Are You Bullish or Bearish on Carbon Markets and Beef Production?
There’s a lot of chatter about beef cattle production and the environment especially with the current administration’s focus on climate change policies. Livestock producers can sense the target on their backs but industry groups and agribusinesses are banding together to provide guidance and a voice that represents farmers and ranchers in this emerging marketplace as well as in Washington, D.C.
WHY ARE CARBON MARKETS A HOT TOPIC?
According to the Texas A&M AgriLife Extension bulletin “Carbon Markets: A Potential Source of Income for Farmers and Ranchers”, the United States government in 2008 put into motion a voluntary plan to become a “net zero” greenhouse gas (GHG) emitter by 2025. Private international and domestic voluntary carbon markets began to develop to serve buyers and sellers of carbon offsets. A headline grabbing example of how these private markets work occurred in February 2021. Truterra – a subsidiary of Land O’Lakes Dairy Co-op – sold $2 million in carbon credits to Microsoft. This deal was announced under TruCarbon, a new carbon credits trading program launched by Truterra and the Soil Health Institute. Land O’Lakes touted TruCarbon as the first farmer owned carbon market.
Agribusiness leaders realized from the beginning that farmers and ranchers needed to be represented in these markets and in 2019 the Ecosystem Services Market Consortium (ESMC) was formed. ESMC is a non-profit, member based organization launching a national scale ecosystem services market program for agriculture to recognize and reward farmers and ranchers for their environmental services to society. Founding members include companies ADM, Cargill, General Mills and Nestle. Legacy and Producer members include major farm and commodity groups in the U.S. including American Farm Bureau Federation, American Soybean Association, National Corn Growers Association and National Cattlemen’s Beef Association (NCBA). In 2022, ESMC will launch their own voluntary national market to sell credits for increased soil carbon, reduced net greenhouse gases, and improved water quality and water use conservation.
“As a member of ESMC, we are really working with them to try to make sure the grazing protocols work for producers and to try to drive producers and buyers to a central market to ensure its viability,” said Ashley McDonald, Senior Director of Sustainability at NCBA. “ESMC intends to have carbon, biodiversity and water quality credits all in one place, so there’s a value to stacking those credits. Biodiversity is the next big thing like carbon is today, and has the potential to be the ‘golden ticket’ for the cattle industry. Our cattle utilize forages that are inedible for humans and turn it into high quality human edible protein, and they do it on a landscape that doesn’t have to be altered, which works with nature to protect and enhance forages and wildlife habitat. And ultimately, supporting and scaling carbon markets helps the cattle industry showcase the benefits we provide to society and the planet, helping us reach the U.S. cattle industry goal of demonstrating its climate neutrality by 2040.”
This past August SureHarvest Sustainability Solutions based out of San Ramon, CA prepared a report on voluntary carbon markets for NCBA. This report is an excellent resource for producers interested in learning more about carbon markets and what to consider when evaluating their options. For a copy of this report visit ncba_ carbonmarketsreview_final_20210823.pdf
GOOD GRAZING, CONSERVATION AND WATER USE MANAGEMENT PRACTICES REWARDED
It is estimated that grazing lands contain 10-30% of the world’s soil organic carbon. This indicates a high potential for carbon sequestration. According to Iowa State University, there are over 3.1 million acres in pastureland in Iowa. Grazing manage ment decisions by beef producers impact climate, water quality, water quantity and biodiversity. In a national survey of beef producers in 2017 published by the Iowa Beef Center at Iowa State University, 99% of beef producers reported that they were taking steps to protect surface water quality and 83% reported that they sampled their soil at least once every four years. From all indications, most Iowa beef producers are keenly aware of the role they play in providing solutions to climate and environmental issues. Good conservation practices make sense for the long term stability, productivity and profitability of their farm or ranch.
“My biggest thing is I want to leave the land better tomorrow than when I found it today,” said Justin Robbins, co-owner of Robbins Land & Cattle LLC in Scranton, Iowa and the 2021 Iowa Environmental Stewardship Award Program winner. “We utilize cover crops, pasture rotation and water use management. For instance, we took about 80 acres of row crop ground out of production and put it into pasture rotation in land that was near the Raccoon River in Greene County. We were starting to lose the edges of the field and we had a lot of washed out sections and ravines. By converting this land into pasture, we are allowing the land to rest and stop the erosion and runoff.”
Robbins and his wife, Lacie, have spent the last 18 years improving their farmland and their purebred Angus operation.
“We also utilize cover crops on around 50 percent of our row crop acres,” said Robbins. “Cover crops are a lot like a sponge for our soil – they hold the water for when it is needed. It really helps keep the soil healthy and alive.”
Robbins also is an Iowa Cattlemen’s Association Board of Directors member. Recently the ICA Board discussed carbon markets.
“Right now, I am listening to the conversation,” said Robbins. “I think this needs to be an individual choice – something each farm chooses and is not forced to do. I think if the industry or marketplace really wants producers to participate, then it needs to be incentivized.”
For now, most producers are taking a “wait and see” attitude towards carbon markets. A recent survey from Purdue University indicated that well over half the respondents were not aware of any carbon market opportunities available in their area and just over 1% had explored any carbon market opportunities. For over two thirds of farmers, low payments of $10 to $20 an acre were the number one reason given for not pursuing a carbon credit contract.
Even if you are not interested in carbon markets, best use conservation and water management practices are still a good bet for the future.
GOOD STEWARDSHIP CAN BE SIMPLE & COST EFFECTIVE
Incorporating environmental practices into your beef cattle operation doesn’t have to be complicated. For diversified operations, cover crops and rotational grazing practices can be a straightforward way to add value and increase the health of your soil and water. Whether you run a cow-calf operation or a feedlot, one of the most cost effective, environmentally friendly things you can do is upgrade your watering systems to energy efficient models.
“Time is one thing you can’t put a price on,” said Robbins. “Whether it is your fencing, your feeding equipment or your waterer – it is all about the right tools. You need reliable equipment that you don’t have to spend a lot of time on. For example, I use Ritchie waterers on our farm because they are reliable – they just work. Our previous waterers always iced over. They had one to two inches of ice almost daily in the wintertime. Granted, it is not hard to break up the ice but that takes time. Sometimes when you are chipping the ice away you’ll damage the float and then you’ve got to fix it. Ritchie waterers are energy efficient, they cost me pennies to operate and I don’t have to deal with ice. The time and savings add up.”
Ritchie Industries is headquartered in Conrad, Iowa, and was the first company to patent the automatic water valve in 1921, ushering in energy efficiency savings to farmers and ranchers. Made in the USA for 100 years, Ritchie has manufactured and sold over 3 million units globally.
“Ritchie has a full line of waterers that can help any beef producer achieve their water conservation or energy efficiency goals,” said Jeff Miller, Ritchie Industries Sales & Marketing Manager. “One of our best-selling product lines are the Thrifty King series because they are energy free. The water is completely surrounded by fully insulated polyethylene plastic – even the floats are insulated. Our CattleMaster and Omni models are the top of the line in energy efficiency providing fresh water on demand for hundreds of cattle while minimizing water use. All of our poly units are 75% more efficient than comparable concrete units. Most of our waterers also qualify for energy efficient utility rebates through your local co-op or rural electric provider.”
BULL OR BEAR? THE CHOICE IS YOURS
Carbon markets will continue to be a hot topic of discussion. These markets are just beginning to gain attention and they don’t have a long track record that producers can evaluate. However, there is cautious optimism that this could be an added revenue stream for producers willing to take the leap.
“Iowa beef producers are in a really excellent position in terms of carbon markets, especially those who run a diversified operation with row crops,” said McDonald. “And on the flip side of sequestration, how do we get credit for reductions in emissions for feeder operations who are feeding a high quality diet to animals? We also want to make sure that these markets appropriately recognize and give credit to early adopters who have been doing these conservation and environmental practices for years and not just reward new adopters. These are just some of the challenges we face and are working on here at NCBA.”