By Lisa Baertlein and P.J. Huffstutter
July 2 (Reuters) - Missouri Governor Jay Nixon vetoed two bills on Tuesday that would have cleared the way for foreign ownership of farmland and potentially eliminated obstacles to the planned $4.7 billion purchase of Smithfield Foods Inc by a Chinese company.
Missouri and at least seven other U.S. states including Iowa, Nebraska, Minnesota, North Dakota, Oklahoma, South Dakota and Wisconsin, have often-overlooked laws that prohibit foreign ownership of agricultural land.
Nixon vetoed state Senate Bill 9, which contained a provision that would have struck down the existing ban on foreign ownership of agricultural land in the state. The provision would have allowed non-U.S. businesses to own up to a total of 1 percent of the state's agricultural lands - or about 300,000 acres of farmland, an area the size of New York City.
The provision had been inserted as an amendment to the larger omnibus agriculture bill after it had already been rejected by a legislative committee and was opposed by leading agricultural groups, Nixon's office said in a statement.
"Not only was this provision inserted into the bill without a public hearing, it was done so after the provision was rejected by at least one legislative committee on agriculture, as well as publicly opposed by leading Missouri agricultural groups," Nixon said.
The governor also vetoed Senate Bill 342, which also would have allowed foreign ownership of farmland.
The decades-old statutes are virtually untested and some foreign farmland owners work around them by shifting their property into majority-U.S. owned subsidiaries.
The laws are potential complications to the proposed acquisition of Smithfield, the world's largest pork processor, by Shuanghui International Holdings, China's leading pork producer. The deal, valued at $7.1 billion including debt, would be the biggest takeover of a U.S. company by a Chinese company.
"Smithfield Foods and Shuanghui International identified this issue during their discussions and it presents no obstacles to closing the proposed combination," Smithfield said in a statement.
"We intend to consult and work closely with appropriate state officials on this matter as needed after the closing," Smithfield said.
Shuanghui declined to comment.
Missouri lawmakers have the option of undoing Nixon's action when they meet in September for an annual veto override session, an assembly librarian said.
Reuters reported in June that Missouri Senate Bills 9 and 342 were passed by the legislature on the last day of its session, less than two weeks before the Smithfield deal was announced on May 29.
Smithfield does not disclose specifics of its property holdings, but Missouri court filings showed that it owns some agricultural land through subsidiary Murphy-Brown of Missouri.
That unit, previously called Premium Standard Farms, is the largest hog producer in Missouri.
Smithfield Foods shares on Tuesday were down 2 cents, or 0.06 percent, at $32.75 in after hours trading.