The Real Dirt on Who Owns U.S. Farmland

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It  hasn't made any headlines yet, but Iowa's farmland may gain a new watchdog. Not to guard against the pragmatic threats keeping farmers awake at night – urban sprawl, soil erosion, finding affordable land, or eminent domain.

No. In the 2024 Condition of the State address this week, Governor Reynolds set her sights on a global target:

"China continues to grow more aggressive, and buying American land has been one of the many ways they have waged this new battle," Reynolds said.

"Fortunately, Iowa has some of the strongest laws in the country on foreign ownership of land—in fact, other states have looked to us as a model for their own policies. But as China’s threat adapts, our laws should, too. . . To that end, working in conjunction with Secretary of Agriculture Naig, we’ve developed a bill to further protect our farmland from foreign interests."

Foreign countries have owned American farmland throughout the history of this country. At the end of 2022, the USDA's most recent available report revealed that foreigners held an interest in about 43 million acres, or 3.4% of all privately held U.S. farm land. Canada owns the most, followed by Europe and the United Kingdom. Chinese ownership? Less than 1% of total U.S. foreign-held land.

Targets Foreign Farmland Ownership

It's not surprising, though, that Iowa would line up to march in lock step with a dozen other states enacting restrictions in 2023. Three factors have laid the groundwork for this legislative call to arms.

"Foreign ownership has increased more than 50% in the past decade," says Micah Brown, an attorney at the Agricultural Law Center at the University of Arkansas. Brown spoke at the Land Investment Expo organized by People's Company in Des Moines last week.

The past decade also corresponds to increasing farmland values. In 2022, Iowa's average land value rose to a record-setting $11,400 per acre.

Finally, the Chinese hot air balloon that drifted over the U.S. last year apparently released aerosol plumes seeding a motherlode of national security worries.

Photo by Max Ducourneau on Unsplash

Two recent high-profile news stories put China in the spotlight:

·       In November 2021, a Chinese food manufacturer selected Grand Forks, North Dakota as a site to build a wet corn milling plant. Its 370-acre location, 12 miles from the Grand Forks Air Force base, led to the City Council ultimately rejecting its development plan.

·      In Val Verde County, Texas that same year, a Chinese billionaire's company bought up to 140,000 acres for a wind energy farm near the Laughlin Air Force base. After Texas passed a law preventing Chinese companies from accessing the state's power grid, the project moved forward under a new owner, based in Spain.

Last year, Syngenta, a Swiss ag seed and crop protection company purchased by ChemChina in 2017, fell afoul of a new Arkansas law banning certain foreign owners. Syngenta had owned 160 acres in Arkansas. Although it notified the federal government of its sale, it was fined $280,000 because it failed to register in Arkansas.

In 2022, Indiana passed  a new law limiting foreign investment from China, Iran, North Korea, and Russia. Presidential candidate and Florida Governor, Ron DeSantis also recently banned ownership of farmland by countries of concern, including China.

Concern at Federal Level

There's no federal law restricting foreign investors from buying U.S. farmland. Foreign interests are required to register with the USDA, under the Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA). The Farm Service Agency in the county where land is purchased requires an FSA-153 which is compiled into an annual USDA report, titled Foreign Holdings of U.S. Agricultural Land.

Prompted by recent concerns, the Senate Committee on Agriculture, Nutrition and Forestry held a hearing last fall focusing on foreign farmland ownership.

Sen. Mike Rounds, R-South Dakota proposed the Promoting Agriculture Safeguards and Security Act of 2023 (PASS), specifically aimed at purchases by China, Iran, North Korea, and Russia. Reps Randy Feenstra and Ashley Hinson (R-IA) also have supported bills to prevent some countries from buying any U.S. land and to strengthen oversight of foreign land purchases.

The Devil In the Details

Foreign investors are buying land for same reasons U.S. investors have bought land over the past decade. It's been a good investment hedge against inflation. In fact, farmland values haven't significantly declined since the 1980s, according to the USDA Economic Research Service. A significant portion of the foreign farmland portfolio includes forested acres in California and Maine.

Another category of long-term land ownership, Canadian, is concentrated in pension funds. David Bergval, Manulife Investment Management, told Land Expo attendees, "These types of purchases tend to bring stability to the land market."

Land Expo panelist Todd Freidman, a Portland, Oregon, attorney working with clients in the agribusiness arena, cautioned, "Look at the universe of consequences, without overcorrecting, or enacting broad blanket foreign ownership laws."

Harrison Pittman, director, National Agricultural Law Center, University of Arkansas, agreed, asking: "Is it a solution looking for a problem? State laws aren't uniform, and that's a fly in the chili. The USDA would need more staff to do more. State laws may be ripe for possible preemption by a federal law on the horizon."

Panel members suggested the 2023 federal farm bill also could become a vehicle for reforms on foreign land ownership.

However, other foreign-owned segments of the U.S. food system seem to be flying under the radar. "In my opinion the real concern isn't foreign ownership of farmland, but the foreign ownership and involvement in agribusiness,"' says Mark Gannon, Gannon Real Estate and Consulting, Ames, Iowa. This includes:

·       Chinese ownership of Smithfield Foods, the largest hog producer in the U.S, and Syngenta Seeds.

·      Bayer [Germany] is the largest chemical company.

·       JBS [Brazil and worldwide] is the largest meat producer in the world and heavily involved in Iowa.

"The WH Group of China acquired 146,000 acres of farmland, along with hog farms, processing plants and feed mills, when it purchased Smithfield Foods in 2013," Gannon says. "There aren't any laws on foreigners owning business and they like agriculture."

Greater Threats to Farmland

According to the USDA, 513,982 Iowa acres (1.6%) were owned by individuals or entities from other countries in 2020.

As a farmer and farmland owner, should I be alarmed? When it comes to Iowa farmland, it seems as if everyone wants to claim a piece of it.

Last year, Iowa House Study Bill 147would have allowed foreign companies to buy contiguous farmland tracts of 1,000 acres or more, provided they spent a minimum of $1 billion on the project, and it was verified as a certified site for industrial development.

The Iowa Economic Development Authority advocated for it. The Iowa Association of Business & Industry, the Iowa Business Council and the Greater Des Moines Partnership registered in favor of it. It's likely to be introduced again, although I don't see how it squares with the Governor's proposed legislation.

It's reasonable to consider tightening reporting and enforcement and improve transparency. Tracking multiple entities and layers upon layers of LLC ownership is an increasing complex challenge. Wind and solar projects also are raising questions of foreign land ownership in Iowa, although most of these acres are leased long-term, not owned.

Photo by Nejc Soklič on Unsplash

Let me be clear: I don't trust China. But other trends threaten Iowa farmland as much, if not more. Thanks to a months-long investigation by The Gazette, we know the Church of Jesus Christ of the Latter Day Saints (commonly known as Mormon) owns at least 22,000 acres of Iowa farmland across 21 counties. However, Farmland Reserve Inc., a nonprofit related to the Mormon Church, owns 370,000 ag acres in Nebraska. It's also believed to be the largest private landowner in Florida.

Nebraska Farmers Union has raised concerns that these purchases have inflated farmland prices, and are preventing fulltime farmers from buying land. "Local bidders, especially beginning farmers cannot outbid the Mormon church," says John Hansen, president, Nebraska Farmers Union.

In fact, the Mormon Church may own more farmland than Bill Gates, or China. It's also under Federal investigation on charges of misuse of its member donations intended for missionary activities.

Urban sprawl has concerned me for more than two decades. This week The Des Moines Register reported that Ankeny develops about 650 acres of land annually. Now the city has its eye on a 420 acre annexation to expand even farther north. 1,000 Friends of Iowa was cofounded by LaVon Griffieon to protect her family's Century Farm, and the livelihood of the sixth generation on the farm.

"With urban growth pressure increasing upon our farm's boundaries, we hope to increase consumer awareness of the importance of the world class soils around Ankeny," she says.

Another farmer friend northeast of Ankeny welcomed a son to take over their family farm, but the sprawl makes operating their business challenging, and has raised their property taxes. Altoona, Bondurant, and Waukee fall into this same category of paving over prime farmland.

Is Iowa truly worried about food security? Does food security equal national security? If so, I'm not sure that these concerns are reflected in our land use and farm policies. Even when the land remains in farming, the barriers to entry by young farmers are formidable, as Iowa's farmers are aging. Young farmers cited finding affordable land to purchase as their top challenge in a 2022 survey by the National Young Farmers Coalition.

Professional athletes buying shares of land through a private investment Platform called PatricofCo. aren't likely to be involved in the management of the farm, or be concerned with soil conservation or erosion. Passive ownership also is a source of rural wealth extraction.

Photo by Tim Mossholder on Unsplash

"The profits and wealth are seldom, if ever re-invested in the local community," Hansen says. "Typically the profits end up in the bank account of the owners. It doesn't matter whether it's Bill Gates, Ted Turner, the Mormon Church, or a foreign company or country, the negative wealth-sucking impact on rural communities is the same. They become poorer over time."

Maybe that's the real dirt on farmland ownership.

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