The Global Supply Chain

Almarai is one of the largest food production companies in the world. The company sells milk, powdered milk and packaged items such as croissants, strudels and cupcakes in supermarkets and corner stores throughout the Middle East and North Africa.

With the Saudi Arabian landscape there being mostly desert and alfalfa being a water-intensive crop, growing it there has always been expensive and draining on scarce water resources, to the point that the Saudi government finally outlawed the practice in 2016. In the wake of the ban, Almarai decided to purchase land wherever it is cheap and has favorable water conditions to produce enough feed for its 93,000 cows.

In 2012, they acquired 30,000 acres of land in Argentina, and in 2014, they bought their first swath of land in Arizona. Then, in 2015, they bought 1,700 acres in Blythe – a vast, loamy, agricultural metropolis abutting the Colorado river, where everything but the alfalfa seems cast in the hue of sand. Four years later, the company owns 15,000 acres – 16% of the entire irrigated valley. Blythe is a desert, it is adjacent to the lower Colorado river, a river that supplies water to roughly 40 million people and irrigates 4m acres of land.

Bart Miller, Western Resource Advocates’ healthy rivers program director, says that over the last 80 years, due to the growth of proximate cities such as Denver, Los Angeles and Phoenix and the expansion of large-scale farms, demands on the river have steadily climbed. The river is also shrinking due to climate change. It has endured a nearly two-decade-long drought, with only waning rain and snowpacks to supply its flow. As a result, the river is at a record low. Blythe farmers are thus only charged to cover the water district’s overhead – $77 an acre a year, an astonishingly low rate. In other places, people are charged according to how much water they use and are thus incentivized to use less. In Blythe, no matter how much he uses, a farmer gets his water for a cheap, flat rate. It’s no surprise, then, that Fondomonte chose to set up shop here. While Saudi Arabia has enacted laws to manage their water resources. In Blythe, water is there for the taking.

What Fondomonte Farms, a subsidiary of the Saudi Arabia-based company Almarai, is doing is one of the inanities of the global supply chains. Each month, Fondomonte Farms loads the alfalfa on to  shipping containers destined to arrive 24 days later at a massive port stationed on the Red Sea, just outside King Abdullah City in Saudi Arabia, 13,000 miles of land and sea away. It’s not just alfalfa, and it’s not just agriculture. People will find goods at the cheapest prices, and companies in areas with unstable resources will relocate elsewhere.