Foreign investors are purchasing larger shares of American and Alabama farmland than ever before. At least one Alabama legislator, Senator Tim Melson, sees that as a problem and wants to do something about it. But should state government have the authority to tell private landowners who they can sell their property to?
Senate bill 14, pre-filed by Senator Melson, would restrict nonresident aliens, foreign businesses, foreign governments, or their agents from purchasing agricultural or forest land in Alabama.
Melson’s push to bar foreign purchases of Alabama farmland comes amidst an increasing nationwide effort to do the same. National politicians point to the risk posed by China’s presence in the U.S. food system, claiming that it endangers national security.
The largest Chinese-backed purchase to date was in 2013 when WH Group Limited purchased U.S. pork producer Smithfield Foods for $4.7 billion. The deal included 146,000 acres of American farmland.
According to United States Department of Agriculture (USDA) data, at the end of 2019, 2.7% of the United States’ more than 2.2 billion acres of agricultural land was held by foreign investors. That’s just over 35 million acres of foreign landholdings.
Alabama ranks third highest on the list of foreign agricultural landholdings, with the USDA reporting that 6.1% (1.75 million acres) of Alabama’s farmland is owned by foreign entities.
In an interview with Alabama Daily News (ADN), Senator Melson indicated that the biggest threat of foreign landholders was related to food supply issues, saying that “…We feed the world and we don’t need the world coming in and buying up all our farmland. It’s just to protect US citizens.”
A representative from the Alabama Farmers Federation (ALFA), which supports Melson’s bill, told ADN “It is more critical than ever to secure our ability to produce our nation’s food supply. Sen. Melson’s bill promotes national security and protects hard-working Alabamians.”
While the risk of foreign entities taking control of the U.S. food supply is a legitimate concern, that seems to be far from reality in Alabama. According to the USDA, of Alabama’s 1.784 million agricultural acres owned by foreign investors, 1.734 million acres is forest land. Over 28,000 acres are being used for non-agricultural purposes, leaving less than 22,000 acres of foreign-held land that might directly impact the food supply.
The Netherlands holds over half of the foreign-owned farmland in Alabama, with Canada and the United Kingdom having the next largest shares. The data does not indicate how many acres China owns.
If Alabama’s government prohibits landowners from selling to foreign investors, then what’s next? Could the state bar domestic investors from purchasing land as well?
Some proponents of restricting the sale of U.S. agricultural land to foreigners claim that it has caused the price of land as well as food production costs to skyrocket, pricing out independent farmers.
However, there has also been a sharp increase in domestic investment in farmland, and not just by wealthy individuals like Bill Gates, who is reportedly the largest farmland owner in the U.S. Institutional investors, like pension funds, university endowments, and private foundations are also incorporating farmland into their investment portfolios. Iowa is one of six states that has banned the sale of farmland to foreign entities, yet land prices have still increased by 93% since 2010.
To be fair, the USDA data does not come without criticism. The data is self-reported, meaning the USDA does not verify it. Foreign entities only refile paperwork when the land changes hands and there is no routine follow-up to evaluate whether land use has changed. Without higher reporting standards it is hard to be sure how much land is owned by foreign investors and who those investors are.
Maybe the threat of foreign control of Alabama farmland is greater than the data suggests. Regardless though, there is the overarching issue of Alabamians being able to sell their property to whomever they choose. Prohibiting land sales to foreign entities opens the door to more restrictions in the future. It also violates the free-market economic principles this country was founded on.
Unless there is a legitimate and demonstrable threat to Alabama’s food supply or national security, state government should have no authority to intervene in private land sales. If there is a specific threat, then supporters of this bill should present that evidence to Alabamians.
Justin Bogie serves as Senior Director of Fiscal Policy at the Alabama Policy Institute. The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information to: [email protected].