What is Carbon Farming?

Carbon farming involves implementing agricultural practices that sequester carbon dioxide from the atmosphere into the soil, reducing greenhouse gas emissions. As global industries and governments increasingly prioritize sustainability, carbon farming presents not only an opportunity for conservation but also for farmers to diversify revenue streams through carbon credits.

How It Works

Here is a basic visual of the carbon farming process:

Soil Health, Soil Amendments, and Carbon Farming | USDA Climate Hubs

Carbon farming utilizes a variety of techniques designed to enhance carbon sequestration and mitigate atmospheric carbon dioxide levels. These include no-till farming, cover cropping, crop rotation, agroforestry, and grazing management.

Carbon Contracts & Credits

Central to carbon farming initiatives are carbon contracts — agreements between farmers and entities interested in purchasing carbon credits. The contracts outline specific terms and conditions governing carbon credit generation and trade. 

Todd Janzen, attorney and founder of Janzen Agricultural Law in Indianapolis, Ind., says these are 6 critical components of carbon contracts to consider:

  1. Enrollment of Land: Farmers must designate specific acres for carbon farming, often with exclusivity clauses to prevent overlapping contracts.

  2. Mandated Farming Practices: The contracts specify practices like no-till or cover cropping that farmers must adopt to qualify for carbon credits.

  3. Data Collection: Rigorous data collection is essential to verify carbon sequestration claims, ensuring transparency and accuracy.

  4. Third-Party Verification: Independent verifiers validate farmers' adherence to contractual practices and carbon credit generation.

  5. Prohibitions on Stacking: Contracts prohibit farmers from participating simultaneously in multiple carbon programs to prevent double counting of carbon credits.

  6. Sale of Carbon Credits: Clarity on how carbon credits are monetized is critical. Contracts should transparently define payment mechanisms, which can vary widely depending on market conditions and program specifics.

One carbon credit is equal to 1 metric ton of carbon dioxide, which is equivalent to about 2,200 pounds. That is about the same weight as a Fiat car, according to Janzen.

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Carbon Credits Role in Corporate America

Carbon credits may not be a real currency, but plenty of companies are willing to buy them, in order to offset their emissions.

“I think of carbon credits as sort of like an environmental cryptocurrency in that they aren't really a thing, but they are really something that can be traded, bought and sold. But they're not a real currency like money is,” Janzen says.

Carbon farming faces challenges, such as technological constraints in measuring and verifying carbon sequestration, long-term commitments required by carbon contracts, and market volatility affecting financial viability. 

Companies like McDonald's and PepsiCo are setting emission reduction targets, which result in them engaging in carbon credit programs, in order to reshape agricultural practices towards sustainability.

Janzen says this commitment necessitates partnerships with farmers to implement carbon farming practices, such as no-tilling, which enhances carbon sequestration in soils. The credits are generated through sustainable farming practices incentivized by companies like Indigo, acting as intermediaries between corporations and farmers.

As global industries increasingly commit to carbon neutrality, farmers are at the forefront of a shift towards sustainable agricultural practices.

“You can go to any of the corporate websites, and of course you can see that they have these emission targets or these pledges that we’re going to be net-zero by 2050 or we’re going to reduce our carbon footprint by 40% in the next 10 years,” Janzen says. “And so to do all of this, of course they have to somehow figure out how to reduce their own emissions footprints. And that falls on you all as farmers.”

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