In a recent turn of events that feels like a blast from the past, the topic of foreign investment in U.S. agriculture has resurfaced with a fervor reminiscent of Cold War-era protectionism. Proposed legislation by Senator Jon Tester at the national level, coupled with similar initiatives in states like Kansas, seeks to curb foreign ownership of American farmland. A considerable amount of this legislative effort appears to be directed at China, with other nations such as Iran, Russia, and Venezuela also in the crosshairs. Kansas’s attorney general has even voiced concerns about “Mexican drug cartels” acquiring land, although evidence to substantiate these claims remains elusive.
This apprehension over foreign land ownership isn’t new. Back in the late 1970s, there was a similar outcry when the Continental National Bank in Chicago planned a farmland investment fund. The angst then wasn’t about foreign investors but rather non-farm entities in general. Fast forward to today, and while times have changed, certain underlying fears have not. The resurgence of xenophobic sentiment, stoked by some politicians, echoes a time when America was more insular.
Historically, many states have had laws aimed at limiting agricultural land ownership by non-farm entities, though these laws have not always been strictly enforced. In fact, outside investment—predominantly from domestic sources—has been a significant part of the agricultural landscape in these states. As of December 31, 2022, foreign entities owned 3.4% of U.S. agricultural land, or 43.4 million acres out of approximately 1.3 billion acres, according to the USDA. This represents a 50% increase since 2017, as reported by the Government Accountability Office. Despite the seemingly large figure in dollar terms, this ownership is but a small portion of the sector.
It’s important to note that some foreign investors have been part of the U.S. agricultural fabric for decades. The current debate takes place against a backdrop of financial challenges in the sector. Crop prices are declining, with corn and soybean prices dropping to levels that spell financial difficulty for many American farmers. The agricultural sector’s focus on yield-boosting technology has led to an oversupply that the global market struggles to absorb.
The political dimension of this issue is particularly thorny. On one hand, we face a reduced demand for our staple crops; on the other, we confront a climate of xenophobia that targets China, a key trading partner. The narrative spun around foreign land ownership as a national security threat seems exaggerated. If the U.S. pushes too hard, China could very well turn to other grain suppliers, like Brazil, which stands ready to fill the gap.
The agricultural sector’s health depends on diverse markets, land ownership, and access to capital. The younger generation of farmers, already facing high barriers to entry, could benefit from foreign investment. The USDA has had reporting requirements for foreign investment in U.S. farmland since the late 1970s, and this transparency has not previously been a point of contention. It’s only now, under the spotlight of political agendas, that it has become a hot topic.
The issue at hand calls for a sober analysis. With the agricultural sector already under strain, it’s crucial to consider the implications of restricting a potential source of capital that could support the next generation of farmers. Instead of treating the situation as an isolated problem, it would be wise to recognize the interconnectedness of the global agricultural community and the potential harm that could come from isolating the U.S. from it. A reality check on foreign investment in U.S. farmland may reveal that the perceived threat is more of a political talking point than a genuine risk to national security.