Posted in GreenBiz
April 19, 2022

Carbon markets can bridge gap to sustainability goals


This article is sponsored by Corteva Agriscience.

While farmers around the world are reducing emissions and producing crops and livestock in more efficient ways, more must be done to mitigate the impact of climate change. 

To date, many efforts to pay for climate-positive outcomes have focused on sourcing from farmers, paying them to grow and deliver more sustainable crops. Despite consumers’ stated willingness to pay for such “sustainable” brand claims, progress has been muted. 

Why? Because of the structure inherent in the markets that trade the crops grown on most farmland: We are literally dealing with commoditized, undifferentiated goods. Despite the limited progress to date, I am quite bullish on the potential of carbon markets and believe they can bridge existing gaps in current supply chain-focused sustainability efforts and help farmers realize the value of their land as a solution to climate change. 

The commodity marketplace is a challenge for driving change

Today’s broad-acre farming and commodity market system was developed for productivity and efficiency. But commoditization — the same innovation that has enabled the development of our modern food system — is also the biggest challenge to incentivizing the adoption of regenerative practices at the field level and to the establishment of financial incentives that carry through the entire food system, from consumer to farmer. 

For regenerative agriculture to be successful for individual farmers, a long-term, focused investment strategy is needed. We find it takes on average seven years for farmers to plan, experiment and gradually adopt regenerative practices such as no-till, cover crops or expanded crop rotation. That long-term investment and transition is not something that is rewarded in our current environment of commodity production and procurement, and we can’t expect farmers to shoulder the financial burden of direct costs such as equipment, input and facilities, or indirect costs of education and system changes. 

Even more challenging is the complexity of our food distribution and production system. Inherently, the commodity sourcing system is not effective at rewarding place-based change: Purchasing large quantities of grain at the lowest price from across multiple global markets will not drive and reward sustainable practices. These practices require years of investment at the farm level, as well as adjustments to the commodity purchasing, transportation, storage and distribution systems that track grain production and shipments and reward farmers for their practices.

While consumers and many food companies state that they want to purchase food produced through regenerative means, it’s hard to do. Some companies have developed programs with farmers that reward regenerative practices — tracing field-to-grocery store shelf — but those programs represent a minute percentage of a much larger system that needs to evolve. Even programs on tens of thousands of acres are a small piece of the puzzle when you consider that there are more than 240 million acres of crop production in the U.S. — most of which produce commodities that are shipped across the globe. 

Finally, the sequestration rates of carbon per acre of farmland are relatively low, so a meaningful change happens not at 10,000 acres, but something closer to 50 million acres.

There is an assumption that if you make a change on one acre of corn that sequesters additional carbon, it can be easily scaled up to the 90 million acres of corn produced across the United States. Unfortunately, it isn’t that easy. Practices such as planting cover crops or switching to no-till practices may not be the best agronomic fit for every acre. Every farmer must decide which practices are right for their operation, and while there are common practices and concepts that can work across broad geographies, each farm (and even acre) is managed individually.

Carbon markets can bridge the gap

With all the obstacles we face, I am still confident that agriculture can lead the way in sustainable solutions, and carbon markets can build the foundation to even more positive change. 

Why? Because the same commodity marketplace that is a challenge for grains can scale for carbon markets. One ton of sequestered carbon is a commodity that can be similarly measured and exchanged for the same value everywhere. Sequestered carbon can also be produced and traded without a connection to the existing commodity food chain. Farmers can get paid directly for their efforts without affecting grain or oilseed production.  

There is still work to do in developing the systems to make this marketplace successful, and collaborations across the food systems are key. Corteva’s partnerships with the Ecosystem Services Market Consortium (ESMC) and IndigoAg are focused on developing metrics, tracking, measurement and ultimately the markets that deliver value to farmers for the changes they are making in their fields. When farmers use digital tools and recordkeeping systems, they can more easily gather the data to not only qualify for carbon market sales, but to help them plan, manage and grow their own crops more effectively. 

Because carbon markets focus on the outcome of total carbon sequestered rather than paying for a specific practice, farmers have the opportunity to tailor practices to meet their agronomic and production goals. They can work with trusted advisers to choose the combination of no till, cover crops and other practices that fit their acre, crop, soil type and more. The approach is also elegant in that farmers are all driving toward the same climate positive outcome even with individualized and diverse practices.  

Building for the future

Global agricultural companies such as Corteva are key to driving carbon markets, helping to scale the delivery and administration of these programs to the farmgate. However, everyone in the industry has a role — grower organizations, ag companies, startups with new technologies, groups purchasing carbon credits, and, most important, the individual growers who are taking the risks and doing the work on the ground. 

We must combine carbon markets with other programs such as revised federal crop insurance programs. These programs support farmers in their focus on soil health and can provide the first steps to the wholesale change we need. All solutions should be on the table. Carbon credits are the technology we have today to deliver meaningful scale and an invaluable tool to address climate change.

April 19, 2022 at 01:18PM

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