Carbon Markets: A Business Case for the Farmer Perspective

October 26, 2022

Print This Article Share it With Friends

by Amy Skoczlas Cole (Trust In Food™) The "Ready or Not? Agricultural Carbon Markets and U.S. Farmers" report is the first phase of the Trust In Food team’s response to multiple sources of insight on the current carbon market landscape. We’ve conducted quantitative and qualitative research, studied farmer-focused content engagement and psychographic data unique to Farm Journal, and listened to producers firsthand on the ground. What we’ve seen adds up to a simple truth: Carbon markets are exploding, but the farmers needed to supply these markets are skeptical.

The report builds on these signals and others, such as those from our fall 2021 survey of 500 row-crop farmers that found:

60% either aren’t interested in a carbon market or won’t consider a carbon market until there is a better structure in place to support farmers’ interests.
75% believe costs such as time and resources required outweigh the benefits of carbon market participation.
88% don’t calculate carbon sequestration on their operation today.
65% don’t believe customers have a right to know how they manage their farm.

Compounding the urgency of these findings is an exponential interest in climate-smart agriculture implementation. In the next 12 months, existing carbon markets will evolve and new markets will emerge. A key success factor will be the degree to which markets meet producer needs and wants.

Trust In Food’s objective is to help leaders center sustainable agriculture programs, markets and incentives on farmer perspectives. This is both a personal mission and a business necessity to scale sustainable agriculture and make it standard practice in the industry. Organizations that prioritize helping producers understand, value and feel capable of taking the next step on their sustainability journey will be the ones to move the needle in a way that rewards farmer and rancher efforts and delivers the ecosystem services and climate goals that the public and the planet increasingly require.

Trust In Food will advance this work by introducing the second phase of our response: A proprietary carbon insights platform designed to cultivate an understanding of farmer priorities in order to accelerate producer adoption of climate-smart agriculture.

An extension of Trust In Food’s Human Dimensions of Change work, this platform will combine quantitative and qualitative research, psychographic and content affinity data, and farmer thought leadership to provide in-depth intelligence on:

producer sentiment about carbon and other ecosystem markets;
differentiating factors farmers evaluate when choosing a program;
stage of producer enrollment readiness;
co-affinities (e.g. behaviors or beliefs that tend to occur together) for positive or negative carbon attitudes;
practice adoption triggers; and
information on producers’ perceived barriers to marketplace participation.

These resources will advance the industry’s collective desire to create sustainable agriculture value for farmers, in addition to from farmers. As stated in the report:

“Trust In Food recognizes that consumers increasingly want information and stories about their food. We also believe farmers are dedicated stewards of our land and waters, and that climate-smart agriculture can be a powerful force in addressing a changing climate. But we know that this will only be possible when everyone across the value chain—the farmers, ranchers and producers who grow our food, feed and fuel; the supply partners who build markets for those products; and ultimately, the consumers and other end users who benefit from them—can trust they are all working toward complementary goals …

Farmers are waiting to see if carbon markets will demonstrate shared values, shared vision and shared skin in the game. Because all of us share this planet we call home, it has never been more important to ensure that carbon market programs are designed in ways that producers can trust.”

Providers of carbon markets, other ecosystem services markets and incentives intend to mainstream sustainable agriculture adoption. They need farmer confidence to make the leap to scalable, widely adopted programs that benefit producers and achieve environmental goals worldwide.

Trust In Food is ready to help. Read the full Ready or Not? Agricultural Carbon Markets and U.S. Farmers report to learn more about our work on carbon. READ MORE

Ready or Not? Agricultural Carbon Markets and U.S. Farmers (Trust In Food™)

See What Producers Are Saying About The Carbon Ecosystem And ‘Ag Carbon Markets And U.S. Farmers’ Report (Trust In Food™)

Cultivating Farmer Acceptance Is Critical To The Future of Ecosystem Service Markets (Trust In Food™)

Texas Ranchers Forever Protect Property from Development (Trust In Food™)

Climate Smart Ag -- Defining Climate-Smart Agriculture (DTN Progressive Farmer)

Excerpt from DTN Progressive Farmer:

Jimmy Emmons, a farmer from Dewey County, Oklahoma, says the various terms used today are sometimes confusing to producers.

"We started years ago talking about healthy soils, and then regenerative ag came along, and I really liked it because when you regenerate something, you rebuild it, and you repair it, then you revitalize it," Emmons says. "Right now, everybody is trying to figure out how to capture CO2 out of the atmosphere and turn it into carbon and store it."

Emmons speaks across the country and internationally to farmers about how soils function and the value of soil health. Just trying to understand the basics of soil is important, and farmers in different climates will have different priorities.

"Water is our limiting factor here," he says of south-central Oklahoma. "I want to capture every drop of water in my soil. In other areas with a lot of water, they sometimes want to get rid of water. But, it's still about the ability of the soil to do that. The worst thing you can do is not plant a cover crop."

Still, Emmons isn't ready to enroll in a private carbon credit program despite multiple companies trying to recruit him. They've come to his farm to take soil samples in some cases. Emmons isn't convinced everyone has figured out how to measure carbon in the soil.

"And, everybody is trying to make a buck. Whether you are trying to trade the carbon or store the carbon on the farm side, as well, I just don't think we're there yet," Emmons says.

ATTENTION ON CARBON

Right now, there are at least a dozen companies enrolling farmers in some sort of carbon program (see "Carbon Markets," on page 30). Some companies are aggressively recruiting producers, while others are testing their own methodologies on exactly how this will work.

"About half of the whole carbon industry right now is educating growers about how it works," says Clay Craighton, an agronomist working with Agoro, a company that offers a carbon program.

There are multiple strategies at work. Even without government mandates, corporate America has challenged itself to lower its carbon footprint, and businesses see agriculture as a way to do that. Within ag, ethanol producers continue looking for new strategies to drive down their carbon scores to sell more ethanol and get carbon credits in regulated markets such as California.

"There's a general acceptance now that ag can be part of the solution, obviously, or they wouldn't have been throwing money at us like that," says Ron Alverson, a South Dakota farmer who has worked with the ethanol industry on carbon scores. "If climate-smart agriculture can reduce the carbon intensity of corn production, what does that translate into for every acre out there?"

...

(Agriculture Secretary Tom) Vilsack and USDA also surprised the industry in mid-September when the department took its $1 billion climate-smart pilot program and tripled it in size to $3.5 billion in USDA funding. USDA rolled out $2.8 billion in 70 initial grants under the Partnership for Climate-Smart Commodities.

To note, DTN (parent company of Progressive Farmer) is part of a $95-million grant with a coalition of groups called Farmers for Soil Health (FSH), a project that will work to increase cover crops and conservation tillage in 20 states that produce more than 85% of the country's corn and soybean crops. Part of the goal is to help double cover-crop acreage nationally.

The Farmers for Soil Health news release stated, "FSH will also work with data insights and publishing company DTN to develop a digital platform that will use satellite imagery, allowing farmers to receive an 'eco-score' for corn and soybeans produced with cover crops and conservation tillage. This platform will facilitate the marketing of crops to parties interested in securing a documented source of sustainably produced corn and soybeans."

Overall, the goal for USDA's pilot projects is to help farmers receive premiums for their crops or livestock based on their conservation practices.

USDA's focus on climate-smart agriculture has multiple goals to drive down greenhouse gas emissions with farming practices that build resiliency in the soil and, ultimately, reduce nutrient pollution in rivers and streams.

"You're going to see more productive soil and cleaner water as a result of embracing climate-smart agriculture," says Robert Bonnie, USDA undersecretary of Farm Production and Conservation. "What we are focused on is those practices that are going to benefit the climate, but a bunch of these practices also benefit productivity, they benefit water quality, all kinds of other things. There's an alignment between good agronomic practices and good climate practices. So, we're trying to take advantage of that."

REDUCING FERTILIZER NEEDS

Climate-smart agriculture goes beyond no-till practices, cover crops or grazing management. Technology and equipment used to make the most efficient use of fertilizer and chemicals -- precision agriculture -- will also need to play a key role, especially if agriculture is going to drive down nitrous oxide emissions from nitrogen fertilizer.

Companies are enrolling farmers in different ways to reduce nitrogen applications.

...

Among the biggest complaints is the lack of measurement and metrics of what is being sequestered.

"All of these offsets are based on soil organic matter," says Silvia Secchi, a professor of geographical and sustainable sciences at the University of Iowa. "A lot of the focus is on the kind of activities and practices in the Corn Belt where we already have high soil organic carbon, and so it's hard to increase it. The choice of metric is problematic, but the other thing is that it doesn't really reflect the greenhouse gas emissions from agriculture."

Much work is still going into measuring the potential of soil organic carbon to mitigate climate change. Rattan Lal, a distinguished soil science professor at Ohio State University and a 2020 World Food Prize laureate, is now leading a new $20-million global research project with a long list of university, corporate and agricultural collaborators to detail strategies that capture carbon in the soil and improve the rate at which carbon dioxide is captured by plants. READ MORE