Politico | China is buying up American farms. Washington wants to crack down.

Reposted from: https://www.politico.com/news/2021/07/19/china-buying-us-farms-foreign-purchase-499893

The push to drain China’s influence from the U.S. economy has reached America’s farm country, as congressional lawmakers from both parties are looking at measures to crack down on foreign purchases of prime agricultural real estate.

House lawmakers recently advanced legislation to that effect, warning that China’s presence in the American food system poses a national security risk. And key Senate lawmakers have already shown interest in efforts to keep American farms in American hands.

The debate over farm ownership comes amid broader efforts by Congress and the Biden administration to curb the nation’s economic reliance on China, especially in key industries like food, semiconductors and minerals deemed crucial to the supply chain. The call for tighter limits on who owns America’s farms has come from a wide range of political leaders, from former Vice President Mike Pence to Sen. Elizabeth Warren (D-Mass.), after gaining momentum seeded in farm states.

“America cannot allow China to control our food supply,” Pence said Wednesday during a speech at the conservative Heritage Foundation, urging President Joe Biden and Congress to “end all farm subsidies for land owned by foreign nationals.”

Chinese firms have expanded their presence in American agriculture over the last decade by snapping up farmland and purchasing major agribusinesses, like pork processing giant Smithfield Foods. By the start of 2020, Chinese owners controlled about 192,000 agricultural acres in the U.S., worth $1.9 billion, including land used for farming, ranching and forestry, according to the Agriculture Department.

Still, that’s less than farmland owned by people from other nations like Canada and European countries, which account for millions of acres each. It’s also a small percentage of the nearly 900 million acres of total American farmland.

But it’s the trend of increasing purchases and the buyers’ potential connections to the Chinese government that have lawmakers spooked.

USDA reported in 2018 that China’s agricultural investments in other nations had grown more than tenfold since 2009. The Communist Party has actively supported investments in foreign agriculture as part of its “One Belt One Road” economic development plans, aiming to control a greater piece of China’s food supply chain.

“The current trend in the U.S. is leading us toward the creation of a Chinese-owned agricultural land monopoly,” Rep. Dan Newhouse (R-Wash.) warned during a recent House Appropriations hearing.

The committee unexpectedly adopted Newhouse’s amendment to the Agriculture-FDA spending bill (H.R. 4356 (117)) that would block any new agricultural purchases by companies that are wholly or partly controlled by the Chinese government and bar Chinese-owned farms from tapping federal support programs.

That move followed a contentious debate over the potential consequences for Asian Americans if Congress adopted a provision aimed squarely at China. Rep. Grace Meng (D-N.Y.) said that if the amendment was about national security, buyers from other countries should also face similar restrictions. “It would perpetuate already rising anti-Asian hate,” Meng warned at the markup.

But Meng, Newhouse and committee leaders indicated they would find a solution as the legislation winds through Congress. The measure is expected to reach the House floor before the end of July, as part of a broader appropriations package, although the Senate has not yet drafted its own version of the spending bill.

“We are new in this process,” said Rep. Sanford Bishop (D-Ga.), chair of the agriculture appropriations subcommittee. “I would suggest that we sit down and we work through it so we can accomplish our objective, but do it in a way that is sensitive to all those who might be somewhat offended by the approach.”

Scrutiny of foreign-owned agricultural operations receiving taxpayer subsidies has also been rising in recent years after meatpacking conglomerates like the U.S. subsidiary of Brazilian-owned JBS received millions of dollars under the Trump administration’s trade bailout starting in 2018.

Smithfield was also in line to receive money from the program, which was created to help U.S. farmers strung by trade retaliation from China and other competitors. But the company backed out of its contract with USDA after an outcry from lawmakers led by Sen. Chuck Grassley (R-Iowa).

The renewed focus on curbing foreign farm purchases comes as Biden and Agriculture Secretary Tom Vilsack roll out a series of actions to bolster the food supply chain, following major disruptions caused by the pandemic.

That effort includes greater scrutiny of large meat processing companies like JBS and Smithfield, as well as plans to tighten the requirements for meat to be labeled a “Product of the USA.”

While lawmakers remain laser-focused on Chinese buyers, other nationals own much more agricultural property in the United States.

Foreign investors by the end of 2019 held an interest in more than 35 million acres — an area bigger than New York State. The total has grown by an average 2.3 million acres per year since 2015, according to USDA data.

A few states, including top agricultural centers like Iowa and Minnesota, already have varying restrictions on foreign ownership of their farmland. As a presidential candidate in 2019, Warren said she would support a national version of Iowa’s law along with safeguards against foreign investors using “fake American buyers” to circumvent the rules.

Those seeking more restrictions say USDA’s numbers actually understate the amount of foreign control over American ag operations. The data is based on a 1978 law directing foreign nationals to report their U.S. agricultural holdings to USDA — a requirement that can be difficult for the department to enforce.

For example, foreign investors can set up limited liability companies in the U.S. and designate an American owner to circumvent the reporting requirements while still controlling the operation behind the scenes, said Joe Maxwell, president of the progressive advocacy group Farm Action Fund.

“It’s a massive undertaking to verify who really owns [the land],” Maxwell said. “These foreign interests are pretty smart. They use different business structures to further conceal it.”

While some states have strict laws in place, others are more open to foreign investments. Texas has the largest amount of foreign-held agricultural land, at 4.4 million acres, followed by Maine and Alabama, according to USDA.

The money flowing into agricultural real estate from other countries also makes it difficult for new farmers in the U.S. to afford land as outside buyers bid up prices. Maxwell said that poses a big risk with an older generation of farmers set to exit the industry.

“When this land changes hands, they’re going to gobble it up,” he said of foreign buyers. “These investments artificially increase the value of that land, which then denies young and beginning farmers opportunities to farm.”