Lawmakers worried that China could gain control over the U.S. food system through land purchases are looking to curb the nation's grip on American farmland, despite no evidence of a recent spike in land sales to Chinese interests, according to an Agri-Pulse analysis of Agriculture Department data.

The most recent data collected under the Agricultural Foreign Investment Disclosure Act (AFIDA) shows Chinese investors held a little more than half of 1% of the overall 35.8 million acres of U.S. farmland and forest land under foreign ownership in 2019. Foreign-owned land accounts for about 2.7% of all U.S. farmland and forest land, which, according to the Department of Agriculture, is about 897 million acres.

That data also shows that the approximately 190,000 acres of farmland owned by Chinese interests has remained virtually unchanged since 2013. However, the USDA’s data on foreign farmland ownership is two years old, so Chinese investors could own more or less land than the numbers reflect. Additionally, complex company ownership structures and problems with USDA enforcement of the reporting act, as reported by the Midwest Center for Investigative Reporting in 2017, may mean those numbers are not accurate or up to date.

Still, a provision that would bar businesses owned by the Chinese government from buying U.S. farmland and participating in USDA programs cleared the House in August as part of the fiscal 2022 funding bill for USDA. There is no similar provision in the Senate version of the appropriations bill, which was approved by the Senate Appropriations Committee in August. 

The House amendment would extend the same ban onto the state-owned businesses of three other U.S. adversaries. But its lead author, Rep. Dan Newhouse, R-Wash., designed it with China in mind. He told Agri-Pulse he intended it to serve as a preventative measure, a way for Congress to keep the Chinese government from acquiring U.S. land in the future.

“We know that there is a stated goal of the Chinese communist government to accomplish the control of not just agricultural assets, but many different kinds of assets around the globe,” Newhouse said. “This was a preemptive effort on our part to prevent important, critical parts of our supply chain from being under the control of the Chinese.”

While Chinese officials have encouraged agricultural companies to invest abroad to expand the nation’s global influence and achieve national food security, a 2018 USDA Economic Research Service report said these investments are becoming less focused on land and more on acquiring existing companies. Most of the agricultural land that Chinese investors do acquire is located in other parts of the world, including Southeast Asia, Russia and Africa. 

“Most Chinese agricultural investment has bypassed the United States,” the report’s authors wrote. “North America has received the smallest share among all continents of China’s outbound agricultural investment, despite being top supplier [sic] of China’s agricultural imports and a top destination for China’s nonagricultural investments.”China_Chart_2-(1)-(1).png

Plus, investors from China — who held 191,652 total acres of land in 2019 — appear to possess far fewer acres of U.S. farmland than people from other countries. Investors from Canada and the Netherlands held 7.4 million acres and 4.5 million acres, respectively, and investors from Italy, Portugal, Germany, the United Kingdom, France, and eight other countries followed, each group possessing more land than their Chinese counterparts.

When Newhouse introduced his amendment during a House Appropriations Committee markup on June 30, legislators from both parties expressed concerns about the potential ramifications of allowing Chinese ownership of U.S. land.

The chairman of the House Ag Appropriations Subcommittee, Sanford Bishop, Jr., D-Ga., said he supported the “concept” of the amendment, calling the current number of Chinese-held acres of U.S. land a “national security issue.” Rep. Jeff Fortenberry, R-Neb., the subcommittee's top Republican, saw the measure as a matter of “fairness,” because China likely does not allow the U.S. to purchase farmland within its borders.

But Rep. Grace Meng, D-N.Y., called the amendment a “slippery slope” that had the potential to fuel hatred toward Asian Americans, though she ultimately voted to add it to the appropriations bill after Newhouse expressed a willingness to work with her to address her concerns.

“This is not about calling attention in any negative way to any group of people in our country — that's not the goal,” Newhouse told lawmakers after a brief recess allowed him to speak with Meng. “This is about the government of communist China. This is about our country's national security. If we can agree on those two things, then I think we can move forward.”

Since then, the amendment was expanded to include three other known U.S. rivals: Iran, Russia and North Korea. Meng said at the markup she wanted to see a broader focus on multiple U.S. adversaries. Iran possessed 2,463 acres of U.S. land in 2019, while Russia held 834 acres and North Korea owned none. 

Rep. Newhouse did not agree to expanding the amendment, even though he doesn't disagree that the additional countries are adversaries, noted a staff spokesperson. "His concern is that since at least 2012, the People's Republic of China has made significant increases in U.S. farmland ownership," the spokesperson said.

China_Chart_5-(1)-(1).pngJames Talent, a former U.S. senator from Missouri and a current member of the U.S.-China Economic and Security Review Commission, spoke with Agri-Pulse in his personal capacity and said Chinese ownership of farmland can be concerning, particularly because the Chinese government is “sophisticated in using economic leverage” to further its own goals. He also questioned the accuracy of foreign ownership data.

“Part of the difficulty here is that we're not certain how reliable our own figures are, because there's a requirement that foreign entities report when they buy agricultural land, but there's really no means for enforcing that,” Talent said. “And it's not like the Chinese are very honest about other economic statistics, that's another well-known fact.”

But Talent said right now, the Asian nation appears to be more focused on feeding its own people than on disrupting the U.S. food supply. 

“I think, in general, it's fair to say that their buying to this point is designed to secure their own food supply chains, rather than to gain leverage over ours,” he said. “That could change.”

The amount of farmland owned by Chinese investors has remained relatively steady in recent years, according to the AFIDA data. The last significant increase in acres occurred between 2012 and 2013 after the privately owned Chinese company Shanghui, now known as the WH Group, purchased U.S. pork giant Smithfield Foods. 

According to AFIDA data obtained by Agri-Pulse through a Freedom of Information Act request, 76% of the land fully owned by Chinese entities in 2019 — or 146,537 acres — belonged to Smithfield Foods.

The company controls more than 49,000 acres of land in North Carolina, more than 42,000 in Missouri, just above 33,500 acres in Utah, over 13,000 in Virginia, more than 3,800 acres in Colorado and about 2,500 acres in Oklahoma. It also owns some land in Texas, South Carolina and Illinois, but far fewer acres than in other states.

After its 2013 purchase of Smithfield, Shanghui took control of several properties in Iowa, including processing plants, at least one livestock buying station, a feed mill, an office facility in Ames, a parcel of land near Manning where construction of a feed mill was planned, and leases of approximately 50 barn structures from local farmers near Algona, according to a series of letters exchanged between Smithfield representatives and the Iowa Attorney General’s office.

But because of the state’s laws restricting foreign-owned or leased farmland, the company told the attorney general’s office it would turn over 40% of the leased barns to the U.S.-based Christensen Farms and convert the rest into traditional contract finishing and custom feeding arrangements by the end of 2015. According to the letters, Smithfield’s other properties were not on agricultural land.

Other states with Smithfield operations, like Oklahoma and Missouri, have some restrictions on foreign farmland ownership, but none that prevent the company from operating in them.

Oklahoma’s statute allows foreign corporations to own agricultural land for swine, poultry or livestock feeding operations. Missouri previously had a ban on foreign ownership, but state legislators changed it in 2013 — 15 days before the Smithfield acquisition — to allow foreign investors to own up to 1% of the state’s agricultural land. 

Smithfield Foods did lobby on Newhouse’s amendment as it worked its way into the final appropriations bill, records show.Newhouse_Amendment_1.png

A source close to the matter told Agri-Pulse that Smithfield representatives urged Newhouse’s office to clarify in the amendment that the restrictions should apply only to companies owned by the government of China. Newhouse's original language had also singled out "nationals of the People's Republic of China," but that section was crossed out before the vote on the amendment.

On its website, Smithfield asserts that the Hong Kong-based WH Group is a publicly traded company and not a state-owned enterprise, which presents the possibility that the company will not be affected by the legislation. Smithfield representatives declined to comment on this story.

The impact the amendment has on Chinese companies will likely depend on how the USDA chooses to define ownership. Both Newhouse and Talent said the Chinese government has ways of influencing how companies within its borders operate, even if they are private. 

"I guess you could theoretically have a company that did not have government ties who it wouldn't affect, but I don't think that in reality that exists in China," Newhouse told Agri-Pulse.  "There's always a relationship with the Communist government. I can't speak to Russia and Iran and North Korea, since that wasn't part of my original language."

In an email to Agri-Pulse, USDA press secretary Kate Waters said the agency has not yet decided what criteria it would use to determine whether or not a company was owned by one of the four countries included in the amendment.

Some experts, including Francine Miller, a senior staff attorney and adjunct professor at the Vermont Law School Center for Agricultural Food Systems, question whether the USDA would have the legal authority to prohibit the governments of the countries listed in the bill from buying land.

"It's really a state law issue," Miller said. "There isn't, as far as I've been able to tell, any federal jurisdiction for the federal government to stop — especially a particular country — from buying farmland in America."

But Waters, the USDA spokeswoman, said Congress would give USDA the legal authority to prohibit sales of farmland to the foreign countries included in the act if the bill were to pass. However, she said some of the infrastructure necessary for enforcing the act does not currently exist and would need to be created by the USDA. 

Editor's note: This article was updated to clarify Rep. Newhouse's position on expansion of the amendment to other countries and additional updates.

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