Carbon evaluated

Philip HOPKINS

CARBON captureisstruggling to attract farmers in the US, according to arecent article in the Wall Street Journal (WSJ).

Patrick Thomaswrote in the WSJ that agricultural companieswereinvesting millions of dollars to develop farming programs designed to capturemore carbondioxideinpaddocks, as apossiblesolution to mitigate climate change.The article was reproduced in The Australian The challenge: convincing farmers it is worth their time, the costs of newfarming practices and potentially losing out on some of their harvestinthe process,WSJ said.

Iowa cornfarmer Chris Edgington told the newspaper he had looked at carbon programs over the past year,calculating the risks of reduced crops as he adjustedthe way he managed his crops and the potentialcompensation for the carbon his paddocks could capture. So far, he hasn’t signed up.

“At the current economics, it will be arealchallenge to grow,” said Mr Edington, chairman and aformer president of the National CornGrowers Association.

WSJ saidagricultural companies suchasBayerare developing systemsthataim to createa farmer-driven carbon market. The idea is to turn paddocks into carbon sinks: plants take carbon dioxide from the air and combine it withwaterand sunlight to produce energy through photosynthesis, which embodies carbon in the dirtthrough the plants’ roots. Soil can retain the carbon for years if left undisturbed.

In this way, farmers couldbe paidand become part ofthe potential solution to the threat of climate change, while carbon programs would give companies apotential new revenuestream.

Companies maintainthat farm-generated carbon offsets would drawdemand from food manufacturers, airlines and tech companies seeking to offset their own emissions.

WSJ said the market for carbon credits, including forestryand other carbon-capture projects, could reach$US 50billion ($A71b) by 2030, according to a 2021 study from consulting firm McKinsey.

“Agricultural companies say farmerswillshare in proceeds from the sale of carbon credits,” Thomas wrote.

Less than 5per cent of the 1300 US farmers surveyed by McKinsey said they took part in acarbon program,and morethan50 per centsaidanunclear return on investmentwas one of their top reasons for not participating.

The number of farmers signing contracts for acompany’s carbon marketwas flat at 1per cent from January 2021 to August 2022, according to asurvey of hundreds of farmers conducted by Purdue University.

However,agricultural executives said their farmer sign-ups wereon track or exceeding expectations, withdemandfor carbon credits tipped to rise along with the price farmers werepaid, WSJ said. They wereflexible, for example grandfatheringfarmers into programs who had been using carbon-capturing ‘notill’ farming practices for years, or by offering moreflexible contracts.

They said farmers’ pay cheques wouldrise over timeaswould the health of their soils, another long-termbenefit. New production techniquesincluded avoiding tillage and planting cover crops in winter Farmers weregenerallypaid $US15-$US20 per tonne of carbon sequestered under agricultural companies’programs, asenior analyst at Bank of Montreal, Joel Jackson, told WSJ.

He estimated that farmers need to earnmorethan $US50 atonne to make carbon programs economically viable. No-till farming, depending on the farm, sequesters an average of 0.3 tonnesofcarbon per acreayear,according to the Soil Science Society of America. Chiefstrategy officeratagricultural companyIndigo,Chris Harbourt, toldWSJ that carbon shouldbepriced at $US75 per tonne for farmers to take notice.

“At $US100-plus,farmers need to think about it as aserious part of their farmplanning,” he said. Australia’s reported ACCU spot price had been generally averaging in the low $30 range since the announcementon contract milestone exit arrangements until it settled at just over $35 after 23 May 2022.

Kevin Prevo, afarmer in Bloomfield, Iowa, said he was paid $US3000 through Indigo’s carbon program in 2021 and $US6000 in 2022. It was apromising start, but the moneysofar wasn’t enough for some farmers to justify overhauling practices on their fields, he said.

WSJ said when the carbon programs werelaunched several years ago, farmers wereencouraged to generate extra cash when commodity prices werelow However,grainprices were now high,boosting farmer income levels and reducing the need for extra cash.

The carbon market remained undersuppliedpartlybecause of the complex process to verify carbon credits frompaddocks, causing delays, Nutrien’s vice-president of sustainable agriculture, Matthew Marshall, told WSJ.

Companies arenow trying to ease the transition to more climate-friendlypracticesby suggestingnew pesticides and providing other agronomic advice that would limit harvest losses thatcouldcome with switching practices, said the head of Bayer’s carbon business model unit, Leo Bastos.

“It’s still anascent market,” he told WSJ.