California’s family growers should not have to bid against pension funds and billionaires for the ground under their feet, and right now the rules let them do it in the dark.

Our state’s farmland is the most valuable in the West. USDA put the average value of California farm real estate at $14,100 an acre in 2026, and California cropland averaged $18,430 an acre. California also had the nation’s highest cropland cash rent, $331 an acre.

At those prices, the question of who can afford to buy the next orchard is not academic. It decides whether the next generation of Central Valley growers owns land, rents it, or leaves.

Who is buying, and why water is the prize

The biggest outside buyers in California farm country are not shadowy foreign agents. They are pension funds, insurers and investment managers, and they are open about what they want: water.

Nuveen, the investment arm of retirement giant TIAA, launched a private farmland REIT seeking $3 billion from institutional investors, with meaningful exposure to the Central Valley. Its own SEC filing calls farmland an implicit investment in water and an attractive inflation hedge. A 2023 Bloomberg Green investigation found at least 70 wells drilled from 2014 to August 2022 on land owned or managed by the biggest institutional investors in California nuts, including Gladstone, Hancock and TIAA.

The money keeps coming in smaller pieces, too. In May, Conservation Resources made the first purchase for its second farmland fund, a 155-acre kiwi and citrus property, after raising $54 million at first close with a Dutch anchor investor. Online platforms now sell slices of Central Valley almond and pistachio orchards to individual investors with a $50,000 minimum.

Ownership is already concentrated. Researchers writing in the San Francisco Chronicle found that in Fresno County, the largest 10% of owners hold 73% of the farmland. They named agribusiness, insurance companies, real estate investment firms and private trusts as California’s top landowners.

Why the small grower loses this bidding war

A family grower buys land to farm it and pays for it out of crop revenue. A fund buys land as one asset among thousands, priced against bonds and real estate, and can wait out a bad decade. That is not a fair fight, and the gap widens every time water gets tighter.

Since 2010, six major investors have quadrupled their California farmland to almost 120,000 acres, according to a presentation to the state’s Agricultural Land Equity Task Force. That same presentation warned that access to new groundwater markets could be difficult for farmers with fewer resources, and that tenant farmers face high risks.

The Sustainable Groundwater Management Act makes the squeeze sharper. In a three-year study by the California Alliance with Family Farmers and UC’s Small Farms Network, 85% of 170 small farmers surveyed said they were concerned they would have to shut down. The researchers noted small farmers are typically not the ones contributing the most to overdraft. UC researchers studying the new groundwater markets have raised concerns about transparency, transaction costs and the potential for some participants to influence prices.

Growers feel it on the balance sheet first. Escalon almond grower Danielle Veenstra told Il Sole 24 Ore last month that a neighbor’s orchard break-even has stretched from 7 to 11 years. In 2024, American AgCredit’s Jill Jelacich told Ag Alert that when crop prices fall and land equity shrinks, lenders may not be able to extend credit. A grower who cannot borrow cannot bid, no matter how well they farm.

The result is a one-way ratchet. Land with secure water rises in value and lands with deep-pocketed buyers. Land without it loses value and gets sold, often by the growers who can least absorb the loss.

What the other side gets right

Fairness requires saying that the picture is not one-directional, and investors make arguments worth hearing.

First, the tide may already be turning. Matt McEwen of Pearson Realty told The Business Journal in May that nearly 95% of the farmland his firm sold in the past year went to family operations. That is one brokerage’s sales, not the whole market. But the institutional benchmark points the same way: the NCREIF Permanent Cropland Index held 332 properties at the end of 2025, a net drop of 38, after a third straight year of negative returns.

Second, institutional owners often lease to local operators rather than farm the land themselves. Nuveen says its land is typically leased to local tenant operators, many of whom have farmed it for a decade or more. For a retiring grower with no heir, a well-capitalized buyer can mean a fair price and a farm that stays in production.

Investors also argue that sellers deserve a strong market. Farmland Partners chairman Paul Pittman told Investigate Midwest that a family who has owned a farm for a century “deserves to get the highest price possible.” Retiring growers are part of this community too.

Third, outside capital pays for things family operations sometimes cannot, from new plantings to efficient irrigation. And foreign ownership, often the loudest worry, is modest here. Foreign owners held 1,357,750 acres, or 3.9% of California’s privately held agricultural land, at the end of 2024, according to USDA’s latest foreign holdings report.

None of that changes the core problem. A retreat in a down market is not a policy, and the money is already planning its return. AgIS Capital, which manages farmland for institutional investors, wrote in September that orchards with reliable surface water offer “one of the most compelling investment opportunities in years.” Its strategy is to buy before SGMA forces out a meaningful share of the competing acreage. Some of that acreage belongs to family growers who depend on groundwater. Growers deserve rules that hold in both kinds of years.

What should happen next

We are not asking Sacramento to ban anyone from buying farmland. We are asking for a market growers can see and compete in. Five steps would help.

1. Shine a light on who owns the land. The state’s Agricultural Land Equity Task Force recommended making land sales public information and funding a Land Observatory to track ownership, lease rates and market trends. Growers of every background should support that piece. You cannot fix a market you cannot see.
2. Give local growers a fair shot before land goes to auction. A right of first offer for neighboring and beginning farmers, or local-first purchase ordinances, would let a family operation bid before a fund does.
3. Write SGMA allocations that protect small users. Groundwater agencies should consider protected allocations for small farms and require open, low-cost groundwater markets. The state itself already lists small farms among vulnerable users needing safeguards.
4. Fund the tools that keep land with farmers. Agricultural conservation easements, land trusts that buy and resell to working growers, and low-interest loans for beginning farmers all put buyers who farm on more equal footing.
5. Protect tenants. As more land is owned by investors and leased out, written leases with reasonable terms and notice protect the people actually doing the farming.

Some of the task force’s other ideas are more contested. It also proposed limiting pension and investment fund ownership of farmland, and parts of the report drew sharp criticism from USDA. Lawmakers should debate those openly. But transparency and a fair first look for local growers should not be controversial.

The choice in front of us

A new governor and a new Legislature take office in January, and both will face hard calls on water. They should add a simple question to every one of them: does this help the people who farm the land keep it?

California agriculture was built by families who put down roots, not by portfolios rebalanced each quarter. Outside capital has a place here. But the next generation of growers deserves a market they can see and a fair chance to buy in. We urge our readers to call their legislators, show up at their groundwater agency meetings, and ask for exactly that.