After participating in four carbon market pilot programs in the past two years, Kyle Mehmen has learned a lot about the opportunity, and perhaps even more about what not to do.
“This market is developing so quickly, I can’t say we have everything figured out,” says Mehmen, general manager at MBS Family Farms in Iowa. “But it will be something we want to understand now rather than play catch up.”
The first two questions Mehmen thinks farmers should ask themselves are:
- Is my digital house in order enough so my data can be applied across a platform?
- Am I interested in a company that is a hub or am I more interested in looking at bolt-on companies with additional services, such as soil sampling or data entry?
Farmers can expect one of two paths with carbon programs, Mehmen says.
“The easier it is to participate in a program, the less it tends to pay. The more work you have to put in, the greater the financial reward,” he says.
Farmers skeptical of lower-paying programs should remember scale. “A little number times a big number becomes a bigger number,” he says. “If it’s $20 an acre times 1,000 acres that’s $20,000. If it’s $20 an acre times 10,000 acres it’s $200,000. Both are worth working for.”
NEW VERSUS OLD
The biggest gains for farmers, Mehmen says, could come from adopting agronomic practices you are interested in for reasons beyond the carbon potential.
“The most common question I get is if there’s a fit for a farm that has already been doing some of these practices for a long time,” he says. “Even if you’ve been implementing a practice for 40 years, there’s likely another piece of the puzzle that’s a change practice.”
An example, he says, is long-time no-till farmers may adopt variable- rate nitrogen as a change practice to go in concert with their no-till.
Kyle Mehmen’s Top Three Carbon Tips:
- Get in now. I feel like the first days of the carbon markets will be the best days.
- Don’t expect a quick payoff. Plan on it taking a year before you get a check.
- There are a few “easy buttons” in the marketplace. But the easier-to-enroll carbon programs don’t offer the most dollars per acre.
Understand the Fine Print
Before you sign any documents, ask the contract provider questions, encourages Steve Cubbage, a precision ag consultant and vice president of services for Farmobile. He suggests asking:
What changes will you have to make to participate?
How much time, effort and historical documents will you need?
What is the term of the commitment?
Can you move credits from one entity to another?
What if you have already implemented sustainable practices?
What happens if you don’t meet contract requirements?
What if you want an early exit from the contract?
Can terms or standards change during the contract?
