A Saudi dairy firm that grows hay in Southern California and Arizona for export to the Center East is about to lose a number of leases that enable it to pump limitless water from government-owned farmlands.
Arizona Gov. Katie Hobbs introduced this week that the state has terminated one of many leases held by the corporate, Fondomonte, and won’t renew three different leases once they expire in February.
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The motion, though partly centered on particulars of the corporate’s rental agreements, displays issues amongst some political leaders about using water to export alfalfa and different water-intensive crops at a time when continual shortages are prompting calls to rein in water use alongside the Colorado River and all through the Southwest.
Fondomonte, a subsidiary of the Saudi dairy firm Almarai, additionally owns hundreds of acres of farmland in Arizona and California, producing alfalfa that’s shipped abroad to feed cows.
The leases of state-owned land in Arizona have generated heated debate, as a result of they’ve allowed the corporate to pay a below-market lease price and never disclose its water use — regardless of issues concerning the depletion of groundwater in one of many driest elements of the nation. State officers stated a evaluate discovered issues that led them to behave.
Hobbs, a Democrat, stated she directed the State Land Division to conduct inspections of the biggest leases of state belief lands, and located that Fondomonte had a “important ongoing default of its lease” relationship to 2016.
“It’s unacceptable that Fondomonte has continued to pump unchecked quantities of groundwater out of our state whereas in clear default on their lease,” Hobbs stated in a written assertion. She stated her administration is appearing “to carry defaulting excessive quantity water customers accountable and convey an finish to those leases.”
Fondomonte stated it’s going to enchantment the state’s termination of its lease and has contacted the governor’s workplace about “factual errors” within the determination.
The choice impacts leases for 3,520 acres in a distant space of western Arizona desert known as Butler Valley. The corporate additionally rents 3,088 acres of state farmland and different cattle-grazing lands beneath leases that aren’t affected by the choice, and owns 3,762 acres in western Arizona the place it depends on pumping groundwater.
In California, the corporate owns 3,375 acres of farmland close to Blythe, the place it pays the Palo Verde Irrigation District a flat price for Colorado River water to irrigate its alfalfa fields.
Arizona has been charging the corporate $25 per acre. And Fondomonte, like different firms that lease state land in Arizona, can pump limitless quantities of water from wells for gratis.
Critics of the leases praised the governor’s motion.
“I’m glad that it got here to an finish,” stated Holly Irwin, a La Paz County supervisor. “We’ve a overseas firm that’s leasing land from the State Land Division in Arizona, mining our pure useful resource.”
She identified that Fondomonte started shopping for and leasing land in Arizona after Saudi Arabia phased out the rising of cattle feed crops as a result of the nation’s aquifers had been depleted.
“We will’t afford to have our aquifers simply depleted,” Irwin stated.
A water truck pulls onto a street subsequent to a Central Arizona Challenge canal close to the Fondomonte farm in Butler Valley, Ariz., in June.
(Caitlin O’Hara / For the Washington Publish / Getty Photos)
The leases started producing criticism after an investigation by the Arizona Republic in 2022 revealed the discounted, below-market charges the state was charging, and the shortage of reporting concerning the quantity of water being pumped in Butler Valley, an space the place groundwater has been earmarked as a possible future water supply for Arizona’s rising cities.
Irwin and different critics have stated they’re involved the state is permitting overuse of groundwater on public lands, and that the state isn’t receiving almost sufficient in alternate for the water that’s being pumped to irrigate crops.
Barrett Marson, a Fondomonte spokesperson, stated the state is mistaken and the corporate has been adhering to the circumstances of its lease.
“We’ve carried out all the things required of us beneath these circumstances,” Marson stated. “Fondomonte will proceed to work with the state to display its compliance with the present lease necessities.”
Marson stated that not renewing the opposite three leases “would set a harmful precedent for all farmers on state land leases, together with being extraordinarily expensive to the state and Arizona taxpayers.”
“Fondomonte will discover all avenues to make sure there isn’t any discrimination or unfair therapy,” Marson stated.
The corporate has been paying $76,000 yearly for the 4 leases which can be being canceled or not renewed.
Specialists have stated the state ought to enhance rents for all firms that lease farmland, and may require them to reveal how a lot water they’re utilizing.
Arizona presently leases about 160,000 acres of state belief land for agriculture. A big portion of the proceeds goes to funding public faculties.
Fondomonte has been leasing land in Arizona for almost a decade, a lot of that point in the course of the administration of Gov. Doug Ducey, a Republican. Hobbs raised the difficulty throughout her marketing campaign final yr, during which she finally defeated Republican Kari Lake.
Arizona Atty. Gen. Kris Mayes has additionally examined the land offers, and earlier this yr revoked permits that will have allowed Fondomonte to drill extra wells on state-owned land — along with eight wells that information present the corporate has drilled in recent times whereas increasing its operation.
“It has been lengthy evident to Arizonans throughout our state that these leases by no means ought to have been signed within the first place,” Mayes stated. “The choice by the prior administration to permit overseas companies to stay straws within the floor and pump limitless quantities of groundwater to export alfalfa is scandalous.”
Mayes known as the governor’s motion a great preliminary step, and lengthy overdue.
“The failure to behave sooner underscores the necessity for better oversight and accountability within the administration of our state’s most important useful resource,” Mayes stated, calling for added steps to guard groundwater in rural areas.
In most rural areas of Arizona, groundwater stays unregulated and state legislation doesn’t restrict well-drilling or pumping.
Groundwater ranges have been dropping as giant farming operations have expanded and drilled extra wells, whereas some households have been left with dry wells and faucets. State leasing of farmland provides a layer of complication to the widespread issues, with overpumping occurring on public land, facilitated by state insurance policies.
The world of Butler Valley is likely one of the few groundwater basins in Arizona the place water can legally be pumped and transported by canal to city areas. The continued shortages on the Colorado River have heightened curiosity amongst officers in preserving that groundwater as a backup provide, stated Kathleen Ferris, a researcher at Arizona State College’s Kyl Middle for Water Coverage.
“I do assume that the cancellation of those leases is, partly, a response to shortage,” Ferris stated. “Nevertheless, whereas many have expressed outrage {that a} overseas firm has been allowed to pump Arizona groundwater to develop crops for export, the true difficulty is that Arizona lacks a complete coverage to handle groundwater provides in rural areas. The depletion of finite groundwater in these areas by increasing industrial-scale agriculture will proceed with out such a coverage, jeopardizing the water safety of these areas.”
The governor stated the state canceled one lease after Fondomonte failed, regardless of being informed in 2016, to incorporate “secondary containment buildings” on gasoline storage models on the land.
Hobbs stated the State Land Division additionally decided that renewing the three remaining leases in Butler Valley is “not in one of the best curiosity” of the state’s beneficiaries of the leases “as a result of extreme quantities of water being pumped from the land — freed from cost.”
Marson stated the corporate continued to be invested in Arizona and is dedicated to “environment friendly agricultural practices.”
“Fondomonte will proceed to work with Gov. Hobbs and her administration to debate groundwater issues transferring ahead,” Marson stated.
The desert aquifers that provide the farmland, like others in Arizona, maintain water that has amassed underground over hundreds of years. State information from six wells in Butler Valley present declines in groundwater ranges starting from 2 toes to 13 toes between 2010 and 2020.
The governor famous that the world “holds distinctive worth” as one among 5 water “transportation basins” that may be tapped when wanted for different elements of the state, and the one a type of that’s predominantly public land.
“I believe it’s an indication of nice concern on the a part of the state, nice concern on the a part of the governor, that this water is just too useful for use rising alfalfa,” stated Robert Glennon, a water legislation professional and regents professor emeritus on the College of Arizona.
He famous, nonetheless, that the USA is the world’s “foremost exporter of water within the type of farm merchandise,” whether or not soybeans, wheat, corn, alfalfa or nuts.
The bigger difficulty in Arizona, Glennon stated, is the necessity for the state to start out limiting groundwater pumping in unregulated rural areas, just like guidelines that exist already in Phoenix, Tucson and different city areas. Because the state of affairs stands, he stated, in giant elements of the state, “it’s nonetheless open sesame.”
“Anybody who desires can drill a properly and pump as a lot water as you need. And that’s simply the Wild West,” Glennon stated. “There must be statewide guidelines.”
Glennon stated he favors this kind of reform reasonably than transferring towards “protectionism.”
Glennon stated he additionally served greater than a decade in the past as a lawyer on a consulting crew for the Kingdom of Saudi Arabia, which was utilizing giant portions of water to develop alfalfa.
“One of many issues we stated was, ‘You’ll be able to’t use this fossil-age water within the kingdom. It’s simply approach too useful,’ ” Glennon stated. “‘You need to as an alternative go on the open market, and purchase the alfalfa, the worldwide market.’ “
He stated that’s exactly the method Saudi Arabia has taken in recent times.
Irwin stated she thinks Arizona’s farmland leases have been “utterly mismanaged by the state,” each by not requiring reporting of water use, and by permitting Fondomonte and different firms a reduced price on lands the place the state doesn’t pay for enhancements.
“Not solely had been they getting a break on the leases, however that was cash that was taken away from our youngsters’ schooling, which isn’t acceptable,” Irwin stated. She stated state officers “shouldn’t be giving out discounted leases to anyone, whether or not they’re overseas or not.”
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