‘New Income Source’

Agriculture Secretary Tom Vilsack has called carbon “a new income source” that could “change the old ways of supporting farms.”

At this point, Climate Exchange Plc’s Chicago Climate Exchange runs a pilot program that lets farmers supply credits for sale to companies, such as Ford Motor Co. and American Electric Power Co., which have agreed to voluntary emissions limits. Its sibling Chicago Climate Futures Exchange last November began trading futures that can be used if a mandatory cap-and-trade law is enacted.

The North Dakota Farmers Union is the climate exchange’s biggest aggregator of farm-related carbon credits, with 3,900 participating farmers who will get ...

‘New Income Source’

Agriculture Secretary Tom Vilsack has called carbon “a new income source” that could “change the old ways of supporting farms.”

At this point, Climate Exchange Plc’s Chicago Climate Exchange runs a pilot program that lets farmers supply credits for sale to companies, such as Ford Motor Co. and American Electric Power Co., which have agreed to voluntary emissions limits. Its sibling Chicago Climate Futures Exchange last November began trading futures that can be used if a mandatory cap-and-trade law is enacted.

The North Dakota Farmers Union is the climate exchange’s biggest aggregator of farm-related carbon credits, with 3,900 participating farmers who will get about $9 million this year, Farmers Union President Robert Carlson said.

U.S. greenhouse-gas trading would skyrocket if Congress adopts a program like the European Union cap-and-trade system, which started trading carbon permits in 2005. The Chicago climate and futures exchanges together handled credits for 28.8 million metric tons in February, compared with a record 447 million metric tons at London’s European Climate Exchange Ltd.

Higher Costs

While farm-state votes may make or break a cap-and-trade bill, proponents face questions about whether agricultural offsets reliably cut greenhouse gases, and whether carbon’s price will rise enough to justify farmers’ costs.

By leaving land undisturbed, no-till farming keeps decaying organic matter in the soil so that carbon produced by decomposition isn’t released into the atmosphere. It also requires less machinery use, cutting fuel consumption.

No-till farmers may get lower yields along with lower expenses, so fuel costs and commodity prices influence tillage decisions. Agriculture Department research in 2007 said no-till corn farmers could save $83 per acre, enough to make up for crop yields that fell by 23 bushels per acre.