(Reuters) - Global commodities trader Cargill Inc [CARG.UL] starting this spring will pay American farmers for capturing carbon in their field soils and cutting fertilizer runoff, an executive said.
The Soil & Water Outcomes Fund, a partnership with the Iowa Soybean Association and third-party verification company Quantified Ventures, will then sell the environmental credits created to polluters such as cities and companies, including Cargill itself, Ryan Sirolli, Director of Row Crop Sustainability at Cargill, told Reuters.
The program is a welcome source of farm revenue as the price of crops such as corn and soybeans hovers near the lowest in several years after the bruising trade war between the United States and China and, now, the coronavirus pandemic that has kneecapped the global economy.
It also follows rising criticism of intensive farming practices and the companies that rely on them. Environmentalists criticized Cargill last year for delaying a self-stated goal of ridding its supply chain of crops produced on deforested land.
Farmers in Iowa have enrolled almost 10,000 acres in a pilot program this spring, but the group is aiming to expand the program next season and broaden it beyond Iowa, Sirolli said.
Farmer Lance Lillibridge of Vinton, Iowa, enrolled about 300 acres in the program this season and expects to get at least $35 an acre, which will offset some of his planting costs.
“For a farmer, our margins are really small. In fact, right now there’s no margin at all ... This is the first time that we are rewarded for our sustainability efforts,” Lillibridge said.
Funded by grants from Cargill and the Walton Family Foundation, the Soil & Water Outcomes Fund will pay farmers $30 to $45 per acre this season, depending on what environmental results are confirmed, said Adam Kiel, director of conservation for the Iowa Soybean Association.
“We’ve got ambitions to go more broadly beyond Iowa in future years,” Kiel said. “Farmers view this as another revenue source on their farm that’s not a government payment.”
Cargill estimates the practices would prevent runoff of 100,000 pounds of nitrogen and 10,000 pounds of phosphorus this year and sequester 7,500 tons of carbon in soils, equivalent to taking 1,480 cars off the road.
The fund is among the first of its kind to seek to verify and monetize the environmental benefits of farming practices such as no-till farming and planting cover crops like grass to prevent erosion. Historically, conservation schemes have paid farmers for more environmentally friendly practices but have not verified their benefits.
“We’re seeing a big shift in terms of the way we look at sustainability and how the industry is looking at it,” Cargill’s Sirolli said.
Reporting by Karl Plume in Chicago; editing by Grant McCool
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