From the Farm: Carbon payouts

The Morning Show

(WCIA) — Carbon farming allows farmers to be paid by large companies who want to offset their energy consumption and become carbon neutral.

Indigo is one of the leaders in linking farmers to companies that want to buy carbon credits, and the head of Indigo’s carbon program, Chris Harbourt, says the value is going up.

“Credits right now, we really are doing direct pricing. We are going out to companies and saying these credits are $20, that was our stance in 2020,” says Harbout. “We’ve raised the price in the industry to $27 today, so we’ve gone up in value. We see them going much higher of the cost of a credit and also because there is a lot of work involved in creating the credit.

“We want to make sure the farmer is getting compensated for that in the best way possible. Now that’s carbon credit per acre, depends on the soil, the rainfall, the cash crop, the practices you adopt for the carbon credit and that varies anywhere from a half of a ton per acre per year up to 2 tons per acre per year typically for an Illinois soil for example.”

WCIA: But does payment go to a farm operator for his agronomic practices or a landowner who owns the soil?

“To participate in a carbon program with Indigo, you don’t have to have a landowner sign up for a long-term contract, all you as the farmer have to do is demonstrate that you have control over that period of the contract,” says Harbout. “So in this case for the indigo contract right now is 5 years, even if you are in an annual lease you can certainly participate in a carbon program if you believe you most likely will be on that ground for 5 years or more.”

That is because payments for one year are spread out over a 5-year rolling payment program. It’s a lot more complex than selling a load of corn at the elevator.

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Market Data provided by Barchart.com