Foreign investors love to buy and invest their money in U.S. farmland. Today they own about 2% of all privately held agriculture land in the U.S. and 1% of the total United States’ land. In Missouri, foreign investors own just less than ½ of 1% of our state’s farmland. SB 9 was passed to address the increasing problem of foreign investors continuing to buy Missouri farmland and going around the existing statutes to do so.
In the 2013 Veto Session, the General Assembly overrode Governor Nixon’s veto of SB 9. This bill contained several important measures for Missouri agriculture, including a provision to limit foreign ownership to 1% of our state’s farmland. Before this legislation, Missouri statutes prohibited foreign ownership of farmland within the state. However, foreigners, as well as foreign investors, already owned thousands of acres here. Possibly some of this land was owned in violation of Missouri law, but most of the land owned by foreigners was due to the many exceptions that were made in the law. Furthermore, some of these acres were purchased before the 1978 law was passed.
Before SB 9 became law, the only means for determining foreign ownership was self-reporting by the foreign purchaser after the transaction was completed. In addition to the 1% provision, SB 9 created the first means to effectively implement the limitation of foreign ownership by requiring the approval of Missouri’s Department of Agriculture. Also, SB 9 made a major change in the ability to enforce the limitation on foreign ownership as a result of shifting from self-reporting by the purchaser to requiring the seller, the realtor, and banker, and the title company to report potential sales of farmland to a foreign buyer.
While all this was good, SB 9 had one major flaw—how to determine who was a foreign purchaser. Requiring prior approval by Missouri’s Department of Agriculture and requiring everyone involved in the sale’s transaction to report the sale was good. The weak point was buyer identification, and this created a major problem for all farm-related real estate transactions, including for Missouri citizens who were buying farmland and needing a loan to finance their purchase. Consequently, in 2014, the General Assembly passed legislation to fix the problem inadvertently created in the passage of SB 9.
The legislation to correct the problem was of the utmost importance to Missouri’s citizens who needed affordable bank financing to buy farmland. The method to repair the flaw is to use the IRS Form W-9, which was already used in many real estate transactions. An American citizen or a tax-paying entity, by signing a Form W-9 is declaring their status as a tax-payer, thus making that person or group eligible to purchase farmland. A foreign citizen who resides legally in the U.S., pays taxes here, and has received a taxpayer ID, can sign a Form W-9 and be eligible to purchase farmland under Missouri statutes.
In 2014 our fix for SB 9 was a part of two omnibus bills, HB 1326 and SB 506. These bills included the captive deer language and were ultimately vetoed by the governor because of that language. So, in 2015, we are back again trying to fix the original problem of SB 9. We have two mechanisms now to do so: SB 12 and HB 29. Both of these bills have been passed through the House and are now in the Senate, awaiting their approval. Again, these bills will provide the Missouri Department of Agriculture, as well as realtors, lenders, and title agencies the method and the guidelines to implement the current law. Actually, this will give a workable method of enforcing restrictions on foreign ownership of Missouri farmland. These bills are not about the cap on foreign ownership—that remains at 1%. Neither will they allow for the purchase of more farmland by foreigners. It is simply fixing the flaw in SB 9. This Session there have been two new bills filed that address the rollback of the 1% cap and seeks to reduce foreign ownership of Missouri farmland to ½ of 1%. They are now beginning to move through the legislative process.
Missourians have always been concerned about our farmland being purchased by outside entities, and rightly so. Within our state statutes and General Assembly, we are trying to address that problem in a fair and equitable manner.