Carbon trading may offer farmers additional income

Farmers engaged in the constant struggle to add more net income to their business may want to take note of announcements that may be made soon about their chances to trade carbon credits through a farm group, probably on the Chicago Exchange.

This chance to make more money takes advantage of widespread political commitments to reduce the carbon dioxide in the air by storing it in the ground through a process commonly being called carbon sequestration among those involved.

Farmers have known the same process throughout agricultural history-it’s called putting more organic matter into the soil. It’s something every farmer ought to want to do anyway to improve the quality of the soil.

But to take greater economic advantage of the situation, heed the advice of Bruce Wells, administrator for Flint Hills Rural Conservation District at Cottonwood Falls, which includes Marion County in its area.

“For the guy who wants to no-till or put some grass in, this could be a way to pick up a few bucks with hardly any strings attached,” Wells said.

The entire Flint Hills RCD includes Marion, Lyon, Butler, Greenwood, Dickinson, Wabaunsee and Geary counties.

Wells said a four-year program giving farmers the opportunity to sign up for carbon-credits trading ended in April. Results of the program are being studied, and something more long-term may develop once the study is complete.

An announcement is rumored to be soon.

Farmers in the eastern two-thirds of Kansas had the opportunity to join in carbon trading through a series of public meetings held in February, Wells said.

The program met with some success, Wells said, but could do much more if the study results in its reinstatement.

The initial program

In Kansas alone, producers entered into 72 carbon-trading contracts on 75,000 acres. These included 15 producers in Flint Hills RCD and two in Marion County.

A Kansas farmer needed a minimum of 250 acres to enter the program.

The program required that an umbrella farm organization be formed for the purpose of trading rather than having individual producers trade on their own, Wells said.
No Kansas farm organization wanted to take on the new responsibility, so the Iowa Farm Bureau, working with the Kansas Coalition for Carbon Management, took Kansas farmers in under its umbrella. Farmers in northeast Kansas benefitted first because of their closer proximity to Iowa.

The KCCM is a diverse group that includes everyone from agricultural researchers at Kansas State University to Kansas Association of RCDs.

The pilot program was offered and managed by the Chicago Climate Exchange, a commodity exchange, or trading center, for greenhouse gases, which is part of the global effort to halt global warming under the 1995 Kyoto Protocol.

Countries that joined in the protocol rather than withdrawing (as the United States did), such as Canada, are further ahead in payments to farmers in this system, although the same market impetus is there for Americans.

The trading is done in units. Each unit equals to one metric ton of carbon dioxide, or CO2, held from the atmosphere, according to IFB guidelines.

The price per unit earned by participating farm producers ranged from $1.16 to $1.50.

A trading partner on the other end, who puts out money for these credits, might be a manufacturer generating CO2 in its processes who requires time to comply with government regulations to reduce CO2.

Or, the company might need CO2-equivalent credits elsewhere on a long-term basis to operate at all.

‘Sequestering’ carbon

As any basic science textbook reports, plants make food through photosynthesis, using sunlight as energy, and, in the process, taking CO2 from the atmosphere.

In the same process, plants release the oxygen needed respiration, combustion of fuels and oxidation. Plants release more oxygen than they require for their own respiration.

When the oxygen is consumed in these processes, it usually is recombined with the carbon. As a result, the sun’s energy required to combine them is released again.

By “sequestering” carbon in the soil as organic matter, it is stored there rather than being released into the atmosphere in carbon dioxide.

Wells eventually expects the program to offer exchanges for sequestration in range land because research done at K-State is showing that the native prairie is one of the more world’s efficient systems for putting carbon into the soil.

The deep layers of organic matter in the soil was one reason settlers were attracted to the native grass region.

Conceptual applications

In some areas of the world, credits are being given for reforestation because trees are a highly efficient way of adding carbon to the soil.

But the program recognizes that crops can be made to be more effective for storing carbon, too.

The Chicago Climate Exchange, called the CCX, recognizes this through units called “exchange soil offsets,” or XSOs, measured through certified improved tillage practices that measurably increase soil biomass.

The program administered by IFB through CCX required land capable of growing crops to be improved in newly added biomass by measures such as grass cover planting, or no-till, or strip-till that left residue on the surface year-round while growing crops in slots or strips.

Since an improvement was needed to make trading units, improvements farmers already had done in the past, such as native grass plantings on Conservation Reserve Program acres, often didn’t qualify for the program.

The program may be extended to include crop rotations that include legumes and grasses, the establishment of shelter belts and woodlots, and wetland restoration.

Participating organizations have recognized that farmers need to be rewarded to take risks to change management programs.

Also, the belief is growing that as public awareness of global warming increases, producers will be pressured by politicians to change practices to increase carbon sequestration.

Farmers may receive more benefits through cash payments and soil conservation programs than they have in the past as a result of the carbon push, experts in the field are saying. Benefits may be added to reward farmers who already have such practices in place.

Looking to the future

Producers may become more familiar with references to agricultural land as a “carbon sink,” which is another way of referring to it as a carbon-storage unit.

Peggy Blackman of Marion, who has served as president of the Kansas Association of RCDs and still works locally on USDA conservation programs, said establishing defined values for carbon in soils adds a great potential for future soil preservation and improvement.

Canadian program workers already are working on implications that other greenhouse gases such as methane and nitrous oxide will also eventually be included in agricultural offset value programs.

The Canadians are also trying to determine the legal implications if land trades ownership or producers want to change farm practices again later.

Even though farmers have had down times, many persons involved in the carbon program are thinking it may be an exciting, uplifting time ultimately for a farmer to be involved in these programs.

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