AFBF panel cites opportunity, urges caution with emerging ecosystem credit markets
WASHINGTON — Emerging agriculture ecosystem credit markets that incentivize farmers to employ sustainability practices could be a great opportunity for growers but a Farm Bureau panel said those markets must remain voluntary and practical to be successful.
As part of the American Farm Bureau Federation’s virtual convention, Shelby Swain Meyers, AFBF economist, led a discussion on the possible wins and roadblocks growers could encounter if they participate by generating credits on their farm.
The purpose of the markets is to connect credit buyers — corporations and governments meeting sustainability commitments — to sellers — farmers who generate verified and measurable credits through implementing conservation practices.
Credits can come in the form of cash payments or discounted inputs from agribusinesses.
Markets are in their early stages as regional pilot projects or still in development, Meyers said, and markets can focus on a specific condition like carbon sequestration, soil health or water quality improvement and different markets are emerging from public, private and non-profit entities.
On the policy side, the federal Growing Climate Solutions Act, proposed last year with bi-partisan support, would create a certification program at USDA to help solve technical entry barriers to farmer and forest landowner participation in carbon credit markets.
According to is sponsors, the bill would address roadblocks of having access to reliable market information and access to qualified technical service providers and credit verifiers that have thus far limited landowner’s and farmer’s willingness to participate.
From the agriculture industry, the Food and Ag Climate Alliance has proposed the creation of a carbon bank run through the USDA’s Commodity Credit Corporation.
Panelist and Indiana farmer, Brent Bible, added the new presidential administration has stated addressing climate issues to be a priority which could support the markets’ development.
“We’re good as producers listening to market signals and this is just another market signal that we should be paying attention too,” Bible said. “I think it’s a great opportunity for us to be looking at.”
Though there is a lot of excitement in the arena, farmers should do their due diligence in determining if it fits into their operation.
“Obviously, we recommend approaching with caution and understanding all the conditions before you sign up, but there is a strong potential for farmers and ranchers to earn revenue for practices they are already doing or considering adopting in the future,” Meyers said.
Lauren Lurkins, the environmental policy director for Illinois Farm Bureau, said with standardized verification processes and information, participating in credit markets could help farmers evaluate which practices bring them the most benefit and simplify decisionmaking on the myriad of practices they could implement on their farm.
A nationally-recognized market could also add consistency through the different levels of government.
“Potentially, if you have some larger market that everyone can feel some respect for and some understanding once it gets standardized maybe everyone can get on the same page at those multiple levels of government,” Lurkins said.
While the markets are getting refined, Lurkins said farmer interest has increased dramatically, with her getting phone calls almost daily.
“They’re going straight to the practical details and ‘What does that look like?’” Lurkins said.
“I think the questions our farmers are asking are the questions that society and everyone is asking as these are being developed.”
One concern she said comes up a lot with farmers is will they get any credit for practices they have already put in place? She said it needs to be sorted out as these farmers have the experience with the practices and the interest to continue using them.
“These are the folks who are interested in thinking about how to engage in the marketplace so some way that lets the folks that have already been doing one or several of these practices participate on a voluntary nature is I think critical to the way that it’s going to be implemented,” Lukins said.
Bible, who helped in forming the Growing Climate Solutions Act, said it’s critical that markets remain voluntary, can be trusted and can “remain a market” subject to changes and fluctuation in order to be successful.
“I think this gives us the opportunity in the ag sector to show that we are leading in that space and are proactively soliciting the opportunity to be involved in an exchange market and not being mandated by government to take those steps,” he said. “If we are ahead of the curve and a leader in that space then people will come to us and say ‘how can we improve on this and or how can we make this work, rather than us sitting back and being told how we are going to perform to some mandate.”
Bible and Lurkins said there are still barriers to entry farmers must consider, including the cost of implementing practices, sharing data with a verifier or market facilitator and signing onto a years-long contract tied to the land.
“It’s all about the implementation and how practical it is for individuals and that means where they live, what they currently do on their operations and how they manage their risk tolerance,” Lurkins said.
She added until trusted sources of information emerge, not having the right resources to make informed decisions will present another barrier.
“They’re looking for resources they can trust that really has a farmer’s best interest in mind and I don’t know if I have the best set of resources even as a state staff person to send them to,” she said.
All the more reason to keep asking questions and learning as much as possible while credit markets iron out the details, Bible said.
“It’s OK to take your time and understand how this market is developing,” he said. “There are going to be success stories and there are going to be failures and you certainly don’t want to be on the side of a failure.”