Regulating Foreign Ownership of U.S. Real Estate: Concerns and Weak Enforcement
Introduction
State and federal lawmakers are advocating for regulations on foreign ownership of U.S. real estate due to fears that Chinese entities pose a national security risk by acquiring large portions of American farmland, some of which are located near sensitive sites. However, a review of documents filed with the U.S. Department of Agriculture (USDA) reveals that Chinese buyers have made very few purchases in the past year and a half, amounting to less than 1,400 acres in a country with 1.3 billion acres of agricultural land. The total amount of U.S. agricultural land owned by Chinese interests is less than three-hundredths of 1%. Despite this, the review also highlights a lack of oversight and minimal enforcement in the reporting of foreign ownership.
Limited Purchases by Chinese Buyers
According to NBC News, a review of filings on foreign purchases and leases of agricultural land in 35 states since January 2022 shows that the majority of transactions involve European wind power companies leasing land from U.S. farmers to build wind turbines. In the same period, only 11 purchases by Chinese entities were reported to the USDA. Some of these disclosures were not recent sales, and one was a repeat of a previous disclosure. Additionally, one purchase was only reported to the government after it had been revealed in the media.
Specific Cases
Smithfield Foods, a Chinese-owned company, reported purchasing 186 acres in Missouri and North Carolina in 2022 and 2023. However, this is a small addition to its existing U.S. portfolio of less than 128,000 acres.
Syngenta Group, a Chinese-owned company, filed six disclosures for a total of 772 acres in Iowa, Florida, and California. These purchases had already been reported to the USDA when they were made under the company’s previous Swiss owner.
A Hong Kong company that bought 365 acres in North Dakota did not disclose its purchases to the USDA until concerns about national security were raised due to the land’s proximity to the Grand Forks Air Force Base.
Weak Enforcement and Calls for Regulation
Historically, only about 3.1% of the nation’s agricultural land has been owned by foreigners, with Canadian interests holding a significant share. However, the share of agricultural land owned by foreign interests is increasing, and the pace of growth has accelerated in recent years.
Enforcement of reporting requirements for foreign ownership has been weak, with only six companies facing penalties for late filings or failure to file in the past ten years. In 2021, two Chinese entities were fined for failing to disclose their purchases of more than 130,000 acres of land along the southern U.S. border more than 20 years earlier. However, the penalties imposed were significantly reduced.
In response to these concerns, members of Congress have called for tougher laws to regulate foreign land purchases. A ban on China, Russia, North Korea, and Iran buying American agricultural land was passed by the Senate, but it remains uncertain if the amendment will be included in the final defense spending bill. Senator Joni Ernst has proposed additional measures to ensure timely and accurate reporting, as well as increased oversight and monitoring of foreign purchases.
Conclusion
While fears of Chinese entities amassing U.S. farmland for national security risks persist, the actual extent of Chinese ownership is minimal. The lack of enforcement in reporting foreign ownership has raised concerns among lawmakers, prompting calls for stricter regulations. The issue of foreign ownership of U.S. agricultural land remains a topic of discussion and debate as lawmakers seek to protect national interests and strengthen enforcement measures.
