Overseeing Farmland Sales to Foreigners

OMAHA (DTN) -- United States senators are looking for the right piece of legislation to attach language to tighten some controls over foreign ownership of U.S. farmland by people or businesses from certain countries.

Lawmakers have a lot of areas with opposing views, but Congress has coalesced around the issue of restricting ownership of U.S. farmland for a handful of countries, notably China. Each chamber has passed provisions with overwhelming bipartisan support, but new disclosure requirements or restrictions on foreign purchases of farmland haven't yet become law.

The U.S. Senate Agriculture Committee held a hearing Wednesday on foreign purchases of U.S. agricultural land and businesses with each senator hammering home points that more data is needed about which foreigners are buying farmland. Consensus also has built up in Congress to prevent buyers from China, Iran, North Korea and Russia from buying U.S. farm ground.

"Right now, we don't know the full extent of the risk at hand," said Sen. Tammy Baldwin, D-Wis., who pointed to an "alarming gap" of information about foreign land sales.

Sen. Debbie Stabenow, D-Mich., and Sen. John Boozman, R-Ark., ranking member of the committee, agreed they were "looking for the best path forward" to find another piece of legislation, such as the Defense bill, that could provide final passage for new reporting requirements and restrictions.

Sen. James Lankford, R-Okla., testified briefly before the committees on the rush to buy farmland in his state after voters approved a medical marijuana law in 2018. Oklahoma now ranks No. 8 in the country in foreign ownership of land and saw more land sales to foreign entities in 2019 than any other state. There are more than 7,000 licensed marijuana growers in the state and potentially thousands more that are unlicensed. Lankford said 75% of those are "actually Chinese-owned facilities" selling marijuana illegally.

Agriculture Secretary Tom Vilsack was asked at the White House press briefing on Monday about Chinese purchases of farmland and whether it is a national security issue. He pointed to the situation over the past year when a Chinese company tried to build a corn mill about a dozen miles from a major Air Force base in North Dakota.

Vilsack said he'd like to have a seat for USDA on the Committee on Foreign Investment in the United States (CFIUS). The committee oversees major foreign purchases that could impact national security and agricultural advocates have long sought to give USDA a seat at the table.

"There (are) legitimate concerns in that space. And I think that's one of the reasons why, you know, we've articulated the need, as a department, to be more engaged in the CFIUS process," Vilsack said.

SENATE BILLS IN HOPPER

Senators have rattled off a mix of bills that do similar things. Baldwin and Sen. Chuck Grassley, R-Iowa, introduced the Farmland Security Act of 2022 to require more reporting from foreign buyers of agricultural land, including "shell companies," and add penalties for not filing proper ownership reports.

Sens. Mike Rounds, R-South Dakota, Jon Tester, D-Mont., and Mike Braun, R-Ind., along with Sens. Marco Rubio, R-Fla., and Tommy Tuberville, R-Ala., have introduced the Protecting Americas Agricultural Land from Foreign Harm Act. That bill specifically prohibits buyers from China, Iran, North Korea and Russia from purchasing or leasing U.S. farmland.

The Rounds-Tester-Braun bill was added in July to the National Defense Authorization Act (NDAA) -- the annual military funding bill -- along with another provision that would add the agriculture secretary as a standing member of CFIUS.

"We shouldn't allow these bad actors to be on our soil, honestly," Tester said.

Stabenow signed onto a bill, the "Farmland Act," earlier this year with Sen. Joni Ernst, R-Iowa, to expand reporting requirements at USDA and increase funding levels for the department to oversee that work as well. The Stabenow-Ernst bill also would require CFIUS to review foreign land sales larger than 320 acres or $5 million in value, or land purchases from those same specific countries.

Gloria Montano Greene, deputy undersecretary of Farm Production and Conservation (FPAC) had to be the person to explain to senators the challenges of trying to ensure foreign land sales are reported to USDA from more than 3,000 county recorder offices nationally. Some suggestions for broadening USDA oversight are not practical and would cost too much.

Montano Greene repeatedly agreed with senators by commenting throughout the hearing, "USDA does believe agriculture is part of our national security."

Montano Greene also noted it is difficult to demand more reporting requirements and oversight by USDA without new funding, even as the House of Representatives voted overnight to cut funding to FPAC.

USDA doesn't have the authority to stop foreign people from buying farmland. The department also does not have a way to determine whether foreign people are renting farm ground, Montano Greene noted.

FOREIGN OWNERSHIP

Foreign persons or entities own about 40 million acres of U.S. farm ground as of the end of 2021, according to the last report issued by USDA. That's about 3.1% of all agricultural land in the country. Forestry land makes up the biggest chunk, or about 18.8 million acres, while cropland makes up about 11.6 million acres. Another 8.8 million acres are pasture.

Canadians are the largest holders of U.S. land at about 12.8 million acres or 31% of the total. Property owners from the Netherlands, Italy and the United Kingdom are next and collectively own about 12.4 million acres.

Chinese owners hold 383,935 acres, slightly less than 1% of all foreign-held acres.

About 80% of Chinese-owned land in the U.S. belongs to Smithfield Foods, which was bought by a Chinese company, WH Group, in 2012, as well as a single unnamed Chinese billionaire investor. A Chinese state-owned entity's takeover of Syngenta also added to China's U.S. acreage.

David Ortega, an associate professor of Agriculture, Food and Resource Economics at Michigan State University, noted foreign ownership is less than 0.03% of all agricultural land. And the Chinese government does not directly own any U.S. farm ground. Ortega was asked multiple times about the impact of foreign sales on land values.

"There is no clear evidence foreign land ownership is causing U.S. farmland prices to rise," he said.

Still, Ortega testified that better reporting on foreign land sales is needed. Right now, USDA relies on a law going back to 1978 authored by Grassley that only requires self-reporting by the foreign buyer.

Harrison Pittman, director of the National Agricultural Law Center at the University of Arkansas, told senators that state restrictions on foreign land ownership amount to a patchwork of 50 different laws that essentially date back as far as the late 1700s. Pittman also noted the president already has the authority to add other people to the CFIUS process.

CHINA STRATEGY: BUY AGRIBUSINESSES

Pointing to the Smithfield and Syngenta purchases, Ortega noted that for more than a decade China's foreign investment strategy has focused on larger agribusinesses.

Pointing to the situation in his home state, Sen. John Hoeven, R-North Dakota, said the CFIUS process was not effective because CFIUS ruled the 320-acre corn mill plan was not under its purview. It took a letter from Air Force leadership to squash the project. He asked Montano Greene about other resources USDA may need.

"Are we getting a grip on these ag companies being purchased as well as the farmland?" Hoeven said.

And yet while senators want more accurate reporting of foreign farm sales, senators also stressed they did not want to force U.S. farmers to provide more documentation to USDA about land ownership. Sen. Deb Fischer, R-Neb., raised that point.

Asked about the possible impacts of tightening land purchases from other countries, Ortega said there could be retaliation and trade implications. He noted China remains the largest export market for U.S. agricultural products.

"We export a lot of our grain -- our soybeans or corn to China as well as more consumer-oriented products like beef and pork," Ortega said. He added it could be easier for China to find new sellers than it would be for U.S. farmers to find new export markets.

Also see, "Chinese Corn Mill Likely Halted in North Dakota," https://www.dtnpf.com/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on X, formerly known as Twitter, @ChrisClaytonDTN

(c) Copyright 2023 DTN, LLC. All rights reserved.