Chinese Corn Mill Likely Halted in North Dakota

Grand Forks Mayor Moves to Halt Corn Mill Project by Chinese-Owned Fufeng Group

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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The proposed 370-acre site on the north side of Grand Forks, North Dakota, for Fufeng's 25-million-bushel corn mill, along with some protest signs against the project from neighbors. (DTN file photo by Chris Clayton)

OMAHA (DTN) -- A controversial $700 million corn mill project by a Chinese company in Grand Forks, North Dakota, should be halted after U.S. Air Force officials raised national security concerns in a letter released Tuesday, the mayor of Grand Forks and the governor of North Dakota have concluded.

The planned project by Chinese-based Fufeng Group has divided the community and helped spark more efforts in Congress and in states around the country to ban Chinese investment in real estate.

Fufeng has been working since late 2021 to develop a 370-acre tract on the northern edge of Grand Forks to build a corn mill that would process as much as 25 million bushels (mb) of corn. Fufeng is known as a producer of corn starch products and other food additives made from corn.

Sens. John Hoeven and Kevin Cramer, both Republicans, released a letter Tuesday from the U.S. Air Force opposing the Fufeng project, which would be about 12 miles from the base.

Andrew Hunter, assistant secretary of the U.S. Air Force, wrote the senators that "the proposed project presents a significant threat to national security with both near- and long-term risks of significant impacts to our operations in the area."

The letter noted, "Grand Forks Air Force Base is the center of military activities related to both air and space operations."

The letter from Air Force leadership comes more than a month after the federal Committee on Foreign Investment in the United States (CFIUS) reviewed the project. CFIUS is a standing committee in the Department of Treasury made up of federal officials from different agencies who examine transactions specifically to look at national security issues.

CFIUS had concluded that it "does not have jurisdiction" over the Fufeng project, which was initially viewed as a green light for the project to begin moving forward. Fufeng's staff in the U.S. released the letter from CFIUS.

The Air Force added, "While CFIUS concluded that it did not have jurisdiction, the Department's view is unambiguous: the proposed project presents a significant threat to national security with both near- and long-term risks of significant impacts to our operations in the area."

Hoeven and Cramer added in a statement, "City leaders have asked for clarity from leaders in the federal government regarding the Fufeng project. The Air Force left ambiguity off the table when they said: 'The proposed project presents a significant threat to national security with both near- and long-term risks of significant impacts to our operations in the area.' As we have recommended, we believe the city should discontinue the Fufeng project and instead we should work together to find an American company to develop the agriculture project,"

In response, Brandon Bochenski, Grand Forks' mayor, issued a statement Tuesday afternoon citing that the Fufeng project should be stopped, pending approval from the City Council. Bochenski said the city would move to halt infrastructure and permits for the project.

"The federal government has requested the city's help in stopping the project as geo-political tensions have greatly increased since the initial announcement of the project," Bochenski stated. "The only remedies the city has to meet this directive is to refuse to connect industrial infrastructure and deny building permits. As mayor of the city of Grand Forks, I am requesting these remedies be undertaken and the project be stopped, pending City Council approval."

North Dakota Gov. Doug Burgum also released a statement supporting Bochenski's decision to stop the project. Burgum credited the mayor and city officials "for their leadership and proactive due diligence throughout this lengthy process." Burgum added,

"The State of North Dakota stands ready to assist the city in exploring additional opportunities for value-added agriculture. As our farmers who compete in global markets know, agriculture is a global business, and North Dakota welcomes investment from domestic companies and our friends and allies."

A representative from Fufeng USA did not respond to an email from DTN seeking comment.

The Fufeng project has been a driving force for multiple pieces of state and federal legislation. One bill filed in January in both chambers of Congress would give the agriculture secretary a permanent seat on CFIUS, a move that has been attempted repeatedly over the past decade. The same bill, the Foreign Adversary Risk Management (FARM) Act, would also require more reporting by USDA and the Government Accountability Office on foreign investments.

On Wednesday, Sens. Mike Rounds, R-S.D., and Jon Tester, D-Mont., introduced a bill, the Promoting Agriculture Safeguards and Security (PASS) Act. The bill would "blacklist China, Russia, Iran and North Korea from investing in, purchasing or otherwise acquiring land or businesses involved in agriculture." Another companion bill was also introduced in the House.

States are also seeking to tighten their laws on foreign ownership of land.

In Missouri, lawmakers are looking at three bills that would ban or limit foreign ownership of farm ground. One bill would ban ownership by individuals or businesses from China, Iran, North Korea, Russia and Venezuela.

The new legislation in Missouri comes a decade after Missouri lawmakers changed a law in the state that allowed Chinese-based WH Group to buy Smithfield Foods for $4.7 billion, including its Missouri assets, which involved packing plants and hog facilities that had once been owned by Farmland Foods. The change in legislation in 2013 allowed WH Group to take ownership of about 40,000 acres of farmland in Missouri.

Similar legislation is being championed in Florida, South Dakota and Texas. Texas Gov. Greg Abbott said he would sign a bill that would ban citizens and foreign entities from China, Iran, North Korea and Russia from buying land in the state. The South Dakota bill would create a new committee to look at foreign investment in the state.

According to USDA, Chinese investors own roughly 384,000 acres of U.S. farmland, or less than 1% of all foreign-held farmland. Chinese land ownership rose by about 31,000 acres from the end of 2020 to the end of 2021, according to the latest report by USDA.

USDA's report on foreign ownership of farmland reported about 40 million acres at the end of 2021, up about 2.4 million acres during the year.

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Chris Clayton