Arizona governor revokes Saudi-owned alfalfa farm lease, announces nonrenewal of others

Arizona Gov. Katie Hobbs (D) declared Monday that she would be revoking the lease of a Saudi-owned alfalfa venture that has for years siphoned off state water resources and rattled residents across party lines.

The governor’s office announced the immediate cancellation of one of four leases in Arizona’s Butler Valley held by the company Fondomonte, after deeming the firm “in significant ongoing default of its lease dating back to 2016.”

The other three Butler Valley leases, set to expire in February, would not receive renewals, the announcement added.

“I’m not afraid to do what my predecessors refused to do — hold people accountable, maximize value for the state land trust, and protect Arizona’s water future,” Hobbs said in a statement.

Fondomonte acquired its Butler Valley leases, which cover about 3,500 acres of land northwest of Phoenix, in 2015. The region is home to critical groundwater supplies, in a desert state that is thirsting for such resources.

While Fondomonte received permits for its water wells in 2016 — and has since been growing alfalfa to nourish cattle in Saudi Arabia — the firm made headlines last year when The Arizona Republic exposed its below-market lease terms.

With orders from Hobbs, the State Land Department conducted site inspections in August and determined that the company had failed to address defaults already identified in November 2016, according to the governor’s office.

Among the deficiencies left unresolved for seven years was a failure to install a system designed to contain leaks in diesel storage units, Hobbs’s office noted.

“It’s unacceptable that Fondomonte has continued to pump unchecked amounts of groundwater out of our state while in clear default on their lease,” the governor said.

But even after Monday’s decision — which can be appealed — the company has another 9,834 acres in Vicksburg, about 20 miles due south of Butler Valley.

Fondomonte is a subsidiary of Saudi Arabian dairy giant Almarai, which secured land in Arizona for growing alfalfa — a highly water-intensive crop — to feed its cattle at home.

Saudi Arabia instituted a near ban on “cultivating green fodder” in November 2018, with the goal of alleviating pressure on water resources, according to an analysis from the Dutch government.

Upon securing the Vicksburg land in 2014, Almarai reported its plans to “supply of the highest quality alfalfa” — a move considered “in line with the Saudi government direction toward conserving local resources.”

Arizona was a particularly attractive environment for such operations due to legal loopholes in state groundwater laws that essentially allow for unbridled water use. Historically, this nonrestrictive environment has attracted both domestic and international companies that are unable to conduct such water-intensive agriculture at home.

In addition to the immediate revocation of one of the Butler Valley permits, the governor’s office determined that renewing the other three would not be in the state’s best interest “due to excessive amounts of water being pumped from the land — free of charge.”

Butler Valley, Hobbs’s team stressed, is one of Arizona’s five so-called water transportation basins, through which groundwater is conveyed throughout the state.

“My administration has taken swift action to hold defaulting, high-volume water users accountable,” Hobbs added in a separate statement on X, the platform formerly known as Twitter.

“Moving forward, I will continue to do everything in my power to protect Arizona’s water so we can sustainably grow for generations to come,” the governor said.

In response, Barrett Marson, a spokesperson for Fondomonte, said in a statement that the company believes that the state is mistaken that the firm is in breach of its lease.

“Fondomonte will work with the governor’s office to highlight these factual errors,” Marson said, noting that the company is adhering to all conditions of its lease.

“As for the other leases the state intends to not renew, this would set a dangerous precedent for all farmers on state land leases, including being extremely costly to the state and Arizona taxpayers,” he added.

Marson stressed that Fondomonte intends to “explore all avenues to ensure there is no discrimination or unfair treatment,” while also continuing to work with the state on resolving groundwater issues.

Taking down Fondomonte was a core campaign issue for both Hobbs and state Attorney General Kris Mayes, both of whom had pledged to repeal the state’s deals with the company.

Mayes applauded the decision Monday as “a good step in the right direction for the future of Arizona,” while noting that further action is necessary to protect the state’s water resources.

Slamming the prior administration for enabling “foreign corporations to stick straws in the ground,” the attorney general described this behavior as no less than “scandalous.”

“While today’s announcement is commendable, it should have been taken by state government much earlier,” Mayes said a statement.

“The failure to act sooner underscores the need for greater oversight and accountability in the management of our state’s most vital resource,” she added.

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