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Farming in Illinois is as American as apple pie. Or, in some cases, apple strudel.

While the vast majority of acreage in the state is held by U.S. citizens, there is some foreign ownership. Just how much is a question for which there is no ready answer.

Farm real estate broker Wayne Keller of Sparta hasn’t dealt much with foreign buyers, but he has heard of some spreads owned by individuals as well as companies based outside the country.

“There are a few very large farms in Illinois owned by German companies,” Keller said. “One is probably a 10,000-acre farm. But it’s hard to find out anything about them because they go through a manager.”

Unlike some surrounding states, Illinois does not limit foreign ownership of farmland. Foreigners must register their purchases, however. That is similar to federal law.

Defining foreign ownership is a dicey proposition, according to Bruce Sherrick, a University of Illinois ag economist who specializes in farmland research. Deeds can be difficult to navigate.

“I don’t think there’s any clear way to know,” Sherrick said.

That’s partly because of economic vehicles such as investment funds, in which ownership can be diluted.

“Fund ownership has become much more prominent,” Sherrick said. “A foreign owner can buy shares of the fund, and it would never register as ownership. It’s a never-ending rabbit hole to try to trace ownership by type or entity or citizenship. You quickly discover, when you do that, that you open a can of can openers.”

Keller said the German fiberglass manufacturer Knauf owns farms in Illinois. Representatives of the company did not respond to requests for an interview.

Why would a German building materials company buy farmland in Illinois? Maybe for the same reason a computer manufacturing firm in Elgin might: It’s a sound investment.

“Farmland has a couple of characteristics that are important to appreciate in the context of other portfolio activities,” Sherrick said. “They include long duration and positive correlation with inflation and negative correlation with financials. If you put those together, that’s why it’s attractive.”

It’s difficult to find strong sentiments one way or another regarding foreign land ownership. There have been some concerns about Chinese land purchases that echo those about Chinese investments in other areas of the U.S. economy, including stocks and government bonds.

“I don’t think there has been a push (to restrict ownership). If anything, there might be a push in the other direction,” Sherrick said. “There isn’t a clean set of issues. There is not an obvious policy perspective that says more or less farm ownership by someone not of U.S. citizenship would be a good or bad thing.”

Neighboring Missouri recently shifted its stance on foreign ownership of farmland. A 2013 law passed by the Missouri General Assembly, over a veto by then-Gov. Jay Nixon, set a new limit on foreign ownership of 1 percent. For the decades leading up to that, state law prohibited all foreign ownership of farmland.

The state law prohibiting foreign ownership of farmland was passed in 1978, at a time when many other states were passing similar bans amid reports of foreign entities seeking to acquire productive American farmland.

Leslie Holloway, director of regulatory affairs for Missouri Farm Bureau, says her organization opposes foreign ownership of farmland.

“Because when you think about it as a limited resource, we hate to think about it as a foreign entity,” she says.

This legislative session, Rep. Tom Hurst, R-Meta, offered a bill, House Bill 149, that would prohibit any more foreign acquisitions of Missouri farmland.

“Any bill to fix it, you’re going to have to grandfather in existing (foreign-owned farmland),” Smith says. “This bill would say ‘no more.’”

Even with the 1 percent limit, Smith has concerns whether the law can be enforced. He says foreign buyers could set up a U.S. LLC, and it can be difficult to track or verify these purchases.

“I think the biggest concern is, can it be tracked?” he says. “If these purchases are being made and aren’t reported to the Department of Agriculture, can it be tracked?”

Smith says there are multiple reasons this issue matters for farmers.

“There’s only so much farmland in the U.S.,” he says. “It’s a food security issue. … It’s not anything against foreign countries. It’s foreign corporations. Our goal is to protect small, independent family farmers.”

To Sherrick, foreign ownership of farmland can be a muddled issue. Even if it were possible to identify foreign owners and their level of involvement, that may lead to a dead end.

“When asking questions like this, what would you do if you found the answer?” he said.

Additional reporting by Benjamin Herrold.


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