About 30 miles from Clint McRae's southeastern Montana ranch, a local utility company bought roughly 6,000 acres of cattle grazing land.

After scouring job postings online and talking with local ranchers, he's deduced that the land might soon be transformed into one of the many large-scale data centers moving into Montana over the past year.

McRae's primary concern is water. It is essential for cattlemen in the western plains who have for years been shrinking their cattle herds in response to droughts.

The local water supply will have to keep flowing to the new data center projects, rather than to ranchers who need it to keep the pasture healthy and calves hydrated. Montana's cattle herd could experience a more permanent decline as a result, he said.

"If we have a dry year like we're having now, who's going to cut back?" McRae, a fourth-generation rancher, said. "It's going to be agriculture."

At town hall meetings, McRae is trying to sound the alarm and rally other local ranchers to speak out against new data center projects. A spokeswoman for the utility, NorthWestern Energy, said no decisions have been made and no timeline set regarding the site. "Securing land now helps ensure we have options later, without rushing decisions that could impact reliability or costs," she said.

America's farmers and cattle ranchers are raising red flags about the potential drain on local resources that the data-center construction boom poses to rural regions of the farm economy. The agriculture industry is warning that the AI-focused facilities are gobbling up farmland acreage, electricity and water needed to raise livestock and grow crops.

"It's almost like the wild west to see who gets there first," said Philip Nelson, president of the Illinois Farm Bureau and a fourth-generation corn and soybean farmer in Seneca, Ill.

Tech companies are investing unprecedented sums of money to finance a construction boom across the U.S. of huge data centers to fuel America's AI ambitions, largely in rural areas. Data center projects have been touted as a new source of growth for small towns and flyover country.

While the precise number of data centers on farmland is difficult to determine, there are an estimated roughly 5,000 finished or under-construction data centers across the U.S., according to the American Farm Bureau Federation.

Farmland is an attractive target for technology companies. Data centers need large amounts of flat land and access to water and energy, the same as farmers do.

Technology companies have faced a wave of backlash from locals concerned about power usage and the strain on their local grids. Lawmakers in about two dozen states are considering banning or restricting their development.

Farmers fear new data centers, some of which consume power equivalent to that of a midsize city, will drive up their utility bills when America's farmers are already struggling with higher costs.

In Illinois, Nelson said he's organized meetings with farmers across the state and brought growers to the state capitol to discuss their concerns with lawmakers, but it has been difficult to gain traction, he said. Nelson worries that if the AI market crashes, some of the best farmland in America will be stuck housing idled data centers.

"When you take a thousand acres out of production just to build one of these, that's a big footprint," Nelson said.

Dan Diorio, vice president of state policy for the Data Center Coalition, a trade group for technology companies constructing the facilities, said data centers are efficient water users and require far less than agriculture production. To manage resources, facilities often use hybrid systems, running air-based cooling 90% of the year and then switching to water-based cooling during the hottest days, he said.

Data centers also don't necessarily equate to higher electricity bills. Diorio said utility companies in some states, including Indiana and Georgia, are lowering or freezing their power rates because of data center revenue coming in.

When it comes to losing farmland, he said, nobody is forcing farmers to sell.

"I find that argument a bit perplexing," Diorio said. "These are ultimately private transactions between a property owner and someone that wants to purchase the property."

There are some cases of farmers turning down offers of tens of millions of dollars for their family farms. But becoming a millionaire overnight offers a convenient retirement plan for many of America's aging farmers, especially in a tough farm economy, Nelson of the Illinois Farm Bureau said.

Data centers aren't the only reason farmland is declining in the U.S.

Expanding residential development, farmer consolidation and ranch land being converted to hunting grounds in western states have been happening for years. Farming acreage declined by an area about the size of Maine between 2017 and 2022, according to USDA's latest Census of Agriculture. Data centers threaten to accelerate that trend.

"The amount of ground that we're seeing move out of production agriculture is something that we really do need to keep an eye on," said Jarrod Gillig, who leads the North America beef business at agriculture giant Cargill, at The Wall Street Journal Global Food Forum.

Despite the criticism, the agriculture industry is increasingly dependent on the digital infrastructure data centers. Cargill has a proprietary AI-powered computer vision system called CarVe that it started rolling out in its beef plants. Debbie Lyons-Blythe, a cattle rancher from Kansas, said losing the prairie grasses cattle roam on is a problem, but she is also increasingly turning to AI to help better manage her operations.

"They are vitally important to me as well," she said about data centers.

Write to Patrick Thomas at patrick.thomas@wsj.com

(END) Dow Jones Newswires

July 11, 2026 13:00 ET (17:00 GMT)

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