On October 14, 1978, Congress passed the Agricultural Foreign Investment Disclosure Act, to require reports by foreign persons of their holdings in agricultural property. The Act directs the Secretary of Agriculture to compile data from these reports, and to analyze the effect of foreign investment upon the agricultural economy. In its 1976 survey of foreign direct investment in the United States, the Department of Commerce found that, although sufficient data existed in most areas of the economy to support an assessment of the effect of foreign direct investment, data on foreign ownership of real estate was insufficient. This was attributed primarily to the anonymity of most real estate transactions, and to the limitations of existing recordation and land data systems. Based on limited data, the survey estimated that foreign persons owned 4.9 million acres of real estate in the United States, of which 22 percent, or approximately one million acres, was agricultural property. These foreign holdings amounted to 0.1 percent of the 1.1 billion acres of United States farmland.
The Act is one of several responses by Congress to economic conditions in the agricultural sector which are said to threaten the existence of the "family farm," usually defined to include small, owner-operated farms. Congress saw foreign investment in agricultural property as contributing to these problems primarily through rising land prices and absentee ownership of farms. Although the Act may help fill a significant gap in information on foreign investment in agricultural property, it is not clear that it will contribute substantially to solving the current economic problems of small farmers. The information available to Congress suggests that these problems are caused largely by increases in operating costs relative to production prices, the superior economic position of larger farm units," and governmental policies which favor the development of larger farms." The Act also raises the potential for conflict with other countries. Even though it does not impose restrictions upon the right of foreign persons to own real estate, foreign nations may see the Act as a signal that the United States is critically examining its longstanding "open door" policy toward foreign investment," or even as the beginnings of a reversal of that policy. Finally, the Act raises problems of United States jurisdiction to require disclosure by foreign corporations operating in the United States through subsidiaries, as well as potential conflict with foreign secrecy laws. This note will examine the background and operation of the Act in light of these issues, and will address potential conflicts of the Act with state disclosure laws and United States treaty obligations.
Edward C. Brewer, III,
Disclosure of Foreign Direct Investment in United States Agricultural Property,
12 Vanderbilt Law Review
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