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Avocado grower holds on despite soaring water costs

A 94.25-acre avocado grove that sold for $1.2 million March 19 on Mountain Way in Bonsall will remain — while more than 3,000 acres of trees have been removed from production countywide during the past decade.

John Haskett, an investor from Incline Village, Nev., who plans to keep operating the Bonsall grove, acquired the property originally offered at $1.75 million.

Haskett, a mortgage loan broker and investor, is also a principal in a Reno Nev.-based pharmaceutical distribution firm called Dr. Dispense.

The grove was sold by Trulette Clayes and Brendan Holmes of Bonsall as co-trustees of the Joseph A.W. Clayes III Charitable Trust.

The Clayes charitable trust also sold a 44-acre avocado and citrus grove in Valley Center for $723,181 in 2009.

Haskett was represented by Monty James of Pacific Coast Executive Realty.

The sellers were represented by Matt Davis, Terry Jackson, D. Matt Marschall and Curtis Buono of Cushman & Wakefield's The Land Group.

A Cushman & Wakefield statement said about 60 acres are planted in Hass avocados.

Davis said the property consists of Hass avocado trees, tangerine and Valencia orange trees, and 78 grapefruit trees.

While the grove had profitable years from 2005 through 2011, water rates, which climbed from about $400 an acre-foot in 2002 to about $1,300 an acre-foot in 2012, consumed the profit that year. The cost of an acre-foot is about $1,400 today. An acre-foot is roughly what two families of four consume in a year.

A Stehly Enterprises report (Stehly manages the grove) said 2011 was a relatively strong year with 650,717 pounds of avocados sold at $1.49 per pound for $970,211 in revenue and $690,192 in operating income.

The picture was very different in 2012, when only about 169,800 pounds of avocados were sold at just 86 cents per pound. Factor in about $277,300 in water costs and almost $97,000 in management expenses, and the total resulted in about a $228,800 deficit — the first time the grove lost money in at least seven years.

James said Haskett bought the property at a sufficient discount to withstand water price increases. New piping systems will make the usage as efficient as possible.

Davis, who emphasized that avocados typically do better in alternating years, said that while the cost of water continues to be a major issue, Haskett will have access to service from the San Diego County Water Authority. In the past, he has had to rely on wells.

"That gives him reliability," Davis said.

Eric Larson, San Diego County Farm Bureau executive director, said that while more than 3,000 acres of avocado groves were taken out of production from 2002 to 2012 to about 22,000 acres, the remarkable thing is that it wasn't more.

Larson said because of increased avocado prices, the value of the avocado crop increased from $152.27 million in 2002 to $157.9 million in 2012.

Phil Henry, president of the Henry Avocado packing facility in Escondido, said he knows of a couple of small growers (five to 15 acres is a typical size) who plan to give up on their businesses this summer.

"This all has been exacerbated by the drought," Henry said.

With water prices continuing to climb, making avocado and citrus less viable, some grove owners may try to sell to developers, but they may not find it easy.

Steep slopes may make them undevelopable and a new general plan that down-zoned much of the backcountry, made it so only nine units could be developed on the Bonsall property, for example.

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