Foreign Hand

The US has long been purchasing farmland abroad. Now that questionable practice has come home to roost.

STEPHEN URRUTIA USED to grow hay and corn on his family’s 166-acre farm just outside of Chowchilla, in California’s Central Valley. His father Leon, who was born in nearby Los Banos and was an active member of the local Basque community, bought the land in 1980. For decades, the family sold their products to local buyers — mainly small dairy farmers purchasing feed for their animals.

But in 2005, seeking funding to expand his landholdings elsewhere, he sold the land — to an Indian company called Farmers International. The company replaced Urrutia’s crops with almonds — a water intensive cash crop that has since exploded in production in the Central Valley — and started exporting them to India, already one of world’s top buyers of US almonds.

Foreign companies like Farmers International have been increasingly looking to the US to buy up farmland, often taking advantage of states’ lax regulations to invest in high-value crops like almonds and alfalfa and export them to places with limited water or land. Today, foreign investors control more than 35.2 million acres of US farmland, according to recent data from the US Department of Agriculture (USDA). That’s twice as much as they owned two decades ago, alarming some activists and policymakers who worry that foreign purchases of farmland degrade the environment and add another barrier to small- and medium-scale farmers’ access to land.

Foreign landholdings aren’t always easy to track down. Many companies work through US-based subsidiaries.

“The holding of land by any corporation, but especially a foreign corporation, means that natural resources and wealth are being extracted and transferred to the pockets of someone hundreds, if not thousands of miles away,” the Family Farm Action Alliance, a nonprofit that advocates for small farmers, said in a statement in April. “This separates the land owners from the consequences of polluting or degrading their land, leaving surrounding communities with little to no access to the resources that surround them and limited access to the wealth that corporations enjoy from selling what they extract.”

These foreign landholdings aren’t always easy to track down. Many companies work through US-based subsidiaries. Online searches for Farmers International, for instance, bring up only the company’s Chico, CA office address. That the company is actually of Indian origin shows up only in USDA data.

The irony of the situation lies in the fact that the US has been the one purchasing land even more often than the one selling it. The US government and many US-based corporations have long sought out land in other countries, especially in African nations. In fact, it is the second-biggest buyer — behind only China — of foreign land. The conversion of millions of hectares of farmland, as well as forests and peatlands, into huge mono-cropped plantations has had similar impacts on local pastoralists, smallholders, and vulnerable landless groups, as well as the environment, in these countries. But now that these effects have begun to appear on American soil, more people, from economists to environmentalists, are starting to pay attention.

IN 1978, CONGRESS passed the Agricultural Foreign Investment Disclosure Act to ensure that foreign companies notify the USDA whenever they buy or sell agricultural land, including both forest and farmland, in the country. According to that USDA data, from 2000 to 2018, foreign investors acquired more than 2.8 million acres of land in Texas, the state with the most foreign land purchases in that time period, followed by 1.3 million acres in Washington and 1.3 million acres in Maine. The biggest purchasers came from Canada, the Netherlands, and Italy — but the fourth biggest was “unknown.” That’s because there are significant gaps in the data. The actual amount of land being purchased is most likely much larger, according to an investigation by the Midwest Center for Investigative Reporting.

A major trigger for the increase was the 2008 economic recession, when the stock market collapse led foreign entities to seek alternative investments. In farmland, they found a lucrative option, says Wendong Zhang, an economics professor at Iowa State University. Some of the biggest purchasers of land are investment and pension funds, which see farmland as a valuable asset in a larger investment portfolio.

“They’re increasingly thinking about farmland not only as the one [investment] that you can generate cash from, but also where you can store wealth, and also where you can diversify from other assets,” Zhang says.

The US government and many US-based corporations have long sought out land in other countries, particularly in African nations. Photo by FAO / Daniel Hayduk.

Foreign companies also see an opportunity to profit from the produce they can grow on the land they purchase. About 20 percent of the global land acquisitions tracked since 2002 by the Land Matrix — an open access, large-scale land acquisition database — have been put under production, often with the goal of enhancing food or energy security in the home countries of the purchasers.

Some countries may also be trying to hedge their bets against climate change, says Caitlin Welsh, director of the Global Food Security Program at the Center for Strategic and International Studies. “Generally speaking, it’s our own strategic partners who are investing in our country. They might not know how climate change will affect the growing season and growing patterns within their own borders. So I think that they’re probably trying to diversify.”

But buyers can also aim to generate a return on investment by planting cash crops, such as high-value nuts or timber, which can then be exported for a profit.

AROUND THE WORLD, the consequences of foreign land purchases are varied, according to a 2017 paper in Land Degradation & Development. Large-scale land acquisitions can raise the value of the land, often shutting out local and Indigenous users who are coerced into selling or can no longer afford to buy land. These acquisitions can also increase pressure on water resources by introducing large-scale irrigation, which can lead to water stress in areas where “blue water” — the kind stored in lakes and rivers — is already scarce. This type of “land grabbing” can lead to social conflicts over land and water, as well as threaten the food security of local populations who lose access to the small-scale farms they rely on to survive.

One place these tensions are playing out is in the Nile Basin, where 11 countries depend on the Nile River for their food and water security. Research by the Nordic Africa Institute has found that 111 agricultural deals made between 2008 and 2013, if implemented in full, would actually require more water than currently flows through the river itself. And although some of these investments were made by other Nile Basin countries, the cheap price of land also attracted investors from the United Arab Emirates, Saudi Arabia, Qatar, the US, India, and South Korea.

“If you strip a community of their resources — land, soil, or water — they may never recover from that.”

Water scarcity is a growing problem in the region even without these deals: Research from Dartmouth University has found that by 2030, drought spurred by climate change may cause between 20 and 40 percent of the basin’s population to face water scarcity in a “normal year.” But many governments in the region appear to be doing nothing to stop foreign land purchases, even explicitly encouraging outside agricultural investment; the land deals in the study were often kept secret, and details about them were not available to the public.

In California’s Central Valley, these concerns are never very far away. The acreage dedicated to almond farms, driven by high-value exports of the crop, doubled between 2005 and 2015 despite the fact that almonds are unusually thirsty: Almond exports in the state use as much water in a year as all the homes and businesses in Los Angeles use in three. And although many almond farms are owned by Americans — whether by farmers who convert their land to almond orchards to cash in, or those who have been growing almonds for generations — foreign companies like Farmers International see an opportunity to invest too.

However, this growth may already have reached its peak. This year, with a record-breaking drought leaving some farms without water, farmers are bulldozing their almond trees, predicting that even international demand won’t be enough to continue the industry’s “unconstrained growth.”

Whether in the US or abroad, large-scale land acquisitions often shut out local and Indigenous farmers who are either coerced into selling or can no longer afford to buy land. Photo by Preston Keres / US Department of Agriculture.

The issues stemming from foreign land purchases, though, are only one part of a larger global trend away from small-scale, local farming, and toward a more globalized food economy. The transition from seasonal crops to permanent ones like almonds, which generate more value for farmers but use significantly more water, is driven by both foreign and domestic purchases and a general corporatization of agriculture, says Newsha Ajami, a hydrologist who researches water and agriculture at Stanford University. And the effects on resources can be drastic: Whereas farmers used to grow fields of row crops like corn and hay that could be allowed to “fallow” — or be left unplanted and unwatered — during times of drought, fruit and nut orchards need to be watered constantly even when water is scarce.

“Farmers have always been seen as stewards of the land — they will take care of the land and the water and the resources because their livelihood depended on it,” Ajami says. But family farms are being replaced by major agribusinesses that are less invested in “the long-term sustainability of the land and resources. If you strip a community of their resources — land, soil, or water — they may never recover from that, or it may take generations before they can go back to where they had been before.”

FOREIGN LAND PURCHASES are still a relatively small part of this pattern. The 35.2 million acres that foreign investors own or lease account for only about 2.7 percent of all privately held US farmland, according to the USDA. But they have received a lot more scrutiny from lawmakers, who have expressed concern with the patchwork of state laws that allow purchases to proceed unchecked. There are no federal regulations on the amount of land that foreign investors can own, though state policies vary widely. Some states, such as Iowa, ban the practice entirely. Others, like Colorado, have no regulation whatsoever. Many states are in between, allowing purchases but limiting them by size or number.

Last year, as part of her platform for the Democratic Party’s nomination for president, Massachusetts Senator Elizabeth Warren announced her support for a federal law to restrict foreign ownership of American agricultural companies and farmland. Warren also joined legislators like Ohio Senator Sherrod Brown and Iowa Senator Chuck Grassley in pushing for increased federal monitoring of the issue. A bill called the Food Security Is National Security Act, which urged the government to consider food security when reviewing foreign investment in the US, was introduced in the Senate in 2017 but never came to a vote.

“As we think about the future and the growing global population, it’s important to consider who will control the food supply,” Grassley said in a statement announcing the bill back in 2017. “We owe it to our farmers and Americans who rely on farmers to grow their food to be more strategic. Especially as countries around the world are making moves to ensure adequate supplies.”

But restricting foreign land purchases won’t solve the larger problems that come with a corporatized and globalized agricultural system, as US-based industrial agriculture can be just as damaging as the kind practiced by foreign companies. As populations around the world experience economic growth, demand for resource-intensive crops like meat and nuts is increasing, Ajami said. With this financial incentive in place, high-value exports will continue to be prioritized over local resources.

“We all depend on agriculture to survive,” Ajami said. “That’s why it’s very important for the countries, or the states, or the regions that are doing this to be much more mindful. Is it okay to allow short-term gain and short-term thinking to replace our long-term sustainability?”

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