Geopolitical Risk in Agricultural Real Assets: How U.S. State-Level Policies Reshape Foreign Ownership in Farmland

The U.S. agricultural real estate sector is undergoing a seismic shift as state-level policies increasingly restrict foreign ownership of farmland. These measures, driven by national security concerns and geopolitical tensions, are reshaping the risk landscape for investors. From Idaho to Texas, lawmakers are tightening controls on foreign entities from "adversary" nations, creating a patchwork of regulations that could amplify volatility in agricultural real assets while redefining the calculus for global capital.

A Surge in State-Level Restrictions

In 2024–2025, six U.S. states-including Idaho, Georgia, Nebraska, Tennessee, and Utah-amended existing laws to expand restrictions on foreign ownership of farmland, while three states (Kentucky, Texas, and West Virginia) introduced new measures. For instance, Idaho's House Bill 356 and Senate Bill 1149 now prohibit foreign principals from "adversary" nations (e.g., China, Russia, Iran) from holding agricultural land, forestland, water rights, and mineral rights. The law mandates divestment by December 28, 2025, and incentivizes whistleblowers to report violations. Similarly, Texas's Senate Bill 17 bans foreign entities from "designated countries" from acquiring any interest in real property, with penalties including civil fines and felony charges according to the report.

These laws reflect a broader trend: a 2025 Michigan State University study found that over 6,700 state legislators across 34 states have introduced bills targeting foreign ownership of farmland since 2023, driven by concerns over national security and critical infrastructure vulnerabilities. The study highlighted cases such as Chinese-owned land near U.S. military bases, which have fueled bipartisan support for tighter controls.

Federal and State Synergies

While federal law, such as the Agricultural Foreign Investment Disclosure Act (AFIDA), remains a reporting tool rather than a prohibition, recent federal actions signal alignment with state-level efforts. The USDA's 2025 National Farm Security Action Plan explicitly positions agriculture as a national security priority, pledging to strengthen AFIDA's compliance requirements and penalties. Meanwhile, the GAO's 2024 report criticized federal oversight for gaps in data collection and coordination with the Committee on Foreign Investment in the United States (CFIUS), urging reforms to close loopholes.

This federal-state collaboration has created a dual-layered regulatory framework. For example, Kentucky's Department of Agriculture now reviews federal AFIDA filings for potential violations, centralizing enforcement. Such coordination raises the stakes for foreign investors, who must navigate both state-specific rules and federal scrutiny.

Geopolitical Implications for Investors

The ripple effects of these policies are profound. First, they heighten geopolitical risk by entangling agricultural real assets in U.S.-China and U.S.-Russia tensions. For instance, Texas's SB 17 has already faced legal challenges from Chinese plaintiffs, who argue it violates the Fair Housing Act and is preempted by federal law. If upheld, such laws could escalate trade disputes and deter foreign capital from U.S. farmland-a sector that attracted $1.2 billion in foreign investment in 2024.

Second, the patchwork of state laws introduces operational complexity. Investors must now assess jurisdiction-specific risks, such as Idaho's strict divestment deadlines or Virginia's reliance on the U.S. Secretary of Commerce to define "foreign adversaries". This fragmentation could lead to market inefficiencies, with farmland in restrictive states trading at discounts compared to regions with more permissive policies.

Opportunities Amidst the Uncertainty

Despite the risks, these policies may create opportunities for domestic investors and agribusinesses. As foreign capital retreats, U.S. buyers could gain access to undervalued assets, particularly in states with aggressive divestment mandates. For example, Idaho's requirement for foreign adversaries to exit by late 2025 could spur a wave of land sales at favorable prices. Additionally, the USDA's beefed-up security plan may incentivize domestic ownership through subsidies or tax breaks, further tilting the market in favor of local stakeholders.

Investors should also consider the long-term geopolitical context. With global food security becoming a strategic asset, U.S. farmland may retain its appeal as a store of value-even under tighter regulations. The key will be identifying regions where state policies align with federal support, minimizing legal and regulatory friction.

Conclusion

U.S. state-level policies on foreign farmland ownership are no longer peripheral; they are central to assessing geopolitical risk in agricultural real assets. As lawmakers continue to prioritize national security over open markets, investors must adapt to a landscape where regulatory uncertainty and geopolitical tensions are inextricably linked. The coming months will test the resilience of these laws in court and in practice, but one thing is clear: the era of unimpeded foreign investment in U.S. farmland is over.