A Phil Hall Op-Ed: Unless you are involved in an agricultural enterprise or you reside in a section of the country where farming is crucial to the local economy, there is an excellent chance that you rarely hear anything related to the U.S. Department of Agriculture (USDA). Strangely, we should have heard an awful lot about the USDA last Thursday following the publication of a report by the U.S. Government Accountability Office (GAO) that found the department is not doing its job in a significant way.
“Foreign investment in U.S. agricultural land grew to about 40 million acres in 2021, per USDA estimates,” said the GAO report. “This can pose national security risks – such as when foreign interests buy land near U.S. military installations.”
The GAO complained in its report that the USDA “does not share timely data on foreign investments in agricultural land collected under the Agricultural Foreign Investment Disclosure Act of 1978, as amended (AFIDA). Committee on Foreign Investment in the United States (CFIUS) agencies, including the Department of Defense (DOD) and the Department of the Treasury, identify and review transactions that may pose national security risks, such as the proximity of agricultural land to a sensitive military base. USDA annually publishes selected AFIDA information online that CFIUS agencies may use when considering potential national security risks associated with agricultural land.”
“In addition,” the GAO added, “USDA officials said they respond promptly when they receive requests for information. However, DOD officials noted they need AFIDA information that is more up-to-date and more specific, and they need to receive this information more than once a year. USDA has requested funding to develop a real-time data system that can be accessed by other U.S. government agencies and the public. Meanwhile, sharing current data could help increase visibility into potential national security risks related to foreign investments in U.S. agricultural land.”
In many ways, the GAO is late to the story – last summer, NBC News reported on what it called “a federal oversight system in which reporting of foreign ownership is lax and enforcement minimal.” But NBC tried to downplay the security risks by noting that “historically only about 3.1%, or 40 million acres, of the nation’s 1.3 billion acres of agricultural land has been owned by foreigners,” with nearly half of that land being forests and one-third of the foreign ownership being held by Canadian entities “while Chinese interests hold less than 400,000 acres.” Yeah, blame Canada but not China.
But there’s the catch – that data only includes the Chinese interests that self-identify as such. I don’t wish to sow a harvest of paranoia, but what if the foreign players buying and owning the farmland are hiding behind U.S.-based shell companies? After all, shady Americans play the shell company game – what’s stopping entities from overseas?
Yet on the other hand, is the USDA willing to enact any enforcement by self-identifying entities? NBC also noted in 2021 that one Chinese entity was 8,017 days late in filing a required disclosure that it purchased land along the Texas-Mexico border. The proposed fine this company was supposed to receive was $21 million, but that was reduced to about $120,000 – the greatest fine reduction in USDA history. Huh?
Even worse, the GAO found the USDA “does not sufficiently verify and conduct quality reviews to track the accuracy and completeness of its collected AFIDA data. GAO’s review of AFIDA data current through calendar year 2021 found errors, such as the largest land holding associated with the People’s Republic of China being counted twice. USDA has begun efforts to identify AFIDA non-compliance through data mining, according to officials, and has opportunities to expand this practice. But without improving its internal processes, USDA cannot report reliable information to Congress or the public about where and how much U.S. agricultural land is held by foreign persons.”
Can you imagine if an American company tried to buy farmland in China and pulled the same stunts that the Chinese and other foreign entities are enacting in this country? It seems that Xi Jinping and his gang running China know a good opportunity when they see one – and they certainly know how to exploit it.
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
Photo by Dati Bendo / Wikimedia Commons