Foreign Policy

Balloon incident may hit China's ability to invest in US agriculture

China has bought farmland overseas to grow its food, but its surveillance balloon over Montana prompted concerns about this type of relationship.

Balloon incident may hit China's ability to invest in US agriculture
AP

It can be quiet out in rural Montana, but it was a different story when it recently became the focus of international security interests.

A high-altitude Chinese surveillance balloon was spotted over Montana fields, which also happen to be home to one of three U.S. nuclear missile complexes.  

The surveillance from the air is renewing conversations about surveillance on the ground, that stem from who owns the land.

"If we don't pay attention, China will buy... land around sensitive missile site. Absolutely. And to spy — why wouldn't they do that?" said Dexter Tiff Roberts, a senior fellow with the Atlantic Council's Asia Security Initiative.

The same concerns about foreign investment in U.S. agriculture were raised in Grand Forks, North Dakota, where the city council just rejected a plan for a corn mill proposed by China-based food producer Fufeng Group. The company bought more than 300 acres of land for the plant in 2021, just 12 miles from the Grand Forks Air Force Base.

"The national security issues arose to a position where we could not move forward any further regarding the development agreement," said Todd Feland, Grand Forks city administrator.

Montanans drive and farm by the sensitive missile sites every day, marked by nondescript chain-link fences.

"The other part of it, of course, is food security.. " Roberts said. "Chinese purchases — whether it be businesses, government, individuals, some kind of Chinese entity — of our agricultural land is still quite small, but it's actually growing very quickly. So, I do think we should pay attention to that."

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China struggles to grow food for its population of 1.4 billion, which has prompted overseas investments in food. But they're not alone.

As of Dec. 31, 2021, the USDA says foreign persons held an interest in about 40 million acres of U.S. agricultural land. That makes up 3.1% of all privately-held agricultural land in the U.S. It's an increase of more than 2.4 million acres from the previous year's report.

Canadian investors own the largest amount of reported foreign-held land at 31%. China makes up less than 1% of foreign held acres at less than 400,000 acres.

Just before the Chinese surveillance balloon was spotted over Montana farmland, Democratic Sen. Jon Tester of Montana and Republican Mike Rounds of South Dakota introduced a bipartisan bill that would prevent China, Russia, Iran and North Korea from acquiring U.S. farmland, including through investments, purchases or leases.

"Countries like China and Russia, North Korea, Iran — those places don't want to see us exist anymore," Sen. Tester said. "The last thing we need to do is let them buy up farmland, which is critical to our food security and national security."

Last year, Rep. Dan Newhouse, a Republican from Washington state, introduced a  house bill that would prohibit the same countries from buying up U.S. farmland.

"The people's Republic of China is only interested in reaping every possible benefit from U.S. land without giving back or considering our future," Rep. Newhouse said.

And many states have their own rules. University of Arkansas researchers found no state has an all-out ban on foreign ownership, but 14 have restrictions.

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Montana doesn't for now, but there is a bill introduced in the state legislature that would prohibit foreign adversaries from selling, leasing or renting critical infrastructure in Montana, which includes agricultural land.

"We have the U.S. Department of Commerce telling us there are adversarial nations and to be aware and that we need to do our part to protect our borders and this is how we can do it," said Montana Republican Sen. Ken Bogner.

Back at the University of Montana, Roberts says the nation's complicated relationship with China requires balance.

"If it's something that has national security implications, broadly defined, then we probably should keep it under U.S. ownership," Roberts said. "An outright ban of all purchases — I'm not so sure of that... at least not yet."

While China is seen as an adversary in some arenas, they're also a trade partner, buying more U.S. agricultural goods than any other country.

A report from last year shows in 2021, China imported a record $33 billion worth of agricultural products — a 25% increase over 2020.

"We have the closest trading partnership in the world for two major countries," Roberts said. "We invest in each other's countries, both ways. There's huge American investments within China. There are large numbers of Americans living long-term in China."

The relationship is complicated, which leads many experts and politicians to believe the U.S. should tread carefully.