Prep Farmers for Carbon Market Opportunities

Sustainable agricultural production practices have always made smart business sense for farmers, and now, those practices can help diversify farm revenue streams. Carbon markets are gaining popularity in agriculture as companies explore innovative ways to offset their carbon emissions.

A recent McKinsey report estimates that demand for carbon credits could increase by a factor of 15 or more by 2030 and by a factor of up to 100 by 2050. Overall, the market for carbon credits could be worth more than $50 billion in 2030.

There are plenty of opportunities for farmers to capitalize on their sustainable production practices, but there’s also plenty of confusion. As a trusted advisor, you’re tasked with helping farmers cut through the noise associated with various agricultural carbon programs to prepare them for emerging markets. But where do you start? What questions should you ask? What data can you help farmers collect? Let’s dive deeper into what it takes to prepare farmers for carbon market opportunities.

(Psssst. If you missed our recent partnership announcement on data collection for carbon markets, check it out!)

Ask the right questions.

Carbon markets aren’t going to be attractive to every one of your customers. So, to help identify if these markets are the right fit for your farmers, start by asking pointed questions. Here are some discussion starters that can help navigate conversations.

What conservation practices are you using on your farm today?

The answer to this question can set a baseline for assessing where your farmer is on the sustainability spectrum. If they’re already using no-till practices and planting cover crops, their operation may be a good candidate for carbon programs.

Are you interested in implementing more sustainable production practices?

Some farmers may express interest in changing their production practices but may need more information about the economic and agronomic consequences associated with making on-farm changes. Understanding how your customers view sustainability can help you gauge their receptivity to new production practices.

What are your long-term operational goals? 

Adopting sustainable production practices is an investment for farmers, so it’s important to consider how proposed changes fit into their long-term plans. Help farmers measure the risk and reward to evaluate whether carbon markets make sense for their farms. Carbon programs often require long-term commitments that may not align with your farmers’ objectives.

Start aggregating data.

Data collection, verification, and management are critical for farmers who are ready to engage in carbon markets. Help your farmers prepare by collecting historical and current information about production practices and conservation efforts. This information can help farmers quantify their good stewardship achievements as they weigh different carbon program options. Aggregating the following data is a good starting point to help farmers prepare for carbon markets. Using a platform like GROWERS Rally to gather the data and keep it organized can help farmers enter the carbon markets when they are ready.

Soil test results

Soil organic carbon levels are a good indicator of soil health and can help gauge the potential impact of future sustainability efforts. Work with your farmers to create a soil testing program to establish the amount of carbon currently in the soil and monitor changes as sustainable practices are adopted. Each carbon program has different soil testing requirements to set a baseline and validate the effectiveness of sustainable production practices over time. 

Nutrient management

Having a solid nutrient management plan is essential for farmers who are interested in marketing their carbon credits. Farmers should plan to track what nutrients they are applying and when and how they are applying them. Using controlled-release fertilizers and products like nitrogen stabilizers can translate into better nutrient use efficiency and additional incentives from carbon programs. Other practices, such as substituting synthetic fertilizers with organic matter additions and implementing variable rate fertility applications may also be eligible for carbon program benefits.  

Production history

Having detailed information about a farm’s production history, including crop rotation and yield data is also good data to leverage when preparing for carbon markets. Some carbon programs offer growers incentives for production practices implemented in previous years. For instance, if your farmers have already been cover cropping for several years they could be eligible for carbon credit payments under some programs.

Some programs require 3 to 5 years of historical plus current season information, while some may require up to 10 years of production history. Plan to reference planting and harvest dates, crop planted and any in-season management records. Some carbon programs may require shape files with actual field boundaries.

Tillage

Reduced tillage is one of the main ways farmers can generate carbon credits, so having accurate data about tillage practices is imperative. Some carbon programs will offer payments if an operation has adopted no-till or strip-till practices in previous years and may even offer back payments for those sustainable tillage practices. Reducing tillage events and/or intensity may qualify for carbon credits, so even if farmers aren’t strictly no-till, they may qualify for benefits. Some carbon programs may require information about specific tillage equipment used to verify eligibility for incentives.

Find stewardship opportunities.

In addition to collecting the required data for carbon marketing, you have an opportunity to help farmers identify stewardship opportunities on their farm. Even if farmers aren’t interested in carbon markets today, implementing sustainable production practices and keeping an accurate record of their field activities now could put them in a good position for marketing their efforts down the road. Meet farmers where they are in their sustainability journey and find ways to improve their production practices. 

For example, you can start by fine-tuning nitrogen management plans to include more prescriptive or split applications. From there, you can look at the crop rotation and residue management to find ways to improve soil health. If farmers are open to making bigger on-farm changes, consider conservation tillage and cover crop options. Making step adjustments over time can lead to scalable results that set farmers up to take advantage of emerging carbon market opportunities.  

Carbon markets are a bit like the Wild West right now, making it overwhelming for farmers to navigate potential opportunities and scale barriers to entry. With your help, they can begin collecting the data needed to make informed decisions and start identifying stewardship opportunities on their farm.

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