The Securities and Exchange Commission is generally not associated with a discussion of agriculture or greenhouse gas emissions. A recent proposal could change that.
The SEC has offered companies to start disclosing their “climate-related risks” by tracking greenhouse gas (GHG) emissions throughout their value chain to investors. This proposal includes agriculture and presupposes that companies have the control and the ability to track how each member of a supply chain, from the truck driver, the food industry or the grocery store to the consumer, emits GES.
The food supply chain in the United States is largely made up of small and medium-sized farms that send their products to processors to do something else with them. For example, in Washington State we have several wheat growers. These wheat producers produce the grain which is sent to a flour mill. The mill transforms wheat grains into flour. The flour is shipped to a commercial bakery to be made into bread before being purchased and shipped to a grocery store for consumers to purchase.
Generally, once the wheat leaves the possession of the wheat grower, the grower has no control over what happens to their product. However, the SEC’s proposed rule would require the wheat grower to track and report “climate-related risks” to their business. and all other businesses or people involved with their wheat, including the consumer.
Given the magnitude of the requirements of the SEC’s proposed rule, small and medium-sized operations would eventually be squeezed out of the commercial landscape by the costs of tracking GHG emissions at this scale. As a result of the sale of these small and medium farms, large consolidated farms would emerge to take their place.
As recent history has shown in the meatpacking industry, when there is consolidation in agriculture it can be profitable for these companies, but it is not in the interest of consumers. . Market competition breeds honesty, innovation, lower costs and a willingness to adapt to consumer needs, consolidation leads to stagnation and rising food prices.
The SEC’s proposed rule could still be salvaged by simply exempting agriculture from the requirements or, at the very least, acknowledging the voluntary strides agriculture has made to reduce industry-wide GHG emissions. Over the past 30 years, animal agriculture has increased its production while reduce your carbon footprint in all major categories – beef (production +18%; emissions -11%); pork (production +77%; emissions -21%); dairy products (production +51%; emissions -26%). Similarly, farmers have seen available land shrink by 30 million acres over the past 30 years, yet they produce about 1.5 times more food with the same inputs over the same period.
Ultimately, the SEC’s proposed rule is out of touch and beyond its expertise. The primary function of the SEC is to “protect investors by enforcing national securities laws, taking action against wrongdoers, and monitoring our securities markets and businesses to ensure that investors are treated fairly and honestly. “, not to track GHG emissions in corporate supply chains. .