Wall Street investors buying farmland; farmers complain that land prices are too high

Wall Street investors are buying up farmland, leading some farmers to complain that farmland prices are being driven up beyond their ability to turn a profit, Christopher Doering reports for The Des Moines Register. "The farmland real estate market is valued at $2.5 trillion, with institutional ownership likely responsible for less than 1 percent, according to Bruce Sherrick, professor of farmland economics at the University of Illinois’ TIAA-CREF Center for Farmland Research. But that small number is poised to grow." In Iowa, for example, land prices have risen almost 330 percent since 2000, according to Iowa State University. (Register photo)

"A study released last year by the Oakland Institute, a California think tank, estimated as much as $10 billion in institutional capital is looking to acquire farmland," Doering writes. Greenwich Associates, which surveyed 100 fund executives in 2014, "found that a third of respondents said they might invest more in farmland through July of this year. It was the second most popular investment among 13 categories, behind only energy."

"Farmers have grown increasingly concerned that real estate investment trusts, pension plans and other farmland investors lack the close ties and direct knowledge of what it takes to maintain the property and implement necessary conservation measures to preserve it," Doering writes. "They also worry their involvement has the potential to shut out local farmers by outbidding them when land goes up for sale."

Justin Dammann, a corn and soybean producer from Essex, Iowa., told Doering, “We farm this land, and if we are profitable, that money goes back into our own farms, into our own communities, into our own schools, into our own churches. If an investment company from New York comes out and buys land in Iowa and they make profits in that land, those profits go out of state, and they are not realized here.”

Doering writes, "Iowa, along with a handful of other predominately Midwestern states, have [sic] taken steps to keep corporations off the farm. Iowa passed its law in 1975,and has since updated it to prevent corporate entities other than one established by a family farm from having more than 25 people who are shareholders or acreage topping 1,500 acres. However, individual investors in the United States are not banned from buying land for themselves in the state." (Read more)

Foreign investment in U.S. farmland increasing; Chinese ownership has increased tenfold in less than a decade

Foreign investors acquired at least 1.6 million acres of U.S. farmland in 2016, the largest increase in more than a decade, according to a review of the most recent federal data. About 2.2 percent of U.S. farmland (1% of all U.S. land) is owned or long-term leased by foreign investors.

"The data from the U.S. Department of Agriculture show that foreign investors control – either through direct ownership or long-term leases – at least 28.3 million acres, valued at $52.2 billion. That area is about the size of the state of Ohio," Jonathan Hettinger reports for the Midwest Center for Investigative Reporting. Most of that farmland is owned by timber and renewable energy companies, but some of it is used for meat production or crops.

Missouri relaxed its ban on foreign farmland ownership in 2013 when a Chinese company bought Smithfield Foods. "That move allowed the company, now known as WH Group, to acquire more than 40,000 acres of Missouri farmland, according to federal data." That deal put Chinese-sponsored businesses in control of about 25% of the state's pork production, Allen Fennewald reports for the Fulton Sun.

Smithfield, the world's largest pork producer, owns about 150,000 acres in the U.S., and Chinese businesses overall own about 191,000 acres worth $1.9 billion. Though that isn't much in the grand scheme of things, Chinese investment in U.S. agriculture has grown tenfold in less than a decade, according to USDA data. "And in Ohio, one of the states where a ban on foreign-owned farmland is being considered, WH Group bought two grain elevators in 2016, allowing the company to skip the middleman in feeding Smithfield’s livestock," Hettinger reports.

Hawaii, Iowa, Minnesota, Mississippi, North Dakota and Oklahoma ban foreign ownership of farmland, and a group called Family Farm Action is lobbying for bans in other states, Hettinger reports. Jake Davis, the group's policy director, told him, "This is about food security for [foreign investors], it needs to be about food security for us."

The five states estimated to have the most foreign-controlled land are:

1. Maine, 3.1 million acres
2. Texas, 3 million acres
3. Alabama, 1.6 million acres
4. Washington, 1.5 million acres
5. Michigan, 1.3 million acres

"In 2016, Luxembourg had the largest increase of any country in foreign investment at 262,000 acres – all forestland – valued at $599 million, while Italy was second at 257,000 acres – almost entirely cropland – valued at $300 million," Hettinger reports. "Overall, Canadian individuals and entities own the most land at 4.7 million acres, valued at $4.6 billion. Netherlands is a close second at 4.5 million acres, valued at $6 billion Those countries hold significant forestland investments. EDP Renewables, a Portuguese renewable energy company, and Enel Green Power, an Italian renewable energy company . . . both control significant swaths of farmland through long-term leases."

Athletes invest in Iowa farmland, which rose 17% in value in 2022, partly due to investors, who made 27% of purchases

Joe Burrow (Photo illustration by Front Office Sports)

Cincinnati Bengals quarterback Joe Burrow, who advanced his team's defense of its Super Bowl title on Sunday, is investing some of his money in Iowa farmland, along with other professional athletes.

Burrow was part of "a group of about 25 athletes [who] pooled $5 million for an agricultural investment fund to purchase farmland," Abeer Allam reports for Successful Farming. "The first purchase was a 104-acre corn and soybean farm in northern Iowa, Front Office Sports reported this month."

The athletes "will lease the land to farmers and seek a single-digit-percentage annual return on the total investment, FOS reports. "The group — which will purchase four additional farms within the next few years, seeking a diverse set of agricultural assets — have looked into watermelon farms in Oregon, which tend to be smaller and offer higher per-acre rent." Allam reports the move was prompted by "investment in farmland by high-profile billionaire buyers like Bill Gates and Warren Buffett . . . to diversify their investment portfolio and hedge against inflation, experts say."

“Beyond the traditional reasons of buying recreational land, many investors see farmland as a stable asset that could generate robust returns,” Wendong Zhan, leading researcher of the Iowa Land Value Survey at Iowa State University and assistant professor at the Dyson School of Applied Economics and Management at Cornell University in Ithaca, N.Y., told Allam. “The declines during downtimes tend to be less drastic.”

The Land Value Survey found that the average value of Iowa farmland "increased 17% to $11,411 an acre in November 2022 from November 2021, the highest nominal value ever since the 1940s," Allam notes. "The value growth has been driven by several factors including high commodity prices, bumper crop yield, low-interest rates, limited land supply, and strong demand from investors. . . . Investors represented 27% of land sales in Iowa, split between local and non-local investors, while new farmers accounted for 4% of sales in 2022, according to the survey."

Higher land value is good news for owners, but "Farmers who still have farmland mortgages and/or rent many acres from others, face a much higher cost of financing and cash rents," Allam notes.

Urban investors buying up farmland in the hopes of getting long-term returns

Soybeans on LandFund Partners' property. The Nashville
firm manages 25,000 acres worth more than $100 million.

Investors are increasingly turning to farmland to generate profits, Getahn Ward reports for The Tennessean. "Investing in farmland is seeing growth as a vehicle for taking advantage of the long-term need to feed a growing world population. More wealthy individuals, pension funds and other institutions also see that emerging asset class as a way to reduce risk in their portfolios."

Farmland, a safe bet for investors, "is a $2.4 trillion sector in the U.S., which is the world's leading agricultural exporting country," Ward writes. "Generally, as the price of goods produced using agricultural commodities rises, the value of farmland also increases. And with the average age of U.S. farmers around 58 and less than one percent of the nation's farmland owned by institutional investors, companies see a lot of opportunity to expand their portfolios."

Since 1970 "farmland produced an average return of 10.27 percent, which according to the TIAA | Center for Farmland Research at the University of Illinois, reflects cash rent plus capital gains less property taxes," Ward notes. "Comparatively, the S&P 500 returned 6.79 percent during that period, while the NASDAQ gained 9.63 percent."

Todd Kuethe, an agricultural economist at the University of Illinois, "cautioned that investing in farmland isn't for everyone," Ward reports. "That's in part because farmland is expensive to buy and sell in transactions that require a large amount of time to identify a buyer and complete a sale." Kuethe told Ward, "There's an old joke: 'It's a get rich slowly investment.' It's a way of managing wealth across a couple of generations."

While land prices have dipped in recent years along with the global downturn in commodity prices, "Kuethe still sees a positive long-term outlook for land prices and growth for investing in farmland,'" Ward writes. He said, "By 2050, we will have nine billion people on the planet. Globally, we'll have to almost double our food producing capability. As people get wealthier, they get more of their calories from protein, which means more feed is required for livestock and also means that more crops has to be grown."

Small farmers squeezed out of purchasing land, partly by investors; states seek to limit foreign farmland purchases

Young farmers are being priced out of land by developers and investors, who include foreign buyers.

Young farmers often start out renting acreage, buying land as they can finance it, but that has become nearly impossible for the average young farmer, writes Linda Qiu of The New York Times: "Joel Gindo thought he could finally own and operate the farm of his dreams when a neighbor put up 160 acres of cropland for sale in Brookings County, South Dakota, two years ago. Five thousand or six thousand dollars an acre should do the trick, Mr. Gindo estimated. . . . But at auction, Mr. Gindo watched helplessly as the price continued to climb until it hit $11,000 an acre, double what he had budgeted." 

Qui reports, "What is happening in South Dakota is playing out in farming communities across the nation as the value of farmland soars, hitting record highs this year and often pricing out small or beginning farmers. As a result, small farmers like Mr. Gindo are now going up against deep-pocketed investors, including private-equity firms and real-estate developers, prompting some experts to warn of far-reaching consequences for the farming sector."

Jason Henderson, dean of agriculture at Purdue University and a former official at the Federal Reserve Bank of Kansas City, told Qui, "A series of economic forces — high prices for commodity crops like corn, soybeans and wheat; a robust housing market; low interest rates until recently; and an abundance of government subsidies — have converged to create a 'perfect storm' for farmland values." 

Meanwhile, there is emerging concern over foreign purchases of land, and at least eight states are looking to limit foreign ownership, reports Johnathan Hettinger of the Midwest Center for Investigative Reporting: "Amid growing concern about Chinese investment in U.S. agriculture, there has been a renewed push to limit and more closely monitor foreign ownership of farmland across the country. There are a number of reasons for the increased scrutiny, according to experts, and China is at the heart of many of them. Increasing foreign investment in agriculture. Rising land prices. Increasing investment in farmland. A trade war with China. A pandemic, where food shortages hit home for many Americans, and spurred concerns about food security."

Farmland values continue downward spiral

Years or historic high crop prices for corn led to a rise in property values. With an abundance of corn planted, crop prices are beginning to drop, and farmland prices are taking a downturn with them. But experts say a total collapse is unlikely, especially since farm debt burdens are low, Jesse Newman reports for The Wall Street Journal.

The U.S. Department of Agriculture predicted this week that net farm income will drop 27 percent this year. Michael Duffy, an economics professor at Iowa State University, "projects lower income for farmers could drive the price of farmland down 20 percent to 25 percent over the next several years," Newman writes. "Other observers point to factors that could cushion or reverse the market decline, including an unexpected resurgence in the price of corn and soybeans. Some buyers say they are waiting to pounce if prices fall, which also could help keep any decline from turning into a rout." 

During the second half of 2013 farmland prices fell 3 percent in Iowa and 1 percent in Nebraska, according to the Farm Credit Services of America, a lender that calculates weighted averages based on land quality. A study by Omaha's Creighton University in January found the outlook for farmland and ranchland prices was the weakest in more than four years. "The shifts have forced farmers to recalculate the value of productive land," Newman writes. Greg Plunk, a third-generation Illinois farmer who added 80 acres to his farm over the past two years, told Newman, "Profits will be tighter, there's not going to be near the returns, and guys will have to be careful how much expenses they've got into an acre."

"Falling land prices could cause economic ripples, curbing farmers' ability to borrow money to buy new acreage, crop supplies or machinery," Newman writes. "Land secures many of those loans. Mark Jensen, chief risk officer at Farm Credit Services of America, said half of its $20 billion portfolio consists of real-estate loans secured by farmland. As credit quality deteriorates, farmers will use more land as collateral, he said. A pullback in farmers' spending could curtail construction of grain bins and livestock facilities as well as purchases of new machinery."

Some observers "point to factors that could cushion or reverse the market decline, including an unexpected resurgence in the price of corn and soybeans," Newman writes. "Some buyers say they are waiting to pounce if prices fall, which also could help keep any decline from turning into a rout. Greyson Colvin, managing partner at investment manager Colvin & Co., which owns about 7,000 acres of farmland, told Newman, "We think this next 12 months is going to be the best window we've had in the past five years" to invest in farmland." (Read more) (WSJ graphic)

Investors see promise in America's farms; some bankers see a possible bubble

Money continues to pour into America's farmland, but not by those who actually till the dirt and plant the crops. The continually rising price of food worldwide and the lack of arable land on which to plant is driving the cost of corn, soybeans, wheat and other crops up, something rich investors who have never planted a seed say makes buying this land a sound investment. (Photo by Joe Raymond, The Associated Press)

In Iowa, the value of farmland has almost doubled in six years, while values of farms in Nebraska and Kansas are up more than 50 percent, reports AP's Bernard Condon. The price of corn in Iowa was at $4 a bushel one year ago. Now, it's at $7. Condon also writes that investors can collect money on farms while they own them, unlike owning other things like gold, art and oil, making land ownership more appealing.

Out-of-state investors are becoming commonplace at farmland auctions, especially in Iowa, where they make up 25 percent of buyers, double the figure from 20 years ago, Condon reports. Marisa Dallman, owner of Kansas Land Brokers, writes for landthink.com that this is the first time she's seen an entire article devoted to farmland, which is usually left out of real-estate industry news, in the National Association of Realtors magazine. She reports that most farmland never sees the open market because it's passed from neighbor to neighbor and down through generations. She also says one sector of investors are buying small tracts of land for possible use in future development opportunities.

There is also a danger that farm prices may be inflated, warns Thomas Hoenig, head of the Federal Reserve Bank of Kansas City. He told Condon that current prices may be in an "unsustainable bubble." Others don't see it that way. Perry Vieth, a veteran bond trader and owner of Ceres Partners, a private investment fund, told Condon he is buying for 71 investors. His company owns 65 farms and he has returned 15 percent annually to his investors. (Read more)

Opinion: Organic farms are paying off as financiers provide the land and tenant farmers cultivate the crops

A twist on organic farming is blooming into profits, opines Peter Coy of The New York Times. The set-up looks like this: Garrett Mussi, a farmer in California's San Joaquin Valley, "doesn’t own any of the acres he tends so carefully. He is a tenant farmer. The owner of the land is Farmland L.P., an investment fund that buys farmland and readies it for certification as organic by the Department of Agriculture: using pesticides sparingly, and only the least harmful kinds; minimizing erosion; sequestering carbon in the soil; rotating crops regularly and providing habitats for butterflies, bees and other pollinators. Some organic farmers use ladybugs to eat aphids and owls to eat rodents. . . . What we have here is finance meeting farming and doing good, not evil."

NYT illustration; images by VectorGoods and Bablab/Getty Images

Federal crop insurance "incentivizes farmers to stick with one crop — typically industrial corn or soybeans — and make heavy use of fertilizers and pesticides," Coy writes. “Companies such as Farmland are thinking further ahead while still keeping financial principles and profit in mind. Farmland bought one 4,000-acre farm that grew mainly low-value alfalfa, feed corn and processing tomatoes, assessed the ideal uses for different sections based on soil conditions and other factors, and chose to go with blueberries, olives, nuts, garden vegetables and pasture in various areas — all grown without heavy-duty pesticides." Craig Wichner, the founder and managing partner of Farmland, told Coy: “At a very simple level, our business model is based on taking high-quality land that’s growing low-value crops and converting it to higher-value crops.”

Coy writes: "Going organic isn’t cheap. Farmland has to stop using industrial-strength pesticides and fertilizers on land for three years before it can meet the Department of Agriculture’s standard for organic farming. . . . The upside is that consumers are willing to pay more for organically grown food. . . . For organic farming to catch on, young people will have to embrace it. But most can’t afford to because of the sky-high cost of agricultural land. . . . It’s as if tech start-ups had to buy their own office buildings before they could go into business, Wichner told Coy. Investors in companies such as Farmland are essentially supplying farmers with the 'office buildings' they need to work their food-producing magic."

USDA data: Foreign ownership of rural land has nearly tripled in past decade, to 10.9 million acres from 4.1 million

Acreage of foreign-owned cropland (including forests and pastures) by county. (USDA data mapped by The Daily Yonder for the Midwest Center for Investigative Reporting; click the image to enlarge it or click here for the interactive version.)

"Foreign investment in U.S. cropland has nearly tripled in the past decade, according to U.S. Department of Agriculture data. The total cropland controlled by foreign interests in 2020 was 10.9 million acres, up from 4.1 million acres in 2010," Jonathan Hettinger reports for the Midwest Center for Investigative Journalism. "This increase has been largely driven by foreign-owned wind companies signing long-term leases on a large number of acres, according to the USDA. However, 'the acres actually utilized by said companies are very few due to the small footprint of the wind towers erected on the land,' a USDA report said."

Foreign investors own or lease 2.9% of the nation's overall agricultural land, more than 37 million acres that include forests and pastures. That's up from 24.2 million acres in 2010, says the report. However, the USDA's database of foreign farmland ownership has significant gaps, and more than 3.1 million acres of farmland don't have a listed owner, Hettinger reports.

"While the database has significant errors and often has incomplete information, it still is a strong indicator of the quantity of land being sold or leased to foreign interests," Hettinger reports. "This growing level of investment has sparked legislative action. Currently, three bills before Congress would require additional review of foreign investment. Also, 14 states restrict or prohibit foreign ownership of farmland, though none outright forbid it, according to a November memo by the Congressional Research Service."

Free workshop in Louisville will examine changing dynamics in ag finance, land ownership

As investors keep putting more money into farmland, questions are raised about how that many affect agriculture and farm policy. The Farm Foundation is hosting a workshop to explore the implications of investor-owned farmland and other newly evolving trends that affect the financial landscape of agriculture.

The free workshop will be held in Louisville June 6-7, just before the Farm Foundation Round Table meeting in the city June 8-10. The program will feature "farmer-landowners, academic researchers and lenders, including representatives of commercial banks, Farm Credit, insurance companies and the investment community," says a foundation news release. "The program will also examine the relationship of ownership and financing to farm policies, including programs targeted to credit, conservation, commodities and crop insurance."

Farm Foundation President Neil Conklin said, "This workshop is targeted to farmers, landowners, investors and members of the finance, agribusiness and public policy communities. All are key players whose actions are shaping the trends in farmland ownership and agricultural finance which, in turn, has potential implications for the social and political environments in which they operate. ... It is clear that trends in farmland ownership and tenure patterns are changing. This workshop will explore the current interest in farmland, the players driving it, and the implications for farmland ownership and tenure." For more information, or to register for the event, click here.

Mormon church is Nebraska's 'top single buyer' of agricultural land over the past five years

Flatwater Free Press graphic

Mile after farm mile, Farmland Reserve Inc. has purchased large sections of Nebraska land. It has purchased so much land in Garden County, Nebraska, that the county assessor couldn't "calculate the nonprofit's total acres," reports Destiny Herbers of the Flatwater Free Press. "The organization simply owns too many parcels, through too many sales, for county officials to comb through the records." Garden County Assessor's Office told Herbers: 

Farmland Reserve, a nonprofit "owned by the Church of Jesus Christ of Latter-day Saints, commonly known as the Mormon church, has been quietly buying up ranch land in Nebraska’s Sandhills for the past three decades," Herbers adds. "The Garden County shopping spree, coupled with more buys in four neighboring counties, made the church Nebraska’s top single buyer of land in the past five years."

The Mormon church has purchased 370,000 acres of "zoned agricultural land in Nebraska," Herbers reports. "The church sees its land buys as a force for good, an investment in agriculture to generate long-term value to support the church’s religious, charitable, and humanitarian good works,' said a Farmland Reserve spokesman. . . . The Nebraska Farmers Union sees the Church as another out-of-state corporation that arrives, drives up prices and makes buying harder for smaller farmers."

Since religious organizations don't have to "publicly report their income or assets, including real estate. The Church has never given a total accounting of their properties, in Nebraska or globally while amassing a fortune exceeding $100 billion," Herbers writes. "The Nebraska land is just one slice of the 1.7 million acres of American real estate the Mormon church is now estimated to own."

Some of the church's land holdings go back 30 years and are widely accepted as part of the state's active ranches. Rex Ranch, a "sprawling 365,000-acre cow-calf operation, that covers most of northern Garden County . . . has gone largely unnoticed by Nebraskans in the 30-plus years it’s been owned by the church," Herbers reports. Dale Bills, a spokesman for Farmland Reserve, said "the Rex, and its employees, are very much a part of the local community. The Rex’s employees live on the land they work and regularly participate in the Nebraska Cattlemen’s Association and Nebraska Grazing Lands Coalition."

Why all the land and ranching? Herbers explains, "The church’s focus on ranching comes down to two factors, a good economic investment, and preparedness for upheaval, said Betsy Gaines Quammen, historian, and author of American Zion: Cliven Bundy, God and Public Lands in the West. Stockpiling food and resources to be prepared for upheaval before a religious event is a central part of Mormon theology, Quammen said."

Quick hits: Billionaires buy up farmland; USDA wants feedback on rural renewable-energy pilot program...

Here's a roundup of stories with rural resonance; if you do or see similar work that should be shared on The Rural Blog, email us at heather.chapman@uky.edu.

The new jobs-and-stimulus package dedicates $20 million for efforts to preserve tribal languages. Read more here.

A pilot project in rural Maine aims to use paramedics to improve health-care access. Read more here.

The Agriculture Department wants feedback on the creation of a rural renewable-energy pilot program. Read more here.

An Illinois billionaire has quietly bought about 24,000 acres of farmland in the state since 2015, saying it's a good investment. Farmland purchases by hedge funds and the wealthy have surged in recent years, and economists say it's a good investment because of its stability. But wealthy investors paying top dollar for farmland contributes to the shortage of land available for farmers to purchase. Read more here.

The Hospital (St, Martin's, $28.99), a new book by journalist Brian Alexander, examines the state of rural health care by focusing on a small hospital in northwest Ohio. Read more here.

University of Tennessee agricultural economists Harwood D. Schaffer and Daryll E. Ray have dedicated their "Policy Pennings" columns over the past month to a look back at crop export trends over the past 60 years, and what they can teach us now. Read more here.

A legal scholar who was raised in rural America discusses academia's blind spot towards rural areas. Read more here.

if you're looking for a story that delves deeply into coal ash and how it impacts people nearby, this is one of the best we've ever seen. Read it here.

An op-ed says the USDA shouldn't be funding rural jails. Read more here.

A study examines the impact of solar farms on rural property values, and notes that such projects increasingly compete with rural residential developers and concentrated animal feeding operation farmers for rural land. Read more here. 

Health-care providers and housing experts explore the intersection of rural housing quality and health. Read more here.

Farmland commanding record prices across country

Across the country, prices for farmland are on the rise as farmers expand operations and investors look to agriculture. "The frenzied activity, interest from nonfarm buyers and accelerating prices are reminiscent of behavior that contributed to the 1980s farm crisis," Pat Waters of the Omaha World-Herald reports. "But experts say critical differences exist today, most significantly the fact that many buyers pay cash and lenders require more money upfront from buyers." Jason Henderson, an economist and head of the Omaha branch of the Federal Reserve Bank of Kansas City, Mo., told Waters the difference between now and the 1970s is that farmers aren't buying assets with as much debt.

At a conference a few years ago, "A lender in the audience raised his hand and said to all the young guys, ‘Remember the lesson of the '80s: Too much debt in the face of falling land values is a recipe for bankruptcy. Manage your debt wisely,'" Henderson told Waters. Troy Louwagie, chairman of the Farmland Value Survey, which is published by the Realtors Land Institute, explained, "Seventy-five percent of Iowa's land has no debt against it. It's in strong hands." Strong grain prices have been the primary driver for farmland sales, Waters writes. The survey reported cropland prices increased an average of 8.5 percent from September 2009 to September 2010.

"Whenever corn is pushed into the $4.25-to-$4.75 range, it doesn't take long to get a return on your investment," Marc Hock, regional manager for Pinnacle Bank, the largest ag lender in Nebraska, told Waters. Hock also pointed to uncertainty about stocks, bonds and other investments and low returns for government-insured products such as certificates of deposit as factors. Buyers looking to finance farmland purchases are more likely to get credit compared to small business owners, Waters writes.. "No. 1, there's a tangible asset," Hock said. "Land is always worth something." (Read more)

House Republicans say Chinese acquisitions of U.S. farmland could be security threat, ask GAO to investigate

Republicans who are likely to take control of the U.S. House in next month's elections have asked the Government Accountability Office, the auditing arm of Congress, to investigate foreign purchases of U.S. farmland, "questioning whether Chinese acquisitions in particular could pose a national-security threat," reports Kristina Peterson of The Wall Street Journal.

“China’s ownership of U.S. farmland is a threat to our food security and national security,” said Rep. James Comer (R-Ky.) said in a statement Monday. Comer and Rep. Glenn Thompson (R-Pa.), the top Republicans on the Agriculture and Oversight committees, asked for the GAO investigation in a letter signed by over 100 House Republicans. The letter specifically raised concerns over a Chinese company's purchase of 370 acres near an Air Force base in Grand Forks, N.D. 

Democrats have also expressed concern over foreign investment; they have backed a measure that would prevent acquisition of land by companies from China, Russia, North Korea and Iran, Peterson reports.

By the end of 2020, less than 3% of all privately held farmland in the U.S. was held by foreign investors, Agriculture Department data shows. Canadians owned 32% of foreign-held U.S. farmland, the largest share of any country. Chinese investors owned less than 1% of the foreign-owned land but "analysts and lawmakers have expressed concerns that China’s need for more arable land and its search for new ways to feed its population are pushing the country to expand its U.S. holdings, through both legal and illicit means," Peterson reports.

Federal laws likely undercount foreign farmland ownership

Foreign companies own more than 10 million acres of American farmland, but the real number is likely higher. "Despite a federal law requiring foreign transactions of agricultural land be reported to and recorded by the federal government, the U.S. Department of Agriculture’s database appears to be missing significant acres of land," Jamie Grey, Emily Featherston, Lee Zurik, Jon Decker and Cory Johnson report for Gray Television's Investigate TV. "Records of who owns what don’t match. Reconciling federal, state and county records on land ownership is all but impossible. It is unclear whether the discrepancies originate from the companies’ reporting, the forms or the USDA’s recording of the land."

The Agriculture Foreign Investment Disclosure Act, passed in 1978, required the USDA to track foreign ownership of farmland, but the data collected under that law appears to be incomplete. Foreign companies or individuals that buy American farmland are supposed to fill out a form reporting it to the USDA, but Investigate TV found numerous discrepancies when they tried matching federal data with county assessors' records.

"In recent decades, no federal legislation to drastically change the tracking or sale of farmland has passed," Investigate TV reports. "State and federal lawmakers from both sides of the aisle have pushed for changes – from locking down the sale of agricultural land to foreign entities to forcing increased transparency and mandating more accurate record-keeping."

Another reason it's hard to reconcile the database with county records: USDA's definitions for some data fields are sometimes incorrectly identified or inconsistent with county definitions. "When InvestigateTV asked the USDA to provide data definitions to help clarify the discrepancies, an agency spokesperson provided two, un-dated data fields keys, which in some cases either contain fields not included in the data sets, or are missing fields," Investigate TV reports. "When asked which data fields correspond to Farm Services Administration Form-153, the document farms use to report foreign ownership and is the source for the AFIDA database, the spokesperson provided a 'rough' breakdown, but said: 'We don’t have anything specific to identify which sections of the form correspond to the data fields in the database.'"

Farms increasingly owned by non-farmers and rented out

U.S. Department of Agriculture map

Farmland is a kind of currency: valuable because of what it can do, and because it's finite. And though rental of farmland isn't increasing -- the number of acres rented has been around 40 percent for the past 40 years, according to the the U.S. Department of Agriculture -- what's changing is the landlord. "The landowner is increasingly not the farmer next door or a landlord intimately involved in the farming operation," Erin McKinstry reports for The Midwest Center of Investigative Reporting. "Instead, many farmers rent from multiple owners who may have little to no connection to farming or the local community and who may own land strictly for investment purposes."

In the Midwest, about 46 percent of the farmland is rented; around 81 percent of those landowners do not farm. Some see that as a good thing, saying it puts more capital into rural communities and makes arable land affordable for farmers who could not outright buy it. "Others see it as one more barrier for farmers trying to access land or expand their operations," McKinstry reports. "They worry that the trend has driven up farmland prices, led to irresponsible conservation practices and drained money from rural economies."

It's difficult to assess trends, since statewide and USDA data can be spotty, but the phenomenon of absentee farm owners appears to be increasing, especially in the most fertile parts of the Midwest. It may continue to increase as more land-owning farmers retire and pass their farms down to their children. Some may not want to farm and rent it out, and some may sell it to investors.

Gates is nation's largest farmland owner for 2nd year in row

A timber baron and a philanthropist now own more land in the U.S. than any other American, according to a new report showing the top 100 landowners in the United States. Tech maven Bill Gates remained largest owner of farmland for the second year in a row, Eric O'Keefe reports for Successful Farming. O'Keefe unveiled the Land Report 100 at the 2022 Land Expo in Des Moines Jan. 11.

"In 2021, California’s Emmerson family, owners of Sierra Pacific Industries, acquired 175,000 acres in Oregon from Seneca Jones Timber. That transaction, which was announced on Oct. 1, raised the family’s holdings to more than 2.33 million deeded acres," O'Keefe reports. "Liberty Media Chairman John Malone ranked No. 2 with 2.2 million acres of ranchland out West and timberland holdings in the Northeast. Washington’s Reed family ranked No. 3 with 2.1 million acres. CNN founder Ted Turner ranked No. 4 with 2 million acres. Los Angeles Rams owner Stan Kroenke ranked fifth with 1,627,500 acres. In recent years, Kroenke Ranches has become a major player in the renewable energy sector and is on track to be able to power more than 1 million households." Jeff Bezos of Amazon came in 24th with 420,000 acres, mostly in rural Texas.

Gates, founder of Microsoft, took 47th place for overall land ownership with 268,984 acres, but owns the most farmland in the U.S. "Instead of what he bought, of note in 2021 was what Microsoft’s cofounder did not buy: Easterday Farms and Ranches," O'Keefe reports. "The extensive operations in eastern Washington were at the center of a megamillion-dollar scam that defrauded Tyson Foods, among others. At a bankruptcy court auction, Farmland Reserve paid $209 million, outbidding an investment company owned by Gates by $1 million."

Amid skepticism, Congress considers restricting farmland purchases by China, Russia, Iran and North Korea

Photo via USDA

Congressional support is building to "restrict China and other foreign adversaries from purchasing U.S. farmland, a reflection of a similar push by some states as well as apprehension over Chinese spy balloons, rising land prices and growing international competition," reports Adam Goldstein of the Washington bureau of States Newsroom. A bipartisan group of House members told Agriculture Secretary Tom Vilsack in a Feb. 27 letter, "Foreign ownership of agricultural land threatens small family farms and the overall health of the agricultural supply chain."

Sen. Mike Rounds, R-S.D., has introduced a bill to prohibit North Korea, Iran, China, and Russia from purchasing U.S. farmland and add the Agriculture Department to the Committee on Foreign Investment, "a multi-agency council that reviews financial transactions that affect national security," Goldstein reports. "Renée Johnson, an agricultural policy analyst, noted that these bills have much more to do with military infrastructure and conflict between the U.S. and the governments of China, Iran, Russia, and North Korea."

"Vilsack said in a Thursday Senate hearing that Russia, China, Iran, and North Korea together own under 400,000 acres of agricultural land as of 2021. He added that the nation's largest foreign landholders include Canada, the Netherlands, and the United Kingdom. Vilsack expressed concern over how federal foreign ownership restrictions could be implemented in a way that was fair and legally sound for international investors."

Clay Lowery, former assistant treasury secretary for international affairs, told Goldstein, "I do believe strongly in the ability for countries and entities to invest in the United States because I think that is actually a positive." Jennifer Zwagerman, director of the Drake University Agricultural Law Center in Iowa, told Goldstein, "My bigger fear is that we limit groups or entities or individuals that are really interested in farming or production themselves. And in doing so, we end up with land that is purchased by those less interested in farming and more in development."

Some doubt federal-level restrictions would be effective. "John Schwarz, a row crop farmer and lawyer in Cass County, Indiana, questioned if any national bill would be enforceable due to the sheer scope of farmland in the country," Goldstein writes. "He suggested it may be better left to counties and localities to handle." Schwarz told Goldstein, "If this is going to work, it really has to be on a micro level. I don't think a macro level is going to do it because there's just way too many ways to slip through, getting cute with the ownership and companies."

Millionaires are investing in farms as a safe bet in an economy that they think may collapse

Financial whiz kid Brian Luftman has been
investing in farms (Courier-Journal photo)

Millionaire investors are purchasing farms as a safe bet in what they think is an uncertain economy, Jere Downs reports for The Courier-Journal in Louisville. For example, Mississippi's Barry Gollott, a self-made millionaire, has bought farms in Alabama, Kentucky and Chile. He told Downs, "In a doomsday economy, farms are where the food has to come from. The way we are going, I think default is inevitable."

Conservative investors like Gollott "are finding safety for their assets in the farmland investor pools assembled by American Farm Investors, a Lexington, Ky. investment firm conceived in the ashes of the 2008 Great Recession," Downs writes. American Farm Investors was created by Brian Luftman, "a financial whiz kid who once traded derivatives in the cattle pit of the Chicago Mercantile Exchange," sometimes making as much as $200,000 a day.

Luftman, who said he bought an Illinois farm in 2008 for $4,800 per acre and sold the farm three years later for $8,800 an acre, told Downs, "Because the market was so scary, so tumultuous, and the banks were on the verge of collapse, I bought a farm." Luftman, who now acquires one to two farms annually, said that "when he looked around for a company that managed farmland for investors like himself," he couldn't find one. So he created American Farm Investors in 2011.

"To date, the annual financial returns on the nine farms purchased and managed by AFI mirror or exceed results achieved by investors in the bond market," Downs writes. "Unlike stocks and bonds, farmland is something an investor can touch, or visit. Unlike volatile securities, farmland's been appreciating in value an average 5 percent annually." (Read more)

Big investors broadening stakes in agribusiness

On the heels of increased speculation in grain markets, "A few big private investors are starting to make bolder and longer-term bets that the world’s need for food will greatly increase — by buying farmland, fertilizer, grain elevators and shipping equipment," The New York Times reports.

Brad Cole, president of Cole Partners Asset Management in Chicago, which manages hedge funds focused on natural resources, told Diana Henriques, “There is considerable interest in what we call ‘owning structure’ — like United States farmland, Argentine farmland, English farmland — wherever the profit picture is improving.”

The new investment could raise food production at a time when many countries need it. "But the long-term implications are less clear," Henriques writes. "Some traditional players in the farm economy, and others who study and shape agriculture policy, say they are concerned these newcomers will focus on profits above all else, and not share the industry’s commitment to farming through good times and bad." (Read more) For more stories in the Times' series on the food system, click here.