'I
4~dL

Circular 306 May 1991 Alabama Agricultural Experiment Station Auburn University Lowell T. Frobish, Director Auihtirn Universitv Alahama

CONTENTS
INTRODUCTION........................................................... REVIEW OF LITERATURE ............................................... DESCRIPTION OFSTUDY................................................

Page 3 4 7

Objectives......0....... ... 0....0................................... 7 Methods ............................................................. 7 Definitions 'of Key Terms....................................... 8 RESULTS ................................................... .............. 9 SUMMARY AND IMPLICATIONS......................................... 19 REFERENCES ............................................................ 21
FIRST PRINTING 4M, MAY 1991

Information contained herein is available to all persons without regard to race, color, sex, or national origin.

FOREIGN OWNERSHIP OF AND INTEREST IN ALABAMA'S

AGRICULTURAL LAND
John L. Adrian, Noel A.D. Thompson, and Anne M. Mims 1 INTRODUCTION

DURING

the past two decades, there has been much concern regarding foreign ownership of U.S. agricultural land. By the mid-1970's, this topic had become a major political issue in many states. So deep was the concern that Congress passed the Agricultural Foreign Investment Disclosure Act (AFIDA) in 1978. According to the Act, all foreign persons holding agricultural land as of February 1, 1979, were required to file a report of such holdings with the Secretary of Agriculture. AFIDA also stipulated that any foreign person acquiring or disposing of agricultural land or holding land which subsequently becomes agricultural land must file a report within 90 days of such activity. Further, any foreign person holding agricultural land who subsequently becomes or ceases to be so classified must file a report in a similar time frame. Included in the filed report are the following: legal name and address of the foreign person, country of citizenship, and nature of the legal entity; type of ownership interest; legal description of property; acreage; name and address of the purchaser, if available; intended use of the agricultural land; and the purchase price or other consideration which was exchanged (5). AFIDA and the subsequently filed reports have provided a data base from which the nature and extent of foreign activity with agricultural land in the United States can be monitored. This analysis is based on reports filed for Alabama during the period Frqryy 2, 1979, through January 1, 1989. Emphasis is givef-o ahai ng changes in levels of ownership of and interests in Alabama's agricultural land at the State and county levels.
'Respectively, Professor of Agricultural Economics and Rural Sociology, Extension Data Analyst, and Microcomputer Specialist.

REVIEW OF LITERATURE Passage of AFIDA and the subsequent collection of data documenting foreign ownership of agricultural land has resulted in numerous analyses of the nature, extent, and impact of foreign involvement in land markets. This section highlights results of some of the studies analyzing the subject and shows the need for continued monitoring of such data. DeBraal (4) reported that foreign persons owned 12.9 million acres, or slightly less than 10 percent, of privately owned U.S. agricultural land (farmland and forestland) as of December 31, 1989. This figure was 263,723 acres (about 2 percent) larger than the total at the end of 1988. He also reported the following characteristics of foreign activity in the United States. -The foreign-owned acreage was allocated to forestry (46 percent), cropland (18 percent), pasture and other agricultural land (31 percent), and nonagricultural uses (5 percent). -Corporations owned 81 percent of the holdings acreage; partnerships, 10 percent; and individuals, 7 percent. The remaining 2 percent was held by estates, trusts, associations, institutions, and others. -Foreign persons from the United Kingdom, Canada, France, West Germany, the Netherlands Antilles, the Netherlands, and Switzerland accounted for 73 percent of the foreign-held acreage. Foreign persons from Japan owned only 2 percent of the foreign-owned acres. -The largest number of acres owned by foreign persons was reported in Maine, accounting for 16 percent of the nation's reported foreign activity. Foreign holdings in Maine accounted for 11 percent of Maine's privately owned agricultural land. Excluding Maine, foreign activity was concentrated in the South and West, each with 35 percent of the holdings.

-Foreigners

did not appear to be taking purchased agricultural land out of production. No change in intended use at the time of filing was reported for 93 percent of the acre[41

age. Further, no change in tenure was reported for 45 percent of the acreage, while some change was reported for 26 percent of the total. In the South in 1989, foreign agricultural landholdings as a portion of private land by state ranged from a low of 0.1 percent in Oklahoma to highs of 2.1 percent in Florida and 2.6 percent in Louisiana (1). Several states had levels of activity involving about 1.0 percent of the private land: Alabama (1.0 percent), Tennessee (0.7 percent), and Texas (0.7 percent). Most foreign activity in the region involved organizations, primarily corporations. Individual owners were most prevalent in Arkansas, Texas, and Virginia, accounting for 23, 16, and 22 percent of the foreign activity, respectively. Forestry was the dominant use in Alabama (94 percent), Georgia (68 percent), Kentucky (42 percent), Louisiana (73 percent), Mississippi (71 percent), North Carolina (45 percent), South Carolina (74 percent), Tennessee (76 percent), Virginia (39 percent), and West Virginia (84 percent). Cropland uses were primary in Arkansas (81 percent) and Florida (38 percent), while pasture uses were dominant in Oklahoma (66 percent) and Texas (55 percent). In Alabama for the period through December 3, 1982, Adrian and Dunkelberger (2) observed that foreign interests in farmland involved less than 1 percent of the privately held and even less of the total land area. Additionally, while these portions were small, concerns relative to traditional agriculture in the State were lessened because most foreign interests were devoted to timber production which was concentrated in the southwestern section of the State where production agriculture was less important. Adrian et al. (3) in evaluating AFIDA reports through December 31, 1984, concluded that there was no immediate need to enact State legislation to deal with the intrusion of foreign entities into agricultural land markets in Alabama, and that much of the so-called foreign activity in the agricultural land markets was by firms which had traditionally operated in Alabama. Ownership accounted for 68 percent of the total interests, and slightly over two-thirds of the acreage was devoted to timberland and forestland usage. Eichler et al. (5) observed that the impact of foreign ownership of real estate on land prices, tenure, land use, and communities would be similar to that of other absentee
[5]

owners with the exception being potential tax advantages which could result in higher net returns being capitalized into the price of land held by foreigners. However, they state that these tax advantages were narrowed by taxes in other countries. The researchers also observed that entry into the land market by foreign investors, like that of any other investors, was expected to move land prices upward, but that the expected effect on land use would be neutral. Jansma et al. (7) concluded that in comparison with the total market, the foreign investment component was so small that the overall impact of foreign investment on prices paid for farmland by domestic farmers was minimal. Healy and Short (6) observed that for several years, newspaper accounts had described increased participation by foreign nationals in individual local markets for rural land. They pointed to stories of purchases of land in northeastern Vermont by Venezuelans, a South Carolina island by Kuwaitis, Iowa farmland by West Germans, and farmland in North Carolina by the Italians and Japanese as examples of this trend. The primary reason given by the authors for foreign purchases of rural land was that foreigners were intrigued by the possibilities of participating in a booming American land market while simultaneously sheltering their capital from the possibility of expropriation by anticipated socialist governments in their own nations. Kitchen and DeBraal (8) found that foreign acquisitions were negatively related to the exchange value of the dollar and the U.S. real interest rate and positively related to U.S. cropland returns. The interpretation regarding the exchange rate effect was that the foreign currency cost of U.S. agricultural land decreases as the exchange value of the dollar falls. Additionally, the opportunity cost of holding land also increases as the exchange value of the dollar rises. Timmons (12) gave the following motives for foreign investment in the United States: a hedge against inflation, safety of investments, capital appreciation, income flows, tax advantages, U.S. dollar versus other currencies, access to resources and technology, access to internal markets for products, balancing investment portfolios, capital and personal havens, intangible benefits, and control factors. Laband (9) observed that the share of total foreign investment in U.S. agricultural land was small, that in terms of dollar value, investment by foreigners in urban real estate
161

was many times greater than in agricultural land. Ricks and Racster (10) observed that there was apprehension that outsiders may gain undue control or influence in the United States. Elements of the agricultural sector were the most vocal because of the belief that foreign ownership would contribute to inflation in land values and the demise of the family farm. Schian and Seid (11) reported that 33 states had laws relative to the ownership of U.S. land by aliens and foreign business entities. The degree of severity of this legislation varies greatly among states, with some laws specifying restrictions, others defining reporting requirements, and some requiring both. Twenty-nine states had some type of law restricting alien ownership of land and 9 states require aliens to report their landholdings within the state. Fifteen states restrict foreign business entities from owning or engaging in the business of farming and 11 states require business entities to report their landholdings within the state. Of the states contiguous to Alabama, Georgia and Mississippi have laws relating to alien ownership of land and Florida, Georgia, and Mississippi specify some requirements for business entities. Neither Alabama nor Tennessee has requirements relative to alien or foreign business ownership of land. However, foreign corporations must file a certified copy of their articles of incorporation prior to transacting business in Alabama. DESCRIPTION OF STUDY
OBJECTIVES

The general objective of this study was to evaluate the nature and extent of foreign activity in Alabama's agricultural land markets. Specific objectives include: 1. Determining the extent of foreign ownership and interests in agricultural land and recent changes in such activity. 2. Evaluating the nature of this activity. 3. Providing information which policy makers and others will find useful for evaluating legislative alternatives and making decisions relative to land markets.
METHODS

Data used in this study were obtained from AFIDA reports filed for Alabama and available in the Alabama De171

partment of Agriculture and Industries. Information was analyzed for the period December 31, 1984, to January 1, 1989. These data were combined with the previously developed data base to evaluate changes in activity and, from February 2, 1979, to January 1, 1989, the nature and extent of foreign activity. Reports were filed by individuals and organizations (corporations, partnerships, and trusts). Detailed analyses were made on the basis of ownership (fee interests-whole and partial, and trusts) and interests which included ownership plus other activities, such as options to purchase contracts and "other" (primarily long-term timber cutting and management contracts).
DEFINITIONS OF KEY TERMS

Key definitions of terms used in applying the AFIDA legislation are as follows. See DeBraal (4) for greater specificity of these and other terms. Acquisitions and Dispositions: Refers to land which was U.S. agricultural land acquired or disposed by foreign persons or entities on or after February 2, 1979. Holdings: Applies to land held by foreign persons or entities as of February 1, 1979. Agricultural Land: All land used for agricultural, forestry, or timber production. This includes currently idle land if its last use within the past 5 years was for farming, ranching, forestry, or timber production. The regulations exempt agricultural land of not more than 10 acres in aggregate if the annual gross receipts from sale of farm, ranch, forestry, or timber products from such land do not exceed $1,000. Also exempt are leaseholds of less than 10 years' duration, contingent future interests, noncontingent future interests that do not become possessory upon termination of the present estate, nonagricultural easement and rights-of-way, and interests solely in mineral rights. Farmland: Used synonymously with Agricultural Land. Fee Interest: The owner owns the estate, either partially or as a whole.
181

Foreign Person: Any individual (one person or a husband and wife) who (1) is not a United States citizen or national, (2) is not a citizen of the Northern Mariana Islands or the Trust Territory of the Pacific Islands, or (3) is not lawfully admitted into the United States for permanent residence. Foreign government entities which are created under the laws of or have their principal place of business in a foreign country, and United States entities which have a significant foreign interest or substantial control are also so defined. Foreign Interest: Whole or partial ownership or long-term (over 10 years) lease or related agreement. Significant Foreign Interest or Substantial Control: Refers to an individual or group of individuals acting in concert who hold 10 percent or more interest or a group of foreign individuals not acting in concert who hold 50 percent or more interest with no one individual holding more than a 10 percent interest. Partnership: All legally defined partnerships, joint ventures, and any tenancy in common which includes two or more persons who are not married. RESULTS Foreign interests in Alabama's agricultural land by individuals and business entities declined by 29 percent between 1984 and 1989, from 883,181 to 625,976 acres, table 1. A major portion (23 percent) of this adjustment was due to changes in the "foreign" status of two firms. One firm, which has substantial interests in the State, had its foreign ownership component purchased by domestic interests and the other firm did not meet the 10 percent foreign ownership requirement when the definition of "foreign" was changed from 5 to 10 percent ownership. Thus, while foreign interests increased substantially (60 percent) between 1981 and 1984 (3), they declined slightly (about 6 percent) between 1984 and 1989 without considering the "foreign" status of the two firms and, substantially, when these changes are included. Major declines (over 15,000 acres) in foreign interests were noted for Baldwin, Choctaw, Clarke, Conecuh, Covington, Escambia, and Monroe counties between 1984 and
[9l

1989, table 1. Three counties (Chilton, Shelby, and Talladega) evidenced relatively large increases in foreign acreage over this time period. One company acquired long-term timber management and cutting contracts in Shelby and Chilton counties and another firm purchased fee interests in three Talladega County tracts.
TABLE 1. LEV ELS OF AND CHANGES IN

LAN D, BY COUNTYv, ALABA~MA, DECEMBER 31, 1984 -JANUA~RY 1, 1989 County 1984 foreign interests Acres Autauga... ..... Baldwin.... ..... Barbour .......... Bibb............. Blount............ Bullock..... ..... Butler ........... Calhoun' ......... Chambers........ Cherokee ......... Chilton..... ..... Choctaw... ..... Clarke............ Clay'............ Cleburne......... Coffee........... Colbert..... ..... Conecuh... ..... Coosa............ Covington ........ Crenshaw........... Cullman............. Dale.................. Dallas ............... DeKalb.............. Elmore'............. Escambia'........... Etowah.............. Fayette ............. Franklin' ............ Geneva'............. Greene .............. Hale.................. Henry' ......... Houston' ........... Jackson .............
Jefferson............ Lamar'...............

FOREIGN INTERESTS JN AGRICULTURAL
1989 foreign interests Acres 5,326 847 2,263 318 12,555 310 8,759 0 12,393 3,198 16,112 55,216 17,986 0 413 19 230 2,175 7,488 3.269 10,309 12,811 230 34,708 8,993 0 0 796 14,173 0 0 5,121 9,086 0 0 40,493 430 0 0 460 Change 1984-89 Amount Acres 0 -27,379 0 -2 -163 238 -4,106 0 224 -140 15,391 -37,487 -17,607 0 -200 0 0 -31,048 0 -44,693 -1,315 235 0 450 40 0 -51,743 -77 -351 0 0 0 0 0 0 0 0 0 0 0 Percent Pct. 0.00 -97.00 .00 -.63 -1.28 330.56 -31.92 .00 1.84 -4.19 2,134.63 -40.44 -49.47 .00 -32.61 .00 .00 -93.45 .00 -93.18 -11.31 1.87 .00 1.28 .44 .00 -100.00 -8.82 -2.42 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
Con tillued

Lauderdale' ..... Lawrence ..........

5,326 28,226 2,263 320 12,718 72 12,865 0 12,169 3,338 721 92,703 35,593 0 613 19 230 33,223 7,488 47,962 11,624 12,576 230 35,158 9,033 0 51,743 873 14,524 0 0 5,121 9,086 0 0 40,493 430 0 0 460

101

LEVELS OFAND CHANGES IN FOREIGN INTERESTSINAGRICULIRAL TABLE 1 (cont'd). LAND, BY COUNTY, ALABAMA, DECEMBER 31, 1984 -JANUARn 1, 1989

County

1984 foreign interests Acres

1989 foreign interests Acres 11,165 418 7,386 3,255 5,283 33,453 1,388 4,540 0 50,746 0 1,520 44,604 4,700 6,177 7,090 18,569 3,982 2,613 4,377 2,620 1,634 6,509 6,657 19,571 89,988 1,244 625,976

Change 1984-89 Amount Acres 0 0 -300 434 0 142 0 0 -13,436 -33,569 0 340 -1,713 0 578 0 591 447 2,575 0 2,103 170 0 199 -8,131 -6,923 0 -257,206 Percent Pct. .00 .00 -3.90 15.39 .00 .43 .00 .00 -100.00 -39.81 .00 28.81 -3.70 .00 10.32 .00 3.29 12.65 6,776.05 .00 406.77 11.65 .00 3.08 -29.35 -7.14 .00 -29.12

11,165 Lee ............................ 418 Limestone ................ 7,686 Lowndes ................ 2,821 Macon .................. 5,283 Madison ................ 33,311 Marengo ................... 1,388 Marion ................. Marshall ...............4,540 . ... . . . 1 . .. . .. . . 13,436 Mobile 84,315 Monroe .................. 0 Montgomery' ........... 1,180 Morgan ..................... 46,317 Perry ..................... 4,700 Pickens .................. 5,599 Pike ......................... 7,090 Randolph ............... 17,978 Russell ................... 3,535 St. Clair ................. 38 Shelby .................... 4,377 Sumter .................. 517 Talladega ................. 1,464 Tallapoosa ................ 6,509 Tuscaloosa ................ 6,458 Walker ................... 27,702 Washington .............. 96,911 Wilcox .................... 1,244 Winston ................. Total .................. 883,181

'Deleted from further analysis because there was no foreign activity with agricultural land in 1989.

Foreign interests were reported in 55 of Alabama's 67 counties in 1989. Two counties (Escambia and Mobile)

which had foreign activity in 1984 reported no activity in
1989 as a result of the changes in the "foreign" status of the two previously mentioned firms. Ten counties reporting no activity in either 1984 or 1989 were: Calhoun, Clay, Elmore, Franklin, Geneva, Henry, Houston, Lamar, Lauderdale, and Montgomery. AFIDA reporting forms for 578 entities were evaluated relative to interests in Alabama's agricultural land, table 2. Adjustments of land holdings (481,929 acres) for acquisitions (180,992 acres) and dispositions (36,935 acres) resulted in a net of 625,976 acres involving foreign interests.
[11]

TABLE 2. FOREIGN ACTIVITY WITH AGRICULTURAL LAND CURRENT (1989) FOREIGN INTERESTS, BY COUNTY, ALABAMA, FEBRUARY 2, 1979 -JANUARY 1, 1989 County
Interests,_____

AND
1989 foreign interest Acres 5,326 847 2,263 318 12,555 310 8,759 12,393 3,198 16,112 55,216 17,986 413 19 230 2,175 7,488 3,269 10,309 12,811 230

reports Acres Autauga .......... Baldwin... ...... Barbour .......... Bibb............. Blount..... ..... Bullock.... ..... Butler...... ..... Chambers ........ Cherokee ......... Chilton.... ..... Choctaw .......... Clarke..... ..... Cleburne ......... Coffee...... .... Colbert.... ..... Conecuh .......... Coosa............. ........ Covington Crenshaw ........ Cullman ......... Dale............. Dallas...... ..... DeKalb.... ..... Etowah.... ..... Fayette.... ..... Greene..... .... Hale ............. Jackson ............. Jefferson............ Lawrence .......... Lee .................. Limestone .......... Lowndes ............ Macon ............... Madison............. Marengo ............ Marion .............. Marshall ............ Monroe ............. Morgan ............. Perry ................ Pickens.............. Pike.................. Randolph............ Russell .............. St. Clair ............ Shelby............... ,,_,,_ 5 9 3 2 7 56 16 23 3 3 26 24 1 1 1 5 2 4 8 2 1 7 3 1 2 5 6 5 1 1 8 4 7 76 4 50 2 5 31 2 18 1 8 6 22 4 2 4,830 0 0 320 12,402 0 7,411 0 9,093 16,112 56,834 16,462 0 0 230 2,159 0 3,199 9,440 12,684 230 34,471 8,630 796 14,173 1,819 8,781 2,993 430 460 0 0 5,461 0 0 29,849 903 1,182 34,036 1,180 45,655 4,700 4,317 0 0 3,535 2,575

filed

Holdings

Activity Dispositions Acres 0 12 0 2 163 0 0 320 5,895 0 3,173 1,818 0 0 0 80 0 40 0 0 0 108 0 0 0 0 0 0 0 0 1 0 0 0 0 5,488 0 0 739 0 2,257 0 0 07 0 0

U4 Acquisitions Acres 496 859 2,263 0 315 310 1,348 12,713 0 0 1,554 3,342 413 19 0 96 7,488 110 869 127 0
345

34,708
8,993 796 14,173 5,121 9,086 40,493 430 460 11,165 418 7,386 3,255 5,283 33,453 1,388 4,540 50,746 1,520 44,604 4,700 6,177 7,090 18,569 3,982 2,613 Continued

363 0 0 3,302 305 37,500 0 0 11,166 418 1,925 3,256 5,283 9,093 485 3,358 17,449 340 1,206 0 1,860 7,090 18,575 447 38

[ 12]

TABLE 2 (cont'd). FOREIGN ACTIVITY WITH AGRICULTURAL LAND AND CURRENT (1989) FOREIGN INTERESTS, BY COUNTY, ALABAMA, FEBRUARY 2, 1979- JANUARY 1, 1989

County

Interests, filed reports

Holdings Acres

Activity Dispositions Acres 0 0 0 0 0 92 16,739 36,935

Acquisitions

1989 foreign interest

Sumter .................. Talladega ................. Tallapoosa ................ Tuscaloosa ................ Walker ................... Washington .............. Wilcox ................... Winston .................... Total ..................

8 4 3 3 2 8 86 1 598

3,075 517 0 6,509 6,657 19,663 86,911 1,244 481,929

1,302 2,103 1,634 0 0 0 19,826 180,992

4,377 2,620 1,634 6,509 6,657 19,571 89,988 625,976

The greatest concentration of foreign interests was in southwestern and west-central portions of the State where forestry is the major land use. Wilcox, Choctaw, Monroe, and Perry counties contributed 14.07, 8.64, 7.94, and 6.98 percent of the State's total acreage involving foreign activity, table 3. Jackson County, in the northeastern portion of the State, was next in prominence with 6.33 percent of the total. These five counties accounted for 44 percent of the total interests. In terms of total land area, foreign interests accounted for 15.49, 9.78, 9.33, 7.69, and 5.63 percent of the total per county in Wilcox, Perry, Choctaw, Monroe, and Jackson counties, respectively. Foreign interests accounted for 2.29 percent of the land area in counties with any foreign interests or 1.92 percent of the State's total land area.
TABLE 3. FOREIGN INTERESTS IN AGRICULTURAL LAND AS A PORTION OF TOTAL INTERESTS AND TOTAL LAND AREA, BY COUNTY, ALABAMA, FEBRUARY 2, 1979 -JANUARY 1, 1989

County

1989 foreign interests Acres

Portion of 1989 interests Pct. 0.83 .13 .35 .05 1.96 .05 1.37 1.94 [13]

Total land area Acres 385,199 1,073,741 579,349 396,721 413,955 400,380 495,148 383,918

Foreign interests in total land area Pct. 1.38 .08 .39 .08 3.03 .08 1.77 3.23 Continued

Autauga ................... Baldwin .................... Barbour .................. Bibb ......................... Blount ..................... Bullock ..................... Butler ...................... Chambers .................

5,326 847 2,263 318 12,555 310 8,759 12,393

TABLE

3 (cont'd).

FOREIGN INTERESTS I\NAGRICULTURAL LAND AS A PORTION Or TOTAL INTERESTS AND TOTAL LAND AREA, ox COUNITY, ALABAMAx,

FEBRUARY 1989 foreign
interests

2, 1979- JANUARY 1, 1989
Portion of 1989
interests

County

Total land area Acres 383,686 453,849 591,780 801,919 361,785 432,723 398,385 544,634 427,576 671,429 390,725 482,467 359,512 635,227 498871 353,782 398,742 417,771 422,621 719,816 719,247 460,076 395,082 388,286 463,502 391,038 520,864 625,391 475,192 400,149 660,093 383,808 455,949 567,997 431,764 375,099 413,245 415,114 516,645 588,076 489,185 488,630 866,632 515,564 494,010 581,171 401,862 27,359,382

Foreign interests in total land area Pct. .83 3.55 9.33 2.24 .11 .00 .06 .40 1.75 .49 2.64 2.66 .06 5.46 1.80 .22 3.55 1.23 2.15 5.63 .06 .10 2.83 .11 1.59 .83 1.01 5.35 .29 1.13 7.69 .40 9.78 .83 1.43 1.89 4.49 .96 .51 .74 .54 .33 .75 1.29 3.96 15,49 .31 2.29

Acres Cherokee.......... Chilton.......... Choctaw ......... Clarke........... Clehurne.......... Coffee........... Colbert.......... Conecuh......... Coosa............ Covington ......... Crenshaw......... Culman......... Dale ................. Dallas........... DeKalb........... Etowah.......... Fayette .......... Greene.......... Hale.............. Jackson........... Jefferson.......... Lawrence..... ... Lee.............. Limestone ........ Lowndes......... Macon........... Madison.......... Marengo ............ Marion .............. Marshall ............ Monroe.............. Morgan ............. Perry ................ Pickens ............. Pike ............. ... Randolph............ Russell............... St. Clair ............. Shelby............... Sumter.............. Talladega .......... Tallapoosa .......... Tuscaloosa .......... Walker .............. Washington........ Wilcox ............... Winston ............. Total' ............ 3,198 16,112 55,216 17,986 413 19 230 2,175 7,488 3,269 10,309 12,811 230 34,708 8,993 796 14,173 5,121 9,086 40,493 430 460 11,165 418 7,386 3,255 5,283 33,453 1,388

Pct. .50 2.52 8.64 2.81 .07 .00 .04 .34 1.17 .51 1.61 2.00 .04 5.43 1.41 .12 2.22 .80 1.42 6.33 .07 .07 1.75 .07 1.16 .51 .83 5.23 .22 .71 7.94 .24 6.98 .74 .97 1.11 2.90 .62 .41 .68 .41 .26 1.02 1.04 3.06 14.07 .19 100.00

45540
50,746 1,520 44,604 4,700 6,177 7,090 18,569 3,982 2,613 4,377 2,620 1,634 6,509 6,657 19,571 89,988 1,244 625,976

'Interests accounted for ahout 1.9% of the State's total land area. [141

Foreign entities owned 315,612 acres, or about 1 percent of the State's total land area, by whole- or partial-fee interests, table 4. This level represented a decline in ownership of about 50 percent from 1984 and amounted to 1.15 percent of the total land area of counties with foreign interests, or about 1.0 percent of the State's total land area. Basically,
TABLE 4. FOREIGN INTERESTS IN AND OWNERSHIP OF AGRICULTURAL LAND, BY COUNTY, ALABAMA, FEBRUARY 2, 1979 - JANUARY 1, 1989

County

1989 filed Ownership foreign ownership reports No. Acres 1,653 835 2,263 0 5,271 122 6,249 12,393 3,198 961 5,270 10,286 413 19 230 136 7,488 3,269 10,309 127 230 15,431 8,993 796 5,987 3,302 3,648 40,493 430 0 11,165 0 3,330 3,245 5,283 16,246 1,388 1,376 38,473

1989 foreign interests Acres 5,326 847 2,263 318 12,555 310 8,759 12,393 3,198 16,112 55,216 17,986 413 19 230 2,175 7,488 3,269 10,309 12,811 230 34,708 8,993 796 14,173 5,121 9,086 40,493 430 460 11,165 418 7,386 3,255 5,283 33,453 1,388 4,540 50,746 [151

Portion ofownership to interests Pct. 31.0 98.6 100.0 .0 42.0 39.4 71.3 100.0 100.0 6.0 9.5 57.2 100.0 100.0 100.0 6.3 100.0 100.0 100.0 1.0 100.0 44.5 100.0 100.0 42.2 64.5 40.1 100.0 100.0 .0 100.0 .0 45.1 99.7 100.0 48.6 100.0 30.3 75.8

Total area Acres 385,199 1,073,741 579,349 396,721 413,955 400,380 495,148 383,918 383,686 453,849 591,780 801,919 361,785 432,723 398,385 544,634 427,576 671,429 390,725 482,467 359,512 635,227 498,871 353,782 398,742 417,771 422,621 719,816 719,247 460,076 395,082 388,286 463,502 391,038 520,864 625,391 475,192 400,149 660,093

Ownership land area Pct. 0.43 .08 .39 .00 1.27 .03 1.26 3.23 .83 .21 .89 1.28 .11 .00 .06 .02 1.75 .49 2.64 .03 .06 2.43 1.80 .22 1.50 .79 .86 5.63 .06 .00 2.83 .00 .72 .83 1.01 2.60 .29 .34 5.83 Continued

Autauga ................. Baldwin .............. Barbour ............... Bibb .................... Blount .................... Bullock ............... Butler .................... Chambers ........... Cherokee ............... Chilton ................ Choctaw ................. Clarke .............. Cleburne ................ Coffee ................. Colbert ................ Conecuh .................. Coosa .................. Covington ............ Crenshaw .............. Cullman ................. Dale ...................... Dallas ................... DeKalb .................. Etowah ................. Fayette ................. Greene .................. Hale ...................... Jackson ................. Jefferson ................ Lawrence ............... Lee ........................ Limestone .............. Lowndes ................ Macon ................... Madison ................. Marengo ............... Marion .................. Marshall ................ Monroe .................

3 3 3 0 6 56 14 23 3 2 15 20 1 1 1 2 2 4 8 1 1 4 3 1 1 4 4 5 1 0 8 0 5 75 4 37 2 2 23

TABLE

4

(cont'd). FOREIGN INTERESTS IN AND OWNERSHIP OF AGRICULTURAL LAND, BY COUNTY, ALABAMA, FEBRUARY 2, 1979- JANUARY 1, 1989

County

1989 Ownership Ownershipforeign filed ownership reports No. Acres 340 10,135 0 6,162 7,090 18,569 3,982 38 4,377 2,620 1,634 940 1,494 80 26,598 1,244 315,612

1989 foreign interests Acres 1,520 44,604 4,700 6,177 7,090 18,569 3,982 2,613 4,377 2,620 1,634 6,509 6,657 19,571 89,988 1,244 625,976

Portion of ship to interests Pct. 22.4 22.7 .0 99.8 100.0 100.0 100.0 1.5 100.0 100.0 100.0 14.4 23.1 .4 29.6 100.0 50.5

owner

Total land area Acres 383,808 455,949 567,997 431,764 375,099 413,245 415,114 516,645 588,076 489,185 488,630 866,632 515,564 494,010 581,171 401,862 27,359,382

Ownership of total land area Pct. .09 2.22 .00 1.43 1.89 4.49 .96 .01 .74 .54 .33 .11 .29 .02 4.58 .31 1.15

Morgan .................. Perry .............. Pickens .............. Pike ................... Randolph .............. Russell .............. St. Clair .............. Shelby .............. . Sumter ............... Talladega ............. Tallapoosa ............. Tuscaloosa ............. Walker ................ Washington ........... Wilcox ................ Winston ................. Total ................

1 9 0 7 6 22 4 1 8 4 3 1 1 1 38 1 455

'Ownership accounted for about 1.0% of the State's total land area.

ownership accounted for half of the foreign interests in the State, with Monroe (5.83 percent), Jackson (5.63 percent), Wilcox (4.58 percent), Russell (4.49 percent), and Chambers (3.23 percent) counties experiencing the most foreign ownership in terms of total land area. Fifty-one counties had reports filed indicating ownership by foreign entities, four less than noted for interests. About three-fourths of the owners identified Canada (62 percent), United Kingdom (8 percent), and the Netherlands Antilles (7 percent) as being their country of origin. For the 597 entities reporting type of interest, 451 reported whole-fee interest and 6 reported a partial-fee interest, table 5. Partial-fee interests ranged from 6 to 50 percent for individual entities. Forty-nine percent of the land involving foreign interests was included in the "other" grouping, which primarily included long-term timber leasing, cutting, and management contracts. Average size of these tracts was 2,275 acres, while the average size of parcels with whole-fee interests was 698 acres.
[16]

TABLE 5. FOREIGN INTERESTS IN AGRICULTURAL LAND, BY TYPE OF INTEREST HELD, FEBRUARY 2, 1979 - JANUARY 1, 1989 Interests, 1989 Portion

Type of interest

filed reports No.

foreign interest Acres 315,346 334 268 2,716 307,194

Average size Acres 698 56 134 905 2,275

of total interest Pct. 50.39 .05 .04 .43 49.08

Fee Interest Whole ................... 451 Partial .................. 6 Option ...................... 2 Purchase Contract ............... 3 Other' ..................... 135

'Other includes primarily long-term (> 10 years) timber cutting and management contracts.

Organizations were the dominant foreign entities involved with Alabama's agricultural land, table 6. Almost all of the foreign-involved acreage was owned or controlled by organizations, primarily corporations. Average size of tracts reported by corporations was 1,267 acres.
TABLE 6. FOREIGN INTERESTS IN AGRICULTURAL LAND, BY TYPE OF

OWNER, ALABAMA , FEBRUARY 2, 1979 - JANUARY 1, 1989

Type owner

Interests, filed reports No.

Total foreign interests Acres 1,013 621,893 683 25

Average size Acres 11 1,267 68 12

Percent of foreign interests Pct. 0.16 99.72 .11 .01

Individuals ............... 95 Organizations Corporations ........ 491 Partnerships ........ 10 Trusts ................... 2

Three of the 31 business organizations having interests in Alabama's agricultural land were created in Alabama. Collectively, they held 63 percent of the foreign acreage in the State. The four entities created outside the United States held 3 percent of the total interests in Alabama's agricultural land. Business entities which identified Alabama as their primary place of business claimed threefourths of the foreign interests in Alabama's agricultural land. While ownership by individuals was relatively small, such acreage almost doubled since 1984, table 7. Citizens from Canada, the United Kingdom, and West Germany were the
1171

primary purchasers of Alabama's agricultural land, accounting for three-fourths of the total acreage held by individuals. A fairly large portion of the individual foreign purchasers had bought acreage in pecan groves in Macon and Bullock counties. Counties having the most foreign ownership by individuals were Bullock, Crenshaw, Macon, Monroe, and Tallapoosa.
TABLE 7. FOREIGN INTERESTS IN AGRICULTURAL LAND BY INDIVIDUALS, BY COUNTRY OF CITIZENSHIP, ALABAMA, FEBRUARY 2, 1979 - JANUARN 1, 1989

Country of citizenship

Interests, filed reports No.

Total foreign interests Acres 310 286 165 49 49 47 38 16 10 9 8 4 3 2 2 2 1 1 1 1 1 0 5 1,013

Average size Acres 103 32 5 3 24 23 38 16 10 2.3 2 2 1 1 2 2 1 1 1 1 0 0 2 11

Portion of individual foreign interests Pct. 30.60 28.22 16.30 4.88 4.83 4.63 3.75 1.58 .99 .89 .84 .40 .35 .25 .20 .20 .10 .10 .10 .10 .10 .05 .54 100.00

Canada ....................... United Kingdom ............ West Germany .............. Switzerland ................... Iran ............................. Egypt .......................... Syria ........................... Austria ........................... Liechtenstein ............... Spain ........................... Saudia Arabia ................ Kuwait ........................... Netherlands .................. France ........................ Monaco .................... ...... Argentina ................... Republic of China .......... Greece ........................ India ........................... Belgium ......................... Thailand ....................... Central African Republic .................... Unspecified.................... Total .........................

3 9 30 17 2 2 1 1 1 4 4 2 4 3 1 1 1 1 1 1 2 1 2 95

'Totals for several countries include small acreages which were sold by a foreign corporation to foreign individuals. AFIDA does not require that reports be filed for holdings under 10 acres. Thus, the total overstates AFIDA reporting.

Two-thirds of the acreage involving foreign interests in Alabama was being used in forestry or timber activities, table 8. Traditional agricultural production involving crops was small, claiming only about 0.5 percent of the total acreage. Nonagricultural uses were second in terms of land usage with 29 percent of the total.
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TABLE 8.

USE OF CROPLAND HELD BY FOREIGN INTERESTS, ALABAMA, FEBRUARY 2, 1979 -JANUARY 1, 1989 Interests,

Land use

s

filed No.

foreign
interests

1989

Average
size

reports

Percent of total interests Pct. 0.44 66.77 3.53 29.26

Acres 2,751 417,906 22,094 183,117

Acres 23 1,266 690 1,565

Cropland ................... Forestry or timber ........ Other agriculture .......... Nonagriculture ..............

119 330 32 117

SUMMARY AND IMPLICATIONS On a statewide basis, about 1 percent (316,000 acres) of Alabama's land area is owned by foreign entities and only about 2 percent (606,000 acres) involves foreign interests (primarily fee ownership and long-term leases and other agreements). Foreign entities own property in 51 Alabama counties and have interests in 55. The greatest foreign activity is in the southwestern counties of Wilcox, Choctaw, Perry, and Monroe and Jackson County in northeastern Alabama. These five counties account for 44 percent of the total foreign interests in the State and 38 percent of the ownership. The acreage involving foreign interests changed substantially in Alabama since the previous analysis completed in 1984. However, this was not due to major shifts in acquisitions or dispositions. Rather, activity declined by about 300,000 acres due to one firm's foreign ownership component being purchased by domestic interests and another firm becoming "nonforeign" due to a change in the AFIDA legislation which defined "foreign" as 10 percent or more foreign ownership in the entity rather than 5 percent or more. Disregarding these adjustments, there still was a 6 percent decline in foreign interests in the State. Corporations are involved in most of the foreign activity in the State. Most of these firms, especially those with large interests, have had long-term activity in the State. While ownership by foreign individuals was small, the total (1,000 acres) had almost doubled since 1984. There seems to be little reason for concern about foreign ownership of or interest in Alabama's agricultural land. Much of the foreign activity is by firms which have substantial economic interests and have been traditional entities in
119]

the State. Activity primarily involves the forest and timber sector, which further lessens concerns relative to production agriculture and the traditional farm unit. About half of the activity involves long-term leases and agreements rather than fee ownership. While the entities may be classified as foreign under AFIDA, they frequently involve large domestic interests and their activity provides employment and income for numerous Alabamians.

[201

REFERENCES
(1)

M. MIMS. 1990. Foreign Ownership of Agricultural Land in the Southern United States. The Southern Business and Economic Journal, Vol. 14, No. 1, Oct., pp. 46-57.
ADRIAN, JOHN L. AND ANNE AND J. E. DUNKELBERGER.

(2) (3)

1983. Private Lan1986. For-

downership in Alabama. Ala. Agr. Exp. Sta. Bull. 554.
, ANNE M. MIMS, AND BILL HARDY.

eign Interests in Alabama's Agricultural Land: Update. The Alabama Agribusiness and Economic Journal, Vol. 10, No. 1, Oct., pp. 33-44. Auburn Univ. at Montgomery.
(4) DEBRAAL, J. PETER. 1990. Foreign Ownership of U.S. Agricultural

Land Through December 31, USDA, ERS.
(5)

1989. Staff Report, AGES 902.

EICHLER, MARILYN E., J. PETER DEBRAAL, GENE WUNDERLICH, AND JuDITH GREEN. 1980. Foreign Ownership of U.S. Agricultural Land,

(6)

(7)

(8)

Agricultural Economic Report #447. USDA, ESCS. HEALY, ROBERT C. AND JAMES L. SHORT. 1978. New Forces in the Market for Rural Land. The Appraisal Journal, Vol. 41, No. 2, April, pp. 185-199. JANSMA, J. D., F. GOODE, K. GERTOL, AND P. SMALL. 1981. Implications of Foreign Ownership of U.S. on Farms and Rural Communities. Pennsylvania State Univ., Bull. 832. KITCHEN, JOHN AND J. PETER DEBRAAL. 1989. Foreign Investment in U.S. Cropland. USDA, ERS.
LABAND, DAVID. 1984. Foreign Ownership of U.S. Farmland. D.C.

(9) (10)

Heath and Company, Lexington, Mass.
RICKS, DAVID AND RONALD L. RACSTER. 1980. Restrictions on Foreign

Ownership of U.S. Real Estate. Real Estate Review, Vol. 10, No. 1, pp. 111-115.
(11) SCHIAN, DALE C. AND DAVID A. SEID. 1986. State Laws Relating to

(12)

the Ownership of U.S. Land by Aliens and Business Entities, Staff Report, AGES 861103.USDA, ERS, NRED. TIMMoNs, JOHN. 1976. Foreign Investment in U.S. Real Estate: An Overview. Foreign Investment in U.S. Real Estate. USDA, ERS.

[21]

Alabama's Agricultural Experiment Station System AUBURN UNIVERSITY W-Tith an agriculatural research unit in every major soil SAubirm Uni-AI sajYyss the oned crop, o iend

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Research Unit Identification

®Main Agricultural Experiment Station, Auburn.
SE. V. Smith Research Center, Shorter.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Tennessee Valley Substation, Belle Mina. Sand Mountain Substation, Crossville. North Alabama Horticulture Substation, Cullman. Upper Coastal Plain Substation, Winfield. Forestry Unit, Fayette County. Chilton Area Horticulture Substation, Clanton. Forestry Unit, Coosa County. Piedmont Substation, Camp Hill. Forestry Unit, Autauga County. Prattville Experiment Field, Prattville. Black Belt Substation, Marion Junction. The Turnipseed-Ikenberry Place, Union Springs. Lower Coastal Plain Substation, Camden. Forestry Unit, Barbour County. Monroeville Experiment Field, Monroeville. Wiregrass Substation, Headland.
Brewton Experiment Field, Brewton.

17. 10.

Ornamental Horticulture Substation, Spring Hill. 19. Gulf Coast Substation, Fairhope.