farmland

Very little U.S. farmland is owned by foreign entities, but acquisitions are accelerating.

During a session on foreign investment in U.S. agriculture at USDA’s 99th Annual Agricultural Outlook Forum on Feb. 24, Clayton Michaud, an agricultural economist with USDA, said foreign entities own approximately 40 million acres, which accounts for 3% of all privately held agricultural land in the U.S.

The majority of that land is forest — particularly purchases in Maine by Canada — but cropland is becoming a more popular commodity for foreign investors.

Foreign acquisition of farmland increased by 2.4 million acres over one year from December 2020 to 2021. Since 2015, foreign holdings of U.S. farmland have increased by 2.2 million acres annually, Michaud said.

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The top five foreign countries owning farmland in the U.S. are Canada, the Netherlands, Italy, United Kingdom and Germany. China accounts for 1% of all foreign-owned U.S. farmland, and Iran, North Korea and Russia own even less, he said.

Federal law doesn’t restrict foreign investors from purchasing farmland, and limitations must be enacted at the state level, according to Micah Brown, staff attorney for the National Agricultural Law Center. He said 14 states, including Pennsylvania, have some form of restriction on foreign ownership of farmland, but many more are considering proposals since two Chinese companies purchased land near Air Force bases in North Dakota and Texas.

“There was a lot of media attention on those two purchases,” Brown said. “In 2023, this has exploded. These bills are dropping like crazy and right now there are 29 states that have some proposal to restrict foreign ownership.”

Not all proposals have come to fruition.

In California, Brown said, legislation to restrict foreign ownership of agricultural land passed the state Legislature unanimously, but was vetoed by Gov. Gavin Newsom. Other proposals have failed in Missouri, where current law already affords some degree of restriction, and Texas.

There is a common theme in much of the state-level legislation being considered.

“Proposed bills restricting China, Iran, North Korea and Russia — the big four,” Brown said. “We see this tone right now. It’s unlikely all of these proposals will be enacted.”

Still, there has been a renewed focus from foreign entities on purchasing land in the Great Plains states, said Mykel Taylor, assistant professor at Auburn University. Since 2020, most of the foreign interest has focused on land in Oklahoma, Texas, Colorado and Kansas.

Taylor said these states are predominantly windy, and wind, along with solar, is a motivating factor behind the foreign interest.

“A large percentage of owners in the AFIDA (Agricultural Foreign Investment Disclosure Act) database have wind or solar in the name,” she said.

China ranks 18th on the list of foreign countries owning U.S. farmland, as of 2020, totaling 352,000 acres. Taylor said China isn’t a big player in the U.S. farmland market, although China-based Shuanghui Group purchased Smithfield Foods in 2013, which increased holdings of U.S. land.

But when it comes to foreign purchases compared to domestic acquisitions, there are major differences, even if the former is much less than the latter.

Taylor said land sold to domestic purchasers has an average per acre value of $5,745, whereas foreign entities pay an average of $6,536 — approximately 13% more.

Also, many acquisitions for foreign entities are conducted through leases of 10 years or more.

“A majority of wind and solar companies are acquiring agricultural land this way,” Taylor said.

Purchases of U.S. farmland by foreign individuals or entities is tracked through the AFIDA database. Such transactions are required to be reported to USDA within 90 days, but the database does have shortcomings.

Renee Johnson, agricultural policy specialist with the Congressional Research Service, said the database has limited ownership transparency and some investors form “identity havens” and their actual nationality isn’t known. Still, AFIDA does give the president the authority to block or pull back any transactions found to threaten U.S. national security.

Johnson said there are numerous bills being discussed at the federal level to tighten the AFIDA reporting requirements, and the members of the House Agricultural Committee have asked the U.S. Government Accountability Office to study the act. The committee also intends to conduct hearings on foreign ownership of U.S. farmland, according to Johnson, but there are concerns about escalating aggression with China.

“There are shortcomings with AFIDA because the USDA doesn’t have authority,” Johnson said. “But there really is no other good source of data.”

As far as the end result for crops produced on land owned by foreign interests, that can vary, according to Taylor. Those who purchase land for the wind or solar interest sometimes lease the property to local producers for crop production, but that’s not always the case.

“An alfalfa farm in Arizona that the Saudis own, they’re shipping it back for their dairy industry,” Taylor said.

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