• August 3, 2021

Lawmakers Say Chinese Investment in US Farmland Poses Threat

Lawmakers are sounding the alarm over Chinese investment in US farmland, which they say poses a threat to national security if left unregulated.

Between 2010 and 2019, Chinese holdings on US farms grew from 75 parcels with a total of 13,720 acres to 263 parcels with a total of 191,652 acres, according to data from the Department of Agriculture.

Foreign investors owned 35.2 million acres, or 2.7%, of all privately owned farmland in the US at the end of 2019. Total acquisitions by Chinese investors lagged far behind Canada and the Netherlands, whose investors owned 4.7 million and 4.6 million acres, respectively. .

But Rep. Dan Newhouse, a Washington Republican on the House Appropriations Committee, said China’s growing agricultural investment abroad, which rose from $ 300 million to $ 3.3 billion between 2009 and 2016, is alarming.

“Preventing China from taking control of a sizable chunk of critical US assets, as Beijing has managed to do in several other nations, is critical,” Newhouse said on Twitter.

Mr. Newhouse and other committee members have taken steps to curb the trend.

Last week, the full House Appropriations Committee approved an amendment to a fiscal year 2022 farm spending bill that would ban the sale of US farmland to China and end farm subsidies currently owned. from China.

Newhouse’s provision was modified by other committee members to include Russia, Iran and North Korea as part of the ban.

“Allowing this practice to continue would lead to the creation of a Chinese-owned agricultural monopoly and pose an immediate threat to US national and food security,” Newhouse said.

In a recent speech about the USA.Relations with China At The Heritage Foundation, former Vice President Mike Pence said the United States must work to decouple “the American economy from China into industries that are essential to the American people and our national security,” including agriculture.

“Chinese investors now own nearly 200,000 acres of prime American farmland,” Pence said. “The United States cannot allow China to control our food supply.”

Some analysts agree that the trend is cause for alarm.

“As a percentage, even if I went up and said China owns a million acres of American farmland, that’s not much as a total percentage,” said Markham Dossett, president of Texas-based commodity brokerage Talon Asset Management. “But it is growing very fast. That is the alarming thing. “

Chinese investors “are the largest buyers of agricultural land in the world,” said Usha Haley, professor of international business at Wichita State University and author of “Subsidies to Chinese Industries: State Capitalism, Business Strategy and Trade Policy.”

“It’s not just the United States,” he said. “In general, the United States was off limits, but now they are buying more and more land.”

According to the USDA, a total of 81 Chinese investors own interests in US farmland. But Dossett and Haley said investors are hard to track down.

Foreign investors are required to self-report US farms under the Foreign Agricultural Investment Disclosure Act of 1978. But many investments are made through large corporate entities with confusing ownership structures.

“It is very difficult to trace because there are many different legal entities that can own a farm,” Dossett said. “And that’s the way it should be organized. This is how most people do business. But it is difficult to trace the property. But we know that it is accelerating rapidly. “

More concerning to Ms Haley are the implicit links Chinese investors have with the Chinese Communist Party. He said the Chinese government closely monitors foreign investments to make sure they align with Beijing’s long-term strategy.

“You need the backing of the Beijing government and an understanding, an explicit understanding, that its strategy and objectives are in sync with what the government wants to achieve,” he said of Chinese investors.

Ms Haley said she has seen similar trends in Chinese investments in other sectors such as shale gas, in which China has made massive investments. He said that various Chinese-backed investors could have enormous influence over US and global industry.

“The great mass of them is problematic because they have to march at the same pace as what the Chinese government wants,” he said. “They are sleepers of the Chinese Communist Party.”

He said Chinese investors, often backed by state subsidies that allow them to weather short-term market cycles, operate on a long-term horizon.

“The Chinese strategy is buy and hold,” he said. “They see an opportunity, they buy it. Then they will decide what to do with it. But in certain key sectors, agriculture is certainly a key sector around the world, buy and hold is a tremendous strategy. “

Legislators at the state level have taken notice, too.

In March, Missouri State Senator Doug Beck, a Democrat, introduced a bill that would have re-imposed a check on foreign investment in Missouri’s farmland. He said the lack of safeguards poses a significant long-term threat.

There are six states that prohibit foreign ownership of agricultural land: Hawaii, Iowa, Minnesota, Mississippi, North Dakota, and Oklahoma.

In 2013, the Missouri legislature reversed a late 1970s ban on the purchase of foreign farmland in the state. The bill received little scrutiny, according to Tim Gibbons of the Missouri Rural Crisis Center.

“And right after they did that, Smithfield was bought by a Chinese corporation,” Beck said. “Within weeks.”

The sale of US pork producer Smithfield Foods to WH Group, formerly known as Shuanghui Group, placed more than 140,000 acres of US farmland in the hands of a Chinese-owned company. More than 44,000 of those acres were in Missouri. Almost overnight, a Chinese company owned a significant stake in Missouri agriculture.

Ms. Haley warned Congress in 2013 that the Smithfield sale, which she said doubled the number of American jobs tied to direct investment from China, would set a worrying precedent and would only serve the CCP’s long-term benefit.

The 2013 law allowed only 1% of the land to be sold to foreign investors. But according to Gibbons and Beck, the Missouri legislature was tasked with producing an annual report on foreign ownership, and they say the review was soon complicated by statutes that allowed companies to circumvent state reporting requirements.

“These foreign corporations can establish a national corporation in Delaware, fill out a W9, and then bypass the reports,” Gibbons said. “So understanding and having the knowledge of what land in Missouri is owned by foreign interests is almost impossible at this point.”

Mr. Beck added: “And now there is no follow-up through the Department of Agriculture. So we have no idea how much farmland you own [by foreign investors] although it is only supposed to be 1%. So we are not sure how much foreign investment is really here, how much of our precious resource they actually own. “

Beck said independent farmers in Missouri were concerned about the number of large-scale concentrated animal feeding operations that emerged in the region and the growth of foreign ownership. Many independent farmers were being driven out of business by what Gibbons described as a “perfect storm,” after years of a depressed agricultural economy that left independent farmers unable to compete with large-scale companies.

Even more concerning was the fact that many of the largest corporate farmers were foreign entities, he said.

Mr. Beck’s bill would have stopped foreign purchases of Missouri farmland until the state could accurately report how much Missouri farmland was owned by foreign entities. In the end it did not happen.

“I understand that there are also jobs related to some of these,” he said. “But behind it all is the fact that some foreign country or entity possesses one of its most precious resources that it cannot replace. You have food security, you have economic insecurity and you also have a national security problem. “

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