Committee passes Noem bill proposing a board to vet foreign ag land purchases

In a 7-0 vote Tuesday, the state Senate Agriculture and Natural Resources Committee passed a bill that would establish a vetting process for foreign purchases of agricultural land in South Dakota.

The bill would create a board to investigate proposed purchases of ag land by foreign interests, and to make recommendations of approval or denial.

Governor Kristi Noem announced the bill in December, receiving national attention for doing so. 

“With this new process, we will be able to prevent nations who hate us – like Communist China – from buying up our state’s agriculture land,” Noem said in a news release at the time.

The board would be called the Committee on Foreign Investment in the United States – South Dakota.

Bill would require companies to disclose ag land and foreign owners

The bill has gained support from some farmers who worry that foreign investors could drive up land prices and make it more difficult for young farmers and ranchers to enter the industry.

And the bill is necessary to protect the state’s agricultural industry and prevent foreign investors from buying up land without proper scrutiny, according to the secretary of the state Department of Agriculture and Natural Resources, Hunter Roberts.

“Food security is national security,” Roberts said during the committee hearing at the Capitol in Pierre.

The board’s jurisdiction would cover transactions of any number of acres involving any foreign person, foreign government, foreign business, or any organization controlled by a foreign person, government or business.

Opposition to the bill came from many state agriculture associations, including the South Dakota Farm Bureau, Farmers Union, Stockgrowers Association, Dairy Producers, Wheat Growers, and the Pork, Soybean, Corn and Cattlemen’s associations. Some took issue with provisions in the bill that would give the governor the final say over the board’s recommendations. 

“Putting this decision in the hands of one individual, whoever that individual is, that doesn’t further democracy,” said Jeremiah Murphy, a South Dakota Stockgrowers Association lobbyist. 

Other opponents of the bill, like South Dakota Bankers, said it could discourage foreign investment in the state, hurt trade relations, and send a negative message to potential investors. Opponents also argued the issue is best addressed at the federal level. 

The bill requires foreigners to apply to the committee before buying ag land. But the bill also puts the final onus of identifying foreign purchasers of ag land onto county registers of deeds. The bill would prohibit registers of deeds from accepting deeds for agricultural land if the transaction is subject to the proposed committee’s jurisdiction and lacks an approval letter.

Stanley County Register of Deeds Patricia Duffy testified against the bill.

“We would have no way of knowing if a deed would be subject to the committee,” Duffy said. “Bottom line is we are concerned we will be asked to do something that is not possible for us to do.”

The bill’s proponents disagreed that the bill’s aims are better left to the feds.

“This is an issue that we cannot leave in the hands of the federal government,” said prime sponsor Sen. Erin Tobin, R-Winner. “We owe it to our future.”

Similar efforts are already underway in other states such as Missouri, where legislators have filed several bills that would restrict foreign ownership of agricultural land.

The South Dakota bill still has to go through several stages of review before it can become law. It will need to pass the full Senate, the House of Representatives, and be signed by the governor before it can take effect.

Related bill and law

A related bill requiring companies to disclose whether they already own agricultural land and have any foreign owners unanimously passed the full House of Representatives on Monday and will next be considered by a Senate committee.

Under that legislation, when corporations file already mandated annual reports with the state, they would have to disclose whether they own any agricultural land and whether they have any foreign owners. The bill would not require those owners to say what country they’re from.

There’s already a law in South Dakota from 1979 that was designed to prevent some foreign individuals and governments from owning more than 160 acres of farmland. Despite that law, records in 2016 published by the Midwest Center for Investigative Reporting showed multiple examples of foreigners owning more than 160 acres in South Dakota. The 1979 law did not come up during Tuesday’s hearing.

According to 2020 data from the U.S. Department of Agriculture, foreign residents or entities now own over 350,000 acres of ag land in South Dakota — that’s only about 1% of all South Dakota agricultural land, but a greater than 3,000% increase from 1979. The largest foreign owners of South Dakota farmland are from Canada and Europe.

Noem’s push to stop some purchases of ag land by foreign entities is part of a broader effort to counter the influence of some foreign countries. She has already banned the Chinese-owned application TikTok from state devices and has undertaken other anti-China measures. On Wednesday, she will deliver a speech to the America First Policy Institute in Washington, D.C., that a news release said will “outline the blueprint for a state response to the threat posed by the Chinese Communist Party.”