know:
– Land with good water will command a premium
– Land with less reliable sources may suffer