According to Soil Science Simplified, Fourth Edition (Milo I. Harpstead, Thomas J. Sauer, William F. Bennett, 2001, Iowa State University Press, 800-862-6657), “Life is essential to the existence of a true soil.” Plants take carbon dioxide (CO₂) and change it into plant tissue. They die or are eaten, and the residue is returned to the soil. Organic matter (mostly humus) is food for microorganisms in the soil, which releases the CO₂ into the atmosphere. This is the carbon cycle.

Soil Science Simplified continues, “Of the countless microorganisms that live in the soil, all but a few derive their energy from the oxidation of carbon just as humans do.” The carbon cycle is continuous, “except where human mismanagement interrupts the cycle by depriving the soil of plant or animal residues and thus impoverishing it.”

Carbon sequestration is the act of taking CO₂ from the atmosphere and storing it in its organic form. The organic compounds that contain carbon are in growing plants or plant residue, which eventually becomes soil organic matter.

Carbon in the soil has decreased and CO₂ content in the air has increased over time due to: 1) the burning of fossil fuels; and 2) the conversion of grasslands and forests to cropland, resulting in the release of CO₂ into the atmosphere. A new environmentally friendly practice now allows farmers to earn money (small amounts) by storing carbon.

The National Farmers Union (NFU) says, “There is growing public concern that global climate change may be responsible for more severe hurricanes, shrinking polar ice and glaciers, droughts, floods, and other disruptions in our climate. Increasing energy prices are also peaking the public’s interest in renewable fuels, alternative energy sources, energy conservation, and other practices that reduce greenhouse gas emissions. As stewards of the land, Farmers Union members want to help protect the environment and our natural resources.”

NFU’s Carbon Credit Program allows farmers to earn income by signing a five- or six-year contract to store carbon in their soil through no-till crop production or long-term grass seeding practices (grazing land). If necessary, a farmer can till up to 30% of his no-till area in crops and still be eligible. The grass stands must have been seeded no earlier than January 1, 1999. Conservation Reserve Program stands established after that date are eligible. There are plans for other carbon programs. A forestation program, which will pay $25/acre, is being considered.

NFU aggregates carbon credits through the Chicago Climate Exchange (CCX). NFU will enroll producer acreages of carbon into blocks of credits that will be traded on the Exchange, much like other agricultural commodities.

NFU says, “CCX is the world’s first greenhouse gas (GHG) emission registry and reduction and trading system for all six GHGs (carbon dioxide, nitrous oxide, methane, hydrofluorocarbons, perfluorocarbons, and sulfur hexaflouride).

“Who buys carbon credits and why? Many Fortune 500 companies, multinational corporations, utility and power generation companies, and others have been buying carbon credits. Some companies have subsidiaries based in foreign countries that have signed on to the Kyoto Treaty and are required to either reduce emissions or buy offsetting credits. Some companies are buying credits as part of a good ’corporate citizen’ public relations campaign and many are genuinely concerned about reducing greenhouse gas emissions. For others, buying credits is strictly a business investment in the event that carbon prices increase. Credits can be bought and sold easily by brokers much as other commodities are traded in other exchanges.”

During each production year, a database of all land tracts under contract will be transmitted to the CCX. Immediately after the end of the calendar year, the credits will be placed in the Farmers Union trading account and sold. The individual producer will receive a share of the sale proceeds (less a 10% administrative fee to NFU) immediately after the credits are sold. In addition, each year 20% of the proceeds due will be placed in an escrow account, or carbon bank, that will be paid in a lump sum at the end of the contract. This provides an incentive for producers to complete all terms of the contract. There are also penalties for early termination of land management practices.

Producers will be credited with 0.5 metric ton of carbon for each acre of eligible no-till cropping and 0.75 ton per acre for qualifying grass stands each year of the contract. The price per ton on CCX varies, but current prices are about $4 per ton. That equates to about $2 per acre for no-till and $3 per acre for grass stands, less the administrative fee. It is not much money, but if you plan to investigate no-till or grazing land, here is some extra incentive.

The 2006 deadline was last November, but check with NFU (800-336-8331 ext. 116 or www.nfu.org) for future dates and to enroll. A Carbon Credit Estimator worksheet is available at www.nfu.org. It allows prospective carbon credit sellers to enter projected acres for each practice and arrive at a schedule of expected payments, an expected escrow account lump sum, and total contract value over the life of the agreement.

Currently, only 25,000 acres have signed up for carbon credits in Missouri, and only 5 million acres nationwide, so there is certainly a lot more eligible land. You may want to think about it.