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Where does FBN’s Gradable Carbon fit into the growing carbon credit ecosystem?

February 24, 2021

Ag carbon credit markets are becoming a widely discussed topic, even at the White House. President Biden’s climate plan includes a carbon bank that would offer credits for farmers who adopt regenerative practices. Microsoft recently purchased $2 million in carbon credits from Land O’Lakes, Indigo Ag and Nori announced the first buyers for their carbon credits, and Canada’s Farmers Edge is partnering with Radicle to launch a carbon program. Now, Farmers Business Network (FBN) is getting in on the ag carbon credit game.

While all the buzz around ag carbon credit markets might be exciting for some, it may be making some farmers’ heads spin.

“I think if I was a farmer it would look like a mess. Frankly, it is super muddy in terms of what each of these programs does,” FBN president of crop marketing and financial services Devin Lammers told AFN

FBN just unveiled its latest service called Gradable Carbon, which aims to help farmers generate carbon credits and find buyers. FBN is hoping to take some of the mystery and headaches out of the process by helping farmers generate carbon credits and find potential buyers. Some of the practices that can go towards credit generation include cover cropping, conservation tillage, and nitrogen management.

Farmers can choose between selling credits now and banking them to sell later when the price may potentially appreciate. It also offers a fixed price floor of $20 per credit in the first year. Gradable will retain a portion of each credit to cover the administration of the program and other costs. 

Allowing farmers to control when they sell their credits is critical, according to Lammers, considering that the soil can only sequester so much carbon.

“Eventually we are going to get to maximum saturation. We don’t know what that number is yet, the research is still ongoing, but it is not an infinite reserve. There will be a period of credit generation that could be 10 years or 20 years, but it will be finite and the credits generated will be finite,” he explains. “That’s why it is so important to start generating those credits now but not necessarily selling them now.”

Incentive with a side of technical assistance

But simply telling farmers to adopt new practices like cover cropping isn’t that simple. It can take a number of years or even a decade to figure out the right cover cropping approach for your farm, as cover crop expert Steve Groff recently told AFN. Groff compared becoming a serious cover cropper to “going from a nurse to a surgeon.” 

Another recent Patagonia-backed report highlighted a lack of trusted technical assistance as one of the biggest barriers to scaling regenerative agriculture.

“We are trying to make sure we learn from these programs across the broader set of farms that we have and figure out how we can actually bring that learning back to the programs. For example, here’s what we are seeing in terms of data among other folks; here is what we see in terms of cover crop adaptation in these regions and adjustments to fertility programs,” Lammers explains. “We are committed to making sure that we collect that and bring it back to the farmer in a way that’s as easy to digest as possible.”

Gradable Carbon is trying to plug the educational gap in a few ways. First, through Gradable Plan, it is offering personalized support to help farmers adopt new practices. This multi-year, per-acre service includes soil sampling and custom crop nutrition recommendations and is designed to ensure farmers are maximizing the ROI of their operation. 

Carbon hope or carbon hype?

Ag carbon credit markets aren’t just buzzworthy because of how popular they are becoming; they are also creating serious debate in different circles. Some underscore the concept as a silver bullet for addressing climate change and agriculture’s impact on the environment. Others find the existing science a little too unreliable to take to the bank. There are a number of carbon measurement standards in use today, for example, and not everyone agrees on their legitimacy.

Right now, FBN is evaluating a number of carbon registries including Climate Action Reserve (CAR), Verra, and The Gold Standard. It is also working with a third-party verifier to ensure that the data it is collecting are checked and audited by someone external to the program. Finally, it’s also selecting an environmental model to apply to its carbon credit quantification process.

“We are taking as conservative of an approach as we possibly can and trying to work with the most reputable registries and verifiers that we can and that buyers have accepted. And by virtue of being in these markets, we will be collecting a massive amount of data both on the economic and soil sampling side that we can use to help better inform environmental models that will only improve.”

There’s also an ongoing debate around whether we know enough about the permanence of carbon sequestration to tack a dollar amount onto it.

“I think carbon credits are part of the solution. I do not think they are a panacea or cure-all for sustainability; it’s just one piece of a broader solution. This is not going to be something that a single company goes out and does by themselves. There are going to be a lot of conversations and consensus across the industry, policymakers, and agribusiness.”

For that reason, FBN isn’t placing all its eggs in the carbon credit basket. In September 2020, it launched Gradable, which is aimed at providing farmers who use sustainability-oriented practices with premiums by offering buyers verifiable low-carbon grain. The grain buying and origination platform aims to provide legitimate data-driven environmental scoring to give farmers premiums for carbon abatement and other environmental practices they may pursue.

The effort is in partnership with POET, the world’s largest producer of biofuels. Through the service, farmers will share information about their practices like fertilizer application, tillage, and cover cropping with FBN. Gradable will process the data alongside FBN’s in-house data to validate it and provide a farm-level sustainability score for the farmer’s offering.

Ultimately, for carbon credits to work in agriculture, Lammers brings it back to a concept we have seen time and time again in agrifoodtech: earning farmers’ trust.

“It has to actually have tangible benefits for the farmer and it has to provide flexibility and control so that if it changes they can just get out of it and go to the better opportunity. I think without that, it honestly would be a big ‘if’ to convince me to participate in anything at this stage.”

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