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Smoke & mirrors, not worth the extra cost: 50 US farmers speak out on carbon markets

December 14, 2022

Editor’s Note: Ben Palen, director of sustainable consultancy Ag Management Partners, is a fifth-generation farmer with diverse experiences in many facets of agriculture in North America, Africa, and the Middle East.

The views expressed in this guest commentary are the author’s own and do not necessarily reflect those of AFN.

If one thinks about the last 25 years in agriculture as a whole, it could be described as an era in which a fairly staid sector of the economy has undergone a great deal of disruption. The disruptors include but are not limited to, the widespread development of the ethanol industry, the acceptance of GMO crops, the introduction of all sorts of digital agtech tools and services, the infusion of massive amounts of institutional capital into an industry that, for the most part, had historically been resistant to “outside money,” and the widespread messaging about “sustainability” and “carbon neutral” practices.

In a recent article for AFN, I wrote about the promises and pitfalls of sustainability and suggested that caution would be an appropriate posture when considering the various claims being made about a topic that is challenging to understand and measure. That much of agricultural production is based on the use of finite resources is a key consideration here when thinking about sustainability.

Today, just about everywhere we look, there are claims about carbon sequestration being akin to the holy grail for agriculture, and by extension, the environment. Throughout the private and public sectors, the carbon bandwagon has lots of riders.

Does the promise equal the reality when it comes to carbon sequestration and its potential to make an environmental difference in our world?

Like many of you, I have read a number of articles on the topic, mostly written from the standpoint of companies claiming to be carbon neutral (or nearly so), or from companies seeking to monetize carbon credits. And there are also the buyers who are paying for carbon offsets generated by third parties—never mind the fact that some of them are more focused on the offsets than on practices that would lower their own carbon footprints…

The next agriculture moonshot?

It has been my experience in some 40 years in agriculture that newly-introduced ideas and products typically come with great fanfare.  Claims are made, there is a lot of buy-in, and then there is a sort of equilibrium — assuming that the idea and/or product made sense to start with — in which incremental gains are the outcome. There is nothing wrong with modest improvement, but more times than not, the promise and the reality do not match. A good example is cover cropping which has been all the rage in many parts of the world, and there is no doubt that it has made an impact on reducing soil degradation and in improving the productivity of certain lands. But in the vast areas where limited precipitation presents challenges for farmers, cover crops have not proven to be very useful; they sap moisture that is otherwise needed for the subsequent crop.

Now, to be sure, there has been the occasional moonshot, and the results have been spectacular for all interested parties. The introduction of Roundup Ready herbicide, while controversial, opened the door to enormous acreages of land being successfully farmed using no-till techniques. Those techniques have reduced soil erosion, preserved water resources, and enabled farmers in many areas to diversify their crops from, say, a traditional wheat/fallow rotation, to one where continuous cropping is practiced using a mix of small grains and other crops.

It’s still early days, but there’s potential for biological products reducing the need for chemical weed control and pesticides, as well as synthetic fertilizers, to be the next moonshot. Companies like Sound Agriculture, Pivot Bio, and Vestaron are seemingly on the right path, albeit still in the early days, with promising results so far.

Surveying 50 farmers about their attitudes to carbon markets

My approach in trying to learn more about the pitfalls and promises of the carbon markets has been to focus on the farmers who are, ultimately, the ones who will make or break this idea. So I prepared a short questionnaire intended to discern what farmers really think about this topic. I spoke to 50 farmers across the Corn Belt (Iowa, Illinois, and Indiana), the Delta (rice, cotton, peanuts, sorghum, corn, and soybeans), the Great Plains (wheat, sorghum, corn, sunflowers), Canada (small grains, oil seeds, lentils, and peas) and California (permanent crops such as almonds, pistachios, and walnuts). The farmers utilize a variety of agronomic practices, and about 20% of the farmers in the survey use irrigation on at least some of their land. The survey was also diverse as to age of the respondents.

The results from some 50 farmers were in line with anecdotal evidence that I have gleaned from many conversations with farmers around the country over the past year or so.

The first question asked farmers how they’d changed their farming practices with regards to tillage and cover crops, between 2012 and today.

1.Farmers are shifting away from full tillage but only 10% no-till.

The results clearly showed a shift away from full tillage, which ranged from 50% to 90% of their lands, in 2012, to 25%-50% this year. There were corresponding changes in favor of minimum tillage. There was just a small percentage (10%), who were using no-till or cover crops. It should be noted that about half of the respondents were in higher rainfall areas where no-till is challenging for the reasons of residue management, disease potential, and ability to irrigate (in areas that are row watered).

2. Carbon payments represent just 1%-1.5% of per acre income.

The range of payments offered by carbon buyers was relatively tight, with most in the $5-$12 per acre range, with the higher values being in those areas with higher land values and crop yields. To put that into perspective, as a % of typical gross income per acre from crops, the carbon payments would be barely a blip on the screen at around 1%-1.5% of per acre income.

3. Carbon measurement and benchmarking only done with soil testing, no remote sensing.

In response to a question asking how carbon credit verifying and issuing companies establish benchmarks to determine carbon payments, farerms were in one of two categories: prior soil test data from the farmer’s crop consultant or current soil testing. Interestingly, despite some claims about using satellite data to determine carbon benchmarks, none of our respondents made mention of that approach. With few exceptions, it was noted that the farmer owned the soil test data instead of a third party.

4. Additional income is main appeal but payments are insufficient to cover associated costs of carbon markets.

Our next question was focused on what the farmers perceived as the pluses and minuses of their participation in carbon markets. The largest plus was some additional income (albeit small). However, virtually all respondents listed the same minus being that the payments were not sufficient to justify the extra expense of compliance or the record-keeping associated with the program.

5. Average farmer thinks carbon markets are smoke and mirrors and impractical.

Perhaps the most interesting question of all was asking the respondents to rate, on a 1-10 scale, whether the carbon markets were smoke and mirrors, or something that provided good financial and environmental benefits. The average reply was slightly over 3. Comments that led to that low rating included (a) no recognition of good practices that I’ve already done for years; (b) no clearly defined rules, and vaguely written contracts; (c) too much paperwork; and (d) practicalities of changing some practices because of site-specific conditions.

With the caveats that this survey did not include tens of thousands of farmers, nor did it ask what it would take to get the respondents to participate in carbon programs, the results are telling, and, in my view, not surprising.

What’s next?

I believe that the potential for carbon sequestration has been hyped to a degree that a reset in approach may be warranted so that there is greater credibility in the market. And, considering the fact that vast areas of the US have followed soil-building practices for many years, it is likely not realistic to expect that agriculture as a whole can have the magnitude of impact on our global carbon issues that has been suggested by some observers. I would like to think that the result would be otherwise, but based on my own experiences (one of the first large-scale adopters of no-till farming in the Great Plains back in the mid-1980s), and those of many of my peers, a reality check is appropriate. The plain fact of the matter is that improvements in soil carbon levels take many years, and it is just not realistic to think that, say, a field presently at X is going to get to 2X anytime soon. It can be a big ask to convince a farmer to change practices in exchange for a “reward” that may take a decade, or more, to attain.

I have wondered whether, as a matter of federal farm policy, compensation should be paid to farmers who have followed good carbon sequestration practices long before they became de rigueur. Arguably, they are already being compensated because the current farm subsidies are generally tied to conservation compliance. They’re also most likely rewarded with higher yields over the long term and they could obtain higher levels of crop insurance, and lower premiums for the coverage, based on their yield histories. So, their practices make them better able to mitigate financial and operating risk than other farmers who may not be as progressive.

However, we still need a robust dialogue among the various participants in the ag-related carbon markets so that the promise and the reality of carbon markets can merge.

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