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Questions to ask before signing a soil carbon contract

An ag lawyer says soil carbon capture programs are becoming more prevalent, but farmers are still asking a lot of questions.

Todd Janzen, president of Indiana-based Janzen Schroeder Ag Law says the first thing they should inquire about is the compensation structure.  “Some are fairly straightforward and say we’ll pay you X number of dollars per acre to switch from conventional-till to minimum-till or no-till,” he says.  “And others are more based on the end products.”

He tells Brownfield farmers should also understand the reporting obligations required by the company because all programs do require at least some data.  “If you have electronic records, you can do that easily,” he says. “If it requires more laborious paperwork, then it may be a bigger burden for the farmer and some may say, you know for a few dollars an acre, it’s just not worth it.”

Janzen says farmers should also inquire about potential yield impacts, the commitment required of the contract, and if there is an indemnity clause.  “What if there is a drought,” he says.  “Or what if something goes wrong on the land and farmers can’t live up to their end of the deal? What happens then?”

As part of the August Purdue University/CME Group Ag Economy Barometer farmers were surveyed to gauge their interest in carbon programs.  Only 2% of respondents had signed a carbon contract.  Nearly half of the farmers who had discussed contract terms with a company said they were offered a payment rate of $10 to $20 per metric ton of carbon contract, 32% of farmers surveyed said the rate was less than $10 per metric ton, 16% were offered $20 to $30 and just 5% were offered $30 or more per metric ton.

Read more from Janzen HERE.

AUDIO: Todd Janzen, Janzen Schroeder Ag Law