Considering that the average age of an American farmer is about 55, and there are not enough young people entering into farming to replace them, it makes sense for investors to be purchasing land. In fact, a study conducted by the National Young Farmers Coalition NYFC found that the most significant barrier to starting a farm is the lack of affordable and accessible land. As a result, a number of state and federal initiatives have been put into place to promote the sale of agricultural land to aspiring and veteran U.S. farmers, while simultaneously limiting its sale to foreign entities.
According to USDA records, a total of 35.2 million acres of agricultural land are owned by entities from other countries, an area that is nearly the size of Iowa. Canadians own the most acreage of American farmland, followed by investors from Italy, Germany, and the Netherlands. In addition, Chinese investment in U.S. land has become a topic of political controversy, with some congressional members seeking to tighten restrictions on Chinese ownership in light of recent Covid-19 supply chain disruptions and escalating tensions between the United States and China.
The vast majority of foreign-held agricultural land in the United States land buying company is held for timber or energy production purposes. Of the top 10 largest land-owning foreign entities, six are associated with timber and energy companies, while one is a life insurance company that manages a diverse portfolio of assets including over 1.2 million acres of agricultural land. One of the largest holdings, a wind power development company, holds over 1.709 million acres across 25 states, with over 40 percent of this total located in Texas and Oklahoma.
Investors are required to disclose the acquisition, change in ownership, and sale of any agricultural land they purchase or have an interest in through a federal regulation known as the Foreign Investment in Agriculture Act of 2022 AFIDA. This law requires that those who own or gain an interest in agricultural land provide detailed information about their investment to USDA, with penalties for failing to comply of up to 25% of the fair market value of the property involved.
However, the reporting requirements in AFIDA are voluntary and the data is only as accurate as the people who actually choose to voluntarily comply and self-report. As a result, the accuracy of the data relies on the integrity of the individuals or entities making their reports, as well as the efforts of USDA investigators to conduct timely inspections and investigations. Furthermore, a person who purchases agricultural land can hide his or her identity by forming an American corporation, buying through a foreign-owned subsidiary, or using another method to conceal his or her true ownership. Despite these limitations, Congress has introduced several bills during the 117th Congress 2021-2022 that would seek to increase oversight and restrict foreign investment in farmland. For example, the Countering Communist China Act H.R. 4792 and the Prohibiting Agricultural Land for the People’s Republic of China Act H.R. 7892 would require USDA to investigate foreign investments in agricultural land and take action against those who violate AFIDA provisions.