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Termination of State Land Leases to Saudi-Owned Farm Over Groundwater Use Announced by Arizona Governor

by Ethan Kim
5 comments
Arizona groundwater leases

Arizona Governor Katie Hobbs has announced this week that her office will terminate state land leases that have allowed a Saudi-owned farm unrestricted access to groundwater within the parched southwestern state. Governor Hobbs, a member of the Democratic Party, revealed on Monday that the state has revoked the lease for Fondomonte Arizona in Butler Valley, located in western Arizona, and will not extend three other leases set to expire in the region next year.

The governor’s office had conducted an investigation that unveiled lease violations committed by the foreign-owned farm. Governor Hobbs expressed her disapproval, stating it was unacceptable for the farm to “extract indiscriminate volumes of groundwater from Arizona while flagrantly breaching their lease agreement.”

Fondomonte Arizona, a subsidiary of Saudi dairy conglomerate Almarai Co., cultivates alfalfa in Arizona, which is then used to feed livestock in Saudi Arabia, a country facing significant water shortages.

The company, through its spokesperson, has stated it will contest the governor’s decision to revoke its 640-acre (259-hectare) Butler Valley lease. In total, Fondomonte operates on approximately 3,500 acres (1,416 hectares) in the arid desert west of Phoenix.

Public attention was drawn to Fondomonte in 2014 when it acquired nearly 10,000 acres (4,047 hectares) of land for $47.5 million approximately 20 miles (32 kilometers) away from Butler Valley, in Vicksburg, Arizona. The increasing severity of drought conditions in Arizona has since amplified scrutiny of the company’s water consumption, as well as broader issues surrounding foreign-owned agricultural operations and groundwater extraction.

According to the governor’s office, the specific violations pertain to the improper storage of hazardous materials, among other matters. Fondomonte was alerted to these issues in 2016, but an August investigation showed that the farm had not addressed these issues even seven years later, providing the Arizona State Land Department with just cause to terminate the lease.

The State Land Department has also chosen not to renew three additional leases Fondomonte held in Butler Valley, citing the farm’s extraction of “exorbitant quantities of water from the land at no cost.”

The department is responsible for managing Arizona-owned land, which in Fondomonte’s case had been leased out. Butler Valley’s groundwater has particular significance due to state laws that potentially allow its transfer to other locations, making it valuable to rapidly expanding cities like Phoenix that also face water supply issues.

Regulatory limitations on groundwater extraction exist in Arizona’s urban centers like Phoenix and Tucson, enforced by a 1980 state law designed to preserve the state’s underground aquifers. However, fewer regulations apply in rural locations, where water users need only to register their wells with the state and use the water for activities defined as a “beneficial use.”

Fondomonte also conducts agricultural activities in Southern California’s Palo Verde Valley, where it relies on the dwindling resources of the Colorado River. This operation has faced less public scrutiny. Fondomonte is not the only foreign entity involved in farming within the Southwest; United Arab Emirates-owned Al Dahra ACX Global Inc. also operates in Arizona and California.

Almarai’s agricultural investments in the southwestern United States are merely a fraction of the company’s global farming operations, which also extend to tens of thousands of acres in Argentina, a country grappling with its own severe drought conditions.

According to the U.S. Department of Agriculture, approximately 3% of American farmland is under foreign ownership, with Canada being the most significant stakeholder—primarily in forestlands.

Arizona’s Democratic Attorney General, Kris Mayes, lauded Governor Hobbs for taking decisive action against the foreign-owned farm. Earlier in April, Mayes had announced that the state rescinded permits that would have enabled Fondomonte to drill new water wells, following the discovery of inconsistencies in its applications. On Monday, Mayes characterized the governor’s steps as a “move in the correct direction,” while also opining that the state should have taken action much sooner.

“The previous administration’s decision to permit foreign companies to insert wells into the ground and freely pump immense volumes of groundwater for alfalfa export was nothing short of scandalous,” said Mayes.


The Big Big News is supported by the Walton Family Foundation for its coverage of water and environmental policies. The AP bears sole responsibility for all content. For comprehensive environmental coverage by AP, visit https://bigbignews.net/climate-and-environment.

Frequently Asked Questions (FAQs) about Arizona groundwater leases

What prompted Arizona Governor Katie Hobbs to terminate state land leases to Fondomonte Arizona?

Governor Katie Hobbs decided to terminate the leases after an investigation by her office found that the Saudi-owned farm, Fondomonte Arizona, had violated some of its lease terms. Specifically, the farm was found to be extracting excessive amounts of groundwater and improperly storing hazardous materials.

What are the broader implications of this decision?

The governor’s action brings attention to the broader issues surrounding foreign-owned agricultural operations in Arizona and their impact on the state’s water resources. The decision could set a precedent for how water rights and land leases are managed, especially in areas struggling with drought and water scarcity.

What was Fondomonte Arizona’s reaction to the termination of the lease?

Through its spokesperson, Fondomonte Arizona has stated that it plans to appeal the governor’s decision to revoke its 640-acre lease in Butler Valley.

How much land does Fondomonte Arizona operate on?

Fondomonte Arizona operates on approximately 3,500 acres in Butler Valley, which is in the arid desert area west of Phoenix. The company also owns nearly 10,000 acres of land in Vicksburg, Arizona.

Are there other foreign-owned farms operating in Arizona?

Yes, Fondomonte is not the only foreign company involved in farming in the Southwest. For example, United Arab Emirates-owned Al Dahra ACX Global Inc. also operates in Arizona and California.

What were the specific violations committed by Fondomonte Arizona?

The violations relate to the improper storage of hazardous materials among other issues. Fondomonte was notified of these violations in 2016 but did not rectify them, which gave the Arizona State Land Department grounds to terminate the lease.

What restrictions exist on groundwater extraction in Arizona?

In urban centers like Phoenix and Tucson, there are regulatory limitations on groundwater extraction enforced by a 1980 state law aimed at preserving the state’s underground aquifers. However, in rural areas, fewer regulations apply.

How does this action relate to water policies in other states or countries?

The termination of Fondomonte’s leases brings into focus the international dimension of water resource management, as the farm is a subsidiary of Saudi conglomerate Almarai Co., which also has agricultural operations in water-stressed areas like Argentina.

What did Arizona’s Attorney General say about the governor’s decision?

Arizona’s Democratic Attorney General, Kris Mayes, praised Governor Hobbs for taking decisive action against the foreign-owned farm. Mayes had previously rescinded permits that would have allowed Fondomonte to drill new water wells due to inconsistencies in its applications.

More about Arizona groundwater leases

  • Arizona Governor Katie Hobbs’ Official Statement
  • Fondomonte Arizona Company Profile
  • Arizona State Land Department
  • 1980 Arizona Groundwater Management Act
  • U.S. Department of Agriculture Foreign Ownership Report
  • Al Dahra ACX Global Inc. Company Profile
  • Almarai Co. Global Operations
  • Arizona Attorney General Kris Mayes’ Press Release

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5 comments

Mike J. October 4, 2023 - 10:05 am

Whoa, didn’t see this coming. So the governor’s finally taking some action, huh? About time, I’d say. Water’s a big issue here, especially with the drought.

Reply
Tom H. October 4, 2023 - 11:38 am

This is a big deal, but whats gonna happen to all that land now? Hopefully it doesn’t just sit there unused or, worse, get used for something even less sustainable.

Reply
Daniel K. October 4, 2023 - 4:23 pm

Wow, this story’s a wake-up call. Makes you wonder how many other foreign companies are getting a pass. Got to keep an eye out on these things.

Reply
Sarah W. October 4, 2023 - 9:53 pm

its really interesting to see how politics and environment intersect like this. What took so long though? I mean, they were notified in 2016!

Reply
Jenny Q. October 4, 2023 - 10:44 pm

Kudos to the governor for taking this step. But what about the local farms? Do they get as scrutinized as the foreign ones? Just curious.

Reply

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