After CNBC wrote that the purchases by Fufeng USA were raising alarms in Washington, a local USDA official contacted the company to ask about disclosure of foreign ownership, according to USDA filings reviewed by NBC News.
Two weeks later the company complied, filing disclosures showing it had made three purchases for a total of $9.5 million to build a “wet corn milling biofermentation plant.”
Eric Chutorash, chief operating officer of Fufeng USA, dismissed concerns the plant could be used to spy on the Air Force base.
“I can’t imagine anyone that we hire that’s going to even do that,” Chutorash said. When asked if he could definitively say it wouldn’t be used for espionage, he responded, “Absolutely.”
But due to the opposition of local, state and federal officials, development of the Fufeng plant was stopped. Fufeng still owns more than 300 acres in Grand Forks, according to the county recorder’s office, a footprint less than a quarter the size of the average family farm in North Dakota.
Weak enforcement
Historically only about 3.1%, or 40 million acres, of the nation’s 1.3 billion acres of agricultural land has been owned by foreigners. Almost half of the foreign-owned land is forest. USDA records show that a third of the 40 million foreign-owned acres are held by Canadian interests, while Chinese interests hold less than 400,000 acres.
But the share of agricultural land owned by foreign interests is increasing, according to the USDA’s Farm Service Agency, and the pace at which the foreign share is growing has also risen. While it grew by an average of 800,000 acres yearly from 2011 to 2015, it rose 2.2 million acres per year from 2015 to 2021.
In the name of national security, members of Congress have called for tougher laws to regulate foreign land purchases, criticizing existing efforts by the USDA to police disclosure.
Over the past 10 years just six companies have faced penalties for late filings or failing to file, according to USDA data.
Two Canadian firms were penalized for late filings in 2013. A Swedish company was fined a year later. After that there were no penalties until a Japanese firm was fined in 2019.
In 2021 two Chinese entities were together fined more than $135,000 for failing to disclose their purchases of more than 130,000 acres along the southern U.S. border in Texas more than 20 years earlier.
The penalty letter that the USDA sent to one of the firms, Brazos Highland Properties LP, shows that the company filed its disclosure 8,017 days late. The government said in its letter that given the long delay the original amount of the proposed fine had been $21 million, but that the agency decided to reduce it to $120,216.38. That sharply reduced amount was the largest fine the agency had imposed in 20 years.
The two companies, Harvest Texas and Brazos Highland, paid their reduced fines three months later, according to USDA documents. They also abandoned plans for a wind farm on the land after significant local opposition.
The members of Congress who want to tighten controls on foreign ownership say its true scope is hard to gauge when enforcement is lacking.
In late July, the Senate passed a ban on China, Russia, North Korea and Iran buying American agricultural land, but it’s unclear if the amendment will make it into the final defense spending bill that will go to a vote in Congress this fall.
One of the sponsors of the amendment, Sen. Joni Ernst, R-Iowa, has also proposed adding the Food and Drug Administration and the Agriculture secretary to conduct oversight of foreign purchases to ensure that reporting is timely and accurate, as welling as adding USDA staff to monitor purchases. She also proposes that any purchase or lease by a foreign entity that exceeds 320 acres or land valued at more than $5 million be subject to review.
In a statement, Ernst said, “Any acre of land that the Chinese Communist Party can use against the United States is a threat that must be taken seriously. We have already witnessed the danger their malign influence poses in our backyard as they bought critical land near our military installations. We need to bolster the law because currently, USDA is not fully able to enforce or police foreign investment.
“That’s why I’m working across the aisle with Democrats to protect our agriculture security that would require CFIUS [Committee on Foreign Investment in the United States] to do its job, modernize USDA’s process to protect our land against our adversaries, and ensure China cannot use any loophole against us.”
