Panel: Approach carbon contracts with caution

Tom Cotter’s family has been farming land on the west side of Austin since 1874.

While he has seen first-hand the benefits of practices that keep carbon in the soil, he seems less certain about emerging markets that allow farmers to sequester and sell carbon credits.

Last week, experts on the topic spoke during a panel, “Taming the Wild West of Carbon Markets”, during the North American Farm and Power Show. The annual event was held Thursday through Saturday at the Four Seasons Centre in Owatonna.

Lindsay Kuehn, an attorney with the Farmers Legal Action Group, explained that some businesses interested in being “carbon neutral”–producing zero carbon emissions to help slow climate change–can’t do it on their own. Carbon markets allow them to purchase credits equal to one ton of carbon dioxide or other greenhouse gas that has been avoided or removed from the atmosphere, to offset what they can’t eliminate.

A business can, for example, pay a farmer to change their practices to sequester carbon.

At this point, there isn’t much government regulation involved in the private markets, Kuehn said.

“It’s important to consider that, especially for the risk is carries for farmers,” she added.

The process typically starts with brokers approaching farmers; a third-party verifies the new practices and that the carbon is being captured. But there aren’t consistent standards for carbon credits versus normal farming standards.

“It’s a bit of a free-for-all,” Kuehn said, which means whatever’s in the contract rules.

In reviewing contracts among a range of brokers, she added, “the requirements we saw were across the board.”

That’s why it’s important for farmers to carefully review the obligations and requirements in any contracts before they sign. Kuehn also stressed the importance of negotiating any terms they don’t like, because “down the road, that could be problematic.”

Also, Kuehn said, it’s “extremely important” to remember that “what someone tells you is not what you’re committing to.” Promotional materials and conversations don’t count when it comes to enforcing a contract.

There are also no clear answers to the question of whether farmers can “double dip,” or sell carbon credits on land when they’ve accepted government funding to support new farming practices. Kuehn said that should part of any contract conversation.

Also, she said, “It is important to consider your future plans for your farm,” as the typical contract length is 7-10 years.

The trickiest and most important part of the contract, Kuehn said, is how carbon sequestering is measured and how the farmer is paid. Contracts may specify measuring through soil samples or with a computer model–with the company having sole discretion to change the model. It’s important to know how changing the model would change the farmer’s payment.

“The big concern we’ve heard from farmers is that there’s a lot of data collected (as part of the contract),” Kuehn said. “There’s usually something in the contract that specifies who owns the data and what they can do with it… Read ‘em closely and ask questions.” 

All of that makes Cotter uneasy.

“As a farmer, it scares me,” he said. “It just seems like no matter what as a farmer, as time has proven over and over, we’re on the short end of the stick.”

He said he’ll wait for better regulations before entering the carbon markets, but that won’t stop him from using no-till and other environment-friendly practices.

Cotter’s family changed their practices more than eight years ago.

“My soil was dead,” he said. “It was stale, I couldn’t find a worm to take my kid fishing.”

After using–and documenting–practices that “armor the soil” and minimize soil disturbance, increasing plant diversity, and adding livestock grazing to the mix, he’s capturing carbon and water, and adding nutrients to the soil.

That, Cotter said, should be the goal, whether or not farmers dip their toes into the carbon markets.

“If you’re doing it, do it because it works on your farm. Your best asset is your land. Protect it,” he said.