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.
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.
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.
"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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This is a great article and covers so many topics! I have comments and suggestions in response to a couple of them.
First - Completely agree with the general sentiment of foreign ownership of farmland in Iowa - it's far from the biggest issue that we should be worried about. Wouldn't it be interesting if we took it farther, though, and required people who own farmland to live in Iowa? Or said another way - what if we were as worried about out-of-state speculators as we were about out-of-country speculators?
Second - I would love for you - perhaps we could together? - dig into the "farmers are getting older" theme. This is something that some folks have been saying for decades. It's not inaccurate. But it misses badly something that I think is far worse: the consolidation of farms. My back-of-the-envelope, off-the-cuff numbers go like this: two generations ago, 400 acres was sufficient for a farming family to earn a living, and it was plenty to keep a "farm family" busy. Today, conventional row crop operators -- which is most of "farmers" in Iowa today -- are farming upwards of 4000 acres. Said another way: 10 farm families two generations ago can be replaced by 1 farm operator today. So the related ideas that "farmers are getting older" and "we need to support beginning farmers" -- well, these ideas have issues from where I sit. Assuming the trend of farm operation consolidation continues - and given everything coming down the technology pipeline (lots) and the regulation pipeline (nothing on this front), there is no reason to believe otherwise - then if only 1 in 10 families today has a child that wants to farm... then we do not have either an aging farmer nor a beginning farmer problem.
There are caveats to this, for sure. Innovative farm families are finding ways to add enterprises to their existing operations in order to include kid(s) that want to live that lifestyle. Conventional row crops have lots of [environmental, human health, etc.] issues - alternative approaches to farming are often more labor- and thought- intensive and may alter my 10:1 ratio.
Regarding farmland that is being taken in for development... it's hard to see families that have been farming for generations lose that heritage. I grew up, and still live in, the North Polk district, which is where families on the north side of Ankeny are going. Nearly every time I drive anywhere, I drive by places that were once farmed, and are now houses and pavement. That does not feel good. And, the other piece of this is: Iowa needs less than 1% of Iowa's land to feed itself. Mind you - we do not actually feed ourselves today - what I have seen suggests 80-90% of the money Iowans spend on food goes out of state. But if we did - Iowa's 3 million people could be fed by 1% of Iowa's approximately 30,000,000 acres.
Wealth extraction: absolutely! And at what scale (system level) is it ok, if any? Out of the country? That seems politically not very acceptable. Out of the state? This issue is being raised more and more, but there is certainly not broad general agreement. Out of the county? Off the farm?
I've been hearing similar points as those raised in this article for the past decade that I have been paying attention to these issues, and I think you for collating them in a well-written way! I would love to dive deeper into many of this issues, and I will as I have time, and implore those of us who care about these issues to go beyond the talking points to see how they are evolving.
The Iowa Farmers Union was the ONLY entity registered against that mega farm bill last year. Let's keep a sharp eye out as you are Cheryl for corporate ownership, not just foreign, and those hiding behind names that look like family LLCs. Finally, SILT is the only org in Iowa permanently and legally preserving farmland as farmland in perpetuity - which scares the bejeesus out of everyone with any power at all.