Noem's foreign ag bill moves forward, despite near-unanimous opposition from South Dakota ag groups

PIERRE ― Senate Bill 185, a piece of legislation proposed by Gov. Kristi Noem that would restrict foreign ag purchases, saw almost unilateral disproval from South Dakota's major agricultural groups.

Representatives of the state's corn, soybean, pork, stock growers, cattlemen, dairy, farming and conservation groups and local farmers all testified in opposition of the bill Tuesday. Other groups, including banking institutions and economic groups also urged legislators to vote "no" on the bill.

After more than an hour of proponent and opponent testimony, the Senate Agriculture and Natural Resources Committee passed an amended version of the bill on a 7-0 vote.

State ag groups present united front against foreign ag legislation

Scott VanderWal, president of South Dakota Farm Bureau and a Volga farmer, told the committee he doesn't "disagree with the intent" of the bill. However, he expressed concerns with certain mechanics of the bill, including giving ultimate authority on transactions to the governor.

"This grants unilateral authority to one person, something that Farm Bureau, regardless of the issue, is deeply concerned about," VanderWal said. "We don't know who future governors will be nor what their philosophies will be."

The bill also increases the state's three-year timeframe to review farmland transactions for violations up to 20 years. Violating parties would be forced to forfeit their land, which VanderWal said could "lead to major and messy lawsuits."

South Dakota Farmers Union, represented by lobbyist Mitch Richter, also joined their Farm Bureau counterpart to oppose the legislation.

Richter said foreign entities could easily circumvent the legislation if so desired by purchasing any other developmental property not considered ag land. He also contended a farmer should be able to sell or rent out his ag lands no matter who is buying or where it's located.

"My family has about 300 acres of ground, and every other month, we get an offer for that ground from land investment companies that from all over the country, and we don't know who they're financed by. We don't know who they are," Richter said. "We rent it to local producers for hay ground, but … I don't think I should be impeded from selling that if I want to just because it's close to Ellsworth."

The Farmers Union lobbyist also said the issue is best left in the hands of federal government. He pointed to the PASS Act, a piece of federal legislation introduced by Sen. Mike Rounds and sponsored by Rep. Dusty Johnson, as legislation that would be more effective than what a state-run board might achieve.

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Jim Ketelhut, a farmer from Pukwana, represented South Dakota Corn Growers Association as a party concerned the proposed legislation would hamstring the industry, whether that's by creating a "patchwork" of state laws or turning away countries that farmers normally engage in business.

He also suggested the bill would limit healthy competition in the industry.

"Given the chance, U.S. farmers, including South Dakotans, can and will compete with our counterparts around the world," Ketelhut said.

South Dakota Wheat vice president Doug Simons joined the forum to say the bill leaves too many questions unanswered, including what the long-term implications of the bill would be and how it could affect the research and development sector.

"We're in a world market... I just don't know how we can get around some of this stuff," Simons said. "I do agree with the standpoint of needing to have some oversight on foreign ownership of farmland, but this particular bill I don't feel is the proper tool to do that."

This concern was echoed by Kathy Zander, executive director and lobbyist for the South Dakota Agri-Business Association. She said the organization would be forced to acquire exemptions for foreign-owned member companies who lease land for R&D, but the current bill does not specifically make this allowance.

Proponents relate the gravity of the times

Republican Sen. Erin Tobin, prime sponsor of the bill, as well as Department of Agriculture and Natural Resources Secretary Hunter Roberts and other state government representatives spoke in support of the bill.

Tobin said agriculture is the backbone of the state, and added the bill "proactively protects" future generations of South Dakota farmers from losing ag land to China and other countries.

"Throughout history, wars have been fought and lives lost over the control of land and resources. Each year our land becomes more valuable," Tobin said. "This is a national security issue and food security issue."

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Alan Vester, Deputy General Counsel and a member of Noem's staff, also appeared before the committee to speak in support of the bill. He pointed to the national security concern posed by the purchase of ag land near Grand Forks Air Force Base by Fufeng Group, a Chinese business, as a failing of the federal Committee on Foreign Investment in the United States. CFIUS-SD, the board created by SB 185, would function independently.

Noem's staff member related his argument to South Dakota's own major military installation, Ellsworth Air Force Base in Box Elder, which was named as the home of the new B-21 Raider, a next generation long-range bomber.

"The [Chinese Communist Party] wants intelligence on the B-21 bomber. The easiest way to do this would be to purchase land near Ellsworth Air Force Base and conduct surveillance activities and operations there," Vester told the committee. "CFIUS-SD would provide South Dakota with the ability to protect Ellsworth and ensure the safety and security of future generations of South Dakotans."

Major General Jeff Marlette, South Dakota's general, also addressed the committee to relate the issue from an international standpoint. He said foreign influence in the state's agriculture industry creates another "lever" for other "adversarial" countries, specifically China, to leverage against the nation as a whole.

According to U.S. Department of Agriculture's latest Foreign Holdings of U.S. Agricultural Land report, China owns 383,935 acres of farmland, which is slightly less than 1% of all foreign-held acres.

The general, speaking in his own personal capacity, suggested China is playing a "very long, long game" to garner this influence.

"They don't have to fire a shot to create the influence that they're creating around the world," Marlette said.

Why did the Senate committee pass SB 185?

The Senate committee members who spoke Tuesday measured the importance of continuing the foreign ag policy discussion in their statements.

Tobin related the message that, at the end of the day, the legislation is intended to serve the state's agricultural organizations and the consumers at the end of the industry's supply chain.

"We owe it to them to dig through this and figure it out. We owe it to our future," Tobin said in closing remarks. "I think we can move this bill forward, continue to have the discussion, and I feel like we can come to a place where we can all agree, because this issue is too important to ignore."

Other committee members, like Democrat Sen. Liz Larson, found themselves on the fence. She told her fellow chairs the current review process for ag land transactions under CFIUS currently functions in a more neutral manner.

"I like the language that is used on the CFIUS website … which does not target any country or political party or entity specifically. It's just a review process," Larson said. "But I do think this is a really important issue that we need to not shove under the rug."

It's the fallout of enacting such large legislation that concerns Republican Sen. Randy Deibert, who serves district 31. He expressed worry the complicated nature of land transactions and the potential influx of canceled leases or documents would overwhelm Register of Deeds offices.

That same issue, Deibert said, could also extend to the CFIUS-SD board members, who he doubted "would work for free if this becomes overwhelming to their time."

Deibert remained hesistant to support the legislation, saying "maybe 35 people should be weighing in rather than seven."

"I don't have a problem moving this to the floor. It just needs a lot of work before I'll support it," Deibert said.

The meeting was not devoid of optimism by the board, however.

Republican Sen. Joshua Klumb was one member who supported the legislation, though he noted he felt odd to take a stance against some groups of which he holds membership. He maintained his colleagues and the ag groups that spoke must "come to the table," even if it means meeting over "a case of beer," he mused.

The positive streak continued with Republican Sen. Al Novstrup, who said the bill may be flawed but advocated for keeping the bill alive to refine it at a later date, which was a sentiment Larson also expressed.

House Bill 1189, a similar piece of legislation that would require entities to disclose whether they have any foreign beneficial ownership to the Secretary of State, passed the South Dakota House on a unanimous 67-0 vote on Monday.

Dominik Dausch is the agriculture and environment reporter for the Argus Leader and editor of Farm Forum. Follow him on Twitter and Facebook @DomDNP and send news tips to ddausch@gannett.com.

This article originally appeared on Sioux Falls Argus Leader: Noem's foreign ag bill moves forward without support from most SD ag groups