China’s involvement in the U.S. agricultural sector is under greater scrutiny, with politicians sounding the alarm about economic and national security risks stemming from Chinese purchases of prized American farmland.
The proposed bill, which would also bar Chinese government-linked entities from participating in virtually all U.S. Department of Agriculture (USDA) programs, continues Newhouse’s campaign to prevent the Chinese Communist Party (CCP) from gaining a foothold in America’s food supply chain.
Six states already have laws banning foreign ownership of agricultural land, including Hawaii, Iowa, Minnesota, Mississippi, North Dakota, and Oklahoma. But as Newhouse points out, Chinese investors can bypass these restrictions by purchasing American corporations that own farmland.
For example, Chinese meat processor Shuanghui International Holdings purchased the largest U.S. pork producer, Smithfield Foods, in 2013. Through this landmark deal, Shuanghui (now WH Group) gained 146,000 acres of U.S. land scattered across more than six states, hosting Smithfield assets from hog farms to processing plants.
The acquisition was a clear win for Beijing, allowing China to benefit from Smithfield’s reputation and food safety record, giving it access to the company’s valuable technology, and helping China diversify its agricultural supply chain and boost the yields of its herds. Smithfield supplied vast amounts of pork to Chinese consumers as African swine fever ravaged China’s domestic hog farms and the COVID-19 lockdowns disrupted production.
For the United States, the benefits of China’s investment are less straightforward. Raising hogs takes a toll on the environment and surrounding communities, which is presumably one reason China would prefer to keep its hog farms overseas.
Ownership of Smithfield also gives a Chinese company, and by extension the CCP, more influence over U.S. supply chains. After its purchase of Smithfield, WH Group bought up a number of processing facilities, farms, grain elevators, and other U.S. assets that allowed the company to cut out many American suppliers and service providers.
“As seen with the Smithfield case, large agribusinesses have the resources to streamline their production lines by purchasing links or companies along the chain,” the USCC report notes. “This may create economic distortions in the U.S. agriculture market should China have more leverage over U.S. suppliers, resulting in more closed market or intracompany trade transactions.”
But as the commission report points out, information about ownership and use of U.S. land is murky and incomplete. Federal reporting requirements aren’t very stringent, Chinese companies can circumvent them without much difficulty, and the government lacks enforcement mechanisms in cases of no reporting or false reporting.
A puzzling twist is the huge amount of Chinese-owned land that is classified as “other land,” as opposed to cropland or pasture land. Other land has unclassified uses, such as swamps, marshes, and bare rock. In 2013, the year of the Smithfield acquisition, 78 percent of the 192,928 acres of U.S. land owned by Chinese investors was other land.
The project has attracted controversy in Grand Forks and is currently undergoing third-party legal review to determine if it qualifies for review by the Committee on Foreign Investment in the United States, a federal panel that scrutinizes foreign deals for national security risks.
“The critical missions our military executes at Grand Forks Air Force Base must be protected,” Sen. Kevin Cramer (R-N.D.) said in a statement to the Grand Forks Herald earlier this year. He added that the jobs and economic benefits from the plant must be weighed against “the long-term concerns of China infiltrating our food supply chains.”