Big agriculture companies like Bayer Ag, Nutrien Ltd., and Cargill Inc. are jockeying with startups to encourage crop producers to adopt climate-friendly practices and develop farming-driven carbon markets. Those efforts would let retailers, food makers and other companies offset their greenhouse gas emissions by paying farmers for their fields’ capacity to withdraw carbon dioxide from the atmosphere and trap it in the soil.
The concept envisions the Midwest’s swatches of cropland doing double duty as a vast carbon sink. Plants’ process of photosynthesis withdraws carbon dioxide from the air, combines it with water and sunlight to produce energy, and ultimately embeds carbon in dirt through roots, while releasing oxygen back into the atmosphere. Soil, if left undisturbed, can retain the converted carbon for years.
Agricultural companies, long criticized as environmental villains, say that paying farmers to maximize those natural processes can put the scale of modern farming behind a potential climate solution. Farmers, following half a decade of lean crop prices, are contemplating a possible new source of income that is less dependent on weather and agricultural commodity markets. The Environmental Protection Agency has estimated that the agriculture sector accounts for 10 percent of U.S. greenhouse gas emissions.
President-elect Joe Biden’s administration also plans to pursue the concept. Biden said in December that under his administration, the USDA will direct federal conservation payments to farmers who use their fields to capture more carbon.
There is no U.S. federal requirement for companies to offset their greenhouse gas emissions, whether by buying credits from farmers or other means. But some companies say they are voluntarily looking for ways to reduce or eliminate their carbon footprint to attract environmentally conscious consumers and investors and pursue their own corporate missions.
Iowa farmer Kelly Garrett in September planted wheat and rye not to be harvested and sold but rather to keep his soil enriched and boost the quantity of carbon dioxide his fields can pull from the atmosphere. In the spring, he will plant his typical crops into the residue.
The strategy boosts farmers’ bottom lines. Farmers that participate in the carbon credit programs so far have generally received between $7 and $40 per acre, depending on farmers’ practices. The companies say those practices can be verified through data beamed from tractors to online farm management systems, and by monitoring fields with satellites and soil tests.
“There’s a lot of money to be made here for farmers,” Garrett said, who adopted carbon-trapping practices on his farm several years ago to help enrich his soil.
In November, he was photographed standing in a corn field holding an oversized check for $75,000, proceeds from selling 5,000 carbon credits that his farm generated through a program being developed by the agricultural startups Nori LLC and Locus Agricultural Solutions.
The e-commerce platform Shopify bought the credits and used the carbon reductions generated to help offset carbon emissions from the boats, planes and trucks transporting goods sold through the platform during the Black Friday/Cyber Monday weekend.
Some agricultural companies, including Bayer and Nutrien as well as startups like Nori and Indigo Ag, aspire to be carbon middlemen, offering products and services to develop platforms where farmer-generated credits can be bought and sold.
Others, including Cargill, Corteva Inc. and Archer Daniels Midland Co. are facilitating and funding farmers’ efforts as a way to burnish the companies’ own climate commitments and those of their customers, such as grain buyers.
Source: Wall Street Journal