By Erin Renshaw, Rabail Chandio, and Kristine Tidgren
Iowa Governor Kim Reynolds signed the latest foreign agricultural land ownership law on April 9, 2024. This new legislation enhances reporting requirements, increases fines for noncompliance, and strengthens enforcement of Iowa's laws restricting foreign ownership of agricultural land. Among the strictest in the nation, Iowa's restrictions on foreign ownership predate its 1975 restrictions on corporate farming. This article provides a brief overview of both corporate and foreign ownership regulations in Iowa.
Corporate farmland ownership
Institutional and corporate ownership of land in Iowa has increased from 17% of Iowa farmland acres in 2002 to about 40% of farmland acres in 2022 (see table 1), with both local and institutional investors explaining about one-quarter of Iowa’s recent land purchases (Chandio 2023). The investor and institutional ownership of farmland in Iowa, nevertheless, operates with a lot of restrictions.
| 2002 | 2007 | 2012 | 2017 | 2022 | |
|---|---|---|---|---|---|
| Sole owner | 28% | 29% | 25% | 22% | 23% |
| Joint tenancy | 37% | 35% | 32% | 28% | 29% |
| Tenancy in common | 12% | 10% | 8% | 8% | 5% |
| Partnership | 2% | 3% | 3% | 3% | 2% |
| Estates | 4% | 3% | 3% | 4% | 2% |
| Trusts | 8% | 10% | 17% | 20% | 23% |
| Corporations | 7% | 9% | 7% | 10% | 6% |
| LLC | 1% | 1% | 5% | 5% | 9% |
| Government/institution | 1% | 1% | <1% | - | <1% |
Iowa enacted its first regulation of corporate farming in 1975, following a number of other Midwestern states, specifically Minnesota, that banned corporate ownership of farmland or use of farmland for agricultural purposes by corporate entities (Knoeber 1997). The objective of these laws was to prevent monopolistic practices that could harm family farmers in Iowa. These laws prohibited vertical integration, where a company controls both production and processing. In 2003, Smithfield Foods challenged this law, leading to a consent decree under which the Iowa Attorney General agreed not to enforce the law against processors for 10 years. The decree expired in 2015, but Iowa has taken no further action (Tidgren 2015).
Today, Iowa maintains some of the strictest corporate ownership restrictions in the country, detailed in Iowa Code 9H.4–9H.5. These laws outline the restrictions and requirements for corporate entities, such as corporations, LLCs, trusts, and certain partnerships, which the laws generally restrict from owning agricultural land, with several exceptions. Family-owned corporations, LLCs, and trusts can own farmland if over 60% of their gross income over the past three years is farm-related, explaining most of the institutionally owned Iowa farmland. Another exemption is given to authorized corporations, LLCs, and trusts with less than 25 beneficiaries who can operate agricultural land for profit, although with other regulations. These laws generally prevent corporations, LLCs, or trusts from acquiring or leasing land “suitable for use in farming in Iowa.” Exceptions to this law allow corporations or other entities to take a security interest in agricultural land, conduct various research and experimental activities on agricultural land, or acquire agricultural land for non-farming purposes. "Family" entities are not subject to these restrictions, and certain "authorized" entities may own or lease up to 1,500 acres of agricultural land (Tidgren 2015).
Foreign farmland ownership
Iowa Code 9I restricts foreign governments and investors from owning land in Iowa, with exceptions for those who owned land before 1980, those inheriting the land, those using the land for research purposes, and those purchasing up to 320 acres of agricultural land for non-farming purposes. These purchasers must convert that land to a non-farming purpose within five years. These examples do not present all the exceptions, only a major few. The first federal law regarding foreign-owned land, enacted in 1978, was the Agricultural Foreign Investment Disclosure Act (AFIDA). This law requires foreign entities to report their land ownership and practices to the federal government annually, allowing the public to access this information by county.
In February 2024, Iowa Governor Kim Reynolds signed into law a bill updating the reporting requirements for foreign land ownership. The new law requires foreign purchasers of agricultural land to register with the secretary of state’s office, in addition to continuing to file biennial reports. The registration must include the identity of the owners, the purpose for which the land will be used, the authority under which they are purchasing the property, and all other interests they hold in agricultural land totaling 250 acres or more. Those currently owning agricultural land have 180 days to register. Registration reports and biennial reports are confidential and not available to the public. The attorney general, the governor, and the general assembly may, however, access them for public policy purposes.
The law requires the secretary of state to create an annual summary of registrations and biennial reports. It also gives Iowa’s attorney general the right to subpoena records and require compliance with law. Finally, the law enhances penalties associated with violations. The civil penalty for failing to file a timely registration increased to an amount not more than 25% of the county’s assessed value of the subject agricultural land for the previous year for “each offense.” Additionally, the civil penalty for failing to file a timely biennial report or filing false information in such a report increased to an amount of not more than $10,000.
Trends in foreign farmland ownership
Foreign land ownership in Iowa increased significantly starting in the late 2000s, with foreign-owned agricultural land rising from 29,609 acres in 2005 to 170,852 acres in 2010. This corresponds to increased interest in farmland as a portfolio investment, especially after the financial crisis (Choi 2023; Baker, Boehlje, and Langemeier 2014; Fairbairn 2014; Kuethe, Walsh, and Ifft 2013). To put this in perspective, these acres represent 0.09% and 0.57%, respectively, of total Iowa farmland acres according to the census of agriculture (see figure 1).
Note: The total acres represented here include crop, pasture, forest, and other agricultural, as well as non-agricultural use.
Source: Authors’ compilation based on USDA FSA AFIDA annual reports (USDA FSA 2024). State-level total agricultural acres are based on 2002, 2007, 2012, and 2017 US Censuses of Agriculture (USDA NASS 2024).
Another surge in foreign interest in Iowa farmland occurred after 2015, corresponding to declining Iowa farmland values and low interest rates, which presented promising investment opportunities that attracted both foreign and local buyers. Between 2015 and 2021, foreign acres owned or leased in Iowa almost doubled again (figure 1) from 248,647 acres in 2015 to 512,384. Most of the over 500,000 acres with foreign interest in 2021 represent long-term leaseholds especially by energy companies.
Figure 2 shows the top 10 countries that owned or leased Iowa farmland in 2010 and over a decade later in 2021. Currently, Canada is the largest foreign holder of Iowa farmland, owning 0.63% or 192,968 acres. Canada is also the largest landholder of all US agricultural land, claiming 32% of the total land base with foreign interest in the United States (Taylor, Zhang, and Attah 2023). While the top 10 foreign holders of Iowa farmland remained quite similar from 2010 to 2021, Cook Islands and Denmark have been the two new additions to the top 10 within this period.
Note: The top panel ranges to about 65,000 acres of land, while the bottom panel goes to 200,000 acres
Source: Authors’ compilation based on USDA FSA AFIDA annual reports (USDA FSA 2024). State-level total agricultural acres are based on 2002, 2007, 2012, and 2017 US Censuses of Agriculture (USDA NASS 2024).
Conclusion
The topic of land ownership, especially by corporations and foreign entities, has garnered a lot of attention recently, with specific concerns about land ownership by US adversaries. It is important to note that, first, the total amount of Iowa land owned and leased by foreign entities is quite small, making up less than 2% of Iowa farmland. Second, most of that interest comes from wind and solar energy companies, similar to the nationwide trend (Taylor, Zhang, and Attah 2023).
References
Baker, T.G., M.D. Boehlje, and M.R. Langemeier. 2014. “Farmland: Is it Currently Priced as an Attractive Investment?” American Journal of Agricultural Economics 96(5):1321-1333. doi: 10.1093/ajae/aau037.
Chandio, R. 2023. “2023 Iowa State University Land Value Survey: Overview.” Working paper 23-WP 655. Center for Agricultural and Rural Development, Iowa State University. https://www.card.iastate.edu/farmland/isu-survey/2023/2023-ISU-Land-Value-Survey-Overview.pdf.
Choi, J. 2023. “Farmland Market Dynamics and Landowners’ Valuation: Evidence from the Global Financial Crisis.” Working paper, The Ohio State University. https://drive.google.com/file/d/1vIG6wzNylWKMPjyOrXc05BPpOf86YHd9/view.
Fairbairn, M. “‘Like Gold with Yield’: Evolving Intersections between Farmland and Finance.” The Journal of Peasant Studies 41(5):777-795. doi: 10.1080/03066150.2013.873977.
Knoeber, C.R. 1997. “Explaining State Bans on Corporate Farming.” Economic Inquiry 35(1):151-166. http://search.ebscohost.com/login.aspx?direct=true&AuthType=ip,shib&db=ecn&AN=0412515&site=ehost-live.
Kuethe, T.H., N. Walsh, and J. Ifft. 2013. “Farmland versus Alternative Investments before and after the 2008 Financial Crisis.” Journal of AFSMRA 2013. https://www.jstor.org/stable/jasfmra.2013.120.
State of Iowa. 2024. “Governor Reynolds Signs Foreign Ownership of Land Bill into Law.” Press release April 9 2024. https://governor.iowa.gov/press-release/2024-04-09/gov-reynolds-signs-foreign-ownership-land-bill-law. Accessed 1 May 2024.
Taylor, M., W. Zhang, and F. Attah. 2023. “Foreign Interests in U.S. Agricultural Lands: The Missing Conversations about Leasing.” Choices 38(4). https://www.choicesmagazine.org/choices-magazine/submitted-articles/foreign-interests-in-us-agricultural-lands-the-missing-conversations-about-leasing.
Tidgren, K.A. 2015. “Iowa's Anti-Corporate Farming Laws: A General Overview.” Center for Agricultural Law and Taxation, Iowa State University. https://www.calt.iastate.edu/article/iowas-anti-corporate-farming-laws-general-overview. Accessed 30 April 2024.
Tong, J., and W. Zhang, 2023. "Iowa Farmland Ownership and Tenure Survey 1982–2022: A Forty-Year Perspective." Working paper 23-WP 651. Center for Agricultural and Rural Development, Iowa State University. https://www.card.iastate.edu/farmland/ownership/farmland-ownership-tenure-2022.pdf.
US Department of Agriculture Farm Service Agency (USDA FSA). 2024. “Annual Reports: Foreign Holdings of US Agricultural Land.” USDA Farm Service Agency, Washington, DC. https://www.fsa.usda.gov/programs-and-services/economic-and-policy-analysis/afida/annual-reports/index. Accessed 22 April 2024.
US Department of Agriculture National Agricultural Statistics Service (USDA NASS). 2024. Census of Agriculture. USDA National Agricultural Statistics Service, Washington, DC. https://www.nass.usda.gov/AgCensus/.
Suggested citation
Renshaw, E., R. Chandio, and K. Tidgren. 2024. “Corporate and Foreign Land Ownership in Iowa.” Agricultural Policy Review, Spring 2024. Center for Agricultural and Rural Development, Iowa State University. https://agpolicyreview.card.iastate.edu/corporate-and-foreign-land-ownership-in-iowa.