Statement by Roger Blobaum Before Subcommittee on Foreign Economic Policy Of the House Committee on Foreign Affairs on Land Ownership And Control | 1974

January 29, 1974

Mr. Chairman, I appreciated very much your invitation to participate in this series of hearings on foreign investments in land, grain terminals, packing plants, and other facilities in this country.

Although my work as a consultant involves several policy areas, I have concentrated on the issue of land ownership and control, particularly where large corporations are involved. I work closely with the Center for Rural Studies and other national groups involved in the land issue and was chairman of the First Midwest Land Conference last November. It dealt with several problems I want to discuss today.

There is considerable evidence that foreign capital has been flowing into the Midwest. These reports were most prevalent late last year following two devaluations of the dollar. The weakening of our currency spurred Japan and other nations with large accumulations of dollars to step up their search abroad for good investment possibilities.

Government embargoes on exports of soybeans and other commodities, imposed at about the same time, raised serious questions about our reliability as a source of farm exports when supplies are short. This apparently led foreign interests to provide some supply insurance for themselves by investing some dollars in this country in agricultural land and facilities.

Although many of these transactions have been announced publicly by the principals involved and others disclosed in stories put together by enterprising reporters, it is nearly impossible to document many others.

Typical of published reports of this activity are two stories written last October by Arlo Jacobson, Agribusiness Editor of the Des Moines Register. I would like to offer them at this time as exhibits for the hearing record.

Among the reports lacking documentation, for example, is one that Japanese money is included in the financing package put together for a huge hog factory near the town of Kahoka in northeast Missouri. The report has credence because the Japanese entered the U.S. market a year ago and bought large quantities of pork. Included was 250 tons a month provided under contract through a Springfield, Mo., plant.

The huge facility proposed at Kahoka, now under investigation by the Senate Antitrust subcommittee, would produce 2.5 million hogs a year. It has stirred concern among thousands of independent hog producers over a wide area of the Midwest. Although foreign investment in this venture has not been documented, neither has the identity of others putting up money, and information on the project has been closely held to say the least.

Undoubtedly there are many more rumors and unconfirmed reports than actual purchases by foreign investors. The possibilities for keeping the identity of these interests secret are many, however, and we have no way to be certain who is involved because no agency or organization has the responsibility to either record them or make them public.

The foreign investment problem may have less impact in Iowa than in most other states because we limit land purchases by foreign nonresidents. The Iowa Code prohibits nonresident aliens from acquiring and holding title to more than 640 acres outside cities and towns. A similar rule applies to corporations organized under the laws of a foreign country and to U.S. corporations where half or more of the stock is owned or controlled by nonresident aliens.

Nebraska’s law goes much further with an outright ban on foreign ownership of land. Ever since 1899, a Nebraska statute has prohibited aliens and corporations not incorporated under the laws of the state from acquiring permanent ownership of land. The initial enforcement responsibility in both states rests with the county attorneys.

The secrecy surrounding purchases by foreign investors follows the pattern most big companies follow when they buy land for agricultural or development purposes. This usually involves retaining a local real estate firm as a front and using options to assemble land in large tracts.

Investigations into this problem have consistently shown that it is most difficult to determine who owns the land in this country. I would like to call your attention to a study reported recently by the Center for Rural Affairs at Walthill, Neb., which points up this difficulty. It was an attempt to determine ownership patterns of large farm units in a 13-county area in northeast Nebraska.

In addition to showing a remarkable increase in corporate ownership of farmland during the past five years, the researchers found they had to search through thousands of documents in courthouses and local Department of Agriculture offices to compile this information. They also found that as many as 40% of these corporations were not entitled to do business in Nebraska, either as foreign or domestic corporations. Some had failed to file, and others had failed to keep current, the reports required by state law.

The study concluded that this information on land holdings is available only to the most diligent researcher who is willing to spend long hours in county court houses. Anyone trying to determine the holdings of a corporation would have to search through records in every courthouse in the state, they added, an inordinate amount of effort for basic information the public is entitled to.

The difficulty of obtaining basic ownership information is the same in most states. Even in Iowa, with our 640-acre limit on holdings and no reporting requirement, a foreign investor working with several real estate firms could quietly acquire up to 640 acres of farm land in each of several counties scattered across the state and run little risk that anyone would add it all up.

I feel rural people are entitled to know the identity of outsiders buying up land in their communities, whether it is for production or development or speculation. This information also is essential to officials at all levels who make land and agricultural policy. Since it is highly unlikely that foreign investors will make voluntary disclosures, I would like to recommend legislation that would subject them to a federal reporting requirement covering all types of agricultural investment. I would particularly urge such a requirement for reporting land acquisitions,

There is growing interest at the state level in a reporting requirement for corporations acquiring farmland. Foreign buyers, however, should be under a federal reporting procedure because of the difficulty states would have in assuring compliance.

The first state reporting law for corporations involved in agricultural production was enacted two years ago in Minnesota and is working well. Reports filed under this law documented corporate involvement in crop and livestock production and led the legislature to enact a law the following year sharply curtailing this activity. I am pleased to say that a similar reporting proposal is now before the Iowa Legislature.

In addition to setting up a reporting requirement, I would suggest that this committee request such federal agencies as Agriculture and Commerce to issue public reports on foreign investments in agricultural land and facilities.

Apparently some attempt is being made to compile some of this information. The Subcommittee on International Finance and Resources recently obtained a selected list of acquisitions by Japanese and European investors from Jack F. Bennett, Deputy Undersecretary of the Treasury. Included among the company listings was one for $84 million in real estate investments by the Kuwait Investment Co., a corporation based in oil-rich Kuwait.

Further, Mr. Chairman, foreign corporations should be prohibited from engaging in agricultural production in this country. We need this kind of ban on all corporations, foreign and domestic, to curb vertical integration and stop the trend toward monopolization of the food industry.

I believe this problem could be handled through enactment of the Family Farm Antitrust Act, which is pending in the House. It would not bar foreign ownership of land but it would prohibit most corporations from engaging in agricultural production.

Corporate involvement in agricultural production, both through vertical integration and factory-type operations, is a serious and growing problem. Although this trend has antitrust implications, neither Congress nor the Justice Department has shown much interest in either studying or stopping it. The growing involvement of well-financed foreign corporations in agriculture has the potential of making this situation even worse. I would urge this subcommittee to give this problem of reporting and disclosure its immediate attention so that any decisions made in the foreign investment area are based on the best information available.




January 29, 1974 Summary: Statement by organic consultant, Roger Blobaum, to the Subcommittee on Foreign Economic Policy of the House Committee on Foreign Affairs. Subject: foreign investments in land, grain terminals, packing plants, and other facilities in this country.