Company: LANDO
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001495240-25-000005
Chunk: 86

Company: GLADSTONE LAND Corp
Filing Date: 2025-02-19
Form: 10-K
Item: Item 7
Chunk 86
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 following a typical “La Niña” weather pattern, bringing wetter conditions to Northern California and drier conditions in the southern part of the state.  Northern California has seen heavy rain and snow from multiple atmospheric storms, while much of Southern California is either already in or trending toward drought conditions.  However, after consecutive above-average or wet years, and due to heavy precipitation experienced in the north, reservoir levels across the state remain above historical averages.  As a result, we currently expect adequate surface water supplies for our farms, pending final water allocation announcements.  Wet conditions often create situations where water purveyors and users have surplus water supplies that can be acquired at lower prices; thus we continue to look for opportunities to purchase water at attractive rates to supplement our long-term water supply.

With the ongoing implementation of the Sustainable Groundwater Management Act (“SGMA”), farmland operators statewide continue to face groundwater restrictions.  These limitations have led to the implementation of supplemental water projects that enable farmland owners and operators to capture or import surplus surface water.  We continue to actively evaluate new projects and programs for 2025 that we believe will help mitigate the negative impacts of SGMA-driven pumping curtailments, including initiatives that support floodwater capture and storage, fallowing programs, and infrastructure development to enhance water management.

Factors Impacting Agricultural Land Values in our Regions of Focus

Western U.S.

Land values in the western U.S. continue to face significant pressure from the ongoing high interest rate environment and lower crop prices, particularly in almonds, wine grapes, and apples.  Both the almond and wine grape industries have experienced large amounts of acres being removed, and the increased cost of capital is preventing much of that acreage from being replanted at this time.  Among other factors, this has contributed to a rise in almond prices, though they remain below the peak levels experienced a few years ago.  Pistachios continue to fare much better and are experiencing stronger profitability, despite an increase in bearing acreage of pistachios.  Meanwhile, with water being more plentiful in recent years, row crop acreage had expanded, putting downward price pressure on many row crops.  As such, we anticipate a reduction in the amount of acreage dedicated to row crops in 2025.

Large tracts of land are becoming available in California’s Central Valley; however, while smaller parcels are selling rather quickly, larger holdings are sitting on the market longer.  The implementation of groundwater plans to comply with SGMA continues to significantly impact land values.  Properties