Last fall, Governor Katie Hobbs announced that Arizona was terminating the farmland leases of Fondomonte – a subsidiary of the Saudi-owned dairy giant Almarai – on about 3500 acres of the Butler Valley State Land Trust. At these sites, Fondomonte was growing alfalfa, which it shipped back to Saudi Arabia as cattle feed for its dairy industry – helping to deepen Arizona’s water crisis on the state’s dime.
Following the governor’s October 2023 announcement, one of the Butler Valley leases was canceled immediately, and the others were not renewed in February 2024.
In early March, various news outlets celebrated the end of the leases, carrying an Associated Press article with the headline, “A Saudi business is leaving Arizona valley after it was targeted by the state over groundwater use.” Other outlets shared similar headlines about the Saudi departure, like the Havasu’s Todays News Herald announcing: “State, local leaders optimistic as Saudi farming company pulls out of La Paz basin.”
But these headlines are misleading: the Saudi dairy company has not left Arizona.
In fact, the leases terminated by Governor Hobbs only amount to about one quarter of Fondomonte’s total farm holdings in Arizona prior to October. Besides the 3500 acres that the company leased from the state, it privately controls almost 10,000 acres more further south and closer to Vicksburg.
According to the company’s press release in 2014 when that deal was announced, the Vicksburg holdings include “3,604 acres of freehold land, 3,080 acres of agriculture lease hold land and 3,150 acres of grazing lease hold land.”
Just a handful of reports about the Governor’s cancelation of the Butler Valley leases mentioned this, briefly adding as the 2024 AP article did, that “Fondomonte has several other farms elsewhere in Arizona that are not affected by the decision.”
This is a serious problem. It is a problem because, although those other farms “elsewhere in Arizona” are not on state trust land, they are still located in La Paz county – where groundwater extraction is still unregulated and where Fondomonte is still pumping at an unsustainable rate to grow alfalfa for the massive dairy herd back in Saudi Arabia that the farms were original bought to feed.
People are right to celebrate the Butler Valley lease cancellations, but canceling the Butler Valley leases is not enough. It’s not enough because the Saudis are still growing alfalfa on their privately-held land near Vicksburg. And so are the Emiratis for that matter: the UAE agricultural behemoth Al Dahra is likewise growing alfalfa on about 3000 acres of privately-held farmland near Wenden. And they too have used state resources to lubricate their operations – in this case, using investment from the State Pension Fund to buy the land and drill new wells.
And it’s not enough because kicking Fondomonte off the Butler Valley trust land does nothing to change Arizona’s scandalous 1980 Groundwater Management Act and the looming water crisis it has caused.
The law has crippled groundwater regulation in most of the state and large farming operations have been exploiting it for decades. This includes American and foreign-owned companies. Even if the state can stop foreign companies from abusing Arizona’s lax water laws, American mega-dairies and large-scale alfalfa farms will continue to pump the state’s aquifer water at alarming rates.
Targeting the Saudi farms is an easy way to gain political points among Arizona voters, but ending one outrageous deal is not a path to the structural change required to correct Arizona’s outdated water laws and reform state farm policy that is built on dangerously unsustainable water use.
Without a total overhaul of Arizona groundwater policy, and an end to the 1980 Groundwater law, there will be no meaningful impact on the state’s critical water situation.
For real transformative action, the state needs to replace the 1980 Groundwater Act to mandate regulation across Arizona’s entire territory, and to ensure that the laws apply to all companies – foreign or domestic.
Natalie Koch is Professor of Geography at Syracuse University’s Maxwell School of Citizenship and Public Affairs, and author of Arid Empire: The Entangled Fates of Arizona and Arabia (Verso 2022).
