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Efforts grow to restrict foreign owners of U.S. farmland

Foreign investors acquired at least 1.6 million acres of U.S. agricultural land in 2016, the largest increase in more than a decade, according to a review by the Midwest Center for Investigative Reporting of the latest available federal data.

The data from the U.S. Department of Agriculture shows that foreign investors control — either through direct ownership or long-term leases — at least 28.3 million acres, valued at $52.2 billion. That area is about the size of the state of Ohio.

A 1978 federal law, known as the Agricultural Foreign Investment Disclosure Act, requires foreign entities to report transactions of farmland to the USDA's Farm Service Agency. The data covers years 1900 through 2016.

The state with the most foreign ownership and investment is Maine, which has 3.1 million acres that are foreign-controlled, followed closely by Texas at 3 million acres.

Alabama, at 1.6 million acres, Washington, at 1.5 million acres, and Michigan, at 1.3 million acres, round out the top five, according to the Midwest Center's analysis.

As foreign ownership of agriculture land continues to increase, efforts to limit foreign ownership of U.S. farmland have gained traction.

“This is about food security for (foreign investors). It needs to be about food security for us,” said Jake Davis, policy director for Family Farm Action, a coalition of family farmers and advocates supporting limits on foreign ownership.

Davis said the organization is working with lawmakers in Missouri, Ohio and Oklahoma to introduce bills banning foreign ownership.

Already, six states have laws banning foreign ownership of farmland — Hawaii, Iowa, Minnesota, Mississippi, North Dakota and Oklahoma.

Meanwhile, the foreign interest in farmland also has become an issue in the presidential election. In March, Democratic presidential candidate Sen. Elizabeth Warren, D-Mass., announced she would support a federal version of Iowa's law. That law, passed in the 1970s, states that non-resident aliens cannot buy farmland for the purpose of farming. However, they can buy less than 320 acres of land to build something or for a purpose other than farming.

“I support a national version of that law, and as President, will use all available tools to restrict foreign ownership of American agriculture companies and farmland,” Warren wrote in an online post on the issue.

Previously, Senators Sherrod Brown, D-Ohio, Chuck Grassley, R-Iowa, and Debbie Stabenow, D-Michigan, have pushed for increased federal monitoring of foreign investment.

Stewart Lewack, a spokesman for Nuveen, which manages billions of dollars of farmland investments for TIAA, said the company intentionally doesn't acquire farmland in states with foreign ownership restrictions.

While a U.S.-based company, TIAA is the largest global agricultural investor and has to report holdings to the USDA because of foreign investors, Lewack said.

“We are cognizant of these limitations and intentionally do not acquire farmland in the U.S. states with ownership restrictions,” Lewack said.

In 2013, one week before Chinese company Shuanghui purchased Smithfield Foods, the Missouri Legislature amended a law clearing the way for the approval.

Previously, Missouri had a law on its books that banned all foreign ownership of farmland, but the new bill raised the ceiling to 1%. That move allowed the company, now known as WH Group, to acquire more than 40,000 acres of Missouri farmland, according to federal data.

 
 

In 2018, the Missouri Legislature revisited the issue after two lawmakers, Rep. Martha Stevens, D-Columbia, and Rep. Tom Hurst, R-Meta, sponsored bills that would ban foreign individuals or entities from buying farmland. WH Group and other foreign entities would be grandfathered in, but they would not have been allowed to sell their land to other foreign entities going forward.

At a hearing on those bills in 2018, the Missouri Farm Bureau, the Missouri Rural Crisis Center and Family Farm Action were among groups that testified in favor of the ban, while groups like Smithfield, the Missouri Cattleman's Association and Missouri Pork Producers testified against the bills.

The bills did not become law.

Blake Hurst, president of the Missouri Farm Bureau, said his organization still supports capping foreign ownership at the current holdings.

“We strongly oppose foreign ownership of farmland,” Hurst said. “Our members think U.S. ownership provides better stewardship of the land and it's better for rural communities. We need to protect this valuable asset for the United States.”

 
Smithfield did not respond to a request for comment on the changes.

While Chinese entities only own about 191,000 acres worth $1.9 billion, overall Chinese investment in the agricultural sector has grown tenfold in less than a decade, according to the USDA's Economic Research Service.

For example, ChemChina, a chemical company, recently purchased Syngenta, a Swiss pesticides and seed company.

And in Ohio, one of the states where a ban on foreign-owned farmland is being considered, WH Group bought two grain elevators in 2016, allowing the company to skip the middleman in feeding Smithfield's livestock.

“The closer you are to the land, the more likely you are to take care of it,” Davis said. “The same goes to the closer you are to the ownership of farm animals.”

Foreign ownership makes up about 2.2% of farmland in the U.S. and 1% of all land.

Critics often cite food security as a reason to ban foreign ownership of agriculture land, but the Center's analysis found that timber companies and renewable energy companies remain the biggest group of foreign investors.

Joe Maxwell, executive director of the Organization for Competitive Markets and former Lieutenant Governor of Missouri, said he is concerned that foreign investment will increase because the trade war and low-profit margins have driven an increase in farm bankruptcies, with twice as many farmers declaring bankruptcy in 2018 than did in 2008.

While foreign entities are supposed to self-report their control over U.S. farmland, they are seldom fined if they do not.

The U.S. Department of Agriculture inconsistently enforces the law that requires foreign entities to report transactions of farmland.

Under the law, every foreign person or entity that acquires at least 10% interest in agricultural land must file what is known as an FSA-153 form with the Farm Service Agency of the USDA.

Peter Wood, a USDA spokesman, said the agency's goal is to monitor foreign ownership of farmland, not to assess penalties.


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