Des Moines Register
03/05/06
Program pays farmers to try greener
methods
No-till planting is one way to earn $1 an acre on the Chicago
Climate Exchange.
JERRY PERKINS
REGISTER FARM EDITOR
Doug Gronau of Vail is earning some green by turning his farming practices
green.
Gronau is one of about 200 Iowa farmers participating in a voluntary exchange
program that pays them a dollar an acre for putting carbon back into the soil and
keeping it out of the atmosphere, a practice known as carbon sequestration.
Carbon dioxide, a gas given off by decaying plants, is one of several greenhouse
gases being blamed for causing global warming by trapping heat in the Earth's
atmosphere.
Although the causes of global warming have been debated for years, most
scientists say the evidence clearly shows that the release of greenhouse gases,
including the burning of fossil fuels, is harming the environment. One way to curb
the release of carbon dioxide into the atmosphere is to keep plant matter in the
soil, much like the Great Plains' prairie grasses kept carbon stored for thousands
of years until farmers plowed the prairie to grow crops.
Mahdi Al-Kasai, Iowa State University Extension soil management
specialist, said carbon sequestration of plant matter won't solve global warming
on its own. "But it can buy some time and at least help reduce a portion of the
buildup of greenhouse gases," he said.
Gronau and other farmers can lock carbon in the soil through conservation
practices such as no-till planting, which leaves as much crop residue in the soil
as possible, rather than plowing it up.
The Iowa Farm Bureau Federation has organized farmers and collectively sells
their efforts at the voluntary Chicago Climate Exchange. The exchange links
buyers who want to offset their carbon emissions with sellers, like Gronau.
The Farm Bureau is sending checks totaling $382,500 this spring to farmers in
Iowa, Kansas and Nebraska.
David Miller, director of research and commodity services at the Iowa Farm
Bureau Federation, said the pilot project is pioneering the sale of agricultural
"carbon credits" on the Chicago exchange.
Sale of the credits has offset the emission of 664,000 tons of carbon dioxide
being released into the atmosphere, Miller said, or the equivalent of a month of
burning coal by a 1,000-megawatt power plant.
Richard Sandor, founder of the Chicago carbon trading exchange, said the Farm
Bureau is showing other agricultural organizations how farmers can benefit
financially by helping the environment.
"We wanted to use the exchange to make some bold moves in agriculture,"
Sandor said. "We're making progress on the environmental front and on the
trading front," he said.
The exchange collects a fee on every credit traded. Trading volume hit a record
in February, Sandor said.
Although the privately owned exchange isn't making money yet, Sandor said, it
has expanded to Europe and Canada, where it has subsidiaries.
One of the first trades that Farm Bureau's pool made was with the University of
Iowa, which was looking for a way to mitigate greenhouse gas emissions from its
coal-burning power plant in Iowa City.
Ferman Milster , the U of I's associate director of utilities and energy
management, said the university paid the Farm Bureau pool $2,800 for offsetting
2,000 tons of carbon dioxide emissions in 2005.
The university also paid an $80 fee to the Chicago exchange for using its
services.
"It was an opportunity to help the environment and partner with somebody from
Iowa," said Milster. "We have a pretty strong environmental ethic here on
campus."
The university has built up enough carbon credits through its program of burning
oat hulls instead of coal at its power plant that it could become a carbon credit
seller, too, Milster said.
Critics of the carbon trading system say that farmers who participate in the
exchange are shooting themselves in the foot by inviting mandatory regulation of
greenhouse gas emissions, which will lead to higher energy prices.
Joseph Bast, president of the Heartland Institute in Chicago, said paying farmers
to sequester carbon in their soil is an appealing illusion.
"Farmers shouldn't fall for promises that they can cash in on the global warming
hysteria," Bast said. "My advice to farmers would be to not support the voluntary
programs because that just lends itself to political support for mandatory
regulation."
Because no regulations curb carbon emissions in the United States, the credit
trading system is voluntary and that's why payments to farmers are so low, said
Miller, of the Farm Bureau Federation.
Although the payment is paltry, Miller said the program gives farmers a chance to
participate in the developing carbon market. "It will be in farmers' best interest to
be at the table when that exchange develops so it has agricultural input," he said.
The Iowa Farm Bureau is the only seller of agricultural carbon credits at the
Chicago Climate Exchange, but an Illinois organization plans to join the
exchange as a second agricultural seller.
Miller and the Iowa Farm Bureau program started small in September 2003,
when the Chicago Climate Exchange began.
"We're kind of like a country elevator for carbon credits," Miller said. "We enroll
the acres like an elevator originates grain, then we pull it together and manage
the accounts."
More than 330,000 acres of farmland in Iowa, Kansas and Nebraska are enrolled
in the Farm Bureau program.
Miller said Iowa Farm Bureau directors want to expand the program to other
Midwestern states.
"Aggregators" like the Iowa Farm Bureau are needed to sign up large numbers of
farmers as sellers of carbon credits because no farm is large enough to
participate in the exchange individually, Miller said.
In Iowa, the average farmer has 400 acres in the pools. In Kansas it is 1,000
acres, and Nebraska averages 800 acres.
The program is paying farmers in Iowa and other states about $1 an acre a year
for no-tilling their corn and soybeans. Farmers also are being paid through the
Farm Bureau project for establishing grass on their fields.
There is no fee to join the pool, but Farm Bureau charges a 10 percent service
charge when the credits are sold to defray the cost of administering the program.
Miller is getting seven to 10 calls a day from farmers who are interested. Some
are ineligible because they don't use no-till, he said.
"I'm pleased with the response," Miller said. "Over the next year or two, I'd like to
grow this to 2 million acres."
Gronau was one of the first Iowa farmers to sign up for the Iowa program when it
began in 2003. He's had a couple of checks for less than $100.
Gronau said he wants to increase the number of acres he has enrolled in the
program. The chance to help the environment and earn money at the same time
appeals to him, he said, although a bigger payoff would be a plus.
"A dollar an acre a year isn't too much, but I'll take it," Gronau said. "But two or
three dollars an acre would be even better."