It’s easy to understand why farmers want carbon credits to work. They want to be paid for the ecological goods and services they provide.
On a more emotional level, it’s nice to be treated like heroes in times when farmers are sometimes painted as environmental villains.
The public is increasingly focused on climate change and the tone of government ag policies centres more on sustainability, so those in agriculture want the carbon credit market to work.
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It hasn’t happened.
As Geralyn Wichers reported in our last two issues (see links below), Farmers Edge has taken flak from producers who signed on to its Smart Carbon offset program. Those farmers say the returns they expected from their carbon credits did not materialize.
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In fact, they say they have been charged thousands of dollars for services they thought would be covered by revenue from those carbon credits.
For the program to function as promised, those credits had to be worth a certain amount on the market. An income estimate provided to one producer — and later shared with Wichers — showed promising numbers, but only if carbon was selling for $20 a tonne.
It wasn’t.
Last week, Wichers reported on the volatility of the carbon market, which expert Kate Ervine said is unregulated. She noted questionable practices have been uncovered at some carbon credit standards bodies.
Farmers Edge has blamed the issues on unfriendly carbon markets. It’s having difficulty finding buyers for farmers’ carbon credits. Until they sell, farmers can’t get paid.
This is not the first time that a well-intentioned (and well-hyped) new market has run into roadblocks.
In 2019, it seemed like everyone in the hemp industry was talking about CBD. Canada had just legalized cannabis and overhauled hemp regulations the year before. Suddenly, the sector could capitalize on the leaves and flowers that older rules did not allow them to harvest, and from which the nutraceutical CBD was derived.
It seemed like good news for an industry in recovery. Hemp grain had taken a hit in 2017, after the lucrative South Korean market evaporated.
Like the recent issues with carbon credits, however, there were problems when the rubber hit the road.
The hype around CBD led to a rash of investment money. Companies tried to set up facilities and farmers were contracted to grow hemp for CBD. But harvest for CBD use or CBD extraction was challenging. In the process, a lot of farmers didn’t get paid, Lyall Bates of Manitoba company Hemp Sense told the Co-operator in 2021.
“It just went from the hottest market to you hardly even hear about it now,” he said at the time.
Once an initial effort has run into growing pains, it’s harder for future efforts to gain traction.
However, there are differences between the CBD and carbon credits situations.
For one thing, carbon credits can get momentum from the cross-societal pressure toward sustainability, perhaps enough to carry them over speed bumps as the market develops.
Current ag funding and programming shows a preference toward grazing projects or 4R nutrient management. Carbon credits fit that theme.
The scope of application is also bigger. On-farm practices potentially eligible for carbon credits span production systems rather than being limited to a single commodity.
With all of that comes more attention, more money and more appetite for research. Extra resources could be used to work out the kinks of the carbon market.
Regulation, currently lacking in carbon markets, could lead to standardization, develop buyer trust and keep market volatility in check.
It also comes down to education.
The carbon credit market is unexplored territory. Not everyone is going to understand how the system works or, as our recent stories illustrate, the underlying risks. Those who play in the market must understand the rules.
Carbon credits are new and shifting ground for agriculture. That makes it twice as important to check the footing before taking strides.
