Wyoming rancher and retired attorney Tracy Hunt is concerned that regulations announced last fall by the U.S. Securities and Exchange Commission could help propel the U.S. into Netherlands-style turmoil.

For the past several weeks, news reports across the globe have detailed Dutch farmers protesting regulations that require them to halve nitrogen and ammonia outputs by 2030. One estimate is that over 11,000 farms will go out of business. Livestock owners say they will have to sell down to the point that their farms will no longer be feasible. It is expected that livestock numbers will have to be reduced by 30 percent in order to achieve government goals.

The government said it was leading an “unavoidable transition” for agriculture.

Protesting farmers say they feel targeted because other industries are not being forced to change dramatically — agriculture is the focus. They also say that the country will become reliant on imported food which they don’t believe is wise.

News reports indicate the Dutch protests are mostly peaceful, with some instances of bare shelves due to the decision to withhold food deliveries.

Could this happen in the U.S.?

It’s a question that seems to be on the mind of many ag producers, following the “Freedom Convoy” messaging in Canada last winter, and now the Dutch protesting. Canada’s prime minister actually announced last week his hopes of enforcing regulations to cut “carbon emissions” on his country’s livestock producers.

Serbian farmers are protesting high fuel and fertilizer costs, among other things. The Gateway reported “the farmers are also dissatisfied with the environmental policies of the government, in addition to the low purchase price of sunflowers and the extension of the ban on oil exports.”

According to the Gateway story, one farmer said they are asking for the abolition of all bans on cereal and oilseed exports, the determination of a minimum price of wheat (which the farmer says have already been enforced and handed over). Secondly, the farmers are asking for the excise duty for oil to be halted.”

“These guys (American producers) realize the handwriting is on the wall, this is about putting them out of business,” said Hunt.

“Last fall the SEC announced a package of regulations that will require companies to collect data on their suppliers. Not just ag companies,” he said.

Forbes reported that the U.S. Securities and Exchange Commission rule released last fall could wreak havoc on U.S. producers.

Following is an excerpt from an Aug. 1 Forbes story by Kenneth Rapoza:

“…the Securities and Exchange Commission, of all places, has released a proposed rule on climate change for publicly traded companies. The proposal is part of the investment world of Wall Street, London, and Frankfurt’s new favorite product line — Environmental, Social and Corporate Governance banking, known as ESG. ESG investing affects portfolio manager decisions and corporate lenders. “E” is the main one as it is easily sold to companies and the public as a means to rollback climate change.

“The SEC’s ESG proposal creates a framework for lenders and investors, requiring publicly traded companies to list their prescribed environmental impacts along their supply chain. This would make gauging carbon footprinting more uniform so everyone knows what is required to be ESG investment eligible. That’s the SEC’s main goal, it says.

“If enacted, the rule would require big food companies like Tyson and Smithfield Foods, owned by China, and JBS and Marfrig, both Brazilian, to report to the SEC how their farmers are impacting the environment.

“In other words: didn’t reduce fertilizer by 30%, for example? Sorry, can’t buy your beef. Too many bovines releasing methane into the air? Need a smaller herd. No loans from Bank of America for you. And sorry, your beef is a climate risk according to ESG adherent Rabobank. That means Rabobank might not provide the big agriculture exporters with trade finance as punishment for not being ESG enough.

“This is coming to the U.S. unless big food exporters successfully lobby to stop it,” said Forbes. “It is unclear if they are even against it. All of their lenders want it, so they may be forced to go along with it. Others are invested in alternatives to traditional means of food production and alternatives to animal protein. It is almost impossible to find an investment firm, lender, or asset manager against the SEC’s proposal.”

Hunt voiced these very same concerns. The Environmental Protection Agency explains the three emission “scopes” the SEC wants to measure.

•Scope 1 emissions are direct greenhouse (GHG) emissions that occur from sources that are controlled or owned by an organization; example: McDonalds — the fuel it takes to patty hamburgers, electricity for their lights, coolers, etc.

•Scope 2 emissions are indirect GHG emissions associated with the purchase of electricity, steam, heat or cooling. Although scope 2 emissions physically occur at the facility where they are generated, they are accounted for in an organization’s GHG inventory because they are a result of the organization’s energy use.

•Scope 3: emissions are the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain.

Hunt says cattle producers fall under scope 3. He worries that producers could be “blacklisted” if they don’t follow certain governmental or corporate guidelines.

The SEC will require these companies to collect data on scope 3 emitters (producers of raw products, ie: ranchers, farmers, etc), said Hunt.

“Their enforcement mechanism is to deny producers access to the market,” he said. He also explained that many “climate friendly” advocates claim that companies are more profitable when they are more “sustainable” but Hunt says the reality is that those companies are more profitable because they are “chosen” to receive more favorable financing. “They are eligible for a better interest rate which eventually allows these companies to vertically integrate which allows huge multinational corporations to report better profits than ever. They are gouging producers and retailers in the process,” he believes.

Forbes reported that the SEC regulations would likely hit small producers the hardest.

“The Netherlands is home to the world’s biggest agricultural export terminal, and to global financiers ABN Amro, ING Group, and Rabobank, as well as Uniliver, a conglomerate waiting for the “new foods” market to take hold. This includes high-tech, laboratory grown meats made from animal stem cells. These three banks, Unilever, and many others quietly push for stricter environmental rules on ranchers and farmers through associations like the Carbon Disclosure Project and the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD),“ reported Forbes.

Some of those same corporations are the impetus behind and driving force of the Global Roundtable for Sustainable Beef. Additionally, that same organization, received $2 million euros from the Dutch government when in its infancy in 2011. The GRSB has many goals, but one is to “globally reduce by 30% the net global warming impact of each unit of beef by 2030, on a pathway to climate neutrality,” it says on its website.

GRSB members at the time of the Dutch contribution were: Australian Roundtable for Sustainable Beef, Cargill, Elanco, Grupo de Trabalho da Pecuaria Sustentavel (GTPS), JBS, McDonald’s, Merck Animal Health, Rainforest Alliance, Solidaridad, The Nature Conservancy, Walmart and World Wildlife Fund.

Today the GRSB’s mission is to advance, support, and communicate continuous improvement in sustainability of the global beef value chain through leadership, science, and multi-stakeholder engagement and collaboration, and its members now include NCBA, A&W, Burger King, Cargill, Tyson, Greenlabs, and many more.

Kim Stackhouse-Lawson PhD., the director of AgNext at Colorado State University, professor of animal science and former director of sustainability for JBS USA said that farmers and ranchers have been sustainable for a long time. She added that in the U.S., “there are farmers and ranchers today who are incredible stewards of our most valuable ecosystems, who utilize a vast area for food production that couldn’t otherwise be used for food production,” she said. However, she encourages all producers to consider establishing a “baseline,” for certain aspects of their operation so they can determine whether they are making improvements.

Three pillars — social, economic and environmental — are the overarching concepts of sustainability, said Stackhouse-Lawson. But what is important to individual producers within those pillars varies drastically, she added. “The nature of food production is so complex,” she said. Measuring and tracing sustainability progress is important but challenging, especially in the beef industry, she said. AgNext, her research lab, is focused on continuously improving these pillars within animal agriculture, she said.

“We are really passionate about supplying tools that they need to meet their goals or to meet the goals that are the most important to them,” she said.

Those goals can look different for different members of the cattle and beef industry, she said.

“What has shifted is the expectation that there will be proof points whereby the industry can demonstrate not only that they are sustainable today but that they will continue to be more sustainable — that improvement aspect is built in to the majority of approaches to sustainability, whether corporate or organizational approaches,” she said.

“As corporations set more commitments like net-zero, it’s hard to know how the expectations for supply chain engagements will look to help meet those goals. Those public commitments will take shape in the form of outcomes, but today the most important thing a rancher can do is measure metrics on his or her ranch,” she said.

“Today’s producers should identify and track things that result in a win-win for their operations (she suggests weaning weights, fertility, etc). Those decisions should be made because they could result in improved profitability, or they help with generational transfer, or improve the ecosystem — whatever that rancher’s goal is,” she said. Stackhouse-Lawson emphasized that any business changes would need to take common sense considerations into the equation such as the operation’s financial situation, landscape, genetics that thrive in a particular environment, etc.

Could the U.S. implement emissions policies that could push producers out of business? “My bigger concern would be that we would unduly burden our producers with a strategy that may or may not work,” she said. Her preference would be a strategy that could be a win-win. “Maybe we reduce methane and we also improve animal health… or something along those lines. So that producers aren’t unduly burdened financially.”

Wyoming rancher and retired attorney Tracy Hunt is concerned that regulations announced last fall by the U.S. Securities and Exchange Commission could help propel the U.S. into Netherlands-style turmoil.

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