Western South Dakota's Only Ranch Station

SEC rule to hold publicly held ag companies accountable will impact producers, growers

WASHINGTON, D.C. – Unintended consequences.

That’s the message agricultural organizations are sending to the Securities and Exchange Commission (SEC) regarding a proposed rule designed to track greenhouse gas emissions from industrialized agriculture businesses but that will – as currently written – also impact entire supply chains, right down to that cow in a pasture.

The SEC has proposed a rule to require public companies to report on Scope 3 emissions. Those are greenhouse gas emissions which are the result of activities not owned or controlled by a publicly traded company but contribute to its value chain.

Public companies that produce goods from agricultural products would need to report emissions from the relevant agricultural operations. An example would be a large processing company like National Beef Packing that is buying cattle from feedlots that were purchased from a rancher. Each transaction would require a report on Scope 3 emissions.

The farm groups’ concern is that the rule will burden family farmers and ranchers and drive further consolidation in agriculture—all for no real environmental benefit.

In a letter sent to the SEC, the organizations stated, “This tracking will be extremely expensive, invasive, and burdensome for farmers and ranchers, at the cost of improved production practices that generate actual environmental gains. Family farms, particularly smaller ones, will be hardest hit, with the rule driving greater consolidation and fewer family farms. The easiest path for registrants will be to source their inputs from larger corporate operations with greater resources and more sophisticated data-gathering and reporting systems. Alternatively, registrants may simply vertically integrate their supply chains, leading to further consolidation.”

In the letter, the organizations ask the SEC to recognize it wouldn’t be appropriate to subject farmers and ranchers to Scope 3 reporting requirements, and to draft a rule that specifies that companies cannot compel farmers and ranchers to provide emissions information.

“While farmers and ranchers play a vital role in America’s supply chain, 98% of farms are family owned and 90% of those are small,” the letter continues. “This means that a considerable part of the agriculture industry does not fall within the SEC’s direct regulation of disclosure information, which extends to regulating public companies (registrants and issuers).”

Signing onto the letter were AFBF, Agricultural Retailers Association, American Soybean Association, National Cattlemen’s Beef Association, National Corn Growers Association, National Pork Producers Council, and North American Meat Institute.

Read the full letter here.

Read a previous letter sent to the SEC here.

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