Most land expansion decisions don’t start with a spreadsheet. They start with a phone call, a tip from a neighbor, or a piece of ground that suddenly becomes available after years of waiting. By the time the numbers come out, the emotional momentum is already built and, truthfully, that’s exactly when it pays to slow down. Agricultural real estate markets in 2025 were characterized more by selectivity than broad-based decline with signs of
stabilization according to the ASFMRA 2025 Trends® report, meaning the pressure to act or a wrong decision are both higher than they’ve been in a while.
Having worked through this circumstance with clients across a range of crops and regions, I’ve found the decision to expand usually comes down to a few core themes. Analyze them wrong and you’re managing the consequences for a generation; but think about it all in the right way and expansion can be genuinely transformative.
Start With a Gut Check: And Be Honest About It
Before anything else, a land owner considering expansion needs to separate economic feasibility from emotional desire. These two things can feel identical in the moment, but they lead to very different outcomes.
I’ll give you an example: let’s say you grow almonds and they haven’t performed as well recently as a neighbor’s pistachios and their land comes to market. Does it make sense to expand into pistachios? Maybe. But “my neighbor is doing well with it” is not a proper or guaranteed business plan. Before saying yes to any expansion, here are the questions that actually matter:
- Do you have access to the capital needed, and are the terms attractive given today’s rate environment?
- Does the expansion offer genuine intrinsic value or meaningful diversification—or is it just a change of scenery?
- Do you fully understand the water, soil, and microclimate of the ground you’re buying into?
- Are you chasing a commodity because it’s performing well right now, or because your specific property can actually support it?
That last one is where I see growers get into trouble most often. People buy ground assuming they can plant whatever is returning well at the moment, only to discover years later that the soil or climate wasn’t actually suited for it. The land doesn’t care what price almonds are fetching.
The right crop for a given property is a function of what that property can actually support and understanding that takes real diligence, not assumptions.
“The best operators understand their on-farm cash needs and diligently sharpen their pencil when it comes to the numbers. They have good processes and systems to make sound business decisions.” – Curt Covington (Senior Vice President, AgAmerica)
Redevelopment vs. New Ground: A Question Worth Contemplating
When expansion comes up, growers often default to thinking about acquiring new acreage. Yet the more pressing question is sometimes whether existing ground is performing as well as it could.
A useful example from the citrus world: decades ago, varieties like Frost Nucellar and TIs were standard navel orange plantings. Over time, consumer preferences shifted and the market moved on but many growers didn’t. They kept farming the same varieties because that’s how it had always been done, or because a prior generation had built the operation around them, and it somehow felt disloyal to make a change. The result was years of declining returns that redevelopment could have addressed earlier.
We find the calculus on redevelopment comes down to cash flow and access to capital during the transition period. Taking ground out of production, even temporarily, has real costs, and you should model those costs before a decision is made. The growers who navigate this well tend to be the ones having proactive conversations with packing houses and buyers, understanding where the forward market is headed, and then working backwards to determine what makes sense for their specific soil, water, and climate profile. I always remind clients that the decision should be market-informed and property-specific, not purely sentimental.
Is the Neighbor Opportunity Strategic or Just Convenient?
There’s a particular kind of expansion pressure that comes from proximity. The neighbor’s ground comes available, it’s literally next door, and the logistics make it feel almost irresponsible to pass up. That instinct isn’t wrong but it should absolutely be stress-tested.
Neighboring ground only comes available once, maybe twice in a lifetime so that scarcity is real and carries genuine value. But it also creates conditions where growers tend to overpay. A few things I’d encourage any buyer in that situation to keep in mind:
- Don’t assume the neighbor’s soil and well are identical to yours. Do the inspections.
- Understand what else is available in the market before accepting the asking price as fixed.
- Know the actual comparable sales in the area—you may be able to pay a fair premium and still come in well below what panic buying would cost you.
Proximity is an advantage but it shouldn’t be a blank check.
How the Tax Picture and Recent Data Can Assist You
One factor that legitimately shifts the calculus right now is the tax environment. Recently passed federal tax legislation restored 100% bonus depreciation for agricultural property, which is meaningfully different from the 27.5-year depreciation schedule that applies to most real estate. The ability to front-load depreciation on qualifying property or equipment can substantially change the after-tax economics of an expansion decision. It’s definitely worth a conversation with your tax advisor before the opportunity passes, not after you’ve done the deal.
“From a tax perspective, the question is not simply whether a grower can or should expand farming operations, but whether the full structure of the investment supports the operation’s long-term cash flow. With 100% bonus depreciation back in play for qualifying assets, the right mix of land, equipment and improvements can meaningfully improve after-tax returns, but only if those benefits are modeled before the deal is signed rather than after.” – K-deep Dhaliwal (Agribusiness Sector Leader for Baker Tilly)
On the market side, the picture is nuanced in a way that’s directly relevant to how you think about expansion. The NCREIF Farmland Index posted a negative annual return for the first time in its history in 2024, driven almost entirely by a -10.18% loss in permanent cropland—largely almonds and pistachios hit by oversupply, price pressure, and looming water constraints from California’s SGMA legislation. Annual cropland actually delivered 5.66% in the same period. Land values overall still appreciated, but the gap between good expansion decisions and bad ones has never been more visible in the data.
In my years of experience, I know for certain that the best time to think through an expansion is before the emotion kicks in. And that’s true whether you’re six months out or looking at a listing right now. These are the conversations I have with clients before they sign anything, and the people who take the time to work through them tend to sleep better knowing they’ve thought through each side of the coin.
