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Business: The Foreign Land-Grab Scare

5 minute read

Xenophobic overreaction to a bit of buying in the farm belt

Few subjects scare and anger American farmers more than reports that carpetbagging foreigners are swallowing up U.S. agricultural land from Georgia to California. To hear many farmers and farm-belt politicians tell it, at least half the population of Europe and maybe a few million Arabs and Japanese are storming ashore, moneybags in hand, to buy every spare square inch of topsoil.

Certainly some foreign purchases have occurred, and ads offering U.S. farm land dance across European newspapers and magazines. Still, aliens are neither big buyers nor big owners of land. In the unlikely event that a buying boom were to start tomorrow, it would not hurt either farmers or the country as a whole.

Georgia Democrat Herman Talmadge, chairman of the Senate Agriculture Committee, has asked the Agriculture Department and the state extension services to make a study of alien buying of U.S. farm land. Last fall Congress passed a law that will force all foreigners to register their land ownership. At least 25 states have enacted constraints of some kind on foreign land holdings.

This is part of a xenophobic overreaction that has been sparked by alarmist reports in the press and on TV and by flag-waving, vote-hungry politicians. The foreign buyers, says Marcus Collins, a state representative in Georgia “come in here and pay $1,500, $1,800 or even $2,000 an acre for land that, even with inflation, should not cost more than $800.” Iowa Congressman Tom Harkin warns that the oil-producing nations, which sold the U.S. $45 billion worth of petroleum last year, “could buy the whole state of Iowa, every acre of farm producing land, with just 394 days of oil production.”

The chance of the Arabs’ wanting to put all their cash into one breadbasket seems remote, and the scare stories are based on phony evidence or plain prejudice. When asked to back up his claim that “thousands and thousands of acres are being bought up,” California State Assemblyman John Thurman cited one “foreign” farm in California; in fact, it is owned by an American of Iranian descent. Under questioning, Tom Harkin admitted that foreign land buying “has not yet affected Iowa.”

Nor has it affected much of the rest of the U.S. Last June the GAO surveyed 25 counties in five states (California, Georgia, Kansas, Missouri and Oklahoma) and discovered that foreigners own no more than three-tenths of 1% of the farm land. The Department of Agriculture figures that, of 1 billion acres of privately owned farm land, only 3 million to 5 million acres are in foreign hands.

Some farming states have done surveys of their own, and these agree that the fear has been exaggerated:

> Iowa has been monitoring ownership of its 33 million acres of farm land for three years and has discovered that there are all of 27 nonresident alien owners, most of them West Germans; together, they have less than 9,000 acres.

> Minnesota has required reporting of foreign land buyers since 1977. Only 29,000 of its 30 million acres are foreign controlled. Last year, there was not a single sale of land to a nonresident alien.

Could the foreigners be buying elsewhere and skipping these rich farm states? Not likely. Says Garrett Cole, vice president of Oppenheimer Industries, a Kansas City firm that deals in agricultural land: “In a single year, no more than 3% of all farm land comes up for sale, and I’d be surprised if more than 2% [of that] is bought by foreigners.”

It is true that more foreigners are acquiring land than ever before, but the numbers are still very small. In Texas, Prince Franz Joseph, the 72-year-old monarch of the 40,000-acre Principality of Liechtenstein, bought 16,000 acres of ranch land. Across the country, other rich aliens are doing the same. Germans and Italians are the heaviest investors, followed by the British, French, Belgians, Canadians and Dutch. Neither the Arabs nor the Japanese seem to be in the market. Most of the buyers are good neighbors who often lease the land back to Americans and pour in development money to introduce modern, small-farming techniques.

Their aim is not necessarily to make a profit, but rather to preserve capital from the ravages of inflation and the specter of creeping socialism in their own countries. All see the U.S. as a bulwark of political stability in a changing world.

Opponents of sales to foreigners make the false claim that foreigners enjoy tax advantages over U.S. farmers. The only U.S. tax that a nonresident alien owner escapes is on capital gains if he sells his land. Otherwise foreigners pay property and income taxes like all Americans, and any deductions they use are available to U.S. farmers as well.

The main objection from farmers is that foreign buyers are paying excessively high prices. That in turn, say the opponents, pushes up the value of land owned and prevents young people from entering farming or expanding in the business.

In fact land prices have been climbing steeply, but almost wholly because of demand by Americans. While farmers justifiably complain that the price increase has kicked up their property taxes, it has also added much to their property values, enhancing their estates. For farmers to complain about that is as illogical as homeowners carping because outsiders are moving in and bidding up land and housing values in their neighborhoods.

Meanwhile, many farmers share the opinion of one weather-grizzled Georgia farmer: “Let’s don’t let them get by with buying our land, but don’t stop it yet, not until I can sell mine.” Adds William Wisenbaker, who farms several hundred acre near Lake Park, Ga.: “If any of them fellas with long robes come around, I’m gonna give them a wide berth. That is, unless they’re carrying so much money I can’t turn them down.”

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