As foreign investment in U.S. farmland grows, efforts to ban and limit the increase mount

In 2018, the Missouri legislature revisited the issue after two legislatures, Rep. Martha Stevens, D-Columbia, and Rep. Tom Hurst, R-Meta, sponsored bills that would ban foreign individuals or entities from buying farmland. WH Group and other foreign entities would be grandfathered in, but they would not have been allowed to sell their land to other foreign entities going forward.

At a hearing on those bills in 2018, the Missouri Farm Bureau, the Missouri Rural Crisis Center and Family Farm Action were among groups that testified in favor of the ban, while groups like Smithfield, the Missouri Cattleman’s Association and Missouri Pork Producers testified against the bills.

The bills did not become law, and Family Farm Action is working to get them passed this session, Davis said.

Blake Hurst, president of the Missouri Farm Bureau, said his organization still supports capping foreign ownership at the current holdings.

“We strongly oppose foreign ownership of farmland,” Hurst said. “Our members this U.S. ownership provides better stewardship of the land and it’s better for rural communities. We need to protect this valuable asset for the United States.”

Smithfield did not respond to a request for comment on the changes.

China ownership surges

According to federal data, WH Group’s Smithfield, the world’s largest pork producer,  owns about 150,000 acres.

While Chinese entities only own about 191,000 acres worth $1.9 billion, overall Chinese investment in the agricultural sector has grown tenfold in less than a decade, according to the USDA’s Economic Research Service.

And in Ohio, one of the states where a ban on foreign-owned farmland is being considered, WH Group bought two grain elevators in 2016, allowing the company to skip the middleman in feeding Smithfield’s livestock.

In 2018, the U.S. government reached a deal with Smithfield to buy $240,000 worth of pork as a part of the Trump administration’s trade bailout program, but that deal was terminated after widespread backlash.

Yet, Brazilian-owned JBS, a meatpacking company, received about $5 million in bailouts.

“The closer you are to the land, the more likely you are to take care of it,” Davis said. “The same goes to the closer you are to the ownership of farm animals.”

Issues with data, recent changes

A previous analysis by the Midwest Center for Investigative Reporting in 2017 found that foreign control of U.S. farmland doubled between 2004 and 2014 – from 13.7 million acres to 27.3 million acres.

Since 2014, foreign investment, in the form of ownership or long-term leases, has continued to increase, an analysis of federal data by the Center found.
Foreign ownership makes up about 2.2 percent of farmland in the U.S. and 1 percent of all land.

Critics often cite food security as a reason to ban foreign ownership of agriculture land, but the Center’s analysis found that timber companies and renewable energy companies remain the biggest group of foreign investors.

Overall, Canadian individuals and entities own the most land at 4.7 million acres, valued at $4.6 billion. Netherlands is a close second at 4.5 million acres, valued at $6 billion.

Those countries hold significant forestland investments.

EDP Renewables, a Portuguese renewable energy company, and Enel Green Power, an Italian renewable energy company, that both control significant swaths of farmland through long-term leases declined comment.

Resource Management Services also did not respond to a request for comment. The Alabama-based company manages timberland for many foreign-owned entities, including three of the top seven foreign-controlled companies, according to a Midwest Center analysis of business and land records.

Many of the firm’s more than $4.5 billion in holdings, which have significant investment from the Netherlands, are land previously controlled by International Paper.

Joe Maxwell, executive director of the Organization for Competitive Markets and former Lieutenant Governor of Missouri  said he is concerned that foreign investment will increase because the trade war and low-profit margins have driven an increase in farm bankruptcies, with twice as many farmers declaring bankruptcy in 2018 than did in 2008.

Maxwell helped start Family Farm Action to lobby on issues like foreign ownership of farmland. The organization also opposes corporate ownership of land.

Inconsistent enforcement, possible underestimates

While foreign entities are supposed to self-report their control over U.S. farmland, they are seldom fined if they do not.

The U.S. Department of Agriculture inconsistently enforces the law that requires foreign entities to report transactions of farmland.

Under the law, every foreign person or entity that acquires at least 10 percent interest in agricultural land must file what is known as an FSA-153 form with the Farm Service Agency of the USDA.

Agricultural land is defined as a parcel of land at least 10 acres in size or that could produce $1,000 in revenue from agricultural activities. Interest can be anything from ownership to a long-term lease.

The form requires disclosure about a broad number of items, including how the project is financed, who the owner is and where the owner is from.

Penalties for not filing within 90 days can be as severe as a fine of up to 25 percent of the fair market value of the land.

Since 2011, the USDA has only assessed 10 fines under the law, worth $115,724, according to agency records obtained by the Midwest Center.

Peter Wood, a USDA spokesman, said the agency’s goal is to monitor foreign ownership of farmland, not to assess penalties. But the USDA continues to publish numbers that are incomplete and inaccurate, according to the Midwest Center review.

Wood said that the database only has “active” holdings of farmland, but spot checks of the data show that there are also inactive holdings.

In addition, about 1.3 million acres, worth $386 million, do not list the country associated with the owner, and about 333,000 acres, worth $65 million, do not list the owner.

Typos within the data are frequent and can make it difficult to figure out correct acreage and value.

Spot checks by the Midwest Center of the data show that many parcels of land are no longer controlled by the owner listed in the database. Furthermore, it is difficult to determine who owns many limited liability companies or how many companies are owned by foreign investors in whole or in part.

Maxwell said the lack of enforcement of the law makes it impossible to know how much foreign investment there is.

“One of the worst issues is the lack of data,” Maxwell said.

This story was republished from the Midwest Center for Investigative Reporting. Read the original story here.