Saudi company faces blowback over water use in Arizona

Reuters/Rebecca Noble

• Fondomonte’s lease expires
• Land was used to grow alfalfa
• Company accused of ‘operational violations’

The US state of Arizona has cancelled land lease deals with a subsidiary of the Saudi dairy company Almarai after complaints of groundwater being depleted in the arid region.

The cancellation highlights tensions over corporations controlling foreign land for food security. 

In 2014 Almarai’s Fondomonte bought and leased thousands of acres in Arizona and California, after Gulf states went on a global spending spree to source food abroad, prompted by the 2008 financial crisis and rising fears over climate change. 

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But Arizona’s governor, Katie Hobbs, a Democrat who came to office last year campaigning on overuse of free water, said last week that the last of four leases held by Fondomonte in the Butler Valley had been allowed to expire, promising to “protect Arizona’s water security”. 

“Fondomonte is no longer irrigating on any of its Butler Valley leases,”  Hobbs’s office said in a statement. 

“Visual inspections also confirmed Fondomonte has begun taking steps to vacate the property.”

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Fondomonte confirmed to AGBI that it had vacated the land and would work with the state to resolve any outstanding disputes. 

“Fondomonte has ceased its farming operations at the Butler Valley state-leased land property,” it said in a statement. 

“The company remains committed to working with the state to resolve outstanding issues as it removes its equipment and infrastructure in accordance with the terms of the lease.”  

State officials in Arizona had accused Fondomonte of a number of operational violations, which the company appealed against in court. 

Arizona rents out parcels of its vast amounts of state-owned land to private companies, and those leases in turn generate a profit for the State Land Trust. 

But vague rules on groundwater use in rural areas angered local farmers and urban planners in growing cities such as the state capital, Phoenix, making free access to aquifers a political hot potato. 

The US government says foreign entities and individuals control around 3 percent of US farmland, but Butler Valley was one of the first cases to provoke opposition. 

Fondomonte used the land to grow alfalfa for export to water-starved Saudi Arabia where it fed livestock for Almarai’s dairy products. 

Almarai also farms land in Argentina, which has also faced severe drought conditions in recent years. 

A Public Investment Fund-owned company procures wheat from Ukraine through a similar arrangement, and the futuristic city Neom, one of Saudi Arabia’s giga-projects, includes a food division called Topian, which has the goal of ensuring a “sustainable food supply”. 

A spokesman for Fondomonte said similar cases could arise elsewhere in Arizona. 

“There are many companies and lots of farmers who farm on state land, use water and grow alfalfa. They may have some issues in the future,” he said.