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Carbon Markets 101:

Partnership Addresses Carbon Market Reluctance by Lowering Risk

 

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Source: No-Till Farmer 

By No-Till Farmer Staff

February 26, 2022

Posted in Cover Crops, Nutrient Management, Soil Health

Regenerative agricultural practices like cover-cropping and no-till are effective at reducing greenhouse gasses (GHGs) while building climate-resilient soils. But for growers, the early-year costs of implementing new practices slow adoption for individual farms and at scale across the country. Traditional carbon marketplaces pay growers for carbon sequestration via regenerative practices, but many of these marketplaces come with costs that outpace the costs of early-year implementation, and it can take farms years to realize financial rewards.

Slow Progress

A recent study showed that 72% of farmers were aware of carbon credits but only 3% have enrolled. Cover Crop Strategies (NTF) asked Anne Fairfield-Sonn, director of corporate communications at CIBO Technologies, for feedback on the slow progress.

“Two of the biggest barriers to adoption are high levels of risk to enter the new carbon markets and the high startup costs of adopting new practices. Carbon markets as they exist today are not built for farmers, despite what most may say. Growers are asked to take on a high level of risk. Although expected to grow significantly, the average price per ton of reduced/sequestered carbon dioxide equivalent (CO2e) is not sufficient to cover startup costs for growers implementing new practices.

“Many of these carbon markets also require growers to make long-term commitments that do not align with the realities of their farming businesses. As a result, growers are reluctant to participate and enrollments remain low, with many existing participants frustrated and underpaid.”

To embrace carbon markets, “farmers need to understand how they can access real cost share, reduced risk — including agronomic support and financial risk reduction — upside in the carbon marketplace, flexibility, and the agronomic benefits of regenerative agriculture,” she says.

A New Approach to Incentives

For those growers interested in starting regenerative agriculture practices, she says CIBO Carbon Bridge can help, as it creates an incentive that solves these problems. “CIBO is basing per-acre payments on what growers say they need to help cover the costs of adopting new practices. The program reduces the risk for farmers now, incentivizing them to adopt regenerative farming practices and still have the ability to share in the upside, and sell their carbon credits a few years down the road when soil carbon markets are more established.

“We also believe in financially rewarding growers who were early adopters of regenerative farming. Typically, these leaders in the industry do not qualify for carbon market programs, but carbon programs are not their only incentive option. We encourage farmers to sign up to be notified when we launch the CIBO Grower platform, where growers can quickly discover and enroll in incentive programs for regenerative farming.”

Collaborative Partnership

CIBO has also announced its first CIBO Carbon Bridge partnership with Bushel to bring visibility to sustainable practices throughout the supply chain. Bushel, a Fargo, N.D., software company focused on building the digital infrastructure for the grain industry, has committed to collaborating with companies that provide new market opportunities for growers.

Using Carbon Bridge, growers can access the best per-acre payments available starting year one, based on real-world cost estimates. The program also gives agronomic support for qualifying growers interested in adopting new practices.

“The new partnership with Bushel is helping to increase the pace and penetration of regenerative adoption and setting the stage for more collaboration across the ag value chain,” said Nitzan Haklai, VP, Business Development at CIBO Technologies. “But just as importantly, we’re focused on helping farms make the transition, and meeting those early-stage investment costs that can truly become very real roadblocks to a better future for farmers and consumers.”

“We believe that bringing visibility to these new programs is a critical piece of helping US growers, and hopefully the rest of the value chain, realize the operational and financial benefits of climate-smart agriculture,” says Bushel’s Director of Sustainability, Allison Nepveux.

“We believe that creating reductions in carbon emissions will be one of the first true monetizable business opportunities for food and agriculture supply chains. That starts with making sure switching to regenerative practices is economically viable for growers. The CIBO program is a great example of testing and enabling that. We hope this collaboration is just the beginning of a much bigger vision for our grain facilities and their growers.”

Bushel provides software technology solutions for the agricultural industry with its flagship mobile application used at nearly 2,000 grain facilities. Last year, Bushel acquired FarmLogs, a leading provider of technology farm management systems for row crop farms. This creates a digital infrastructure to connect the farm gate to the grain facility onto downstream customers with permission from all parties. This expands sustainability opportunities for both growers and grain facilities through verified on-farm practices from field to CPGs, and eventually the end consumer.

Individuals and farms can pre-qualify for CIBO Carbon Bridge and sign up to see when the program is available in their area

Source: No-Till Farmer

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