Saudi-owned farm faces uncertainty after Arizona leases end

A water fight is growing in Arizona

Water is becoming a major issue in western Arizona, where farming, drought, and groundwater use are colliding. One company at the center of the debate is Fondomonte Farms, a Saudi-owned agricultural operation that has grown alfalfa in the desert.

Arizona officials have canceled or declined to renew several of the company’s state land leases after an investigation found lease violations. The controversy has not ended, though. Questions about groundwater pumping and who should control scarce water supplies are now driving a much bigger debate across the state.

Why alfalfa needs so much water

Alfalfa is an important livestock feed, but growing it in a desert environment requires substantial irrigation. Fondomonte has used groundwater to support its farming operations in western Arizona, an area already facing pressure from declining water supplies.

The company attracted attention because its alfalfa was ultimately used as feed for cattle connected to its Saudi parent company, Almarai. That arrangement has raised questions about how valuable groundwater should be used when local communities and farmers are also dealing with limited supplies.

Arizona moved against four leases

The dispute reached a major turning point in October 2023. Arizona Gov. Katie Hobbs announced that the state was terminating one Fondomonte lease and declining to renew three others in Butler Valley.

The governor’s office said an investigation found that the company had violated the terms of its leases. Officials also cited large amounts of groundwater being pumped from state land without charge.

The action put Fondomonte’s Arizona operations under greater scrutiny while highlighting broader concerns about groundwater management in rural areas.

The company is still farming in Arizona

Ending several leases did not mean Fondomonte disappeared from the state. The company has continued operating in western Arizona, including farming areas around the Ranegras Plain.

That has kept attention focused on groundwater pumping and the lack of strong regulation that long existed in many rural areas. In January 2026, Arizona designated the Ranegras Plain Groundwater Basin as an Active Management Area, bringing new groundwater oversight to an area that includes parts of La Paz and Yuma counties.

New rules could limit pumping

Arizona water officials have created an Active Management Area for the Ranegras Plain Groundwater Basin, which includes parts of La Paz and Yuma counties. The designation brings stricter groundwater oversight to an area where aquifer levels have been declining.

State water officials pointed to heavy pumping, declining groundwater levels, and concerns about land subsidence. Supporters say stronger oversight could help protect a vital resource. Some residents and agricultural groups worry the rules could affect other farms and property owners across the region.

The fight has drawn local opposition

The controversy has also moved into the legal and political arena. A local coalition has sought to prevent Arizona’s attorney general from taking action against Fondomonte, arguing that the outcome could have consequences for water users throughout the state.

That disagreement shows how complicated groundwater policy can become. The debate is not simply about one farm or one foreign company. It also involves property rights, state authority, agricultural needs, and Arizona’s management of water during prolonged shortages.

Saudi Arabia changed its farming rules

Fondomonte’s connection to Saudi Arabia is a key part of the story. Saudi Arabia has limited domestic cultivation of water-intensive crops such as alfalfa because of concerns about its water resources.

Instead, companies connected to Saudi agriculture have looked overseas for places where crops can be grown. Fondomonte became part of that strategy in the United States. Its Arizona farms provided alfalfa for use as livestock feed for cattle associated with its parent company.

Little-known fact: Alfalfa can use more than 5 acre-feet of water per acre in Arizona, according to the U.S. Geological Survey.

The company expanded across borders

Fondomonte’s land purchases were not limited to Arizona. Reporting has described the company acquiring about 30,000 acres in Argentina in 2012, before buying land in Arizona in 2014.

The company also expanded in California’s Palo Verde Valley. By 2019, The Guardian reported that Fondomonte controlled about 15,000 acres there. Those acquisitions gave the company access to farmland in regions where water availability is especially important for agriculture.

California became part of the debate

Fondomonte’s presence in California added another layer to concerns about agricultural water use in the West. The company bought farmland near Blythe, close to the Arizona border, where irrigation depends heavily on Colorado River supplies.

By 2019, reports indicated that Fondomonte’s holdings accounted for a significant share of the area’s irrigated farmland. That helped fuel broader questions about how much land and water large agricultural companies can control during periods of drought.

Arizona’s water laws have a big gap

Arizona law prohibits simply exporting the state’s groundwater as water. But crops grown using that groundwater can be shipped elsewhere. That distinction has become central to the Fondomonte debate.

Alfalfa illustrates the issue clearly. Water pumped from Arizona can be used to grow the crop locally, while the finished hay can then be transported outside the state. Critics see this as an indirect way of moving Arizona’s scarce water resources beyond its borders.

Lawmakers want tighter protections

The controversy has encouraged lawmakers from both major parties to consider restrictions on foreign ownership or leasing of land connected to water access. Supporters argue that critical water supplies should primarily serve communities and industries within the state.

Some lawmakers have also pushed for broader restrictions that would apply to out-of-state entities, not just foreign companies. That approach reflects a larger concern about who gets access to groundwater and how much control outside investors should have over scarce resources.

Fun fact: One Ranegras Plain well has recorded a groundwater decline of more than 240 feet since the 1980s.

The drought made everything more urgent

The debate intensified during an unusually severe period of drought across the American West. In 2022, researchers described the region’s prolonged dry spell as a megadrought, with conditions among the driest seen in roughly 1,200 years.

When rainfall is limited, and rivers and reservoirs shrink, communities rely more heavily on groundwater. That makes pumping decisions increasingly important. What happens underground may not be visible immediately, but continued withdrawals can put long-term pressure on aquifers.

See how Arizona’s water fight connects to the bigger Colorado River crisis and why new cuts are raising the stakes for the state.

The water debate is far from over

Fondomonte’s lease dispute has become part of a much bigger question facing Arizona: how should a state with limited water supplies balance farming, investment, property rights, and community needs?

The answer could shape future rules for groundwater across rural Arizona. Officials are now implementing stronger management in the Ranegras Plain Groundwater Basin, while lawmakers continue debating restrictions on outside ownership and water access.

For residents and farmers, the stakes are straightforward. The decisions made now could influence how reliably water is available for years to come.

Find out why Fondomonte’s large alfalfa operation in western Arizona is facing new groundwater oversight after years of largely unrestricted pumping.

What do you think Arizona should do with its limited groundwater supplies: tighten pumping rules or protect existing water-use rights? Share your view in the comments.

This slideshow was made with AI assistance and human editing.

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