Legislators Act Against Chinese Farmland Purchases

Chinese interests own less than 1% of all foreign-acquired land in the U.S., but the purchases are getting outsize attention. (Dan Macy)

The Lede: State and federal lawmakers are increasingly trying to restrict China from buying American farmland on the basis of national security and food security risks. Despite being a minute fraction of all foreign-owned land in the U.S., the acquisitions made by Chinese entities have raised concerns about the possibility that the Chinese government, using these corporations as conduits, could wield control over U.S. assets or gain entry to U.S.-based information.

What we know:

In March, an amendment sponsored by Rep. Randy Feenstra, R-Iowa called the Defend America's Rural Energy Act was approved by the U.S. House of Representatives with a vote of 407 to 26. This legislation aims to prevent China from purchasing American agricultural land that is suitable for producing ethanol and biodiesel – the two energy sources Rep. Feenstra says lower fuel prices in America.
Later this summer Sens. Joni Ernst, R-Iowa, and Debbie Stabenow, D-Mich., introduced the FARMLAND Act of 2023 which empowers the Committee on Foreign Investment in the United States (CFIUS) to review foreign purchases of U.S. farmland over $5,000,000 or 320 acres. It also requires a public database of foreign-owned farmland and limits foreign-involved land in agricultural programs.
At the end of July, the U.S. Senate passed an amendment by Sen. Mike Rounds (R-S.D.) and Sen. Jon Tester that prevents foreign adversaries from purchasing American farmland and agricultural businesses. This amendment will become a part of the Senate version of the Fiscal Year 2024 National Defense Authorization Act (NDAA).
Reports show that China owns 1% of foreign-acquired land in the U.S., far less than Canada, Italy, or the UK. But experts and lawmakers are concerned due to a lack of information about the location of Chinese-owned land and whether it is situated near military installations.
NPR's analysis of U.S. Department of Agriculture data revealed that Smithfield Foods and billionaire Sun Guangxin hold over 80% of the Chinese-owned land. His ownership (over 40%) is facilitated through entities like Brazos Highland Properties LP and Harvest Texas LLC.

The background: The proportion of agricultural land owned by foreign entities is on the rise, and the rate at which this foreign ownership is expanding has also surged. While there was an average increase of 800,000 acres annually between 2011 and 2015, the figure escalated to 2.2 million acres per year from 2015 to 2021, according to NBC News reporting. The USDA report shows that as of December 2021, China possessed a land area of 383,935 acres, which accounts for just under 1% of the total foreign-owned acreage. Among the reported foreign-owned agricultural and non-agricultural land, Canadian investors possess the largest share, amounting to 31%.

In recent years, news of some of the Chinese companies buying U.S. farmland rang the national security alarm bell in Washington. In 2022 Fufeng Group, a private-owned company based in Shandong, China, known for producing flavor enhancers and sugar substitutes, acquired 300 acres of agricultural land close to Grand Forks, North Dakota, for $2.6 million. The land is within a 20-minute drive from Grand Forks Air Force Base, which houses some of the country's most critical military drone technology. Over 51 lawmakers raised concerns that Fufeng Group has close ties with the Chinese Communist Party (CCP) and could be covering up espionage activities under commercial projects. In January authorities in Grand Forks rejected the proposal for the construction of a $700 million corn mill project put forward by a Chinese company, after the U.S. Air Force said it presented “a significant threat to national security”. Though Fufeng Group still owns the land.

Another case concerns a Chinese billionaire with close ties to the CCP who bought land in Texas, initially unnoticed by local or federal officials. A Chinese “real estate tycoon” Sun Guangxin used U.S.-based entity Brazos Highland Properties LP to buy land in Val Verde County in Texas, near the Mexican border, which is also home to U.S. training ground for military pilots. He allocated 15,000 acres for his company GH America Energy LLC to manage the development of a wind farm intended to contribute electricity to the Electric Reliability Council of Texas (ERCOT), which manages Texas' power grid, Forbes reported in 2021. Texas lawmakers completely barred Chinese companies from using the state's power grid and critical infrastructure. As a result, the wind farm developers had to sell their stakes, according to the Associated Press.

The USDA adheres to a rigorous reporting requirement for land purchases, demanding submission within 90 days of the transaction. Yet, the USDA's jurisdiction doesn't extend to investigating these acquisitions; it is limited to applying penalties for tardy, incomplete, or falsified filings, NPR reported. Buyers who neglect to report their transactions could face penalties reaching up to 25% of the land's market value. However, such hefty penalties are uncommon. The USDA indicates that penalties typically hover around 1% of the market value.

Likely outcomes/Takeaway:

The increasing trend of Chinese entities purchasing American farmland has stirred concerns among state and federal lawmakers, raising a complex web of issues related to national security and economic sovereignty. While the proportion of Chinese-owned land within the larger landscape of foreign-owned U.S. land is notably small, its potential impact is magnified by geopolitical considerations and the lack of comprehensive data on the location of these acquisitions.
Multiple bills within Congress are directed at curtailing Chinese ownership. Simultaneously, the Biden administration is enhancing regulations concerning the eligibility of land purchasers in close proximity to military bases. This indicates there might be some developments regarding the issue this fall.

Quotables:

“Food security is national security, which means we cannot allow strategic competitors like China to gain control of the agricultural land that feeds us." – Rep. Elissa Slotkin, D-Mich.
“I firmly believe that American farmland belongs to American farmers.” – Rep. Randy Feenstra, R-Iowa.
There is nothing more basic to our nation’s independence, safety, and security than protecting our food supply from foreign ownership." – Senator Debbie Stabenow, D-Mich., Chairwoman of the Senate Committee on Agriculture.
"I don't know that we know for sure all the foreign land that potentially is owned by Chinese individuals or folks controlled by the Chinese government." – Sen. Jon Tester, D-Mont., told NPR.

Good Reads:

Is China really buying up U.S. farmland? Here’s what we found (NBC News)

Why A Secretive Chinese Billionaire Bought 140,000 Acres Of Land In Texas (Forbes)

China owns 380,000 acres of land in the U.S. Here's where (NPR)