Carbon credits are a complex topic that is still in its infancy and the OFA has just released a new resource designed to give farmers a carbon credit starting point.
A system where companies who can’t reduce their emissions enough can buy credits from others who can. This is called “offsetting” and is the basic idea behind carbon credits. Carbon sequestration by agriculture supports the carbon credit system by capturing and storing carbon dioxide (CO₂) from the atmosphere.
This can be done through practices like planting cover crops, reducing tillage, and using compost or manure instead of synthetic fertilizers to grow crops, for example, to help keep more of that carbon in the soil instead of letting it go back into the air. This process is called carbon sequestration.
For farmers who may have been asked or are considering joining a carbon credit program, it’s important to understand what you’re getting into before signing a contract. These agreements are legal and can affect your farm and land for many years—sometimes even after you retire.
Here are some key things to think about:
Read the contract carefully. How long will you have to follow the rules? Some contracts make you keep certain practices for many years. Are there penalties if you want to leave the contract early? Could this affect your land title or your ability to sell your farm? Make sure the contract doesn’t allow the company to change the rules without your approval and always have a lawyer with agricultural expertise review the document before it.
Understand how carbon payments work. Carbon credit income depends on market prices, which can go up and down. You may be paid per acre or per ton of carbon so ask how your payment will be calculated. Some contracts offer bonuses up front but may pay less over time.
Know what counts. You can usually only earn credits for new practices that reduce greenhouse gas emissions. Some programs do allow backpay for past years if you’ve already been following these types of farming practices – like we have on our farm for more than a decade – but you’ll need to be able to prove the positive impact you’ve had.
Be ready for inspections. Credits must be verified by a third party, which could include soil tests or site visits. Be sure to ask who pays for testing and how often it’s done before entering a carbon credit agreement.
Think long-term. If your stored carbon is lost (e.g. due to tilling, drought, or fire), you may be held responsible. Also, ask what happens if you sell your farm or want to switch practices.
By being informed and asking the right questions, you’ll be better prepared to decide if a carbon credit contract is right for your farm.
For more information, visit OFA’s new carbon credit resource.
