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AGRIBUSINESS


STATES MULL LIMITS ON FOREIGN OWNERSHIP OF FARMLAND


CITING CONCERNS ABOUT CHINA, HOUSE REPUBLICANS ASK GAO TO LOOK AT FOREIGN
OWNERSHIP. THE 1978 AGRICULTURAL FOREIGN INVESTMENT DISCLOSURE ACT REQUIRES
HOLDERS TO REPORT OWNERSHIP TO THE USDA. THERE ARE GAPS IN THE DATA REPORTED.

BY JOHNATHAN HETTINGER, INVESTIGATE MIDWEST | 17 HOURS AGO

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Amid growing concern about Chinese investment in U.S. agriculture, there has
been a renewed push to limit and more closely monitor foreign ownership of
farmland across the country.

At least eight states considered implementing a new limit on foreign control of
agricultural land, and one, Indiana, passed a new law limiting new investment by
foreign companies – specifically citing China as a reason for passing the law. 

In addition, because of concerns about data, more than 125 House Republicans
sent a letter pushing the Government Accountability Office, a top watchdog of
the U.S. government, to investigate foreign ownership of farmland. 

Meanwhile, Sen. Mike Rounds, R-South Dakota, proposed a law that would ban
companies from China, Iran, North Korea and Russia from purchasing U.S.
farmland. The law is one of a number proposed that would strengthen federal
government monitoring of foreign ownership.



Currently, the U.S. Department of Agriculture is supposed to monitor foreign
investment in farmland under the Agricultural Foreign Investment Disclosure Act.
That act, passed in 1978, requires all foreign holders of agricultural land —
whether that is owners or long-term renters — to report those holdings to USDA.



However, the USDA largely relies on volunteer reporting, via a FSA-153 report.
Each year, the USDA’s Farm Service Agency releases that information in an annual
report. 

Investigate Midwest obtained a database via the Freedom of Information Act
detailing all the land in the annual report. The database has significant gaps.
There are more than 3.1 million acres without an owner listed. Spot checks show
that many parcels listed are no longer controlled by the owner in the database.
It is unclear if land is removed from the database after it is sold or a lease
is terminated.

While the database has significant errors and often has incomplete information,
it is the only comprehensive indicator of the quantity of land being sold or
leased to foreign interests.

In addition, 14 states have limits on foreign ownership. 

Micah Brown, a staff attorney with the National Agricultural Law Center who
researches state and federal laws about foreign ownership of farmland, said that
AFIDA is well known to be unreliable, and that despite the state-level laws,
it’s still really difficult to track ownership in those states.

“Almost every state has an enforcement provision in the law, but it doesn’t seem
like there’s much enforcement, just looking at it,” Brown said.

Micah Brown, National Agricultural Law Center

Brown said he views the current concerns as a “political flashpoint” similar to
when current laws were passed in the past. He said those passed during four
distinct flashpoints: the Declaration of Independence era; the late 1800s
(during westward expansion); the early-to-mid 20th century; and the 1970s.

There are a number of reasons for the increased scrutiny, according to experts,
and China is at the heart of many of them. Increasing foreign investment in
agriculture. Rising land prices. Increasing investment in farmland. A trade war
with China. A pandemic, where food shortages hit home for many Americans, and
spurred concerns about food security. 

Joe Maxwell, president and cofounder of Farm Action, an advocacy group on behalf
of family farmers, has lobbied for stricter regulations on foreign investment
from both states and the federal government for years. Maxwell said it’s clear
there has been more focus on foreign ownership of farmland in recent years.

“More people on Capitol Hill are focusing on what China is up to,” said Maxwell,
a Democrat who formerly served as lieutenant governor of Missouri.

The issue has been bipartisan, with advocates for stricter monitoring in the
Senate ranging from Sens. Debbie Stabenow, D-Mich., Jon Tester, D-Montana,
Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vermont, to Chuck Grassley,
R-Iowa.

The eight states that considered implementing a new limit on foreign control of
agricultural land included Alabama, Arkansas, California, Indiana, Missouri,
Oklahoma, Tennessee, and Texas. California's was passed but the measure was
vetoed.

Corn fills Iowa farmland near Muscatine, Iowa, in 2017. USDA collects
information on farmland ownership through a voluntary program. Photo by Lyle
Muller / Investigate Midwest IowaWatch


CHINA CITED AS REASON FOR LAW, BUT DATA LACKING

In their letter to the GAO, House Republicans expressed concerns about what
effect foreign investment in farmland has on national security. The group also
expressed doubts about how AFIDA is working. 

“Concerns have also been expressed that foreign investment in U.S. farmland
could result in foreign control of available U.S. farmland, especially prime
agricultural lands, and possibly lead to foreign control over food production
and food prices,” the letter from the House Republicans stated.

Many of those same representatives sent a letter in July to Secretary of
Agriculture Tom Vilsack, raising concerns about the effect of foreign ownership
on food prices. The group expressed specific concern about China’s level of
investment.

Republicans have repeatedly cited China as a need for the law.

This summer, Indiana became the 15th state to pass a law limiting foreign
ownership after the state legislature passed a law earlier this year banning
foreign-owned companies from purchasing farmland. In Indiana, 401,747 acres are
foreign-owned. 

In doing so, the bill’s sponsor specifically cited China as a concern.

“It’s important that crop ground be used to supply food, food security to our
country first,” Sen. Mark Messmer, R-Jasper, told the Indiana House Committee on
Agriculture and Rural Development, according to The Indiana Lawyer. “With an
adversary of our country buying and controlling more agricultural land every
year, it will eventually become a national security issue.”

What isn’t clear, however, is how much of the focus on China is warranted. 

Chinese companies own 352,140 acres, just less than 1% of all foreign-held
farmland. This pales in comparison to countries like Canada (which owns 12.4
million acres) and the Netherlands (which owns 4.9 million acres).

However, the depth of investment by Chinese companies – such as a Chinese
company’s purchase of Smithfield Foods (the largest pork producer in the world)
and ChemChina’s purchase of Syngenta (a top seed and chemical company) – has
raised concerns.

Brown said the lack of reliable data under AFIDA and state disclosure laws could
mean that the level of investment by China is underreported. Brown also said the
USDA’s current reporting guidelines make it unclear – depending on how many
layers of ownership there are and the percentage of ownership – who should be
reporting.

A 2017 investigation by Investigate Midwest found that the USDA does very little
to investigate whether foreign owners of farmland are properly reporting under
AFIDA, and that the single largest fine was due to a corporation self-reporting
a missed transaction. This raises questions about whether the USDA is
investigating ownership under limited liability corporations. The USDA did fine
two Chinese firms in 2021 for failing to report their transactions, according to
Agri-Pulse.

The largest owner of farmland on behalf of China is WH Group, which purchased
Smithfield Foods in 2013, gaining 146,000 acres of farmland. Smithfield is the
largest pork company in the U.S. 

Smithfield faced criticism in the early parts of the coronavirus pandemic, when
the company was exporting record levels of pork to China, despite claiming a
meat shortage in the U.S. At the time, Smithfield said that the meat was ordered
and processed earlier in the year, and that much of the food that was sent to
China was food that isn’t desired in the U.S.

A report issued earlier this year by the U.S. China Economic and Security Review
Commission raised concerns about Chinese investment in U.S. agriculture,
including foreign investment in farmland. The author of the report did not
return messages seeking an interview.

Soybeans grow in a field in this photo from Iowa State University.


WHO DOES OWN IT? WHAT THE DATA SAYS

An analysis of disclosures under the Agricultural Foreign Investment Disclosure
Act shows that China owns 1% of all land held by foreign entities.

These disclosures include land that is owned, in whole or in part, or in a
long-term lease by foreign companies.

Overall, foreign entities own or lease nearly 37.6 million acres of agricultural
land, including forests and pastures. That is an area slightly larger than the
state of Illinois and makes up 2.9 percent of all privately held agricultural
land in the U.S. This is up from a total of 24.2 million acres in 2010,
according to the USDA.

The largest owners are timber companies – largely owned by Canadian and Dutch
investment firms. Additionally, many European renewable energy companies hold
long-term leases for wind turbines. 

An analysis by Investigate Midwest comparing the amount of agricultural land in
each county to the amount of foreign-owned agricultural land shows that more
than 190 counties are 10% or more owned or controlled by foreign entities. These
generally have large timber holdings or large renewable energy developments.
That figure excludes Hawaii.

The county that is the most owned is Keweenaw County, Michigan, which includes
Isle Royale (a remote national park in Lake Superior) and some land on
Michigan’s Upper Peninsula. Overall, the county, which has about a population
just over 2,000 people, has 345,600 acres of land.

More than 262,000 acres – 75.8% of the land in the county – are owned by three
foreign entities in the county. Two are timber limited liability corporations
that list owners from the Netherlands, and one is called Lake Superior Land
Company that lists owners from the U.S. Virgin Islands.

While this is an extremely high percentage, 18 of Florida’s 67 counties are more
than 10% controlled. Four of Maine’s 16 counties are more than 10% controlled,
while 15 of Alabama’s 65 counties are more than 10% controlled. Arkansas and
Texas, which have heavy timberland investment, also have more than 10 counties
that have at least 10% controlled by foreign interests.

“We have to be careful that we don’t give the farms away,” said Bruce Shultz,
vice president of the National Farmers Organization, a co-op of family farmers.
Shultz is a cattle rancher in rural Montana, and said that the NFO isn’t a
“super political group” but this is an issue that affects farmers everywhere.

“We’re concerned about farmland leaving family farms,” he said. “We’re concerned
about where the next generation of farmers are gonna live, and where that food
is going to come from.”

Scott Chadde of Investigate Midwest contributed data analysis.

Top image: Iowa farmland stretches to the horizon in 2019. Photo by Lyle Muller
/ Investigate Midwest IowaWatch



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