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Iowa retains ban on foreign ownership of farmland

Iowa retains ban on foreign ownership of farmland

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As farmland prices in the Midwest have fluctuated over time, one thing that hasn’t been a major issue is who is allowed to buy that farmland.

A prime example of that is foreign ownership.

In Iowa, non-resident alien individuals are not allowed to buy or own farmland over the long-term.

Approved in the 1970s at a time when farmland prices were soaring and there were concerns investors from overseas were going to swoop in and buy up land, the law puts specific limits on foreign and corporate ownership of farmland in the state.

There is little evidence it has had any impact on farmland values. It also hasn’t been especially controversial.

“I don’t know of any enforcement violations that have happened,” says Neil Hamilton, head of the Drake University Agricultural Law Center.

Hamilton says the law states that non-resident aliens cannot buy farmland in Iowa for the purpose of farming. They could buy less than 320 acres of land to build something or for a purpose other than farming, but they face a timeline that would preclude farming the land for an extended period before building something.

The limit applies to foreign businesses as well as foreign individuals, Hamilton says.

If a non-resident alien inherited farmland in Iowa, the person would be required to sell it within two years.

When the limit was passed, lawmakers also passed legislation that required registration of farmland sales with the Secretary of State.

Neighboring Missouri recently shifted its stance on foreign ownership of farmland. A 2013 law passed by the Missouri General Assembly, over a veto by then-Gov. Jay Nixon, set a new limit on foreign ownership of 1 percent. For the decades leading up to that, state law prohibited all foreign ownership of farmland.

The state law prohibiting foreign ownership of farmland was passed in 1978, at a time when many other states were passing similar bans amid reports of foreign entities seeking to acquire productive American farmland.

Leslie Holloway, director of regulatory affairs for Missouri Farm Bureau, says her organization opposes foreign ownership of farmland.

“Because when you think about it as a limited resource, we hate to think about it as a foreign entity,” she says.

Preventing foreign entities from owning U.S. farmland helps protect the national food supply and preserves opportunities for Missouri farmers, Holloway says. She says other countries are looking to purchase productive farmland, including Saudi Arabia buying farmland in the southwestern U.S.

“We know there are countries out there that need production capacity, and they don’t have it, and their populations are growing,” she says. “They’re looking to acquire land around the world.”

Brian Smith, with the Missouri Rural Crisis Center, says as of 2015, 0.336 percent of Missouri farmland is foreign owned.

“They’re about a third of the way there,” he says.

Smith says his organization also opposes foreign ownership of Missouri farmland.

This legislative session, Rep. Tom Hurst (R-Meta) offered a bill, House Bill 149, that would prohibit any more foreign acquisitions of Missouri farmland.

“Any bill to fix it, you’re going to have to grandfather in existing (foreign-owned farmland),” Smith says. “This bill would say ‘no more.’”

Even with the 1 percent limit, Smith has concerns whether the law can be enforced. He says foreign buyers could set up a U.S. LLC, and it can be difficult to track or verify these purchases.

“I think the biggest concern is, can it be tracked?” he says. “If these purchases are being made and aren’t reported to the Department of Agriculture, can it be tracked?”

Smith says there are multiple reasons this issue matters for farmers.

“There’s only so much farmland in the U.S.,” he says. “It’s a food security issue. … It’s not anything against foreign countries. It’s foreign corporations. Our goal is to protect small, independent family farmers.”

Iowa also has a law limiting corporate ownership of farmland, Hamilton says. Other states have passed similar corporate farming or corporate land ownership legislation over the years, though some of those statutes have been struck down in court. That has not happened with the Iowa corporate farming law.

Hamilton says that law has been revised to allow family farm corporations and other types of ownership structures to own farmland in the state, but the ban on ownership of land by large-scale corporations has remained on the books.

Additional reporting by Benjamin Herrold.


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