State and federal lawmakers are pushing to regulate foreign ownership of U.S. real estate because of fears that Chinese entities are creating a national security risk by amassing swaths of U.S. farmland, some of it near sensitive sites.
A review by NBC News of thousands of documents filed with the U.S. Department of Agriculture, however, shows very few purchases by Chinese buyers in the past year and a half — fewer than 1,400 acres in a country with 1.3 billion acres of agricultural land. In fact, the total amount of U.S. agricultural land owned by Chinese interests is less than three-hundredths of 1%.
But the review also reveals a federal oversight system in which reporting of foreign ownership is lax and enforcement minimal.
Any foreign individual or entity that buys or leases U.S. agricultural land is required by federal law to report the transaction to the USDA within 90 days, yet some were not reported for years — in one case, more than 20 years. And in that same time period, no one has been fined more than $121,000 for failure to make such a report.
NBC News was able to review filings on foreign purchases and leases of agricultural land, meaning both farm and forestry land, from 35 states since Jan. 1, 2022. The vast majority of the transactions were European wind power companies leasing land from U.S. farmers to build wind turbines. One Italian wind company disclosed 40 new leases of farmland in just one rural Illinois county. The same company had leases in at least four other states.
In those 35 states, NBC News found 11 purchases by Chinese entities that had been reported to the USDA from Jan. 1, 2022, to June 30, 2023.
Several of the disclosures were not recent sales, and at least one was a repeat of a previous disclosure. Another was not reported to the government till it had been revealed in the media.
Smithfield Foods reported that it bought 186 acres in 2022 and 2023 in Missouri and North Carolina, adding to its existing U.S. portfolio of less than 128,000 acres, according to a company spokesman. Formerly a U.S. owned company, Smithfield Foods was bought by a Chinese firm in 2013.
“There are important issues to be addressed between the U.S. and China,” said Jim Monroe, Smithfield’s vice president of corporate affairs. “Ownership of U.S. agricultural land is not one of them.”
Syngenta Group filed six disclosures of a total of 772 acres spread across Iowa, Florida and California, but the purchases had already been reported to the USDA when they were made under the company’s former owner, a Swiss company. Syngenta was bought by a Chinese firm in 2017.
Saswato Das, a spokesperson for Syngenta, told NBC News the company owns or leases a total of 6,000 acres in the U.S.
Das said that Syngenta uses a “significant portion” of its U.S. land for research on its products that is required by the USDA or the Environmental Protection Agency. The agencies require that the company test the seeds and chemicals it plans to sell. “All of these activities are conducted on fields and farms in the U.S. to benefit American farmers,” said Das.
A Hong Kong company that had bought 365 acres in North Dakota did not disclose its purchases to the USDA until CNBC revealed national security concerns had been raised about the land’s proximity to Grand Forks Air Force Base.
After CNBC wrote that the purchases by Fufeng USA were raising alarms in Washington, a local USDA official contacted the company to ask about disclosure of foreign ownership, according to USDA filings reviewed by NBC News.
Two weeks later the company complied, filing disclosures showing it had made three purchases for a total of $9.5 million to build a “wet corn milling biofermentation plant.”
Eric Chutorash, chief operating officer of Fufeng USA, dismissed concerns the plant could be used to spy on the Air Force base.
“I can’t imagine anyone that we hire that’s going to even do that,” Chutorash said. When asked if he could definitively say it wouldn’t be used for espionage, he responded, “Absolutely.”
But due to the opposition of local, state and federal officials, development of the Fufeng plant was stopped. Fufeng still owns more than 300 acres in Grand Forks, according to the county recorder’s office, a footprint less than a quarter the size of the average family farm in North Dakota.
Weak enforcement
Historically only about 3.1%, or 40 million acres, of the nation’s 1.3 billion acres of agricultural land has been owned by foreigners. Almost half of the foreign-owned land is forest. USDA records show that a third of the 40 million foreign-owned acres are held by Canadian interests, while Chinese interests hold less than 400,000 acres.
But the share of agricultural land owned by foreign interests is increasing, according to the USDA’s Farm Service Agency, and the pace at which the foreign share is growing has also risen. While it grew by an average of 800,000 acres yearly from 2011 to 2015, it rose 2.2 million acres per year from 2015 to 2021.
In the name of national security, members of Congress have called for tougher laws to regulate foreign land purchases, criticizing existing efforts by the USDA to police disclosure.
Over the past 10 years just six companies have faced penalties for late filings or failing to file, according to USDA data.
Two Canadian firms were penalized for late filings in 2013. A Swedish company was fined a year later. After that there were no penalties until a Japanese firm was fined in 2019.
In 2021 two Chinese entities were together fined more than $135,000 for failing to disclose their purchases of more than 130,000 acres along the southern U.S. border in Texas more than 20 years earlier.
The penalty letter that the USDA sent to one of the firms, Brazos Highland Properties LP, shows that the company filed its disclosure 8,017 days late. The government said in its letter that given the long delay the original amount of the proposed fine had been $21 million, but that the agency decided to reduce it to $120,216.38. That sharply reduced amount was the largest fine the agency had imposed in 20 years.
The two companies, Harvest Texas and Brazos Highland, paid their reduced fines three months later, according to USDA documents. They also abandoned plans for a wind farm on the land after significant local opposition.
The members of Congress who want to tighten controls on foreign ownership say its true scope is hard to gauge when enforcement is lacking.
In late July, the Senate passed a ban on China, Russia, North Korea and Iran buying American agricultural land, but it’s unclear if the amendment will make it into the final defense spending bill that will go to a vote in Congress this fall.
One of the sponsors of the amendment, Sen. Joni Ernst, R-Iowa, has also proposed adding the Food and Drug Administration and the Agriculture secretary to conduct oversight of foreign purchases to ensure that reporting is timely and accurate, as welling as adding USDA staff to monitor purchases. She also proposes that any purchase or lease by a foreign entity that exceeds 320 acres or land valued at more than $5 million be subject to review.
In a statement, Ernst said, “Any acre of land that the Chinese Communist Party can use against the United States is a threat that must be taken seriously. We have already witnessed the danger their malign influence poses in our backyard as they bought critical land near our military installations. We need to bolster the law because currently, USDA is not fully able to enforce or police foreign investment.
“That’s why I’m working across the aisle with Democrats to protect our agriculture security that would require CFIUS [Committee on Foreign Investment in the United States] to do its job, modernize USDA’s process to protect our land against our adversaries, and ensure China cannot use any loophole against us.”
Source: CNBC
