By Andi Anderson
Soil carbon farming has gained attention as a potential revenue stream for agriculture. Before signing a carbon contract, it's crucial for farmers to conduct due diligence and ask key questions.
- Payment Structure: Understand how you'll be compensated. Some contracts offer per-acre fees, while others pay based on carbon credits generated during the contract term. While the future price of carbon credits is uncertain, seek an estimate from the company.
- Paperwork Burden: Assess the reporting obligations. Digital record-keeping may ease the burden, but if self-reporting, especially on paper forms, is required, consider the potential workload.
- Yield Impact: Determine if the contract's requirements will affect short-term yields. While soil health improvements are long-term benefits, ensure any short-term yield impacts are offset by payments or long-term soil health gains.
- Exit Options: Since soil carbon building is a long-term process, clarify if you can exit the program before the term ends and understand any associated penalties.
- Indemnity Clause: Review the indemnity clause, which affects liability. Given the relatively small payouts, indemnity clauses should be minimal or nonexistent.
In most cases, the downside to enrolling in a carbon program is limited, primarily involving paperwork, while the potential upside could enhance your year-end balance sheet. Make informed decisions to maximize the benefits of soil carbon farming on your farm.
Photo Credit: gettyimages-kasinv
Categories: Michigan, Crops