Gov. Kim Reynolds signs law boosting oversight of foreign ownership of Iowa farmland

DES MOINES — Foreign owners of Iowa farmland will face new disclosure requirements and penalties for not complying under legislation signed into law Tuesday by Gov. Kim Reynolds.

Reynolds signed Senate File 2204, which adds transparency requirements for foreign ownership of Iowa farmland, citing a growing concern about Chinese investment in U.S. agriculture. The measure, which Reynolds called for in her annual Condition of the State address in January, sailed through the Legislature with unanimous support in February.

"When Iowa speaks, the country listens. And with this bill our message is unmistakable: American soil belongs in American hands,“ Reynolds, a Republican, said during the bill signing.

Iowa is among several states that already have limits on foreign ownership of land. State law restricts foreign farmland purchases to 320 acres, although foreign owners who held Iowa farmland before 1980 were allowed to keep it.

What does the new law do?

The new law requires foreign landowners to provide more information to the state, and grants the state attorney general broader authority to subpoena financial records and purchase agreements to investigate potential violations of foreign farmland ownership. It also raises financial penalties for violations, and requires the Iowa Secretary of State’s office to increase its tracking of foreign ownership.

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The Secretary of State would be required to file an annual report on foreign farmland ownership in Iowa — which would be made available to state officials, but not the public. Foreign landowners will be required to provide details about all of their holdings in the state that exceed 250 acres.

Failing to disclose purchases or leases of agricultural land by a foreign entity will result in a fine of up to 25 percent of the property's value per violation. Previously, the law called for a fine of no more than $2,000 per violation.

Failing to report holdings once every two years will result in a penalty of up to $10,000 per violation.

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Sen. Dan Zumbach, a Republican from Ryan and a farmer, said state officials wish to continue to support and strengthen economic partnerships with other countries that support Iowa agriculture.

“With that said, it is proper for Iowans to know who their neighbors are,” Zumbach said at the bill signing. "If you’re a foreign landowner, we will know who you are. We will know where you are. We will know what you are up to and we will know your intentions. And if you’re planning on breaking Iowa’s law, you will receive the wrath of (Iowa Attorney General Brenna) Bird."

Why is it needed?

Reynolds and state lawmakers who support the legislation say Iowa already has strong laws regarding foreign land ownership, which the new law will make even stronger.

“Iowa’s laws on foreign ownership of land have long been recognized as some of the strongest in the nation, with other states looking to us when crafting their own policies,” Reynolds said. “Yet, in the decades since we first addressed this issue, adversaries like China have grown significantly more aggressive on the world stage, constantly looking for any opening to assert themselves at the expense of our country. One all-too-common weapon in this battle is the purchase of American farmland.

“Our state’s fertile soil and unmatched production capacity make us a natural target for this strategy,” she continued. “Our farm families produce 10 percent of the nation’s food supply and Iowa ranks as America’s top producer of biofuels. That makes us a natural leader in the race to stave off the evolving threat to American agriculture.”

Foreign ownership and investment in U.S. agricultural land nearly doubled over the last decade, according to the U.S. Department of Agriculture. The USDA estimated that foreign investment in U.S. agricultural land grew to about 43 million acres in 2022, or 3.4 percent of all privately held agricultural land.

Chinese ownership of U.S. farmland increased from $81 million in 2010 to $1.9 billion in 2022, the USDA reported. And reports have shown that Chinese investors are buying farmland near military bases and other critical U.S. infrastructure.

Chinese investors owned roughly 350,000 acres, just less than 1 percent of all foreign-held farmland, according to the USDA. That pales in comparison with Canada investors, who own 32 percent (or 14.2 million acres) of all land in the United States, and Netherlands buyers, who own 12 percent (or 5.3 million acres).

The USDA is charged with monitoring foreign investment in farmland under the 1978 Agricultural Foreign Investment Disclosure Act. The law requires foreign holders of agricultural land to report those holdings to the USDA. Agencies like the Department of Defense and the Treasury use the information to evaluate potential security concerns.

Some members of Congress have proposed specific bans on companies with ties to China, North Korea, Russia and Iran, while others, including members of Iowa’s congressional delegation, have introduced or supported proposals to overhaul monitoring of foreign ownership of farmland across the country.

The USDA has said it needs more funding to accurately inspect land ownership records and to meet a 2025 deadline of creating an online submission process, according to reporting from Investigate Midwest.

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“Keeping Iowa’s fertile and productive farm ground in the hands of Americans is a concern I hear about continuously as I travel the state,” Iowa Secretary of Agriculture Mike Naig said at the bill signing. “ … I share Iowans deep passion for protecting this valuable resource. And today’s bill signing is a big step toward doing exactly that.”

How much farmland in Iowa is owned by foreign entities?

Foreign investment in Iowa farmland more than doubled in the last 10 years, but Iowa still ranks in the bottom half of states for acres with foreign investment. Iowa’s foreign acres are less than 2 percent of privately-owned agricultural land, The Gazette previously reported.

Still, concerns persist about China — one of Iowa's largest trading partners — buying farmland near military bases and owning Smithfield Foods, the world’s largest pork producer with nine facilities in Iowa as well as 521 contract farms and three feed mills. Smithfield Foods Inc., is based in Smithfield, Va., and is owned by WH Group, a publicly traded company based in Hong Kong.

Iowa has roughly 514,000 acres of foreign-owned or leased land, according to the most recent USDA data. That amounts to roughly 1.6 percent of the state's 32 million acres of crop, timber and other agriculture land. The bulk of those holdings are long-term leases for wind, solar and other renewable energy projects.

China is a minor owner of Iowa acreage, according to USDA data.

The largest foreign holder in Iowa is Canada, at close to 200,000 acres, followed by Italy at 104,400 acres. Around 181,300 acres are not specified.

Comments: (319) 398-8499; tom.barton@thegazette.com