China Latest Flashpoint Over Ag Land

OMAHA (DTN) -- The political flashpoint of foreign ownership of agricultural land isn't going away as more bills are offered in statehouses and governors take executive actions to add reporting requirements, restrictions and bans.

Foreign land ownership was a topic of a panel discussion at the Land Investment Expo on Tuesday in Des Moines, and as if on cue, Iowa's governor proposed new restrictions even though the state already has strong laws limiting foreign ownership of farmland.

Harrison Pittman, director of the National Agricultural Law Center at the University of Arkansas, said the emphasis on restricting actions by China rose dramatically after the spy balloon incident nearly a year ago. "That just blew everything up," Pittman said.

After only 12 states had legislative proposals to restrict foreign land ownership in 2021, there were 36 proposals in 2023, and now almost half of all states have some kind of restriction on foreign ownership. This year, legislation has already been proposed in at least 12 states.

Micah Brown, a staff attorney at the National Agricultural Law Center, noted foreign land ownership has been a controversial topic for states going back to the end of the American Revolution. Some of the countries with the largest foreign land holdings were once adversaries.

"This issue of restricting foreign ownership has popped up over different political flashpoints in our nation's history," Brown said. "We're just in the most recent political flashpoint."

Florida Gov. Ron DeSantis last year signed a law banning Chinese citizens from buying real estate and banned foreign investors from certain countries from buying agricultural land or land near critical infrastructure such as military bases.

IOWA OFFICIALS WANT MORE INVESTIGATIVE POWER

While foreign ownership was a topic at the Land Expo, Iowa Gov. Kim Reynolds in her Condition of the State speech Wednesday proposed giving the state attorney general subpoena powers to investigate foreign ownership of Iowa farmland. Reynolds' plan also would require the secretary of state to file an annual report on foreign land ownership. Iowa Attorney General Brenna Bird issued a news release supporting the move.

"As someone who was born and raised on a farm, I know how important it is to preserve and protect Iowa's rich farmland," Bird said. "All across the state, I hear from Iowans who are concerned with foreign competitors buying up valuable Iowa farm ground. That's why I fully support Gov. Kim Reynolds' actions to enhance transparency from foreign entities, increase penalties for violations, and mandate increased reporting to stop the foreign land grab."

The Iowa Cattlemen's Association also issued a statement backing Reynolds' actions. Bryan Whaley, CEO of Iowa Cattlemen, noted there were no federal restrictions on foreign ownership, but praised Reynolds for her efforts.

"There are already enough barriers for farmers, particularly young producers, to build and grow a profitable operation," said Whaley. "As we look at maintaining our family farms and ultimately our food chain, we need to make sure we eliminate things that threaten our members' way of life. We are grateful to have the support of Gov. Reynolds on this issue."

Out of 31.9 million acres of privately held land in Iowa, USDA reports 513,982 acres, or 1.6%, is foreign-owned. The bulk of Iowa's foreign-owned land, 398,577 acres, is in cropland. Another 84,975 acres are in pasture. The rest is in other agricultural or non-ag land uses.

While Iowa officials want more reporting, USDA provides states with a report each year on foreign ownership of agricultural land in each county. Canadians are the biggest foreign owners in Iowa with 198,667 acres, according to USDA. Investors from Italy own another 104,385 acres. The county with the largest foreign ownership in Iowa is Dickinson County with 51,536 acres, of which 41,581 acres are owned by Canadians.

Looking at neighboring states, 1.7% of Nebraska's land is foreign-owned, 2.7% in Illinois, 1.7% in Minnesota and 1.3% in Missouri.

On Jan. 2, Missouri Gov. Mike Parson announced an executive order banning U.S. foreign adversaries from buying agricultural land within a 10-mile radius of critical military bases in the state.

Nationally, 3.4% of agricultural land is foreign-owned, or about 43.4 million acres. USDA's latest report released in December showed foreign investors acquired 3.4 million acres in 2022. Timber or forest land makes up nearly 21 million acres, or 48.3%, of the foreign-interest land, followed by cropland at 12.28 million acres, or 28.3%, and pasture at 9.2 million acres, or 21.3%.

There is no restriction on foreign ownership of agricultural land at the federal level, though attempts have been made to restrict ownership by adversaries -- mainly China, Russia, North Korea and Iran, as well as Cuba and Venezuela.

EFFORTS IN CONGRESS

The House of Representatives last spring voted overwhelmingly to ban Chinese ownership of U.S. farm ground or land used to produce renewable energy. U.S. senators have introduced similar legislation. Lawmakers from both parties also have backed bills requiring more disclosure of foreign land purchases and requiring the Committee on Foreign Investment in the U.S. (CFIUS) to review agricultural real-estate purchases by certain government entities.

Congress passed the Agricultural Foreign Investment Disclosure Act (AFIDA) in 1978 over worries about Middle Eastern oil companies buying U.S. land. That law requires USDA to generate an annual foreign land holdings report that typically lags a year behind. Lawmakers now want USDA to provide more data on foreign ownership and in a timelier manner.

At the Land Investment Expo, Brown said foreign owners face reporting ambiguities. Syngenta, for instance, had reported its ownership of land in Arkansas to USDA, but not state officials. Syngenta, which is owned by a Chinese state-owned entity, ChemChina, was then fined $280,000 by Arkansas officials for missing a filing deadline and now has two years to divest of 160 acres, which has been owned by its subsidiary Northrup King since 1988.

Looking ahead, Pittman also said it's likely that at least some of these state laws will lead to litigation as well.

INVESTORS' PERSPECTIVE

At the Land Expo, an investor and an attorney cautioned against overly broad limits on foreign investment. David Bergvall, an investment manager for Manulife, managed ag and timber land in 18 states. These investors are often pension funds from friendly countries, he said. That kind of foreign investment helps ensure a healthy agricultural sector. "That infusion of capital really becomes a stabilizing force," Bergvall said.

Some areas, such as updating the reporting requirements, are ripe for modernizing, Bergvall said, but he also warned against making every foreign land transaction into an issue for CFIUS to investigate.

"We don't want that to become the standard for routine transactions," Bergvall said.

Todd Friedman, a Portland, Oregon, attorney who focuses on helping agribusinesses comply with state and federal laws in mergers and acquisitions, said requiring more reporting for foreign ownership becomes less problematic than restricting sales.

"We get questions from our clients about how to comply and whether they can comply," Friedman said. "Sometimes we don't get questions because they're simply not aware of either any foreign ownership issues, or they're not aware of the rapidly changing environment. In some cases, they're not necessarily even aware that they have a foreign ownership issue upstream."

A smaller universe of investors also can make it harder to get transactions done. "That creates some problems in having a vibrant market," Friedman said. "A person who is totally 'rah-rah' that only U.S. people should invest in U.S. farmland, when they're trying to sell, might change their minds a little bit."

Also see "Ag Land Values Susceptible to 1980s-Like Crash as US Debt Problem Looms" here: https://www.dtnpf.com/….

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

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