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The Security and Exchange Commission’s proposed rule to require climate disclosures by public companies could severely impact family farms and ranches and intensify the already concerning rate of consolidation in agriculture.

The proposed rule requires extensive requirements for public companies to report on Scope 3 emissions, which are the result of activities from assets not owned or controlled by an organization but contribute to its value chain. While farmers and ranchers would not be required to report directly to the SEC, they provide almost every raw product that goes into the supply chain.

“The SEC has no standing to create such an intrusive rule that has the potential to create substantial liabilities and costs for producers of every commodity,” said Brandon Kern, senior director of state and national policy with Ohio Farm Bureau. “We talked about this extensively during a recent trip to Washington, D.C. and we told our members of Congress directly that Farm Bureau strongly opposes this proposal and we ask them to do the same. They need to hear that message from our members as well through the Action Alert that was created for this issue.”

American Farm Bureau economists anticipate those costs and liabilities stemming from reporting obligations, technical challenges, significant financial and operational disruption and the risk of financially crippling legal liabilities.

“Farmers have never been subjected to regulations intended for Wall Street,” said AFBF President Zippy Duvall. “This proposed rule is an example of overreach by the SEC, whose primary purpose is to protect investors from unscrupulous business practices. Unlike large corporations currently regulated by the SEC, farmers don’t have a team of compliance officers or attorneys dedicated to handling SEC compliance issues. This proposal could keep small farms from doing business with public companies at a time when all farms are needed to ensure food security here and abroad.”

AFBF economists expect the proposed SEC rule to impact farmers and ranchers through:

• Increased costs due to compliance concerns. Farmers could be required to track and disclose information on day-to-day activities;
• Potentially requiring private and personally identifiable data. Unlike public companies and corporations, farmers work and raise families in their place of business;
• Consolidation, as small farms lack the resources to comply with burdensome reporting requirements;
• Increased liability because the timeline given to comply with Scope 3 emissions is unattainable.

Farmers have until June 17 to comment on the proposed rule change.

American Farm Bureau Federation economists discuss potential impacts of the proposed rule in the latest Market Intel.