Major Jump in Foreign Ownership for Michigan’s Upper Peninsula Forestland
Michigan is witnessing a significant uptick in foreign ownership of its agricultural land, particularly the Upper Peninsula forestland—a phenomenon that mirrors a broader trend. Federal data shows that in the last two years, Michigan experienced a substantial surge in foreign ownership of farmland, increasing from 5.6% to 8.6%.
Upward Trend in Foreign Ownership
In the past decade, a trend of increasing ownership of Michigan’s rich farmland by foreign entities has emerged. Notably, the number of Michigan acres under foreign ownership remained stable for over a decade, until over 460,000 acres saw new ownership in 2022. Nonetheless, despite rising national security concerns ignited by the question of land ownership, foreign investments in farmland remain minimal.
Bill Knudson, a Michigan State University economist, clarified that there’s “a lot less foreign ownership than what people generally assume.” Foreign investors, as per legal definitions, are obligated to report their land acquisitions to the U.S. Department of Agriculture annually. The 2022 figures indicate that about half of the total increase in foreign land ownership was due to large purchases of forestland in Alabama and Michigan.
Upper Peninsula Forests Trending Among Foreign buyers
In Michigan, around 92% of foreign-owned acres are located in the Upper Peninsula, although this still constitutes only 8% of the total agricultural land in the state. Major acquisitions occurred in the Western Upper Peninsula from 2021 to 2022, with significant land purchases in counties like Gogebic, Ontonagon, and Keweenaw.
Bill Knudson stated, “With the forestland in the Upper Peninsula, those are mostly owned by Canadians, and as a general rule, we’ve never had a problem with people in the United States investing in Canada or Canadians investing in the U.S.” In Keweenaw County, which has the largest proportion of foreign ownership, Dutch entities own 120,000 acres, while “all others” own over 250,000 acres.
A Multitude of Foreign Entities
Recent federal data records show timber investment firms hold the most foreign-held land in Keweenaw. These include GMO Threshold Timber Michigan, a company with Dutch roots, and Lake Superior Land Co., which is linked with the U.S. Virgin Islands.
Inmissible light is shed on the new land acquisitions through the careful scrutiny of property and company records. For instance, Gogebic County saw over 131,177 acres purchased by a foreign entity between 2021 and 2022. While the buyer’s identity is not explicit, a careful examination of the data trail can reveal associated entities.
Minimal Chinese Ownership
The USDA report delineates certain details regarding Chinese ownership of farmland, a cause of concern for some lawmakers. Despite the apprehension, the recent research reveals that Chinese entities hold only a relatively minor portion–352,139 acres, i.e., less than 1% of American farmland, compared to Canadian investments account for 32% of all foreign-owned farmland. Notably, in Michigan, Chinese investors do not own any land according to USDA’s latest map.
The Allure of US Farmland
Foreign entities express interest in American farmland for a straightforward reason—it is a promising investment. Real estate values for farmland have consistently escalated over time, with an increase of 7.4% from 2022 to 2023, following a 12% jump the previous year. As per USDA, the price of farmland per acre escalated from $2,730 in 2013 to $4,080 in 2023, representing a quite commendable rate of return.
Foreign investors, notably, are inclined to pay premium prices. According to an analysis, foreign buyers typically spend 13.7% more for Midwest agricultural land than their domestic counterparts. Meanwhile, local farmers manage to secure land at lower prices than non-local buyers.
