Why Saudi Arabia Grows Alfalfa in Arizona

Several months ago, we said that seven states and approximately 40 million people could help to solve the Colorado River’s problems. We should have added Saudi Arabia.

This is the story.

The Arizona Water Supply

We could start in 1848 when the U.S. acquired a large part of the Southwest. Migrating there, the settlers looked to the Middle East and decided to grow dates. Then a delicacy, dates could be grown in the desert. Assisted by the newly established University of Arizona, the farmers dug deep and elaborate irrigation networks. Not only had they developed a domestic date industry but they also displayed the desert’s agricultural potential.

Fast forwarding to the 1940s, we have Saudi Arabia asking the U.S. how to farm the desert. In exchange for access to the Saudi airfields the U.S. needed to fight the war, we said yes. (It helped that the Saudi King’s assistant was from Arizona.) The rest of the story is history. The Saudis moved from donkey drawn buckets of water to bountiful wells and grew a massive dairy industry that depended on some very thirsty alfalfa for as many as 29,000 cows.

You can predict what happens next.

In 2015, their wells dry up and they ban alfalfa farming. Looking for a similar home away from home, the Saudi dairy company Almarai wound up in Arizona. Because of the sunshine and cheap, minimally regulated water, Arizona is the ideal spot for a dairy farm. Although deep wells are expensive, Amarai can afford it. As a result, crops like alfalfa create close to one half the demand for water in the region.

Now, Arizona has to decide what to do with a Saudi company using up its water. Nearby though,  the United Arab Emirates has a farm as do a mega-dairy from Minnesota and a large North Carolina egg company.

Our Bottom Line: Comparative Advantage

The economist who first explained comparative advantage, David Ricardo (1772-1823) said each nation should make the goods and services for which it has the lower opportunity cost and import what it does not produce. Because of those imports, consumers would enjoy lower prices and more variety. Benefitting also, exporters have larger markets that supported the efficiencies of economies of scale.

The Saudis growing alfalfa in Arizona is the least likely example of comparative advantage I could have thought of.

My sources and more: Yesterday, listening to the Outside/In podcast, I learned abour Saudi Arabia’s Arizona connection. Then, Natalie Koch, geography professor tells us more in Arid Empire. And I also recommend the podcast Parched from Colorado Public Radio.