Opening Up to Carbon Markets
Farm Leaders Discuss Need to Generate Revenue for Farmers Through Environmental Services
GLENWOOD, Iowa (DTN) -- Members of the Senate Agriculture Committee on Wednesday heard about the need for farmers, ranchers and foresters to benefit from conservation practices through environmental markets.
Leaders from farm groups and one of the country's largest farmer cooperatives testified on the Growing Climate Solutions act, a bill that would create a program at USDA to set standards for carbon-sequestration markets. The bipartisan bill was introduced by Sens. Debbie Stabenow, D-Mich., ranking member of the Agriculture Committee, and Sen. Mike Braun, R-Ind., also a committee member.
More than 50 groups support the legislation, including the American Farm Bureau Federation and National Farmers Union. The National Pork Producers Council issued a release Wednesday backing the bill as well.
Studies have pointed to carbon markets as potentially creating a $5-billion or more market for carbon sequestration on agricultural ground. Such farm practices, if more widely implemented because of market incentives, also could lead water-quality improvements by reducing nutrient runoff in streams and rivers as well.
Right now, some markets for carbon sequestration are again developing, but the markets lack a unifying standard or guidelines to follow. The Senate bill, if it were to become law, would set those standards through USDA. Third-party certifiers would be established, as well as an advisory council on carbon-sequestration practices at USDA.
While senators were holding their hearing, Reps. Abigail Spanberger, D-Va., and Don Bacon, R-Neb., announced they were introducing a companion bill to the Growing Climate Solutions Act in the House. Spanberger and Bacon both serve on the House Agriculture Committee, and Spanberger chairs the Subcommittee on Conservation and Forestry, which increases the odds the subcommittee could potentially hold a comparable hearing on the legislation.
In the Senate hearing Wednesday, Brent Bible, an Indiana corn and soybean grower, told senators that demand for commodities "face massive headwinds" but the Growing Climate Solutions Act could open the door for markets that reward farmers for implementing conservation practices on their farms. Bible said Congress needs to provide policies that will help expand these markets and incentivize farmers to participate.
"We need real market-based options to allow farmers to make a choice and participate and see the benefits to their economic bottom line," Bible said.
Zippy Duvall, president of the American Farm Bureau Federation, said agriculture already performs better than other U.S. industries when it comes to emission reductions. Agriculture accounts for less than 10% of emissions, "far less than other industries," Duvall said. He pointed to production improvements, saying it would take 100 million more acres in 1990 to match the production in 2018. Duvall credited access to technology for lowering the industry's carbon footprint as well as "voluntary, incentive-based conservation programs."
Farm Bureau supports incentives for farmers to adopt practices that sequester carbon in the soil, Duvall said, but any certification program must be voluntary and part of USDA.
"Congress must protect agriculture from undue burdensome regulation, and also we have to respect farmers' and ranchers' ability to solve problems," Duvall said.
Rob Larew, president of the National Farmers Union, said climate change is a long-term threat to family farms and ranchers, as well as rural communities and global food security. With the right tools, though, farmers can help reduce carbon dioxide in the atmosphere and reduce their own emissions as well. The Senate bill would help farmers get involved in carbon sequestration, and the legislation would also "lend legitimacy to these voluntary carbon markets."
From 2006-10, NFU and the North Dakota Farmers Union aggregated soil carbon credits sold on the Chicago Climate Exchange. At its peak, the program paid $7.4 million to nearly 4,000 farmers across 5 million acres. But the CCX shut down in 2010, largely because Congress did not enact climate policy legislation.
Larew also plugged ethanol as part of a carbon-reduction program. He pointed to problems right now with EPA continuing to approve small-refinery exemptions, undercutting the value of biofuels to reduce emissions.
"For Farmers Union, biofuels are very much aligned with our climate strategy as well," Larew said.
Jason Weller, vice president of Truterra LLC, the sustainability arm of Land O'Lakes Inc., explained how Truterra works through agricultural retailers to provide conservation services to customers. Weller said the legislation "anticipates a future class of commodities, in this case, environmental commodities."
Weller also talked about data and information on the farms leading to "the cusp of a revolution in precision conservation." For those precision tools to work, though, farmers must also have good internet access, he said.
Weller, a former conservation chief at USDA, also said in his testimony that, without legislation, agriculture risks falling behind global competitors. Global customers for Land O'Lakes are increasingly asking about sustainability efforts for the cooperative's dairy products. That also is spilling more into the grain side.
"Their expectation is the dairy farmer, whether they're dairy producers, protein producers or gran producers, have to have the data and ultimately the outcomes to be able to characterize not only the quality of the grain and the quality of the product, but also what system was used to produce that food product," Weller said. He added, "We see the potential of it being a market-access challenge."
Senate Agriculture Committee Chairman Pat Roberts, R-Kan., pointed to increased agricultural production and conservation practices farmers have implemented over past years to ask whether there should be an accounting for what agriculture already has done. Duvall agreed there should be such accounting for past practices.
"I believe our farmers have led for many, many years in getting out ahead on climate change," Duvall said. "To account for what we've already done is very, very important."
Roberts also asked about the necessity of having USDA play a role in any future carbon-trading policy. Duvall said USDA understands farmers and agriculture, and "our farmers and ranchers trust USDA." He added, "For farmers to participate in any voluntary program, they have to have trust."
Sen. John Boozman, R-Ark., said his concern about the bill is that "you really wonder who is going to benefit." He said third-party certifiers and corporations "who want to greenwash their businesses" really appear to be the big beneficiaries. Boozman added, "I'm worried a little bit about companies dictating about how our farmers will farm."
Larew pointed out that the market will be voluntary and that "farmers would have the option to participate or not." Bible also added that farmers will decide if the investment is worth the effort.
"What it comes down to is the farmer will be looking for economic signals in a free market," Bible said.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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