Arizona governor moves to end Saudi-owned farm Fondomonte’s controversial leases

Arizona Gov. Katie Hobbs said Monday that her administration would effectively kick a Saudi-owned alfalfa farm off a critical stretch of state land, a forceful step that speaks to the firestorm of controversy over foreign extraction of natural resources as well as deepening dilemmas over water scarcity as climate change dries out the West.

The move will prevent the Saudi-owned company, Fondomonte Arizona, from pumping groundwater that could one day serve as backup for booming urban areas. Currently, the company uses the water to grow alfalfa to feed the kingdom’s dairy cows.

Fondomonte came under fierce bipartisan criticism on the campaign trail last year, and Hobbs, a Democrat who took office in January, has been under pressure to act. In a statement, she said the state land department had terminated one lease held by the company and decided not to renew three other leases when they expire in February. The leases cover about 3,500 acres of desert terrain west of Phoenix, in an area called the Butler Valley.

A Washington Post investigation in July found that state land planners have been raising alarms about Fondomonte’s presence in the Butler Valley since its arrival in 2015 under then-Gov. Doug Ducey, a Republican. At the time, planners warned that the water there might one day have a better use, and that the state was not charging sufficiently for access to the land, given the value of the dwindling natural resource underneath it. Experts within the state land department also raised concerns in subsequent years about upgrades and other changes made by Fondomonte to the land, according to emails released in response to a public records request.

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The Post previously reported that aides to Hobbs prepared a memo in June recommending against renewal of the leases next year.

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Hobbs said Monday the state was moving immediately to terminate the one lease, covering about 640 acres, after finding that Fondomonte had failed to rectify problems previously brought to the company’s attention, including a lack of fuel containment equipment. An inspection in mid-August found that the problems had persisted for nearly seven years, according to the statement from the governor’s office.

“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 the statement.

“It’s unacceptable that Fondomonte has continued to pump unchecked amounts of groundwater out of our state while in clear default on their lease,” she said, promising to do “everything in my power to protect Arizona’s water so we can continue to sustainably grow for generations to come.”

Fondomonte fired back against Hobbs, disputing that it had breached the terms of its lease and warning that booting the company from state land “would set a dangerous precedent for all farmers on state land leases.” A spokesman, Barrett Marson, said the company was reviewing the state action and “will explore all avenues to ensure there is no discrimination or unfair treatment.”

The decision will not end Fondomonte’s presence in the state. The company owns about 10,000 acres of land in nearby Vicksburg, and it has a separate lease of state-owned land in that area as well. A letter sent Monday from the state land department to Fondomonte indicates that the company can appeal the lease cancellation, which is effective in 30 days.

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Fondomonte is a wholly owned subsidiary of Riyadh-based food and beverage giant Almarai, which grows water-intensive crops in other regions of the world to avoid depleting the kingdom’s limited supply of the natural resource. Since 2015, one of those regions was the Butler Valley. Agriculture is possible in the valley, smack in the middle of the Sonoran Desert, thanks only to the water drawn through wells like soda through straws. Because of minimal natural recharge and scarce rainfall, water pumped from the basin is essentially mined, with no replacement.

The Butler Valley is especially critical because it is one of just several so-called transport basins, where state law allows transfer of water to cities. But Fondomonte’s leases, which it secured for below-market rates, gave it the ability to pump unlimited supplies of the scarce resources.

In a lengthy statement issued to The Post over the summer, Fondomonte’s general manager, David Kelly, said the company follows the same rules that govern farming operations throughout the state while going out of its way to save water.

“All we ask is to be measured according to the same standards as every other farming leaseholder on state land,” he said in an email, arguing that the company’s “best-in-class irrigation technology and equipment” made Fondomonte’s operation in the Butler Valley “one of the most efficient and highly productive farms in not only Arizona, but the entire Southwest.”

Kris Mayes, Arizona’s Democratic attorney general, praised the governor’s move against the foreign-owned farm but said it should have been made sooner. Mayes, whose office represents the state land department, said the recent inspections “confirmed what we suspected — Fondomonte has been in violation of its leases for many years.”

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“The failure to act sooner underscores the need for greater oversight and accountability in the management of our state’s most vital resource,” said Mayes, who emerged as a vocal critic of Fondomonte on the campaign trail last year.


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