Stoel Rives Agribusiness Co-Leader Todd Friedman Comments on Foreign Land Ownership Regulation at Land Investment Expo

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PORTLAND, Ore.—Stoel Rives’ Agribusiness Industry Group Co-Chair Todd Friedman and Environment, Land Use & Natural Resources partner Elizabeth Ewens participated in panel discussions about land ownership issues and water rights at the Land Investment Expo January 9 in Des Moines, Iowa.

Friedman and Ewens led a morning breakout session titled Agribusiness Transactions: 2023 Review and 2024 Preview alongside Dave Muth from People’s Company Capital Markets. The group reviewed the busier-than-expected 2023 farmland deal environment, water rights issues and their expectations for transactions in the coming year.

The panel noted that 2023 saw more high-quality farmland coming to market than was anticipated, with buyers taking advantage of low interest rates in the first part of the year to purchase land in the corn belt, Plains and Midwest. Sales followed the momentum from 2022 carrying into the first half of the year, with a slowdown in the third and fourth quarters.

In 2024, the panel expects farmland as an asset class to remain an attractive investment option, especially if interest rates remain stable, and the stock market continues to grow. Rising operational costs, such as the cost of labor, and access to water are likely to impact agriculture operating costs and land transactions.

Ewens discussed the importance of secure water rights in a transaction, as it becomes an increasingly valuable asset. Negotiations require more due diligence and chain of title record verification to confirm the scope and security of water rights, especially as investors move to purchase land for the purpose of acquiring water. She noted that in the coming years, she expects increases in regulation and litigation related to water rights, as well as cooperation between landowners and those with access to water to maximize resources.

Friedman also participated in a keynote panel titled Foreign Land Ownership - Going Deep on Foreign Land Ownership Policy and Implications on U.S. Agriculture with Harrison Pittman, director of the National Agricultural Law Center, Micah Brown, National Agricultural Law Center staff attorney and David Bergvall, director of policy and environment at Manulife Investment Management.

The panelists examined the growing trend of foreign investment in U.S. farmland and timberlands, and uncertainty for the future resulting from actions by several states to restrict such investment. Panelists discussed reporting requirements under the Agricultural Foreign Investment Disclosure Act, which requires foreign investors who acquire, transfer, or hold an interest in U.S. agricultural land to report such holdings and transactions to the Secretary of Agriculture. Friedman noted the importance of understanding the reporting requirements and interpreting them liberally where uncertainty exists, and contrasted foreign ownership restrictions, where uncertainty and severe penalties result in the chilling of foreign investment, even if permissible as a technical matter. Various states have already, or will soon, enact laws that restrict foreign ownership in agricultural land, or enhance reporting requirements. When looking to the future, panelists agreed that federal preemption to provide a federal framework would be an ideal solution to address the issue.

Key Contributors

Todd L. Friedman
Elizabeth P. Ewens
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