Farm Group Leader Promotes Cash For Carbon Program

The Ohio Farmers Union this year unveils a new program to pay farmers for storing carbon on their land. The payments begin just as new reports surface that point to carbon dioxide emissions as a prime factor in global warming. But, at least one agricultural economist says the so-called carbon credits program will make little difference in the economics of farming.

The Farmers Union “Carbon Credits” program is designed to change some farming practices. It will pay for methods that either store or reduce the amount of carbon emitted from farms. Spokesman Dale Enerson says “think sink.”

Individual farms will act as carbon sinks and farmers will be paid to keep the sink as full as possible. For instance, a farmer can use no-till planting methods, sow cover crops such as alfalfa, clover, or les Pediza, or keep woodlands intact to earn credits on the Chicago Climate Exchange. If a ton of carbon is priced at five dollars then a farmer will earn five dollars annually for every acre of woodland he owns. “In the last couple years farmers have actually received real money for carbon credits. And in our National Farmers Union program now, in the next three or four months, we’ll be sending out probably in the neighborhood of about $3,000,000 to about 1,200 farmers nationwide here. That’s an average of over a couple thousand dollars per farm.” Says Enerson.

Enerson adds that the market for carbon in the U-S is volatile since there’s no limit on carbon emissions from factories, autos, or utilities. By contrast, in Europe, in countries that signed the treaty known as the Kyoto Protocol, carbon dioxide emissions are limited and the price of carbon credits is 30 dollars or more per ton. As a result, Enerson says, the American carbon market reacts to the news of the day. “A lot of things we don’t even think about, Al Gore’s movie, the reports of the Polar Bears drowning, all of that seems to move the carbon market and I think we’re going to be looking at a pretty volatile market.”

But, at the current price of two to five dollars per ton of carbon, Ohio State University Agricultural Economist, Matt Roberts, predicts the carbon credits program will have little effect on farming practices. “It seems unlikely we’re going to see any land actually leave crop production to become a carbon sink, simply because that is less money than is available from the production of corn or soybeans or wheat, especially at the current prices of corn or soybeans and wheat.” Says Roberts.

Corn and soybean prices have spiked in recent years as ethanol and soy diesel products are more aggressively marketed. Last year, 20 percent of the U-S corn harvest, or about 2,100,000,000 bushels were diverted away from food production to ethanol production. As result, an acre of corn provides a much better return on investment than an acre of alfalfa or a stand of trees. And Roberts says the alternative energy market will create even more demand for corn and possibly drive prices even higher. “If one can come up with a very reasonable scenario that we will produce 50 percent more ethanol with the 2007 crop than we will with the 2006 crop and that’s where a lot of the worry comes from. We could be talking about using 30 percent of the oh-seven crop for ethanol.”

Roberts adds that if the price of carbon credits in the U-S approaches $10 to $15 dollars per ton or even $20 dollars per ton, then more farmers would take a look at changing some practices, perhaps plow less, or keep a few more acres in grasses or wooded.

Tom Borgerding WOSU News.