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 Happened?

• What happened in 2014 that matters??

It Never Rained

Imports Continued

The Crop Came in Okay

Thompsons dried up

Almonds went to $4/pound

Groundwater Legislation

Uneventful year?

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

Real Estate Factors

• Competition

• Profitability

• Supply & Demand

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

Real Estate Factors

• Good vineyard (with contract) retains value

$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

Rory RobertsonWestchester Ag Asset Management

Dan KevorkianPearson Realty, Farm Lands Dpt

Ben SlaughterCorreia-Xavier, Inc.