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How to capture cash with carbon

Farmers across the country annually hang their livelihoods on the potential of tiny seeds to transform into cornstalks taller than the grower who planted them. The same goes for soybean plants so thick and full you can barely distinguish the rows between them. It’s this potential that keeps farmers farming.

In that same spirit, some say U.S. carbon markets have the potential to be the next golden opportunity for American farmers.  

“A lot of companies are putting forth many millions of dollars, betting on the fact that this segment is going to grow,” says Garth Boyd, partner at The Context Network, an agricultural consulting firm that analyzes agricultural carbon programs.

Boyd and Matt Sutton-Vermeulen, another partner with The Context Network, agree agricultural carbon markets potentially could be lucrative for farmers while also helping companies reduce their greenhouse gas (GHG) emissions. Will they?

“We’ll see,” Boyd says. 

Carbon Markets Defined

Many voluntary carbon markets exist in the United States. Some are even run by household names such as Cargill. The differences between them abound: how they measure carbon reductions, how they verify their credits, how they pay growers. 

Still, carbon markets tend to follow a similar order of operations:

  • A farmer agrees to participate in a voluntary market.
  • The farmer implements a new on-farm practice or technology that may sequester carbon.
  • Soil testing or modeling using farm data measures the amount of carbon sequestered.
  • A metric ton of sequestered carbon or CO2 equivalent in the soil earns the farmer a carbon credit, which is sold by the carbon market company to a customer (typically a large corporation) looking to offset its GHG emissions.
  • The farmer is then paid for generating the credit. 

More Than a Fad

Carbon markets are in their infancy and payments are relatively low. However, Boyd says the demand for credits indicates the value will likely go up.

Sutton-Vermeulen says the carbon program “gold rush” happening today comes from the serious commitments major corporations have made to reduce GHG emissions along their supply chains.

“The reason this is important to farmers is because it’s important to their customers and their customers’ customers,” he says. 

Even industries that seem far removed from agriculture, such as shoe manufacturers, are looking to agriculture to reduce emissions, he says. 

“If there’s leather in their shoes, it’s relevant,” says Sutton-Vermeulen. “Because that supply chain, eventually, for leather products associates it with the feed footprint. The feed footprint comes back to the farm and to the corn, the wheat, and the soybeans to produce the product.” 

Sutton-Vermeulen and Boyd say financial institutions are starting to look at sustainability as a factor when considering investments. 

“This risk to the brand and risk to the investors’ capital that they’re deploying in this, with these brands, is very, very real,” Sutton-Vermeulen says. “If you follow the trillions of dollars, that is what the driver is. And time will tell on how this all plays out, but it’s more than a fad.” 

Soil First

Carbon markets may be the new gold rush, but the practices that qualify a farmer to participate are the same practices farmers have been adopting for decades to protect their soil, such as reduced tillage and cover crops. 

“The foundation of our program is soil health practices,” says Clay Edwards, sustainability program lead at Cargill. “The carbon credit and payment is just the cherry on top.”

Steve Flaig farms near Montezuma, Indiana, and signed up to participate in Cargill’s carbon program, RegenConnect, last year. Flaig says he would have implemented no-till and cover crops anyway, but the carbon credit payment was the “fruit on the cover crop.” 

“I’m not a carbon farmer,” Flaig says. “I’m a no-till, cover crop farmer.”

Cover crops are a costly practice you have to be committed to, says Eric Schwenke, who farms with Flaig. A typical carbon credit payment today wouldn’t even cover the cost of seed in some cases. 

“If the carbon payment goes up, there’s going to be more people doing cover crops, which will help the environment immensely,” Flaig says. 

Barriers To Widespread Adoption 

No industry standard or federal regulation governs these voluntary carbon markets. Experts agree this is a big obstacle standing in the way of mainstream success and higher carbon credit payments for farmers. 

“Depending on which model we are using to calculate carbon credits, the amount of carbon sequestered will probably be different even when we are talking about the same farm, operated by the same farmer, using the same practices,” says Alejandro Plastina, an Iowa State University agricultural economist. 

Plastina compares these early days of carbon markets to the early days of the organics market. 

“Prior to the creation of the USDA organics label, there were all kinds of claims about organic products,” he says. “And whether you consume organics or not, we cannot deny that before the introduction of that USDA organics standard, there was lots of confusion and the organics market was really tiny. After that, the organics market grew at an incredible rate for 10 years.” 

Sutton-Vermeulen says it’s not surprising carbon markets face challenges. 

“The early days of all commodities go through the same painful experiences that we’re experiencing in carbon today,” he says. “You have this tension all over the marketplace that exists and it’s predictable.” 

Get In on The Ground Floor

With this volatility, it may seem like a risky time to join a carbon market, but some say now is exactly the right time. 

“Right now, it’s a way to learn,” Sutton-Vermeulen says. “It’s going to be easiest to learn around these things and to be able to react and adapt after you’ve had some experiences.”  

Plastina suggests farmers start small, adding they may want to adopt a “portfolio approach” by entering different fields into different programs. 

Start now while the barrier to entry is lower, advises Edwards. He says signing up may get more complicated as the markets evolve.

“This emerging market is now giving them an opportunity to market an additional commodity that nobody was valuing before,” Edwards says. “Ten years ago, people weren’t looking to purchase these outcomes and today they are. This is a once-in-a-generation discovery. It’s hard not to get excited about where this market could evolve to in the next few years, and again because of the barrier of entry and where we’re at today, farmers should look to participate.”


Another risk to waiting is losing out entirely because of the pesky concept of additionality. 

Carbon credit buyers view conservation practices that have long been in place as part of the baseline carbon footprint of the farm. Only the new practices qualify a farmer to participate in a carbon market. This means practices adopted today might not qualify down the road.

This frustrates early adopters of conservation practices. However, Casey Mattke, U.S. digital and systems leader at Corteva Agriscience, says today it is rare to find growers who can’t add something to qualify them to participate.  

“The answer is to add a practice,” he says. “So, if you’ve been no-till, add cover crops. If you’ve been reduced till, can you reduce tillage even more? Potential payments will be correlated to the significance of the practice change.”

Stepping Into The Future

Shelby Fite used to work at Indigo, which partners with Corteva and other leading companies on a carbon program. She returned to the family farm near Jackson Center, Ohio, in 2019. Her family recently signed a contract with Indigo. She says she is impressed with the name-brand companies looking to buy carbon credits. 

Fite predicts the pool of buyers will only grow. She says her family joined Indigo’s program because sustainability is going to continue to be a hot topic in American agriculture.     

“That’s the future of farming,” she says. “Figuring out how we can do things a little bit better, keeping the environment in mind.”

No Stupid Questions

Carbon market consultants, representatives, and farmers advise asking many questions before signing a contract. Here are key questions when considering a particular carbon program:

  • Is this carbon program following a scientific process when accounting for carbon sequestration and generating carbon credits?
  • Are the credits registered and verified by reputable third parties?
  • Are there any costs to the grower to start?
  • Who owns farmers’ data and is it shared outside the company?
  • How difficult is it for farmers to share their data with the company?
  • Is this company financially stable? What is its track record?
  • How much are the credits sold for and how much of that price goes to the farmer?
  • How does the farmer receive payment and when?
  • How many years does the contract cover?
  • What happens if the farmer has to break the contract? 

Editor's note: The Context Network is a global agribusiness consulting firm that helps organizations achieve results through strategic management insights and a network of ag industry professionals, creating business solutions that deliver actionable out- comes. Learn more at

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