ST. LOUIS — The development of carbon markets has been a topic of conversations and a recent webinar addressed if farmers are buying into the new concept.
The Donald Danforth Plant Science Center hosted an AgTech NEXT event that looked at this unique model.
Sara Wyant, Agri-Pulse Communication founder and president, served as moderator, and panelists were P.J. Haynie II, owner of Haynie Farms and chairman of the National Black Growers Council; Erin Fitzgerald, U.S. Farmers and Ranchers in Action CEO; and Mike DeCamp, CoverCress Inc. CEO.
There are a lot of different companies right now who are out paying producers to sequester carbon, a lot of respectively different programs and different payment rates. Are you participating in any right now and why or why not?
Haynie: Yes, we’ll welcome any opportunities to generate additional revenue streams on the farm. I’m selling corn for the same price that my grandfather sold 40 years ago. However, my grandfather’s combine cost $40,000 and mine cost $400,000. So, as an ag econ major in college it would behoove myself to look at additional revenue streams of income, especially for work that I’m doing that’s going impact and benefit the overall economy. That’s you as a consumer, that’s me as farmer, that’s the future generation that will inherit the land and soil that we’re working today.
We’re all in favor of that because we have to make sure we can sustain. Yes, it is an agronomic benefit, it is an environmental benefit, but it also offers financial benefit and that’s where we see an intersection at a point where we want to be in the middle of the road.
We’ve heard numbers anywhere from $10 an acre to $45 an acre in the carbon market. What’s the sweet spot?
Haynie: I think it is worth a lot more than that. There’s a lot in equipment to get this done. When you looking at trying to get a good stand or a good established seed bed, it’s not just about going out and broadcasting it and hoping that it comes up. You have to work the soil, burn diesel, block plow points and run steel across the field, and it really costs you.
The other component is, just like chemical and fertilizer, the industry knows we need it. So, we start to see the prices ratchet on up. When you look at what you were paying for cover crops four years ago to what you’re paying now, they know you’ve got the hook in your mouth; you need it, so they’re just reeling you on in so we’re to offset that cost.
I’m hoping that world farmers will see opportunities north of that $50 an acre mark because they need it. I support my fellow farmers. I would like to have each of them get every dollar they can for the work they do to put in the cover crops. I don’t want to see companies come out and take advantage and prey off the backs that farmers put sweat out on to get these cover crops and other programs that they implement on their farms to benefit the greater community.
How can payments be applied in a consistent fashion given that there are huge regional differences in soil types, moisture and other factors?
Fitzgerald: To just step back and look at the economics situation of the farmers; it’s great that we’re seeing a private sector emerge for carbon credits. The question then is over what time frame and over what verifiable and repeatable data needs to be ascertained. It’s still a little bit emerging, moving fast, and we need to think about this.
Agriculture needs to look like the renewable energy sector in 2007. It created an actual renewable energy trade. So, we’re now seeing the same thing in agriculture. We’re seeing carbon trades, nutrient and water management trades that will help stimulate the market. That moved the market so Nike could in Washington buy renewables when there’s no sun, and then there were federal and state carve-outs. But what they did and did well is develop new financial instruments that worked on the direct investments on farms.
We know that carbon credit is going to help in terms of revenue stream, but what are the direct investments that are truly needed to sustain many of these high capital expenditure investments that are needed.
If we’re talking about beef, it we’re talking about multi-million dollar fencerows, if we’re talking about water pivots, these are major million dollar infrastructure investments and we’re going to need new creative financial mechanism and, at the same time, we can also imagine effects of climate change. We have to also start looking at risk mitigation tools that bolt alongside those financial instruments.
In the third quarter of 2020, $10 billion in climate bonds were announced and agriculture wasn’t even considered as one of those private sector climate bonds. We need to look at stackable carbon credits, federal and then private sector investment that really bolt alongside our farmers to support.
As we look at adoption, Monsanto, for example, used to have a lot of field days and farmers would come together. We also used to have a lot more robust Extension service, demonstration plots. What is out there now that can help farmers adopt these new practices by first learning about them and also ground-truthing them with their neighbors.
DeCamp: Any time you bring a new product to market, you have to have something that truly people are going to believe in its performance. It’s going to add value to what they’re doing and so forth. For a grower it’s really important that it’s going to bring some form enhanced value, profitability to that farm and those are really important pieces.
But something I’ve found unique in the years I’ve been in agriculture is that trust factor. Take the time, not rush a product to market, to have these demonstration fields and to be able to help a grower understand how they’re going to benefit from this product, have them experience it firsthand on their acres so that when they make that investment, that decision to actually buy that input that they’re not just taking a leap of faith and that they’ve seen it. The party that’s bringing that product to the market has been alongside them helping them understand it and that they’re going to be there with them throughout that launch.
That trust piece is critical. That’s the responsibility we have as a supplier and bringing a new product like this to the market, being able to show and demonstrate in real time with a grower that we’re going to be there alongside them and be a trusted supplier.
Fitzgerald: It is a little bit of a leap of faith for our farmers. They are intuiting their way. They have this science and then they’re trying to figure out what are the carbon results and outcomes.
USFRA and Foundation for Food and Agriculture Research formed AgMission and we see the need to fundamentally have a public/private protocol to help lift up a public/private sector database to help us all go further faster. There’s just a lot of noise, a lot of great work, but often we’re not sensing and sense-making this data so that our farmers can rapidly respond to not only demonstrating their improvement on carbon improvements but adapt to climate change.
We’re going to have to be able to sense in real time changes that are happening and make scientific advancements and get it out to our farmers in real time.
We believe in order to do that we have to build a data infrastructure to help us kind of reduce a little bit that leap of faith we’re all making, not only our farmers, but even our innovators, startups and major institutions, that we need to move a little faster.
Will farmers be able to get assistance with measuring carbon sequestration?
Haynie: We have been getting some offers for technical assistance. They’re coming out and we’re doing some trials looking at soils tests prior to planting cover crops, and then when the cover crops are in the field and post harvest cover crops. So, we’re taking multiple steps during the year to see how that goes.