By Joel McNair
Imagine if someone offered you $150 an acre just to keep doing what you’re already doing. No doubt some of you would turn away due to philosophical reasons, and at least initially quite a few of you would view the pitch as just another dose of snake oil.
But no doubt many of you would be intrigued.
Intriguing indeed is the concept of being paid for ecosystem services. And it’s happening. Specifically, private enterprise is offering payments to farmers who are either judged or proven to be reducing greenhouse gas emissions.
Based on the available science, we have a pretty good idea that high-level management of permanent pastures is the best of agricultural practices for keeping carbon dioxide out of the atmosphere. So at least in theory, top graziers should be able to reap enough rewards from such programs to make them worth the time and effort required to qualify for those dollars.
I like the general concept. Grass farmers should indeed be recognized for what they offer in terms of water quality, soil health, food quality and other services not currently rewarded by our food system.
I want to see dollars shifted way from commodity production, and toward these more holistic measures. And I have no problem with corporate America showing interest in this new way of recognizing the value of your practices.
There’s potential for something very exciting as multinational corporations set “net zero” carbon goals, and governments around the globe enact (or at least talk about enacting) measures to reduce greenhouse gas emissions.
More of the usual?
Problem is, at this point it sure looks like carbon credits and the carbon markets that will trade them are shaping up to be more of the usual when it comes to ag environmental programs.
Big operations, including many that are putting Band-Aids on the same old damaging farming practices, seem to have the inside track for grabbing carbon dollars. Or at least enough of those dollars to make the effort worthwhile.
Meanwhile, smaller farms that have been doing the right thing for years may well be shut out of these markets, or else offered per-acre payments so small that they won’t be worth the bother.
In addition to these typical problems, we see issues specific to more than a few of these carbon markets — things like questionable testing procedures, privacy concerns and lack of guaranteed payments.
But let’s look at this a bit further, as today’s efforts to reward “carbon farming” may offer a window into the future regarding how farmers and farm programs will be operated.
First off, this is not new. In Europe, where governments are more forceful in their efforts to ratchet down on pollution, “cap and trade” programs that essentially allow polluters to meet edicts by buying credits from operations that pollute less have been around for years. Increasingly the focus is on greenhouse gases.
While supposedly effective because polluters end up making changes to avoid having to buy expensive credits, many people harbor concerns about these programs, such as the fact that polluting industries with deep pockets can continue to pollute.
In the U.S., most of the emerging carbon markets are voluntary, with California’s state cap and trade program being the most prominent exception. In agriculture’s case, entities will buy credits from farmers who are shown to be reducing emissions, with the credits placed in carbon markets where they can be purchased by companies that have pledged to reduce their carbon footprints. As with any market, carbon prices fluctuate.
American carbon markets are not new, either. Fifteen years ago, the Chicago Climate Exchange was launched with the thought that Congress soon would be implementing a cap and trade program. Millions of acres were put into the market, and producers did receive some money based on their farming practices.
But Congress never passed cap and trade, the value of carbon credits — never very high on a per-acre basis — collapsed, and the Chicago exchange went out of business in 2010.
The carbon exchange concept has returned, and the wind is in its sails as companies hear the climate concerns of customers and investors growing louder by the day. Third-party entities now offer to aggregate carbon credits in markets connecting sellers and buyers, thus aiding in price discovery.
And it’s possible that USDA will grease these wheels by someday funding a “carbon bank” to buy credits from farmers and sell them to corporations.
This is all very interesting, and the general idea is certainly gaining ground given the number of bigtime players expressing interest in the subject. More than 300 U.S. corporations sent a letter to President Biden supporting efforts to reduce greenhouse gas emissions at least 50% by 2030, which at least at face value shows that something big is happening.
Some people even forecast that carbon will become the world’s biggest commodity market.
Also big is the Food and Agriculture Climate Alliance, a who’s who of conventional agriculture’s most powerful farm/agbiz organizations and their allies.
FACA supports development of carbon markets, along with “voluntary, incentive-based tools” to help farmers sequester carbon and reduce emissions.
Sounds good, I guess. Perhaps FACA’s efforts will lead to programs that justly reward grass farmers managing permanent swards.
Yet an organization that includes the American Farm Bureau Federation, National Corn Growers Association, National Cotton Council, National Milk Producers Federation and the Biotechnology Innovation Organization seems unlikely to promote anything that might ding conventional row crop/CAFO livestock ag while shifting incentives (read: dollars) toward the kind of topnotch grazing and cover crop management practiced by Graze readers.
Even FACA’s biggest environmental group members, Nature Conservancy and Environmental Defense Fund, are known to work primarily within the conventional system.
By the big, for the big
So it is easy enough to see carbon markets being tailored to the needs of multi-thousand acre cropping enterprises putting a few cover-crop Band-Aids on their management practices, and CAFOs using public money to install manure digesters. Sound familiar?
Indeed, already the private entities forming these market-based programs — including those looking at grazing — much prefer working with big acreages.
It looks like you’ll have to be a big operator to make this stuff worthwhile, as the per-acre payments being offered are amounting to a tiny fraction of that $150 mentioned above.
Ten-thousand acre western ranches might find such small payments worth pursuing, but $10 an acre for 100 acres of dairy pasture doesn’t sound all that appealing.
Methinks the outfits peddling these carbon credit offers are looking to lock in their share of the money pie while leaving producers with the leftovers. Sound familiar?
Meanwhile, at least to this point the incentives (money) seem to be heading almost entirely toward operations that alter their cropping or livestock management, as opposed to those that have been capturing and retaining carbon all along. Sound familiar?
And there are questions about methods for calculating the numbers that will underpin these payments. The preferred way would be to accurately quantify changes in soil carbon levels.
But the accuracy of current testing technology and methodology is shaky at best. Satellite and shallow-depth monitoring provide questionable results. Soil carbon numbers fluctuate with locales, years and seasons.
Without some sort of known cause and effect, the easy work-around to the testing problems — payments based on the idea that X practice increases soil carbon by X amount — is quite simply a sham. Still, that’s probably where we’re heading, at least in the short term — if for no other reason than to get the big operations on board.
(By the way … deep-soil testing by someone I respect indicates that many organic systems are not stellar performers when it comes to capturing and keeping carbon. Too much tillage.)
There are no guarantees for farmers with these private carbon markets. Payments are based on the whims of testing and, of course, market price fluctuations. While you’re accustomed to price fluctuations, having a carbon payment slashed due to an inexplicable test result could join weird milk quality reports in making your blood boil.
Who gets your data?
And then there’s the subject of who benefits from data collected on your farm.
According to the National Sustainable Agriculture Coalition (NSAC), “One reason companies are interested in carbon markets is to collect and then mine farmers’ data in order to develop new products and services, leading to questions over who controls and who benefits from the data. Without adequate data privacy control and protections in place, farmer data can be leveraged in ways that enrich agribusiness companies instead of farmers.”
This, too, sounds plenty familiar in our current Big Tech world. Again, though, most Graze readers wouldn’t need to worry about very much of the above, as most likely you would be shut out of the carbon markets due to being good stewards all along.
The idea of rewarding farmers based on their carbon performance is a good one, but only if the majority of the above concerns are adequately addressed.
More than carbon
In the end, however, carbon isn’t the only environmental question of our agricultural age. Soil erosion, nutrient runoff, groundwater degradation, pesticide use, food quality — you and I might consider these the equal of carbon performance.
NSAC again: “Paying farmers for soil carbon offsets treats their land narrowly as a carbon sink instead of encouraging integrated systems that offer multiple ecosystem services.”
NSAC and others rightly talk of the need to provide additional public dollars to existing environmental/conservation programs. While recognizing the merits of such action, to me this never amounts to anywhere near enough change.
Enough change would be eliminating crop insurance subsidies and direct government payments — including emergency payments — that are based on bushels produced. Get rid of ethanol blending requirements, too.
All public dollars should be shifted to holistic environmental practices, and be based on the merits of each practice. Partial payment for these programs would come from fines paid by those who keep damaging the environment based on measurable performance.
We know quite a bit about measuring erosion, nitrates and the chemical content of food. Each day we’re learning more about monitoring soil health and how management practices affect that health.
And I’ve little doubt that somewhere down the road we will develop testing technology reliable enough to tell us which practices are sequestering soil carbon, and how much. Carbon would then carry potential as part of the total ecosystems package graziers can offer consumers.
Assuming government won’t be changing how it governs agriculture, I would like to see private companies go beyond carbon by forming holistic packages of credits that could be traded on markets. Put the entire package together, and you might indeed see environmental payments at $150 per acre for topnotch graziers.
But carbon markets as standalone entities? For agriculture, at least at this point, I’m skeptical.
Joel McNair is editor and publisher of Graze and has a small farm in southern Wisconsin.