3 farmers share their carbon market experience

Carbon programs are nothing new, but many in the agriculture industry remain skeptical. Three farmers sat down with Garth Boyd, partner at The Context Network, on the Successful Farming Main Stage at the 2023 Commodity Classic to discuss their experiences with the programs.

Why join a program?

A corn, oat, and cattle farmer in southeastern Minnesota, Matt Krugar is relatively new to farming his own land. While 2023 may only be his third crop season, Krugar had a vision for his farm from the very beginning.

"It bugs me to see soil erosion, so I knew I was going to do things differently," Krugar says. "I'm going to start with cover crops and figure out how to work in no-till. For my rotation, oats are helping me cross that bridge for introducing no-till to my operation."

Also a Land O'Lakes employee, Krugar saw the Truterra program as an opportunity to cash in on practices he was already implementing.

"Farming is pretty competitive," he says. "I'm a 33-year-old renting farm ground an hour away from my family where I don't know anyone. I needed to find opportunities, carbon markets being one of them, so that I can hopefully expand the farm. That's my reason for joining a carbon market."

For Jesup, Iowa, farmer Ben Riensche, fitting regenerative ag practices into his corn and soybean operation has been a 10-year mission. A sixth-generation farmer with 15,000 acres, he looks for scalable ways to make "planet positive" change while remaining profitable.

Riensche is enrolled with Indigo, and while he enjoys the payments he gets today, he's looking to the future.

"Corporate America adheres to this idea of being carbon neutral," Riensche says. "That's worth something to them. When the carbon market started coming alive, it represented the alignment between things that farmers could do and sell as a revenue stream and something corporations really wanted. I'm not here for exactly what's offered in the market today. I'm here to add to my revenue stream and practice my skills, so as this grows I'm ready."

Steven Stenzel of Hamburg, Iowa, also has extensive experience with climate-smart practices. The fourth generation corn and soybean farmer has fields with 30 years of no-till history. He joined the Agoro Carbon Alliance as a way to offset the cost of new practices like cover cropping.

Stenzel strongly believes that getting involved in carbon programs now will set future generations up for success.

"I was looking for something to further enhance the ground that we have to make it sustainable for my sons and future generations," Stenzel says. "If you're not messing with carbon programs now, your kids, if they join the operation, will."

What are farmers getting paid?

Carbon payouts can vary greatly across programs. While the overall global carbon credit averaged around $4.70 in 2022, nature-based sequestration seen in farming is often worth more.

Stenzel says he makes enough from his Agoro carbon payout to cover the cost of planting his cover crops. Krugar says the payouts from Truterra have risen from $20 per metric ton to $30 over the past three years. For Riensche, Indigo payouts are unique in that they are extended over a five year period.

"Last year, on the acres put aside, I had 1.2 tons of carbon sequestered, and we took a number in the mid 50s that is paid out over a five year period," Riensche says. "I get 50% the first year, 20% next year, and 10% the following year. Next year, we start a new cycle of another set of five year payments, and it will be at the market price."

What about early adopters?

Being left out of carbon programs can leave farmers who have been no-tilling or cover cropping for years feeling bitter. While there's currently a limited market for early adopters, Krugar says the tides are changing.

"No carbon program wants to leave out the growers that have been doing right," Krugar says. "Carbon markets have only been around for a couple years. They evolve and change constantly. Do I expect there to be opportunities for these legacy farmers? A hundred percent, but it takes a while to find buyers for those types of credits."

Despite strict additionality requirements in many contracts, Riensche says it's important to do your homework.

"Look at the programs and what other features they offer," he says. "Can you document your improving soil health or increasing biodiversity? Reducing nutrient use? There's ways to participate other than just the piece that focuses on soil erosion and keeping watersheds clean."

What should hesitant farmers know?

Complicated contracts, industry jargon, and fear of the future can lead to misconceptions and leave farmers hesitant to join a carbon program.

For some, the fear of losing yield and profit is enough to stop farmers from implementing new production practices.

"There's enough data out there to say you're not going to lose yield, but if you manage it incorrectly, you could," Kruger says. "The management of these practices is where you need to focus, not how much per ton you can get. Think about how you can make this work for your operation."

For other farmers, there's hesitancy to wait until payouts are larger, but additionality requirements may mean they wait themselves out of the opportunity entirely.

"Just sign up, don't wait," Riensche says. "The size of the market is growing, and this could be a big revenue stream for farmers."

Other farmers are worried about data demands and the extra hassle a carbon program can create, but Stenzel says the reward is worth it.

"If you're in the mindset that this is going to create a problem for you, then don't bother," Stenzel says. "If you want to further your operation and look toward the future, then you're going to have to put forth a little bit of effort, but that effort is going to be reimbursed in multiple ways."