The administration of Arizona Governor Katie Hobbs has made a significant move this week by terminating state land leases that have granted a Saudi-owned farm unlimited access to pump groundwater in the dry southwestern state for several years.
Lease Cancellation and Non-Renewal
Governor Hobbs, a Democrat, announced on Monday the cancellation of Fondomonte Arizona’s lease in Butler Valley, located in western Arizona. Furthermore, three other leases held by the farm up for renewal next year will not be renewed.
Violations Uncovered
An investigation conducted by the governor’s office revealed that the foreign-owned farm had violated several of its lease terms. Governor Hobbs expressed her deep concern over the fact that the farm “continued to pump unchecked amounts of groundwater out of our state while in clear default on their lease.”
Appeal from Fondomonte Arizona
Fondomonte Arizona, which is a subsidiary of Saudi dairy giant Almarai Co., has expressed its intention to appeal the governor’s decision to terminate its 640-acre lease in Butler Valley. Overall, Fondomonte farms approximately 3,500 acres in the arid desert area near Phoenix.
Background and Water Usage Concerns
Fondomonte raised eyebrows back in 2014 when it purchased almost 10,000 acres of land for $47.5 million in Vicksburg, Arizona, approximately 20 miles away from Butler Valley. The ongoing drought in Arizona has brought increased attention to the company’s water usage and the broader issue of foreign-owned farms and groundwater pumping.
Lease Termination Grounds
In addition to violating lease terms, the governor’s office highlighted a range of violations related to Fondomonte’s storage of hazardous materials and other issues. Despite being notified of these violations in 2016, the company failed to rectify the situation even after seven years, leading the Arizona State Land Department to establish grounds for lease termination.
Excessive Water Pumping
The Arizona governor’s office further revealed that three additional leases held by Fondomonte in Butler Valley will not be renewed due to the “excessive amounts of water being pumped from the land — free of charge.”
The Importance of Butler Valley’s Groundwater
The Arizona Department of Land Management oversees the land owned by the state, including the lease granted to Fondomonte. The groundwater in Butler Valley holds significant value due to a state law that permits its pumping to other areas. This makes it a sought-after resource for cities like Phoenix, which also face water supply-related challenges amidst a rapidly growing population.
Contrasting Regulations for Groundwater Pumping
Cities such as Phoenix and Tucson in Arizona adhere to strict limitations on groundwater pumping as mandated by a state law established in 1980. The law aims to safeguard the state’s aquifers. However, in rural areas, water users face minimal requirements for pumping from underground aquifers. They only need to register their wells with the state and utilize the water for activities deemed “beneficial use,” such as farming.
Fondomonte’s Diverse Agricultural Operations
Fondomonte is involved in agricultural activities in both Arizona and Southern California’s Palo Verde Valley, sourcing water from the diminishing Colorado River. Despite this, its operations in California have garnered less attention. Not all of Fondomonte’s Arizona farms are affected by the recent decision made by the governor. Additionally, the Southwest hosts other foreign-owned farming companies, including Al Dahra ACX Global Inc., owned by the United Arab Emirates. Al Dahra is a significant exporter of hay and cultivates forage crops in both Arizona and California.
Almarai’s Global Farmland Holdings
Almarai, along with its subsidiaries, maintains farmland outside of Saudi Arabia, as seen in its investments in the Southwest. In addition to Arizona, it cultivates tens of thousands of acres in Argentina, a country that has been grappling with severe drought conditions in recent years.
Foreign Ownership of U.S. Farmland
Approximately 3% of U.S. farmland is controlled by foreign entities and individuals, according to the U.S. Department of Agriculture. Canada holds the largest share, predominantly in the form of forestland.
Positive Reception to the Governor’s Actions
Kris Mayes, the Democratic attorney general of Arizona, commended the governor for taking a firm stance against the foreign-owned farm. In April, Mayes announced the withdrawal of permits that would have allowed Fondomonte to drill new water wells due to inconsistencies found in their applications. Mayes believes that the governor’s decision is a step in the right direction and asserts that the state should have acted sooner. Criticizing the prior administration, Mayes labels their allowance of unrestricted groundwater pumping by foreign corporations for alfalfa export as scandalous.
