Carbon Program Providers Say Buyer Demand is Outpacing Farmer Supply 

Currently, most voluntary carbon programs are based on payment for a change of practice on the farm. But what’s the tipping point for farmers to make any change in exchange for enrollment in a carbon program? 
Currently, most voluntary carbon programs are based on payment for a change of practice on the farm. But what’s the tipping point for farmers to make any change in exchange for enrollment in a carbon program? 
(Farm Journal)

Currently, most voluntary carbon programs are based on payment for a change of practice on the farm. But what’s the tipping point for farmers to make any change in exchange for enrollment in a carbon program? 

A MOVING TARGET

It might seem like farmer interest is a moving target fueled by fluctuations in the commodity markets. While carbon programs an-nounce their first and second rounds of payments to farmers, it seems the price for the carbon sequestered is also a moving target. 

Carbon by Indigo announced their second tranche of payments in December 2022 – $3.7 million to 450 farmers. The company reports it has consistently increased the price it pays for carbon credits. 

“Demand is currently outpacing credits produced by farmers in our program,” says Heather Gieseke, vice president of carbon commercial for Indigo Ag. “As the market continues to mature and corporate buyers increasingly focus on high-quality and registry-

verified carbon credits, we expect to see increased demand and rising prices continue for Indigo’s credits.”

As such, Indigo has increased its price paid to farmers. At launch in June 2019, Indigo guaranteed farmers a minimum payment of $10 per verified credit produced and sold (one credit equals one metric ton of carbon dioxide equivalent sequestered). 

The first round of payments made in September 2021 were increased to $15. By June 2022, the company paid $30 per credit to both the first and second tranche of participants. 

The prices for credits are set between the carbon programs and the purchasers and can be based on volume, delivery timing and more. 

Now, the industry is three years into signing up farmers, the real-world scenarios and information collected is informing its future. 

“The old rule of thumb was a simple one-to-one ratio, where one acre equals one ton of carbon sequestered annually,” says Steve Cubbage, founder of Longitude 94 and carbon market analyst. “However, many of the updated carbon models and programs are show-ing that benchmark may be too aggressive. In most cases it is probably less — in the half to three-quarters per acre range.” 

Cubbage theorizes as carbon sequestration is being measured, analyzed and realized in real-world conditions, that may be increas-ing the prices paid to farmers. Today, the system almost predominantly relies on samples being pulled from soils for measurement. 

THE PRICE FUTURE

Prices are expected to continue to climb Cubbage says, as time passes and more measurements are gathered based on real-world conditions. 

“I believe we have to get to a minimum of $40 to $50 per ton to make it worthwhile,” he says. “Farmers equate things in terms of per acre, not tons. For many, I would say right now the tipping point for farmers is a minimum of $30 per acre.”  


Margy Eckelkamp reports on the ag retail industry, input trends, machinery, technology and more.

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