Lawmakers in Congress and across the country are sounding national security alarms about foreign buyers, particularly those with links to the Chinese government, acquiring control of U.S. farmland and forestland.
Members of both parties increasingly see Beijing and the Chinese Communist Party as threats to the U.S. The warnings offer farm-state lawmakers an opportunity to advance proposals they have pushed for several years that would treat foreign control of farmland and businesses as national security threats equivalent to those posed by foreign ownership of cutting-edge technology companies and intellectual property.
Despite the rhetoric on China, however, there’s also worry that federal scrutiny over transactions recorded at a local level and sometimes with only voluntary disclosure of the buyers’ homeland could meet resistance.
The result is that legislative efforts that stalled in the 117th Congress are now back on the table, but with no clearer path to passage in the current Congress. One reason they might have a better chance is that both sides of the divided Congress appear to be in agreement on China. And several bills would toughen the approach to some buyers, an acknowledgment that federal scrutiny of some recent transactions didn’t block Chinese buyers from proceeding.
“It’s something everybody has an eye on,” said Wyoming Agriculture Director Doug Miyamoto, before adding, “There’s been foreign ownership of U.S. resources for decades.”
Miyamoto said most farmers and ranchers he’s worked with would be wary of giving the federal government more information about private land transactions.
Sen. Jon Tester, D-Mont., said at a Senate Banking Committee hearing on Feb. 28 that he supports legislation sponsored by Sen. Mike Rounds, R-S.D., that would require the Committee on Foreign Investment in the United States, or CFIUS, to review transactions involving agriculture and agriculture biotechnology and block purchasers acting for China, Russia, Iran or North Korea.
“I don’t think North Korea, China, Russia or Iran give a damn whether we exist or not,” Tester said. “Why should we allow them entrance, any entrance, into our country? Rounds and I already have our minds made up. This is a good thing to have out there, not only for America’s national security but food security.”
Tester and Rounds used the hearing to ask witnesses how to make restrictions airtight, particularly in dealing with shell companies.
Two deals seem to be driving the current worry: the purchase over five years of 140,000 acres in Texas by businesses controlled by a billionaire Chinese real estate developer, with 15,000 acres set aside for a wind farm that would supply the state with electricity; and the 2022 purchase by Fufeng Group Ltd. of 370 acres in Grand Forks, N.D., to operate a corn milling operation. Both sites were near U.S. military installations.
Chinese ownership of U.S. farmland also grew substantially in 2013, when Shuanghui International Holdings bought Smithfield Foods in a deal that included farms, hogs, equipment, technology, water rights and intellectual property.
Despite such well-publicized purchases, Chinese buyers, with 383,935 acres, hold less than 1 percent of foreign-owned U.S. farm, forest, pasture and nonagricultural land, the Farm Service Agency said in a 2021 report. Canadian buyers, with 12.8 million acres, much of it Maine woodlands, own far more and top the list of foreign countries with U.S. agriculture holdings.
The Farm Service Agency’s report said foreign persons and businesses had stakes in about 40 million acres of agricultural land as of Dec 31, 2021. That’s 3.1 percent of all privately held agriculture land and 1.8 percent of all land.
Focus on China
Some members of Congress warn against any Chinese ownership, saying U.S. food security could be at risk.
“No Chinese corporation or individual associated with the CCP should be permitted to own American farmland,” Sen. Josh Hawley, R-Mo., said in a statement. “It undermines the integrity of our nation’s food supply chain, it presents national security threats when the land is in close proximity to military installations, and it hurts American farmers.”
Hawley introduced a bill that would apply to farmland acquisitions, leases and ownership by individuals and entities with ties to the Communist Party in mainland China, its administrative regions, Hong Kong and Macau. Such owners would have to sell existing holdings within two years.
Another bill by Rep. Dan Newhouse, R-Wash., wouldn’t require divestiture of holdings but would direct the president to bar the purchase of public and private agricultural land by nonresident aliens, foreign businesses, agents, trustees or fiduciaries associated with China’s government, and bar them from participating in agriculture programs.
Newhouse, an appropriator, drew attention to farmland acquisitions with amendments to the fiscal 2023 and 2022 House Agriculture spending bills barring the sale of farmland to companies fully or partially owned by China. The amendments drew bipartisan support but did not become law.
Rounds’ bill, with a House companion from Rep. Elise Stefanik, R-N.Y., would require CFIUS to review transactions involving agriculture and agricultural biotechnology and the president to block those involving individuals acting on the behalf of China, Russia, Iran or North Korea.
Sen. Tommy Tuberville, R-Ala., and Rep. Ronny Jackson, R-Texas, introduced similar bills that would amend Section 721 of the Defense Production Act to expand CFIUS’ oversight of agriculture. The legislation would classify agriculture as critical infrastructure and agricultural supply chains as critical technologies.
The bills propose several ways to address foreign control of farmland, including stiffer fines for failing to report accurately to the Farm Service Agency and giving the Agriculture Department a seat on CFIUS.
Tracking foreign ownership of U.S. farmland is itself a challenge, and the legislation wouldn’t provide funding to address that problem.
Reporting gaps
Congress enacted a law in 1978 to track farmland purchases during a wave of concern about wealthy Saudis and investors from other oil-rich nations, but experts say that law needs retooling.
The Farm Service Agency collects self-reported data and publishes the information annually in a report to the House and Senate Agriculture committees.
Renee Johnson of the nonpartisan Congressional Research Service said the Agriculture Department and the Government Accountability Office have identified shortcomings such as incomplete or inaccurate data, limited owner transparency and identity havens that obscure the true nationality of a buyer.
“In general, USDA has generally lacked the resources and staff to verify, monitor and track some of these transactions,” Johnson told an audience in February, during the annual USDA Agricultural Outlook Forum.
Johnson, who focuses on food and agricultural systems for the Congressional Research Service, said efforts to develop more thorough information collection could eventually encounter resistance from land sellers reluctant to disclose more details to the government.
“I think there are a lot of sensitivities within the agricultural community about disclosing that information,” Johnson said.
Even knowing of the purchases doesn’t necessarily stop them. CFIUS didn’t object to the Texas project and found the North Dakota corn mill wasn’t in its jurisdiction. Several experts who follow the interagency group noted that the North Dakota Air Force base is not listed as a sensitive military installation under CFIUS regulations.
Texas lawmakers passed legislation to stop the wind farm, and the buyer subsequently sold at least some of the land, according to press reports. In North Dakota, city and state officials, who had touted the corn mill as a win for economic development, subsequently turned against it, with the mayor widely quoted as saying the buyer owned the land, but couldn’t build on it.
Micah R. Brown, a staff attorney with the National Agricultural Law Center at the University of Arkansas, tracks state bills that propose various restrictions on agricultural land or general real estate purchases by foreign individuals, businesses or other entities.
“It’s messy and all over the place,” he said.
Brown said 14 states restrict land or business purchases by foreign buyers. He is monitoring 27 state legislatures that are considering varying restrictions or bans on acquisition by non-U.S. buyers.
But Brown said enforcing restrictions at the state or federal level may be difficult if consistent information is not available. Land purchases are typically recorded at the county level and there is no standardized reporting process.
David J. Ribner, a lawyer at O’Melveny who advises U.S. and foreign clients on trade and investment regulatory matters, said the Rounds-Stefanik bills aim squarely at stopping specific transactions.
“Unlike some of the other bills that expand CFIUS, the Rounds bill identifies transactions and blocks them,” Ribner said.
Ribner said the Tuberville and Jackson bills also are notable because they would add agriculture as part of U.S. critical infrastructure in keeping with the Department of Homeland Security’s designation of agriculture and food as one of 16 critical infrastructure areas.
However, the legislation’s proposal to include agricultural supply chains under the umbrella of critical technologies is unique, he said. “I think it would require at minimum further refinement either in the law or implementing regulations. Supply chains are not covered as critical technology. Perhaps it would be better to have a new category of supply chains.”
The Farm Service Agency pleads understaffing, at least in some years, and says it doesn’t have the technology to keep up with information it receives.
When the publication Agri-Pulse disclosed that the agency didn’t assess civil penalties for unreported sales or incomplete sales, the report sparked a letter led by Stefanik and Reps. Mark Pocan, D-Wis., Rick Crawford, R-Ark., and Mike Flood, R-Neb., and 24 colleagues demanding more information from the Agriculture Department.
Administrator Zach Ducheneaux told the Senate Agriculture Committee on Feb. 9 that the Farm Service Agency compiles reports based on paper documents submitted by foreign buyers required to self-report if they meet certain conditions. He said the agency would need more funding and up-to-date technology to track farmland purchases by foreign buyers, especially those with ties to the People’s Republic of China.
Answers about the strengths and weaknesses of the agricultural foreign investment reporting law could come in response to a late 2022 letter from 130 House Republicans to the Government Accountability Office.
Reps. Glenn “GT” Thompson, R-Pa., now House Agriculture chairman, and James R. Comer, R-Ky., now House Oversight and Accountability chairman, led the letter asking the GAO to look into seven areas, including the Farm Service Agency’s way of ensuring accuracy of information it collects, how it deals with U.S. chartered companies used by a foreign buyer and whether the agency should work with other parts of the federal government to collect accurate acquisition information.
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