Saudi Arabia Is Buying Up American Farmland To Export Agricultural Products Back Home

Submitted by Tyler Durden on 01/17/2016 20:00 -0500

 

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Just what we need, cornfield crucifixions.

Seriously though, this is very troubling. The Saudis are explicitly conserving their own resources at home, while exploiting land and water supplies here in America.

CNBC reports:

Saudi Arabia and other Persian Gulf countries are scooping up farmland in drought-afflicted regions of the U.S. Southwest, and that has some people in California and Arizona seeing red.

Saudi Arabia grows alfalfa hay in both states for shipment back to its domestic dairy herds. In another real-life example of the world’s interconnected economy, the Saudis increasingly look to produce animal feed overseas in order to save water in their own territory, most of which is desert.

Privately held Fondomonte California on Sunday announced that it bought 1,790 acres of farmland in Blythe, California — an agricultural town along the Colorado River — for nearly $32 million. Two years ago, Fondomont’s parent company, Saudi food giant Almarai, purchased another 10,000 acres of farmland about 50 miles away in Vicksburg, Arizona, for around $48 million.

But not everyone likes the trend. The alfalfa exports are tantamount to “exporting water,” because in Saudi Arabia, “they have decided that it’s better to bring feed in rather than to empty their water reserves,” said Keith Murfield, CEO of United Dairymen of Arizona, a Tempe-based dairy cooperative whose members also buy alfalfa. “This will continue unless there’s regulations put on it.” 

Recall, this is precisely the type of investment Michael Burry of “Big Short” fame recently said he was involved in.

In a statement announcing the California farmland purchase, the Saudi company said the deal “forms part of Almarai’s continuous efforts to improve and secure its supply of the highest quality alfalfa hay from outside the (Kingdom of Saudi Arabia) to support its dairy business. It is also in line with the Saudi government direction toward conserving local resources.”

Crucially, the issue of land rights comes into play.

The area of the Arizona desert where the Saudis bought land is a region with little or no regulation on groundwater use. That's in contrast to most of the state, 85 percent of which has strict groundwater rules. Local development and groundwater pumping have contributed to the groundwater table falling since 2010 by more than 50 feet in parts of La Paz County.

Sure, conserve local, exploit American. Just brilliant.

"We're not getting oil for free, so why are we giving our water away for free?" asked La Paz County Board of Supervisors Chairman Holly Irwin.

...

Added Irwin, “We’re letting them come over here and use up our resources. It’s very frustrating for me, especially when I have residents telling me that their wells are going dry and they have to dig a lot deeper for water. It’s costly for them to drill new wells.” 

Local development and groundwater pumping have contributed to the groundwater table falling since 2010 by more than 50 feet in parts of La Paz County, 130 miles west of Phoenix. State documents show there are at least 23 water wells on the lands controlled by Alamarai’s subsidiary, Fondomonte Arizona. Each of the wells is capable of pumping more than 100,000 gallons daily.

“You can use as much water as you’d like, as long as it’s put to a beneficial use, and you’re not required to report your water use,” said Michelle Moreno, a spokesperson for the Arizona Department of Water Resources, which has scheduled a public meeting for Jan. 30 in La Paz County to hear concerns from residents.

More competition for land and fodder is likely to make things more expensive for dairy farmers in California and elsewhere.

“It will ultimately drive the price up for the West Coast dairy operations,” said Robert Chesler, vice president of the dairy group at FCStone, a Chicago-based commodity-risk management company. “This is where they are buying that hay. This is where they are buying the farmland for dairy farms as well as and where they are buying the dairy goods, because we are obviously exporting more out of the West Coast.”