The FDI angle

• Foreign holdings of US agricultural land rose by 50% from 2017 to 2022.
• Renewable energy companies, mostly from Europe, are behind this surge.

Why it matters: Foreign holdings of US farmland have become a political flashpoint, with half of the 50 states passing laws restricting foreign ownership of private land. However, they still make up only a fraction of the country’s agricultural land.

Foreigners buying US farmland is not a new concept. For many years, foreigners have purchased US agricultural land to grow crops and raise livestock.

Now, a new commodity is attracting foreign direct investment (FDI) in US agricultural land — renewable energy. Specifically, foreign investors are increasingly leasing or buying US agricultural land to install wind turbines and solar panels. A US Government Accountability Office (GAO) report released in early 2024 argues that foreign ownership and investment in US agricultural land — which includes farmland, pastures and forests — rose by 50% between 2017 and 2022. 

Much of this surge stems primarily from foreign-owned wind companies signing long-term leases to place wind turbines on farmland and pastures. The report defines foreign investments as acquisitions by foreign companies, countries or residents, or by US-headquartered companies with foreign ownership.

An incomplete picture

In absolute terms, the extent of foreign control of US agricultural land targeted for renewable energy projects is difficult to pin down. This includes a lack of details about precisely who controls the land.

Foreign holdings represented just 3.4% of private US agricultural land as of December 31, 2022, the GAO estimates. Yet the US Department of Agriculture (USDA) only goes so far as to state that up to half of the agricultural land intended for non-agricultural uses is “likely” earmarked for renewable energy projects developed by foreign companies, according to the latest USDA report on foreign holdings of US agricultural land published in 2023. 

The USDA estimated that roughly 25% of it (nearly 4.3 million hectares) was controlled by wind companies; 3% (more than 525,600 hectares) by solar companies; less than 1% (less than 135,000 hectares) by renewable energy companies; and 28% (less than 4.9 million hectares) by a combination of wind, solar or renewable energy companies.

The USDA report sheds light on just how little agricultural land has actually been lost to non-agricultural uses, such as wind and solar projects, over the course of more than half a century.

While more than 404 million hectares of privately owned agricultural land lay scattered across the US in 2022, just 324,000 hectares have been converted to non-agricultural uses during a more than 50-year span, the report says. That translates to a decrease in agricultural land (excluding timber operations) of less than 0.001%.

Foreign ownership of rural America

The real extent to which foreign ownership of US agricultural land for renewable energy and other purposes is affecting rural areas in the US has yet to be fully grasped. 

“More data is needed before we can better understand and draw further conclusions on the broader impacts of foreign investment in US agricultural land on family farms and rural communities,” the USDA report states.

But the nature of the ownership picture isn’t entirely fuzzy.

Danny Munch, an economist at the American Farm Bureau Federation, says renewable energy leases lasting at least 10 years make up the “overwhelming majority” of the growth in foreign control of US agricultural land. He attributes this to the jump in global interest in generation of wind and solar power.

“As government incentives grow to adopt renewable energy systems around the world, many nations — particularly European nations with less available open land — look for ways to take advantage of these incentives. Investing in open space in the US is one of those options,” Mr Munch explains.

Renewable energy developers often flock to agricultural land for wind and solar installations due to land availability, the ease of engineering the land for renewable energy purposes and the affordability of agricultural land in rural areas.

For farmers, the monetary appeal of land acquisitions can be alluring. For example, the Farm Journal reported that annual solar leases of agricultural land can range from €460 to nearly €3700 per acre. These attractive leasing deals come against the backdrop of an overall decline in the value of farmland.

Divided opinions

Still, while this trend opens up opportunities for them, many US farmers express divided opinions about foreign control of agricultural land, according to Mr Munch.

On one hand, he says, some solar panels are being placed on prime agricultural land. As of July 2024, a database published on OpenEI showed 567 solar installations spread across more than 25,000 hectares of US agricultural land.

“On the other hand, many farmers firmly believe in private property rights, in that farmers should be able to sell property to whomever they want, whenever they want, without government interference,” Mr Munch explains. “Regulating the sale of land could give the government more power than intended and minimise this freedom.”

In this regard, wind turbines aren’t as much of a concern, he says, because much of the land occupied by wind turbines can still accommodate crops and cattle, for instance. Furthermore, wind turbines occupy a relatively small footprint, according to the USDA.

Security concerns

Foreign control of US agricultural land — including land for wind and solar installations — also stokes worries over national security.

Roughly half of the US’s 50 states have passed laws restricting foreign ownership of private land, including agricultural property, according to the National Agricultural Law Center. While several federal lawmakers have proposed a nationwide clampdown on agricultural land purchases or leases by foreign “adversaries”, no federal law places limits on this activity. Such adversaries include China, Iran, North Korea and Russia.

Kimberly Gianopoulos, a GAO managing director who specialises in international affairs and trade, says the USDA faces challenges in collecting and reporting accurate data about foreign ownership of US agricultural land, particularly when it comes to property located near sensitive military facilities.

As an example of national security issues, the GAO report cites the 2022 purchase by a subsidiary of a Chinese company of nearly 150 hectares of cropland near Grand Forks Air Force Base in North Dakota. Following significant pushback from federal lawmakers and others, the subsidiary scrapped the project.

David Ortega, a professor at Michigan State University, emphasises that Chinese-owned land made up less than 1% of all foreign-owned agricultural land in the US at the end of 2021. Canada, the Netherlands, Italy, the UK and Germany accounted for half of US agricultural land owned by foreign investors.

A flawed system

Data about which countries control US agricultural land generally comes from USDA reports issued each year. But Ms Gianopoulos points out that the agency’s largely paper-based reporting system is prone to human error, doesn’t offer real-time data and relies heavily on information collected by local government agencies. Further, the data is often either incomplete or inaccurate.

Mr Ortega notes that a 2023 federal law directs the USDA to set up an online database containing information required by the Agricultural Foreign Investment Disclosure Act. The database isn’t active yet, though.

“Establishing a system to track this data is rather complex, given issues of data privacy and security, as well as the logistics and funding necessary to undertake such an effort,” says Mr Ortega.

Until the database is up and running, it’ll remain tricky to monitor foreign ownership of US agricultural land for solar projects, wind projects or any other purposes. Inevitably, you can expect speculation and curiosity about who owns US farmland, and for what purposes, to continue for the time being. 

John Egan is a freelance contributor based in Austin, Texas.

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This article first appeared in the August/September 2024 print edition of fDi Intelligence.