Understanding Carbon Credit Programs for Soybean Producers

Carbon programs for farmers and ranchers have gained momentum in the past couple of years.

Today, soybean producers have an increasing number of market-driven opportunities to cash in on certain soil management practices, including the following:

• Reduced tillage

• Fertilizer conservation

• Improved grazing

• Diversified rotations

• Planting cover crops

These practices initially fetched anywhere from $10 to $20 per carbon credit — representative of 1.1 tons of carbon dioxide equivalent (CO2e) — but that price appears to be increasing in value as market demand continues to grow.

How Carbon Credit Programs Work

Whether you’ve already signed a carbon credit contract or you’re just evaluating your options, it’s helpful to understand this relatively new and ever-evolving landscape.

Offered by the major ag retail companies as well as a growing number of tech startups, carbon credit programs typically work with an established carbon offset registry to verify and purchase credits from participating farmers.

Soil sampling is quite often built into this process, although quantity and frequency will vary by program. Most carbon credit programs also provide an online platform for producers to manage their acres and document on-farm practices.

After compensating a producer, the company is then able to sell these verified carbon credits on the market. The most common buyers, larger corporations, purchase carbon credits in an effort to offset their own carbon footprint and either satisfy consumer demand for a higher sustainability commitment or comply with governmental regulations (or, in many cases, both).

What To Know Before Signing Up

The opportunity to earn additional income on land you farm is a huge upside, but you want to make sure you know what a particular carbon credit program entails.

When evaluating carbon credit programs, you should ask yourself a few key questions:

• What practices will you need to implement on your farm?

• What kind of investment, in both time and money, will the above practices require?

• How will these practices benefit your farm agronomically?

• How much data are you required to share? Are you willing to share it?

• What are the terms of the agreement? How long does it last?

• If credit values increase, will you receive additional compensation?

Also, there are many different comparison charts available online to help you discern what distinguishes each of the major programs and which might be the best fit for your operation. Doing homework upfront can position you to make the best decision about participating in a carbon credit program.

Additional Carbon Credit Program Resources

As noted earlier, the market for carbon credits continues to evolve — as do the programs that can help operators tap into its economic benefits.

Both SDSU Extension and your county NRCS office have soil management resources available and can provide you with additional insight into various carbon credit opportunities.

Another resource is the Ecosystem Services Market Consortium, a non-profit organization funded in part by the United Soybean Board (USB) to help advance markets that incentivize farmers and ranchers to implement soil management practices that benefit society.