Value of farmland owned by Select Harvest, page-2

I did some calculations on this last year (the post is here if you are interested.)

What I found back then was that the land and orchards owned by Select were worth about $370 million AUD.  

Assuming a share price of $5 per share, that would put the current market cap of the company at just over $350 million. So it does look like that at the current share price, you are buying the company for less than the value of its land and almond orchards. (possibly the land values have fluctuated a bit in the past six months, though there is not much reason to believe that the almond orchard valuations have changed much since then).

Bear in mind that the $370 million figure was just for the land and orchards owned by Select: it completely ignores the food processing business, which of course could have significant value given the value of the brands and growth potential.

Meanwhile, in California earlier this week, one local news source has stated that one of the largest growers in the state is removing 10,000 acres of almond orchard:

One of Kern’s largest growers said Wednesday it will immediately take 10,000 almond acres out of production in the western part of the county because of “limited water resources and market factors.“

The move by Wonderful Orchards, formerly known as Paramount Farming, idles a swath of land equal to about 5 percent of the total acreage devoted to almonds in 2014, according to county figures.

Almond prices have dropped sharply in recent months even as California continues to wrestle with the effects of at least four years of drought.

Despite that, the timing and magnitude of the company’s actions seemed almost shocking to one observer.

”That’s very surprising that they would pull 10,000 acres, especially because it’s bloom time right now,“ said Central Valley grower and economics teacher David Gill. Almonds remain one of the most profitable commodities being grown locally despite a roughly 37 percent decline in prices paid to producers, he added.

In 2015, the US National  Agricultural Statistics Service estimated the total almond acreage in California was at around 1,020,000 acres, so assuming the above report from the local news site is accurate, the 10,000 acres would be equivalent to removing 1% of the total almond acreage in the state.