Saudi farm brings Arizona water controversy to boiling point

A Saudi Arabian company is at the center of a water controversy in Arizona that bubbled to the surface during the 2022 election cycle. While Canadian-controlled companies are by far the largest foreign owners of agricultural land in the state, it is the 10,000-acre Saudi-owned alfalfa farm that has garnered the most attention.

The southwestern United States is experiencing its worst drought in 1,200 years, what experts call a “megadrought.” Despite this, “irrigated agriculture” on Arizona farms consumes roughly “74% of the available water supply,” according to the Arizona Department of Water Resources website.

“Arizona and the rest of the stakeholders on the Colorado [River] have managed to kick the can down the road for 100 years, but the west has grown beyond the physical reality of the river. There’s just not enough water anymore to support nonstrategic growth,” water policy expert Dan Schaefer told The Media Line.

Arizona is the leading producer of alfalfa in the US, shipping the crop to other countries as well as to other US states.

Illegal to grow in Saudi Arabia but not in Arizona

While it is illegal to grow alfalfa in Saudi Arabia because of the amount of water it requires, Arizona’s laws give those who own or lease land almost unlimited rights to extract water from their land.

Saudi company Fondomonte, a subsidiary of Saudi dairy giant Almarai, bought vast tracts of desert in western Arizona on top of a massive groundwater aquifer in part because there are no regulations on how much water can be pumped out of the ground. The company uses the land to grow alfalfa for livestock in Saudi Arabia.

Although what the company is doing is entirely legal and, for it, a smart business practice, it has rubbed many Arizonans the wrong way.

Arizona recently announced a shortfall in the 100-year water supply, triggering a moratorium on building permits for residential homes that require wells. Last month, well drilling permits for the Saudis were revoked.

However, the water saving for Arizona is just a drop in the proverbial bucket. More will have to be done.

“For Arizona, strategic growth means we double down on smart legislation like the 1980 Groundwater Act, continue to build flexible infrastructure and storage to get through dry years, expand reuse, and potentially the most painful but most impactful change is coming to terms with the biggest water user in the state: irrigating feed crops for beef and dairy,” Schaefer said.

Arizona Attorney General Kris Mayes, who took office last January, promised that she would tackle water use issues in the state.

“For too long, our state leaders have been asleep at the wheel while this crisis has only grown. With new state leadership and the ever-increasing urgency of the issue, now is the time for the state government to get serious about regulating groundwater across Arizona and fulfill existing statutory duties so Arizona as we know it can continue to exist,” Mayes said in a press release.

Arizona State Representative Tim Dunn (Legislative District 25) told The Media Line that the issue was not the nationality of the farm’s owners, but their access to unlimited water via a state lease.

“The particular farm that is hitting the news all the time is the one for which the lease is up next year. … Some people have issues with it being foreign-owned, some people have issues over shipping alfalfa out of the state. Some people have issues with just farming in general,” he said.

Dunn, who is chairman of Arizona’s land and agriculture committees and vice-chairman of the Natural Resources, Energy and Water Committee, is also a lifelong farmer with a degree in agriculture. 

Arizona has four transfer basins that, by state statute, provide Arizona cities with a means to backfill water shortfalls. The Saudi farm planned on drilling into one of those transfer basins for water, but its permit was denied by the state.

According to Dunn, that particular transfer basin is a water “savings account for the future” and that discussing its use “is a valid conversation to have, to see how we want to use our water as a state.”

He views foreign-owned farms as an asset to Arizona’s economy.

“I don’t have a particular problem with the Saudis owning and working it,” he said. “The same company ships a lot of [Arizona] products along with what they grow. … They are hiring local people, they are paying taxes, they are buying fuel, they are buying electricity. Whether it is a foreign-owned company or a private company, they are paying for products and services on these farms.”

He worries that Arizona may take its battle against foreign-owned farms too far.

“When you start going after farms, are they going to come after my farm and my ability to ship my products next? It is a slippery slope,” Dunn said.

As well as alfalfa, Arizona farmers export wheat, cotton, and a host of other agricultural products around the world.

What happens in Arizona is being watched across the United States, which will either see the state as a model for the country or as a warning to those in drought-stricken areas who are not willing to act.

Moving forward will require input and buy-in from a lot of stakeholders, but the West has a long legacy of cooperation. I’m confident we’ll figure it out,” Schaefer said.

Some 40 million acres of US agricultural land are foreign-owned. Canadian and European companies own 62% of the foreign-owned land, with Canadian companies owning the most, 12,845,209 acres, followed by the Netherlands, with 4,875,034 acres. No Middle Eastern or Chinese companies make the top 10 list of foreign-owned agricultural acreage.

According to a report by The Intercept news organization, Thomas Galvin, an attorney at Rose Law Group who was appointed to the Maricopa County Board of Supervisors in 2021, lobbied on behalf of the Saudi farm. Neither Galvin nor Rose Law Group responded to The Media Line’s numerous requests for comments.

A spokesperson for the Arizona Attorney General’s Office told The Media Line the office did not have any new comments on the matter.