Saudi company's Arizona water use puts attention on foreign-owned farmland (2024)

(NewsNation) — A Saudi-owned dairy company with farmland in rural Arizona has sparked local tension over its use of the region’s groundwater amid a worsening drought.

For nearly a decade, Fondomonte Arizona, a subsidiary of Saudi Arabia-based Almarai Co., has been growing alfalfa — one of the most water-intensive crops — for livestock in the Gulf kingdom on land it purchased in La Paz County.

But now, the property has become a flashpoint for residents and local officials who are questioning why foreign companies are allowed to take advantage of loopholes in the state’s groundwater laws.

Those laws have allowed the company to draw an unlimited amount of groundwater from wells it operates in the area even as water is becoming a scarce resource across the region.

Last month, the state of Arizona rescinded drilling permits for two additional water wells for the company after authorities discovered inconsistencies in Fondomonte’s well applications. The two new wells would have pumped in just three minutes what a family of four uses in a month, the Associated Press determined.

“We just can’t — in the midst of an epic drought — afford to do dumb things with water in the state of Arizona anymore,” Attorney General Kris Mayes told The Associated Press.

The AG said she thought most Arizonans find it “outrageous” that the state is allowing foreign-owned companies to “use our water for free to grow alfalfa and send it home to Saudi Arabia.”

The situation in the American Southwest is just the latest example of local pushback against foreign entities on U.S. farmland.

In recent months, residents in North Dakota and Michigan have spoken out against plans to bring Chinese-owned companies to their communities.

Foreign entities and individuals control roughly 40 million acres, or 3% of U.S. farmland, according to the U.S. Department of Agriculture. Although, the majority of that land is owned by longtime allies.

Canadian investors hold the most U.S. land, with more than 12.8 million acres of agricultural and nonagricultural land. Investors from the Netherlands, Italy, Germany and the United Kingdom collectively hold 12.4 million acres — about 31% of foreign-held acres in the U.S.

China currently holds 384,000 acres of land in the U.S., which is around 1% of all foreign-held acres. The total holdings for Saudi Arabian investors is about 36,000 acres.

Despite its relatively small portion of the overall pie, China’s foreign investment in agriculture abroad has increased rapidly in recent years. The trend has led some lawmakers on Capitol Hill to raise national security concerns.

Sen. Mike Rounds, R-S.D., and Sen. John Tester, D-Mont., have introduced legislationto prevent foreign adversaries from buying American farmland. At least 11 state legislatures are considering similar laws.

Approximately 18 states already have laws that seek to restrict some degree of foreign ownership or investment in private agricultural land, according to theUniversity of Arkansas’ National Agricultural Center.

The Associated Press contributed to this report.