More farmers are signing up to cash in on carbon credits, according to officials of AgraGate Climate Credits Corp., a subsidiary of Iowa Farm Bureau. The carbon credits aggregator expanded its distribution network in 2007.
"Combined with the successful work of our predecessor company, AgraGate now has contracted for more than 3.4 million carbon credits with farmers, ranchers and private forest owners," says CEO Dave Krog. "We're pleased that customers have expressed their confidence in our approach to this emerging market as they take advantage of this new revenue opportunity."
AgraGate was created in July 2007 to broaden Iowa Farm Bureau's carbon credits program, which began in 2003. AgraGate collects credits from farmers, ranchers and private forest owners and markets them on the Chicago Climate Exchange, returning the proceeds to the farmers.
Farmers collect revenue for practices
In Iowa, no-till is the most popular practice eligible for carbon credits. "While no-till remains the largest single source of credits for us, we've also enjoyed considerable success in adding credits from timberland, especially in Louisiana, Mississippi and east Texas," says Krog.
Credits on the CCX have recently been selling for $2.15 per credit per year. No-till farmers in Iowa generally qualify for six-tenths of a credit per acre. There are higher rates for new grass plantings on cropland, such as riparian buffer strips, CRP, etc. You sign up for a five-year contract to collect carbon credits.
At the current price of only around $2 per credit, the income you get per acre per year for no-till would be 0.6 times $2 or $1.80 an acre. "That's not a lot," Krog admits. "But by participating you can earn some money now and learn about the program so you can take advantage of a better deal that may come in the future."
Environmentalists are pushing for federal legislation to mandate reductions in greenhouse gas emissions by industrial companies. Such a law would spur growth in carbon credit trading and escalate prices for carbon credits. Projections suggest the credits could trade anywhere from $3 to $28 over the next eight years. At $25 per credit, sequestering .6 of carbon credit per acre could earn $15 of extra income per acre. That's significant when rising costs for crop production are pinching farm profit margins.
AgraGate is now taking applications
The new company continues to leverage connections to Farm Bureau affiliates as it works to build a nationwide distribution system. AgraGate isn't the only company aggregating carbon credits. There are several others in the business.
AgraGate is accepting applications for a new, five-year carbon credits contract that includes a bonus option for a sixth year for qualified land. The 2008-2012 contract is for cropland farmed with continuous no-tillage or strip-tillage practices, or with new grass plantings since January 1, 1999. The contract also has a bonus provision for farmers who used the conservation tillage practices in 2007.
"The new contract includes an option for an additional year of credit for cropland that was no-tilled or strip-tilled in 2007," says Krog. "If the tillage practices qualify and can be verified, the operator could sign up for six years of credits."
Carbon emitters must reduce emissions
AgraGate collects carbon credits from farmers, ranchers and private forest owners, assembles the credits into large bundles, and then sells them on the Chicago Climate Exchange. The companies that have joined the Exchange - the CCX emitting members - have made a voluntary but legally binding agreement to meet annual greenhouse gas emission reduction targets. The companies that reduce emissions below the targets will have surplus allowances to sell or bank; those who emit above the targets can comply, in part, by purchasing CCX Carbon Financial Instrument contracts such as those offered by AgraGate. Carbon dioxide emitters must reduce emissions internally by at least 50% before they can use the offsets from agriculture and other sources. For more information on the new 2008-2012 cropland soils contract, call AgraGate at 866-633-6758 or visit www.agragate.com.