Worried About Spying and Tensions With China, Many States Limit Who Can Buy Farmland April 14th, 2023
Via Investigate Midwest, commentary on how federal and Midwestern state lawmakers are seeking to crack down on Chinese ownership of U.S. agricultural lands, amid security tensions and the shooting down of a “spy balloon” spotted over Montana. Federal data shows that foreign holdings of U.S. farmland increased by an average of 2.2 million acres a year from 2015 to 2021, with China owning less than 1% of foreign-owned acreage while Canada, the largest investor, owns 31%.
A proposed corn mill processing plant was expected to be a big economic boon for Grand Forks, North Dakota, bringing hundreds of jobs.
Then the U.S. Air Force weighed in at the request of North Dakota’s two U.S. senators — finding the Chinese-owned project’s proximity to a military base made it a “significant threat to national security.”
The city council voted the project down soon after.
U.S. Sen. Kevin Cramer, R-ND, said it was a clear decision to stop the project, given current U.S.-China relations.
“It’s quite coincidental that just within hours or days of the Air Force letter arriving, China had a spy balloon 55,000 feet above Montana,” Cramer said.
That spy balloon, the eventual rejection of the corn mill and a similar incident with a wind farm in Texas has put a spotlight on Chinese ownership of farmland. According to USDA data, foreign holdings of U.S. farmland increased by an average of 2.2 million acres a year from 2015 to 2021.
The data also shows that China owns less than 1% of the foreign-owned land, while Canada, the largest investor, owns 31%. (Experts also caution there are issues with how that data is collected.)
Now federal lawmakers want to crack down and a flurry of bills has been introduced in state legislatures across the Midwest and the rest of the nation.
“I think [what happened in Grand Forks] was really an example to the rest of the country that, you know, be careful when it comes to dealing with investments from China,” Cramer said.
The former would blacklist China, Iran, North Korea and Russia from buying farmland, while both bills would place the U.S. Secretary of Agriculture onto the Committee on Foreign Investment in the United States, giving the USDA more input into potential land purchases.
Cramer said the legislation targets a big issue for both Republicans and Democrats.
“There’s such an overwhelming concern about China’s role in America and their intentions that we will get something passed in a strong bipartisan, bicameral way,” he said.
While the PASS Act and the FARM Act are the main bills to keep an eye on this year, other bills from the previous Congress might be reintroduced, according to Renee Johnson, an agriculture policy specialist at Congressional Research Service.
“There’s lots in the pipeline. It’s hard to keep up,” she said during a presentation at the USDA’s 2023 Agricultural Outlook Forum in February.
In January, lawmakers created a Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party that focuses on economic and security threats from China.
The House Agriculture Committee also turned its attention to getting more accurate data on how much U.S. land is foreign-owned. The committee requested that the U.S. Government Accountability Office do a study of the Agricultural Foreign Investment Disclosure Act, also known as AFIDA, the law that requires foreign investors to report to the USDA and provides the data on foreign ownership.
“The data is incomplete,” Johnson said. “There’s limited ownership, transparency. A lot of the investors. They’re known identity havens, so we don’t really know what the true nationality is.”
State action
There are 14 states, many of them in the Mississippi River Basin, that already have laws on the books preventing or restricting such purchases. Still, more restrictions are making their way through state legislatures in more than half the states in the nation.
“There’s so many proposals. It’s insane,” said Micah Brown, a staff attorney at the National Agricultural Law Center, who has been keeping track of the laws and bills in each state.
Two Iowa House bills would ban Chinese ownership of property in the state. In Kansas, a Senate bill would prevent all foreign ownership of land, while another Senate bill and House bill would target “foreign adversaries.” Illinois has three similar bills in the House.
Brown said that foreign land ownership has come up time and time again since colonization. He’s pinpointed four waves of “political flashpoints” throughout U.S. history. Currently, he said, we’re seeing a fifth wave.
“Especially in 2023 with all these proposals, proponents of these bills, lawmakers that are proposing these bills are really saying the reason is national security,” said Brown.
Some states are even reversing course.
Just 10 years ago, Missouri moved to allow up to 1% foreign ownership of its farmland, just ahead of the Chinese company WH Group buying out Smithfield Foods, a large pork producer and food processing company with facilities in the state. (According to USDA data, the state is over that 1% threshold.)
Bill Eigel, a Missouri state senator, is sponsoring one of the 16 bills moving to restrict foreign ownership again. The Republican said food security is the main issue.
“I don’t want China to own our ground,” he said. “I honestly don’t want European countries to be able to buy our ground, because that’s American ground that is feeding our population, and we need to maintain that sovereignty.”
Land access
The Missouri Rural Crisis Center has been working on the issue of foreign ownership of farmland for more than a decade and supports completely stopping all foreign purchases. Even before the Smithfield sale, corporate consolidation was pushing local farmers out, according to the center’s communications director, Tim Gibbons.
“We have a systemic problem right now,” he said. “And that problem is major parts of our food and livestock markets and industry are controlled by just a few multinational and increasingly foreign corporations.”
That means less revenue for smaller family-owned farms, which can eventually push them out of the industry, Gibbons said.
Yet efforts to limit foreign ownership are just a small piece of the puzzle in keeping land in the hands of U.S. farmers, according to Francine Miller, an attorney at Vermont Law and Graduate School.
“I wouldn’t say that there is no issue with foreign ownership,” she said. “But the ways that it is being talked about are, in my opinion, very much for political purposes, and not really because there’s all these national security issues that are coming up.”
She said the national attention on Chinese ownership of agricultural land is taking away from the fact that investors, including those in the U.S., are driving up farmland prices.
“The focus on this issue obscures the issues that many of us are trying to work on on improving land access for beginning (farmers) and people of color farmers and people who’ve been denied access to land in America,” she said.
In order to keep the number of U.S. farms from slipping further, Miller said she hopes Congress will provide more support for small farmers as the farm bill comes up for renewal this year.
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Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race. Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm. Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm. It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.
Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land. Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas. Monty writes about freshwater scarcity issues at www.waterpolitics.com and frontier investment markets at www.wildcatsandblacksheep.com.
