Upper Peninsula Forestland in High Demand among Foreign Landowners
The Buying Spree Intensifies
In recent times, Michigan’s farmlands have become increasingly popular among foreign entities. According to federal data, there was a noteworthy increase in foreign ownership, jumping from 5.6% to 8.6% of Michigan’s total agricultural area within two years. This significant increase places Michigan amongst the top states in America experiencing foreign farmland ownership. The largest ratio of this foreign-held acreage is found in the Upper Peninsula forestland. The figure remained steady for a decade, but over 460,000 acres were purchased in 2022.
However, despite the wave of foreign purchases raising national security concerns, the overall percentage of foreign investments remains quite low. “The biggest misconception is how much they truly own. There’s significantly less foreign ownership than most people assume,” advised Bill Knudson, an economist from Michigan State University.
Changes Across The Region
According to the U.S. Department of Agriculture, foreign investors— those not citizens, not legal immigrants or U.S. entities with substantial foreign interest— have to report their land purchases annually. In the year 2022, a hefty portion of the overall increase was due to significant purchases of forestland in Alabama and Michigan, and a substantial acquisition of croplands and pastures in Colorado. In Michigan, about 92% of foreign-owned acres are accounted for in the Upper Peninsula. Yet, this still constitutes only a fraction (8%) of Michigan’s total agricultural land.
Remarkably, in Keweenaw County, the Canadian ownership is nil; instead, Dutch entities own 120,000 acres and “all others” own over 250,000 acres. However, tracing the ownership can prove to be quite complex; hence, keep in mind that “You don’t precisely know who owns what in the United States or overseas – tracking that information can be rather hard”, explains Knudson.
The Current Scenario
Among recent acquisitions, timber investment firms appear to own the most foreign-held land in the Keweenaw. GMO Threshold Timber Michigan, a firm with Dutch connections, and the Lake Superior Land Co., associated with the U.S. Virgin Islands, are among the primary entities. However, finding details about the most recent sales remains challenging.
The U.S. Government Accountability Office has recommended that to better assess potential national security risks from foreign farmland ownership, the USDA should provide more recent and detailed data.
The Role of Renewable Energy
In recent years, foreign land acquisitions have been increasingly driven by renewable energy production. For instance, 25% of the entities reported to the USDA have the term “wind” in their titles. Interestingly, the top foreign landowners in Shiawassee County are wind farm companies.
As per the Cornell University researchers, most of the land leased by foreign entities is used for establishing wind and solar farms, while the land under “whole ownership” is typically used for wood and timber production.
Why the increase in foreign purchases?
The reason behind the surge is rather straightforward: purchasing American farmland is a lucrative investment. Over the years, farmland real estate values have seen quite a rise, having recently increased by 7.4% from 2022 to 2023 alone. Foreign investors often pay a premium price. In fact, studies have found that foreign buyers pay almost 14% more for Midwest agricultural land than domestic investors.
As expert economist Bill Knudson pointed out, “If you’re a landowner contemplating selling your land, you would naturally want as many potential buyers as possible.”
