Sustainable Ag 101: Carbon Farming Brings Extra Income and Environmental Benefits

This is the seventh and final installment of our series on sustainable farming practices, where we take a closer look at how each practice can bring long-term economic and environmental benefits.  

Agriculture is in a unique position to mitigate climate change. It’s the one sector of land management capable of changing from a net emitter of carbon dioxide to a net sequester, says the Carbon Cycle Institute

It’s possible through a variety of management practices, which fall under the umbrella of carbon farming. Carbon farming, as Modern Farmer defines it, is simply taking excess carbon from the atmosphere and storing it in the soil. 

When it happens, it’s not just a win for the environment. Soil carbon becomes a component of soil organic matter, which plays a critical role in soil health. 

Carbon farming is also a money-making opportunity. Carbon markets make it possible for farmers and ranchers to earn and sell carbon credits, a financial reward for their greenhouse gas-reducing efforts. And if the House of Representatives approves the Growing Climate Solutions Act of 2021, which passed the Senate in June, the USDA will be able to create a certification program to help farmers participate in these markets. 

What’s Considered Carbon Farming? 

There’s no one set method to carbon farming, which means growers and ranchers can choose whichever carbon sequestering practices will work best for their operations. The NRCS identified 35 practices for reducing greenhouse gas emissions, which the agency also ranked by qualitative effectiveness. Some of the top practices include: 

  • Establishing perennial vegetation on retired land 
  • Limiting soil-disturbing activities by no-tilling or strip-tilling 

The NRCS also offers a free tool called the COMET Planner, which farmers can use to see how much carbon dioxide they can reduce by practice, acreage, and the county they farm in. 

Carbon-Saving Practices Bring Financial Savings 

Farmers can see financial benefits from carbon in two ways. The first being reduced expenses and stronger yields from improved soil health. 

The savings in lower expenses depends on what the farmer was previously doing and what practice they adopted. But it can add up.  

Take the switch from tillage to continuous no-till. Based on an annual fuel savings study, the USDA found conventional tillage farmers could save more than $8.50 per acre in fuel if they adopted continuous no-till. They’d also save on labor. If a farmer plows 15 acres per hour and has 1,000 acres, the USDA says they would save around 67 hours in eliminated passes by giving up tillage.  

Even if a farmer isn’t making a drastic change like adopting no-till, any increase in soil organic matter can benefit their bottom line. The Noble Research Institute says every 1% of organic matter releases 20 to 30 pounds of nitrogen and 4.5 to 6.6 pounds of phosphate per year. Organic matter also holds up to 90% of its weight in water, which it will mostly release to plants. 

Cashing in on Carbon Sequestration 

The second way farmers can financially benefit from carbon farming is by earning and selling carbon credits through carbon markets. 

As Texas A&M AgriLife Extension explains, carbon markets allow large greenhouse gas emitters, such as power plants, a cost-effective way to meet government regulations. Instead of altering their operations to reduce their emissions, these emitters can pay others who are reducing emissions to offset their own.  

There are also voluntary carbon markets where businesses or individuals wishing to reduce their carbon footprint can purchase carbon credits. 

Farmers and ranchers can work with a carbon marketer to earn and sell carbon credits. This involves taking soil samples to quantify the amount of carbon, then getting verified by an independent third party. 

So how much can a farmer expect to make from carbon credits? The University of Illinois’ farmdoc daily says it appears most companies offer a minimum of $10 to $20 per metric ton of carbon dioxide equivalent.  

There can be a significant payoff for farmers who have been committed to these practices for a while. A Civil Eats article reported Maryland farmer Trey Hill received $115,000 in 2019 from carbon marketer Nori. The payment was for the previous 5 years’ worth of carbon-sequestering practices, and Hill has since received more payments. 

How to Break Into Carbon Farming 

If you simply want to curb climate change, reduce expenses, and improve your soil health, the first step is to identify areas where you can sequester more carbon. Again, the NRCS list of 35 practices is a good place to start. 

But if you’re ready to cash in on carbon farming, you’ll need to find a marketer. University of Illinois’ farmdoc daily says there are two approaches for entering a carbon marketplace. They also provide a list of questions you should consider or ask before getting started to ensure you pick the right opportunity for your operation. 

Conterra Ag lends exclusively to American agriculture and has expertise in a variety of farm and ranch operations utilizing both traditional and sustainable farming practices. If you’re ready to refinance, or looking to grow your operation, let’s talk ag — contact your Conterra relationship manager today: 

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