With good reason, Texas politicos like to brag on the state’s agricultural exploits: Texas leads the nation when it comes to cattle, cotton and hay production and boasts more farms and ranches than any other state in the union.
But Texas agriculture has another distinction that gets considerably less attention. Over the last ten years, Texas also leads the nation when it comes to foreign purchases of its agricultural land. Foreign companies and individuals have bought 1.7 million acres of farm-, timber- and pastureland in Texas over the last decade, far more than in any other state, according to a Statesman analysis of data obtained by the Midwest Center for Investigative Reporting.
The foreign-owned land — an area the size of Travis, Hays and Williamson counties combined — is worth about $3.3 billion.
The purchases mirror an increase across the country, which has spurred calls to tighten regulations on foreign investment in the agricultural sector. Citing potential threats to the nation’s food security, both the U.S. Senate and House are contemplating bills that would increase scrutiny of agricultural land deals involving foreign buyers to make sure they don’t endanger the nation’s access to a reliable food supply.
“As we think about the future and growing global population, it’s important to consider who will control the food supply,” said Sen. Chuck Grassley, R-Iowa, who co-authored a bill to require agricultural land deals to get stricter government vetting.
“We owe it to our farmers…to be more strategic, especially as countries around the world are making moves to ensure adequate supplies.”
Wesley Sims, president of the Texas Farmers Union said his group favors tighter rules for foreign purchases of agricultural land in Texas. “We oppose foreign entities taking over our resources,” he said. “It’s not just food security, it’s national security. We’re always concerned about either one.”
The bills don’t appear to be a burning priority for Texas members of Congress. Several elected officials, including Senators Ted Cruz and John Cornyn, did not respond to requests for comment this week.
State Sen. Charles Perry, R-Lubbock, who chairs the Texas Senate Agriculture, Water and Rural Affairs Committee, said loss of agricultural land “be it to foreign or domestic sources” is a symptom of “burdensome regulations.”
“This trend should serve as a wake-up call that food and fiber supply is no less important for homeland security initiatives than border security,” Perry said in a statement.
Canada is top Texas buyer
Overall, about 600,000 acres of Texas ag land bought by foreign entities in the last decade is classified as cropland or pastureland. That represents a small fraction of the state’s 130 million acres of cropland. Transaction and appraisal district records show that agricultural land has been scooped up by foreign wind energy firms, solar power companies and real estate investment consortiums.
And while foreign purchases of agricultural land in the U.S. hit record levels after last decade’s recession, and remain high, the United States remains the world’s second largest buyer of agricultural lands in foreign countries, behind the United Kingdom and just ahead of China, according to a 2012 study.
Most of the Texas land was bought by North American and European entities, according to the data, which the Midwest Center for Investigative Reporting compiled through the Agricultural Foreign Investment Disclosure Act.
Canadian firms bought more than 800,000 acres over the last decade, much of it in timber-rich areas of East Texas. Entities from the Netherlands, Germany and Portugal bought a combined 600,000 acres. Other countries with a stake in Texas agriculture include Indonesia, Mexico, India and Malaysia.
China has purchased the 10th most Texas agricultural land — 21,000 acres worth nearly $10 million, over the last decade. But the 2013 purchase of pork processing giant Smithfield Foods by a Chinese corporation, which included 1,500 acres in the Texas Panhandle town of Pampa, helped spark concerns in the U.S. about foreign control over food production.
China’s fast-growing economy faces a quandary: the country has 20 percent of the world’s population, but just 9 percent of its farmland. “When we look overseas, we see large tracts of land where you can operate a farm that makes sense economically,” a Chinese agricultural analyst told the Los Angeles Times after the purchase.
Tax breaks for foreign owners?
Countries across the globe are taking a more nationalistic approach to their agriculture: in June, the Republic of Georgia took steps to amend its Constitution to prohibit foreign ownership of agricultural land to foreigners; South Africa and Namibia are contemplating similar measures and a bill in Canada would make it harder for foreigners to make purchases over five acres. Two years ago, Australia tightened its rules to require that large land deals involving foreigners win approval from its foreign investment review board.
The U.S. bills call for similar changes, and would install U.S. Department of Agriculture officials on the Committee on Foreign Investment in the United States, which reviews transactions to make sure they don’t negatively impact national security.
Nearly half of American states — 22 — regulate foreign ownership of farmland to some degree, according to the Midwest Center for Investigative Reporting’s review of state laws. For example, Missouri limits foreign ownership to 1 percent of agricultural land, while Iowa has a more complete ban on farmland ownership.
Texas does not prohibit foreigners from buying agricultural land, though state law sought to prevent foreign entities from enjoying tax breaks associated with open space land. But in 1994, the Texas Supreme Court ruled “no rational basis exists” to prevent foreign owners from getting their agricultural land appraised at the same lower levels that native born owners enjoyed.
By valuing agricultural land at their “productivity” level rather than market value, landowners in Texas received about $3.5 billion in tax relief in 2015. The Texas Comptroller’s Office says it does not track how much of those savings went to foreign entities.
Foreign owners of agricultural land also qualify for sales tax exemptions on farm implements and related equipment that are worth hundreds of millions of dollars throughout the state.
About 58 percent of the foreign-purchased agricultural land in Texas - more than 1 million acres - is made up of timber holdings. East Texas is home to a number of timber investment management organizations (TIMOs), in which investors ranging from individuals to pension funds have bought timberland, which typically provides healthy returns through lumber processing and land appreciation.
In Polk and Newton counties alone, firms from Canada and the Netherlands bought more than 350,000 acres of East Texas land, according to the database.
Farming communities also saw some significant foreign investment. In Hidalgo County, foreign firms bought 13,000 acres of Rio Grande Valley agricultural land worth about $36 million; in the cotton and pumpkin-growing lands of Floyd County in the Panhandle, foreigners purchased 33,000 acres.
Foreign owners bought 326 acres of agricultural land in Travis County, 2,500 acres in Hays and 1,077 in Williamson over the last decade.