Foreign ownership of U.S. farmland probed at U.S. Senate hearing

WASHINGTON — U.S. senators said during a Wednesday hearing that foreign ownership of U.S. farmland is a national security threat that should be further examined.

The U.S. Senate Committee on Agriculture, Nutrition and Forestry discussed foreign ownership of the nation’s agricultural lands, with testimony from experts and Senate colleagues who have been taking the lead on the issue.

“Food security is national security,” said U.S. Sen. Jon Tester, a Montana Democrat, who told the committee about his work to limit foreign ownership of farmland.

Tester said foreign adversaries such as China, Russia, Iran and North Korea should not be allowed any claim to U.S. soil.

In 2021, the U.S. Department of Agriculture reported that foreign investors held about 40 million acres of U.S. agricultural land. This is about 3% of the total amount.

“That’s more than the entire state of Iowa,” Sen. Joni Ernst, an Iowa Republican, said.

The USDA also reported Canada as the largest foreign investor in 2021 with 12.8 million acres, or 31% of foreign-held acres. The Netherlands, Italy, the United Kingdom and Germany, the other top foreign investors, collectively had 12.4 million acres, according to the report.

China had approximately 383,935 acres, or under 1% of foreign-held land in the U.S., according to the USDA report.

Foreign ownership of U.S. agricultural land has increased by 66% since 2010, Chairwoman Debbie Stabenow, a Michigan Democrat, said.

State restrictions on foreign ownership

Earlier this year there was growing bipartisan support in Congress for limiting foreign ownership of U.S. agricultural land, but there are currently no federal restrictions. The issue is also widely discussed at the state level.

Foreign ownership of U.S. land is currently restricted in 24 states, including Alabama, Arkansas, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Utah, Virginia and Wisconsin.

Eleven of these states enacted foreign ownership laws during the 2023 legislative session, according to the National Agricultural Law Center. Those states include Alabama, Arkansas, Florida, Idaho, Louisiana, Montana, North Dakota, Ohio, Tennessee, Utah and Virginia.

Harrison Pittman, the National Agricultural Law Center director at the University of Arkansas System Division of Agriculture, said there are “really not very many states left that haven’t had at least one or more proposals at the state level” to restrict foreign land ownership.

Sens. Tammy Baldwin, D-Wis., James Lankford, R-Okla., and Mike Rounds, R-S.D., joined Tester to speak about their efforts to improve farmland security when it comes to foreign investors.

In July, the Senate passed Rounds’ amendment to the National Defense Authorization Act, which sets defense policy. If enacted, his amendment would ban China, Russia, North Korea and Iran from purchasing U.S. farmland and agricultural businesses.

National security threat seen

In his testimony, Rounds referenced recent examples of China’s land ownership near military bases. In 2020, a Chinese company planned to build a wind energy farm project two miles from Laughlin Air Force base in Del Rio, Texas, Rounds said.

Rounds and other senators said they were concerned about the attempt of a Chinese company to build a corn milling plant on farmland near an Air Force base outside of Grand Forks, North Dakota.

Senators also cited the purchase of Smithfield Foods by a Chinese company as a point of concern.

“Who controls our farmland is really important and honestly, my concern is also with who controls many other parts of our food system, including our seeds, meat processing and grocery stores,” said Sen. Cory Booker, a New Jersey Democrat. “This is all part of our national security.”

Stabenow said U.S. national security “depends on a food system that is safe, secure, affordable, abundant and resilient.”

“As foreign entities continue their acquisitions of U.S. food and agricultural assets, American farmers and families deserve to know that these transactions receive proper scrutiny,” Stabenow said.

Data gaps

David Ortega, as associate professor of agricultural, food and resource economics at Michigan State University, said foreign ownership of agricultural land potentially could increase land prices and push farmers out of the market.

However, Ortega said there is “no clear evidence” that foreign ownership is making U.S. farmland prices rise.

Baldwin said that foreign investors holding U.S. farmland can put domestic food supply and local communities at risk.

“And right now, we don’t know the full extent of the risk at hand,” Baldwin said.

She said outdated reporting systems and a lack of auditing at both state and federal levels need to be addressed.

Last year, Baldwin worked with Sen. Charles Grassley, an Iowa Republican and member of the Agriculture panel, to pass the Farmland Security Act of 2022 as part of the fiscal 2023 omnibus appropriations bill.

This law requires the USDA to update its paper report system for filing foreign investments in agricultural land to an online, public database.

The USDA must also report to Congress on the impacts of foreign ownership of agricultural land on family farms, rural communities and the domestic food supply, Baldwin said.

Gloria Montaño Greene, USDA’s deputy under secretary for farm production and conservation, told senators that while Congress did direct the USDA to modernize its foreign investment reporting system within three years, the USDA “was not provided funding to implement these requirements.”

Instead, the USDA posted Excel data spreadsheets in June for each year from 2011 to 2021, Greene said.

Ernst said the Agricultural Foreign Investment Disclosure Act, which became law in 1978, must be modernized to “increase reporting, strengthen oversight and send a strong message to our adversaries that American farms are not their playground.”

“Enforcement of reporting requirements has been inconsistent and at times lax,” Ortega said. This is attributed to low staffing at the agency level, he said.

“While passing our legislation was a step in the right direction, Congress can and must do more,” Baldwin said.

Lack of progress on the farm bill

Baldwin and Grassley are teaming up again to pass a new version of their proposal, the Farmland Security Act of 2023, which Baldwin said “will go even further in addressing foreign activity in our domestic agriculture marketplace.”

Baldwin urged the committee to include this legislation in the next farm bill.

Ernst said she was frustrated that there has not been “meaningful progress” on the farm bill.

The current farm bill is set to expire at the end of the week.

“I really think this is a shame,” Ernst said.

She said she hears from farmers and ag leaders that there needs to be more “farm” in the farm bill, and that they are concerned about the increase in foreign investment in American farmland.

Possible consequences

Ortega said that implementing restrictions on U.S. agricultural land ownership could result in retaliation by other countries.

Trade relations could be affected, Ortega said, and used China as an example. He said China is the largest export market for the U.S. when it comes to agricultural and food products.

Specifically, China imports soybeans, corn and grains from the U.S., Ortega said, as well as other consumer-oriented products.

“In my view, it would be far easier for China to find new sources of these products than it would be for American farmers to find new export markets,” Ortega said. “So I think it’s important to also be aware of potential trade impacts.”