The deadline for farm operators with no-till or strip-till cropping practices or new grass plantings to sign up to sell carbon credits and still take advantage of a bonus provision that includes credit for 2007 practices is August 15.
Completed contracts must be postmarked by the mid-August date to qualify, says Chad Martin, soils specialist with AgraGate Climate Credits Corp., a subsidiary of the Iowa Farm Bureau. The 2008-2012 contract is for cropland farmed with continuous no-till or strip tillage, or with grass plantings made since Jan. 1, 1999.
The contract also has a bonus clause for operators who used the conservation tillage practices in 2007. Blank contracts are available on the AgraGate Web site: www.agragate.com.
Last date to earn 2007 bonus credits
"The contract includes an option for an additional year of credit for cropland that was no-tilled or strip tilled in 2007," Martin says. "If the tillage practices qualify and can be verified the operator could earn credit for last year's action. However, that option is gone after the deadline and the contract rolls over to a 2009-2013 term with possible 2008 credit."
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. CCX emitting members have made a voluntary - but legally binding - commitment to meet annual greenhouse gas emission reduction targets.
Those who reduce emissions below the targets have surplus allowances to sell or bank; those who emit above the targets can comply, in part, by purchasing credits from sources such as AgraGate. Greenhouse gas emitters can use offsets for no more than 50% of their emission reduction goals.
AgraGate is the leading aggregator of carbon credits from agriculture. On behalf of farmers, ranchers and private forest owners, the company has marketed more than three million carbon credits from enrollments in 26 states on the CCX. For additional information on the 2008-2012 cropland soils contract, or the 2009-2013 contract that goes into effect after August 15, call AgraGate at 866-633-6758 or visit www.agragate.com.
Carbon credit payments rise substantially
July is harvest time for a new crop - carbon credits - and farmers who have met the requirements for earning these environmental credits are now reaping the benefits. In mid-July 2008, AgraGate distributed checks for carbon credits to nearly 1,800 farmers, including 475 in Iowa.
The nearly 1,800 farm operators received payments averaging $2,375 from the sale of their carbon credits during the first half of 2008. In all, AgraGate Climate Credits Corp. disbursed more than $4.2 million to customers who have enrolled their no-tilled, strip-tilled or grass-planted land in the voluntary carbon credits market. AgraGate collects credits from farmers who use eligible conservation practices, then sells them as "exchange soil offsets" on the Chicago Climate Exchange.
Dave Krog, CEO of AgraGate, says the mid-year payments are up substantially from July 2007. "Our 2008 mid-year payments more than tripled from last year, when we wrote checks totaling just under $1.2 million to 1,141 participants, an average of about $1,050 an operation," he explains. "We can attribute part of the increase to a larger customer base. The number of customers is up by some 57% from a year ago to 1,794 and we also have considerably more credits registered with the CCX."
Mid-year checks average $2,375 per farmer
Krog notes that the market price of a carbon credit - the equivalent of a metric ton of carbon dioxide - plunged below $2 early in the year and then rose to a record high of $7.50 in June. Prices are currently around $4 per credit.
"We were able to sell a considerable number of our XSO credits during the upswing in the market this past spring," Krog adds. "Farmers, ranchers and landowners who are early participants in this market are the true pioneers and are being rewarded for their conservation efforts.
"We are seeing volatility in the carbon credit market," notes Krog. He explains that prices are being influenced by debate over national climate legislation and the potential for mandatory greenhouse gas emission reductions. "AgraGate does not try to 'out-guess' the market. We are active in the market most days, and we work to get the best prices that the market has to offer," he says.
AgraGate distributes sale proceeds to customers twice a year, in January and July.
AgraGate marks first year as stand-alone
AgraGate, a subsidiary of the Iowa Farm Bureau Federation, was launched as a stand-alone company in July 2007. The IFBF was a charter member of the CCX and had operated a carbon credits program since late 2003. That head start gave AgraGate a position as the leading aggregator of agricultural carbon credits when it was spun off.
Since last year the company has expanded into three other segments - rangeland, methane and forestry. It has agreements with several state Farm Bureau organizations to serve as aggregators for producers in their areas. AgraGate recently made arrangements with the Alabama Treasure Forest Association, which will provide carbon credits aggregation services to forestland owners in that state.
"To date we've marketed more than three million carbon credits on behalf of farmers, ranchers and private forest owners in 26 states," says Krog. "We believe we can continue to expand since the entire arena of environmental credits is still so new."