What Are Carbon Credits For Farmers? How Can It Boost Their Income?

by | Dec 16, 2022 | Carbon Trading

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Carbon Credits in Agriculture

We are familiar with renewable energy and reforestation projects that generate carbon credits. However, today, there is growing awareness around ‘carbon farming’. So let us understand the role of carbon credits for farmers.

Carbon farming programs seek to support offset production from soil carbon sequestration. Farmers can then trade these offsets. For example, recently, Microsoft bought 2 million dollars worth of carbon credits from an American farming cooperative. The US President, Biden, also called for a ‘carbon bank’ to pay farmers for adopting soil-friendly and regenerative agricultural practices.

So far, agriculture-based carbon credit systems have been confined to large, developed countries. Farmers have greater access to information, technology, and appropriate mechanisms and equipment in these countries. However, we must also realize the impact of carbon credits for farmers in the developing world. The developing world is home to millions of small farmers. Governments must establish simpler verification processes for carbon credits to support sustainable practices.

Farmers can claim carbon credits for a wide range of regenerative agricultural practices, such as not burning stubble, not plowing the land, introducing cover crops, etc. If applied with the right technologies and applications, farmland has the capacity to store 1.2 billion tons of carbon. It could offset 4% of total greenhouse gas emissions over the rest of this century. Sequestering carbon in soils opens up new possibilities for climate-positive agriculture. It can deliver shared benefits and enhance soils that reduce fertilizer use and greenhouse gas emissions and improve overall crop health.

Even technology and the private sector can help open carbon credits for farmers. Take “nurture.farm” as an example. Nurture Farm is a digital platform for sustainable agriculture. In November 2021, it partnered with the Indian Agricultural Research Institute and convinced 25,000 farmers to decompose their rice stubbles instead of burning them. The activity resulted in the prevention of one million tons of carbon dioxide. By providing them with a host of technology-driven innovations, “nurture.farm” helped India’s farmers sell the country’s first-ever agriculture-driven carbon credits.

How Does It Help Farmers?

In 2017, Mahyco, a Maharashtra-based seeds business, and Indigo Ag formed a joint venture in India called Grow Indigo. They geo-tagged around 1,000 acres of farms in Punjab, Haryana, and Maharashtra. They are monitoring these farms using remote sensing technology for regenerative farming practices. The practices include adopting low or no-tillage, no burning paddy stubble, rotating crops, and conserving water. They will measure the soil’s carbon content at the beginning and end of each crop cycle and buy credits from farmers accordingly.

In 2020, Bayer, a seed and crop protection company, announced that it would reward around 1,200 farmers in Brazil and the US for adopting climate-friendly practices like no-tillage and planting cover crops. In mid-October 2020, Shopify, Barclays, Boston Consulting Group, JP Morgan Chase, IBM, and Indigo Ag teamed up to pay farmers for carbon dioxide sequestered. They agreed to pay them 20 dollars per ton of carbon dioxide they sequestered in the soil or lessened during the growing season. To earn these credits, a farmer must log into Indigo’s website and enter their farm coordinates. They must send a set of readings at regular intervals. Indigo will analyze these readings along with soil samples from the farm. After an independent audit, the company will buy the verified carbon credits from the farmers. This way, a farmer could potentially earn 2-3 credits per acre, which translates to around 20-30 dollars.

Not plowing the soil stores carbon for a longer time. When the soil isn’t plowed, the organic matter in soil particles stays together in larger clods, which microbes cannot easily get to. When farmers plow, they expose the organic matter in the soil to the atmosphere. The exposure hastens its decomposition.

What Are Carbon Credits For Farmers? How Can It Boost Their Income?


Apart from the immediate benefits to the soil of adopting low-carbon farming practices, the demand for these credits from the voluntary carbon market will further incentivize small farmers and provide them with additional sources of income. Generating carbon credits for agriculture will make farmers resilient by improving soil health and enhancing livelihoods.

Integrating technology into agriculture can boost agriculture-related carbon credit trading. Many agtech startups are ushering the agricultural sector into a new era of carbon credit-based incentive models. They’re encouraging farmers to adopt practices better for them in all aspects. A carbon credit-based agriculture model will ensure wide adoption by farmers. It will also ensure global food security in a climate-constrained world.

The Future of Carbon Farming

Over the past few years, many private companies have set up carbon markets to pay farmers who capture carbon via their farming practices. Here’s how they work:

Imagine you’re a company whose operations release greenhouse gases. It is impossible for you to eliminate your emissions completely. But, you can choose to offset your emissions by buying carbon credits from farms that store greenhouse gases. By buying carbon credits, you make your emissions ‘net-zero’. A third-party firm will estimate the amount of carbon a farm has sequestered. It will then convert this amount into sellable credits, which you will buy.

Farming is a relatively new entrant in carbon offset projects. But even in this initial phase, it has piqued the interest of corporate buyers. Experts say that global croplands have the ability to sequester as much as 570 million tons of carbon dioxide every year. Using farmlands as storage for greenhouse gas emissions will help us head off the worst effects of climate change.

However, how carbon accumulates in the soil is still a black box to scientists. Carbon content can have huge variations in soil depth, composition, and geographical location. Another issue is that we don’t know for how long agricultural soils will store carbon. Companies buy credits from farmers based on the promise that the soil will store carbon for decades. But many markets and environmental factors can cause agricultural decisions to change annually. If a farmer adopts ‘no-till’ for one year but decides to till the next year, all the carbon stored during that year gets released. This essentially resets the climate value back to zero.

Also Read: Saudi Firms Procure Tons Of Carbon Credits In Kenya Auction


  • Dr. Emily Greenfield

    Dr. Emily Greenfield is a highly accomplished environmentalist with over 30 years of experience in writing, reviewing, and publishing content on various environmental topics. Hailing from the United States, she has dedicated her career to raising awareness about environmental issues and promoting sustainable practices.

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