Navigating California's Ag Real Estate: Insights from Tim Murray

Timothy Murray, founder of Murray Ag Real Estate, meets with Acres’ VP of product and data science, Aaron Shew to discuss the intersection of data-driven insights, market trends, and regulatory challenges in managing and valuing California's agricultural land. 

See how Murray Ag utilizes Acres.com mapping and data tools to simplify the analysis of complex datasets for better decision-making in agricultural real estate.

Aaron Shew (00:00)
Hi everyone, Aaron Shew here with Acres. Today we're excited to have Tim Murray joining us for an expert interview to discuss how Murray Ag uses market research and data to support their clients. 

Tim “Boomer” Murray is a broker and the founder of Murray Ag Real Estate in Fresno, California. Welcome Tim, great to be with you today. Thanks for joining us. 

Timothy Murray (00:22)
Aaron, it's a pleasure. Thank you.

Aaron Shew (00:24)
Yeah, so as we get started maybe just give us a little more background on Murray Ag real estate, the region you're working in, maybe an example project that you've worked on recently. 

Timothy Murray (00:36)
Sure. Murray Ag Real Estate is located in the Central Valley of California. We have physical presence in Fresno, Visalia, and then the Porterville area. So if you think about the San Joaquin Valley, break it down from Bakersfield to Sacramento. A pretty expansive area of farmland production, commodities grown for export and domestic, and we cover all of it. 

So large scale commercial farming operations– which would be permanent crops, tree nuts, citrus, et cetera, inclusive of dairy and livestock as well. 

Aaron Shew (01:19)
That's quite the breadth of land and data that you cover. A lot of complex markets. I think most people, when we think about California ag or California land values and brokerages, we're often thinking about two things. 

One is gonna be water security, what's going on with water on the property? And the other is probably to do with the crop type. What kind of orchard is it? What kind of crop is it?

So I'd like to dig in on a couple of those things today and have you share some of your insights. So let's start with water. What kind of water data are you looking at most often for a project? And what tools are you using? What are the most important features you're looking for when you take on a new project? 

Timothy Murray (02:06)
Absolutely. So water is the number one driver of land value in California and probably the nation. The one thing that makes water unique in California is that it's very locally nuanced. And what I mean by that, there's federal supply, there's local and state supply, and it's complex in nature of how that works to the environment and what we're getting from precipitation and allocations. 

So when you think about some properties in the Delta and Sacramento area, that's very different than a property in Kern County near Bakersfield. So it's complex, and how you understand and discern the water security relative to the region can be cumbersome. 

One of the ways that Acres has made that very easy for me and a number of professionals in Ag real estate, whether it be finance, appraisal or brokerage, is to layer geospatial data on top of the water relative to the land and the acres and the planting. Permanent crops use more water. Relative to open or row crops.

And if you think about the complexity of the region just on how big it is, and then bring it into a county level, there's multiple different water districts within. The allocations and the security of the supply are very different. In a short two to three mile radius in some cases. So how you discern that to drive the land value is critical.

And honestly, before acres, it was very challenging and it really wasn't done. So you all have really changed the game to understand the data to actually apply real asset values relative to the number one driver of what you can grow, which is water.

Aaron Shew (04:19)
That's a really good insight on water. So when we're thinking about water, I mean… it's access to water, it's surface water, it's groundwater, and it's rights to water, right? So it's just, it’s the water there doesn't even mean that you have access, right?

So you have to dig even deeper to figure out, okay, I've got access to surface water, but do I have the right to it? And then splitting that across the demand of your crop, it sounds like, to derive a value. 

Timothy Murray (04:50)
And water is political. In California, we have a law that was passed in 2014 called the Sustainable Groundwater Management Act (SGMA) and its impact is not only on agriculture, it's on municipalities, it's on residential use. 

And the goal is to bring California into sustainable framework and get the aquifers, which have been overused and depleted, back to a framework that supports California. So even though the water might be there, under your property in the ground, your ability to pump it, to irrigate, might not be feasible relative to the laws and the regulatory environment that Californians have to operate within.

Aaron Shew (05:38)
Yeah, it requires a lot of local insight, which you obviously have. Really glad to have an expert like yourself come on to talk with us about water. 

Now I'd like to talk maybe more about the crop side of things. So we know water is critical. It's important. There's both the access, you know, is it available environmentally, but is it available legally? But once you get past… so let's say you've got your property somewhere around Kern or Porterville and you've assessed the water for the property, tell me a little bit about how that relates to specific crop types. 

Where I'm from in Arkansas we have row crops, we don't really do permanent crops out there. I know you've got almonds, pistachios, citrus, wine grapes– which generates a tremendous amount of complexity in valuing a property or selling a property or investing in a property where you're not really sure. 

You know, there's probably a much broader window that you could fit in. So I'd love to learn more on the crop side. What are you looking at when you step on to a permanent crop farm in terms of coming up with a value once you get past the water rights piece? 

Timothy Murray (06:49)
There's a number of factors that go into it. The economic life of the tree, right, of the permanent crop. How much more economic life do you have on that tree? Number one, what's the state of the tree? Have the inputs, the growers, the farmer been giving the right inputs where the yields are beneficial on a forward-looking basis? 

There's under-farming practices, and that's important to note when you're looking at a property. Not only from a value when you bring it to market, but if you're a buyer, and how can you utilize what's left on the economic life whether it's five years or 40 years.

The second piece of the economic life of the tree or the permanent crop is what's the broader commodity space doing? Is there a market for it? So you have the yield, but how is that crop paying to the grower? What are they getting? 

And what we've seen in the last several years is walnuts, as an example, there's been a significant decline in the commodity price, which has to impact the underlying asset of how much that walnut property is worth. That's just one example. 

You can look at what almonds have done, you can look at what citrus is doing, how are naval oranges or tangos or caras performing in terms of the price to the grower.

The buyers are getting more sophisticated in terms of forward-looking returns that they're looking to generate. And whether that's a grower who's more of an investor, or a grower, a farmer, a diversified grower– are they able to make money? Because if the farmer's not profitable, the farmer's not producing what they need. 

And so the challenge has been to see does this crop have a market in an export? Is it expanding? Is it retracting? All of that plays into actually what the price is worth. And that's been, I think, a big change in the last five to seven years if you look at California agriculture and what the price breakers or the total transaction values have done.

Aaron Shew (09:15)
Yeah, that was one of the maybe the most challenging land values report we've published at Acres was on California Land Values, which you were one of our reviewers for to help us understand where we might be off or what insights we might have. 

It is incredibly challenging and it's hard for me to imagine almost as a farmer or a broker or an investor, anyone valuing land in California for permanent crops. Because you're all at the same time looking at these government regulations on water, what you can access and what you have a legal right to. 

And then you're looking at the specific farm and all the trees on it and the attributes of that supply that you can actually get off of that ground. And then you're tying that to sort of the global supply and demand of that specific commodity. 

And it's just, it's incredibly overwhelming to think through. So I have a lot of respect for folks like yourself that have dug in and really understand these markets and can give people good information on the crops themselves and on the markets beyond the farm. 

When we buy in Arkansas, I mean, you don't really think about– you go buy a rice farm in the Arkansas Delta, you don't really think about the commodity prices so much. There's sort of the underlying land value and there's what you can produce and we all know prices go up and down, but we don't think about that global supply and demand as much as you have to in these permanent crop regions.

Aaron Shew (10:42)
So kind of linking back to acres, in the Land Values Report, we looked at stuff by, we isolated surface irrigation districts in ag space. We really didn't go into a SGMA or adjudicated basins or anything else because it got too complex. 

Timothy Murray (10:56)
Yeah. You get lost in that.

Aaron Shew (10:59)
Oh, man, it's just a plethora of data. And we did look at some crop type stuff and started to dabble in year planted as an example, just trying to assess the age of the tree and we decided that was too much. The report was something like 50 pages long by time it was done anyway so we kind of had to put a nail in it. 

But maybe tell us a little bit about what you're looking at in acres in terms of crop data or maybe a workflow you go through. You've got this property, you've got the water rights, you've got permanent crop data. What kinds of information in acres are you looking at or what features are you using to help you analyze that property?

Timothy Murray (11:39)
Yeah, you all have taken a highly complex set of layers and provided it both web and mobile in a very digestible and actionable manner. And some workflows within that is not just the water layer- it's understanding opportunity zones, or the Williamson Act, solar, and the transmission lines. 

All of this is coming into play in how we're looking at our properties at Murray Ag Real Estate. And the goal for us is to discern the right data in a reasonable amount of time in order to advise and make actionable insights that are data backed. It's both qualitative and quantitative. 

So taking reports, bringing out one property that might be looking to go to market, how does that perform on a comparable basis in the comps? What's for sale? Because the listed properties, those are easy workflows that we take a look at every single day. 

But then taking that one more level is the reporting or the exporting of that data to inform that buyer/seller of how we're going to advise based on what the data tells us. And that could be a PDF report that's emailed, but it could be a simple link that is texted to that grower or that buyer who's out on the road.

Aaron Shew (13:14)
Yeah, that's super helpful. I really appreciate all of the kind words about Acres. We spent a lot of time building this out and we spent a lot of time listening to users like yourself. And so the input and the feedback that you've provided and others have provided plays a key role in what we build here. So I'm glad that that's coming out and we're growing the business together, so to speak.

Timothy Murray (13:38)
Absolutely. 

Aaron Shew (13:39)
So, you know, we talked about the individual property analysis and the data that matters for valuing a property. I'd like to talk because I mean, you're the expert again at the economic level for these crops of supply and demand. I'd like to hear a little bit more as we're moving into 2025. 

We know we've had, we've ridden this crazy wave of kind of pre-pandemic, we hit a surge of land values, particularly in permanent crops in terms of acres sold in and price per acre sold. In ‘21, ‘22 we had a big peak there. Now we've seen some tough times, mostly due to increasing interest rates and a number of other factors. But it feels like we are stabilizing and maybe seeing some of those headwinds recede and maybe seeing some momentum in the market. 

Again, this is me from a distance looking at some of the data. I'd love to hear some of your insights. Are there particular crops you see doing better this year, recovering better this year? Tell us a little bit more about that. 

Timothy Murray (14:39)
Yeah, well, I think it's important to note that I'm not an economist. I don't pretend to be one, but the view that I have is that high yield crops will yield the way. There has to be the mindset to make money, and make money in a profitable way. 

And right now what I'm starting to see both from conversations and transactions, buyer behavior, is stepping into almonds. Younger fourth to seventh, eighth leaf almonds. Where you've got another 20 years or so of economic life. 

Citrus is still highly sought after. And whether we're looking at 50 acres or 500 acres, it's important to discern the scale in some of these commodities. But almonds right now, citrus, pistachios, avocados– are a number of crops in the permanent landscape that people are still seeking.

Aaron Shew (15:44) 
Yeah, that's really helpful to understand and I'm glad to see it. Even when we published our report, not quite a year ago, but I know citrus remained pretty resilient. Of course, it's much smaller in acreage terms, but it's a very unique crop that was resilient through a lot of that. 

So it seems like the market is kind of recalibrating or recalibrated to some extent, relative to a year ago, which is great to hear. So as the landscape in California, specifically the California ag real estate market continues to evolve this year, what macroeconomic trends or issues are you concerned about? And maybe on the flip side of that, what might make you optimistic?

Timothy Murray (16:30)
It's a great question and there was an event earlier this week with a new administration taking over. So tariff and trade is really important and that's, optimistically, I think where we'll go in a direction is, California growers and exporters will be beneficiaries. 

The rate environment should come to a more favorable framework but it's still very much elevated from where it was in 2021 and 2022. The regulatory environment of the California grower, both on water and energy, is still top of mind for anyone who's on the producing side in California. 

Despite these challenges, there's real impressive opportunities to produce in a sustainable framework and a profitable framework.

And that's the unique aspect of California with soil, climate, and water. Despite SGMA, I think the optimistic framework of that is at least we have a clear picture of what that ramp down will look like. And growers are iterating and figuring it out and pushing forward.

Aaron Shew (17:42)
Yeah, that's really great insight and very glad to hear that there's some optimism in the air. Well, “Boomer”, thanks so much once again for joining us today for an Acres expert interview. We can't thank you enough for the product feedback you've given over time. It's made our product better.

And we really appreciate your time today sharing insights on California and the ag real estate market there. So appreciate you joining today. Always a pleasure to talk with you. 

Timothy Murray (18:09)
Aaron, I really appreciate it and congrats to you on the team on all the great things you guys are doing. It's really impressive and you guys are changing the game in a very positive and constructive manner. So thank you.