Upper Peninsula Forestland Faces Increasing Foreign Adoption
Michigan’s beautiful Upper Peninsula forests and farmlands have increasingly become a target for foreign investment over the past decade. According to recent federal data, foreign ownership of agricultural acres in Michigan jumped dramatically from 5.6% to 8.6% just two years ago, placing Michigan amongst the top states for foreign farmland ownership. This increase notably includes a significant uptake in the ownership of Upper Peninsula forestland.
The shift in land ownership has not been without controversy, creating heated conversations around national security concerns. However, it’s important to clarify that the percentage of foreign investment in American farmland remains relatively small. As noted by Bill Knudson, a renowned Michigan State University economist, the perception of foreign ownership is often larger than the reality.
Who are the Foreign Investors?
Foreign investors – defined as non-U.S. citizens, non-legal immigrants or U.S. entities with a significant foreign interest – are required to report their land acquisitions to the U.S. Department of Agriculture annually. As of 2022, approximately 460,000 acres of Michigan farmland were acquired by foreign investors.
The vast majority, roughly 92%, of these foreign-owned acres are located in the Upper Peninsula. Within this region, Keweenaw County has seen the most dramatic increase in foreign ownership, with over 370,345 acres of forestland now foreign-owned.
Primarily, Canadian entities are the prime foreign investors of forestland in the Upper Peninsula. Although, in Keweenaw County, Dutch entities have also shown a strong interest, owning around 120,000 acres.
Chinese Ownership Still Minimal
The issue of Chinese ownership of U.S. farmland has been a topic of concern amongst lawmakers over the recent years. Despite the noise and fears, data shows that Chinese entities own less than 1% of American farmland, significantly lesser than Canadian, Dutch, Italian, and United Kingdom’s holdings. In fact, there is currently no agricultural land in Michigan owned by Chinese investors.
Renewable Energy Role
Another interesting dimension of this foreign land acquisition trend is the impact of renewable energy. Researchers have observed that renewable energy production initiatives have been a major driver behind recent foreign land acquisitions. Approximately 25% of foreign investments bear a relationship to ‘wind’ energy, with several wind farm companies, such as J.W. Great Lakes Wind LLC and Shiawassee Wind Project, LLC, being the major foreign landowners in areas like Shiawassee County.
Driving Forces behind Foreign Purchases
The underlying objective behind foreign investment is straightforward – it’s a potentially lucrative venture. Farmland real estate values in the U.S. have demonstrated a consistent upward trajectory, providing an attractive rate of return to investors. Furthermore, foreign investors typically manage to secure land at premium prices, paying an approximate 13.7% more than domestic buyers for agricultural land in the Midwest.
Such trends continue to place U.S. farmland, particularly the forestland in Upper Michigan, at an attractive proposition for overseas investors. Despite the increased attention on foreign investment, it remains a fraction of the broader investment landscape.
Note: This article’s data is based on the last publicly available annual report, which covered 2022 and detailed ownership information from 2021.
