A Saudi company abusing water rights in the US lost its leases

The Saudi Arabian company drawing near unlimited groundwater in the drought-ridden Western United States had its land leases terminated by Arizona in October as a result of its practices.

The story of what happened in Arizona involves a Saudi-owned company that was banned from producing a water-intensive crop in its own country and instead opted to focus operations in the American West.

Fondomonte Farms is owned by one of Saudi Arabia’s largest dairy companies and had been growing water-intensive alfalfa in Arizona at a time when the state's supply was low. 

Farming alfalfa has been illegal in the mostly desert country of Saudi Arabia since 2016 because of how much water it takes to produce the crop according to a 2019 report from The Guardian. 

But the alfalfa being grown in the US wasn't used for consumption by humans. Instead, the crop was farmed to provide feed for Saudi Arabian cows owned by Fondomonte Farms' parent company, Almarai.

Photo by Twitter @almarai

The situation slowly came to a head in Arizona as drought conditions in the state pushed local farms to the brink, forcing state officials to consider a ban on foreign-owned farms. 

"Pumps are pumping water out of the ground that belongs to the State of Arizona, and essentially it's being exported to Saudi Arabia," state Attorney General Kris Mayes said in April 2023. 

Photo by Twitter @AZAGMayes

"We cannot afford to give our water away frankly to anyone, let alone the Saudis, for free," Mayes explained as she described the situation to Ben Tracy of CBS News. 

Fondomonte Farms has had a long history of buying up large tracts of land to gain access to an area’s all-too-important water rights, water that is desperately needed by Alamrai. 

In 2012, Fondomonte Farms bought 30,000 acres of land in Argentina and two years later acquired their first land in Arizona according to The Guardian’s Lauren Markham.

In 2015, the company bought 1500 acres in Blythe, California on the border with Arizona, and by 2019 owned 15,000 acres in the area, which Markham noted was about 16% of the entire irrigated valley that was fed by the Colorado River.

Little is known about how much water Fondomonte Farms is allowed to draw in the West, but CBS News was able to obtain documents dating back to 2014 showing that in Arizona, the company held the rights to more than 6000 acres of state-owned land and its water. 

"It is a scandal that the State of Arizona allowed this to happen," Mayes said, adding that, “We are on the cusp of a potential water disaster in the state of Arizona.”

The water situation in Arizona had gotten so bad that state officials from both parties worked on legislation to ban foreign companies from accessing the state’s water.

Republican State Representative Leo Biasiucci said that the new bill was “pretty simple” and aimed to protect America’s water resources so they could benefit the country. 

“We want to make sure the water is not being pumped and used for reasons that are not benefiting us at all,” Biasiucci said according to info from The Pew Charitable Trusts. 

“If we stop them from getting the land, they can’t pump the water, and that’s the goal. We want to stop that altogether.” Biasiucci added. 

Democratic State Representative Mariana Sandoval agreed with Biasiucci but added that no “out-of-state entities” should be pumping groundwater, even if they’re American.

According to a November 2022 report from CNN’s Ella Nilsen, it is forbidden under Arizona law to export the state's water. But produce like alfalfa and cotton, which use water resources, can be exported according to Arizona Geohydologist Marvin Glotfelty.

Arizona isn’t the only state that’s introduced legislation to stop foreign companies from accessing critical Western water supplies according to The Pew Charitable Trust. 

“Republican and Democratic lawmakers in Arizona, California, Texas, Utah, and Washington state are considering legislation that aims to protect their states’ water supplies by banning foreign companies from owning or leasing land,” the trust noted. 

In 2022, the Western United States was suffering from what experts were calling a “megadrought” according to NPR’s Alex Hager, which produced some of the driest conditions the region had seen in the last 1800 years. 

On October 3rd, 2023, Arizona Governor Katie Hobbs announced that the state was terminating Fondomonte's land leases after an investigation from her office found that some terms of the leases had been violated.

Photo Credit: Wiki Commons By Gage Skidmore from Surprise, AZ, United States of America - Katie Hobbs, CC BY-SA 2.0

Governor Hobbs explained that the Saudi company "continued to pump unchecked amounts of groundwater out of our state while in clear default on their lease," according to a report from CBS News in October.

Photo Credit: Wiki Commons By Jeff Vanuga / Photo courtesy of USDA Natural Resources Conservation Service

The investigation by the governor's office also revealed a number of other issues, including the improper storage of hazardous material by the company.

Photo Credit: Wiki Commons By Gage Skidmore / Flickr / CC BY 2.0

One 640-acre lease in Butler Valley was terminated and the State's Land Department also opted not to renew three other leases Fondomonte has in Butler Valley, citing "excessive amounts of water being pumped from the land — free of charge."

Photo Credit: Wiki Commons By Jeff Vanuga / Photo courtesy of USDA Natural Resources Conservation Service