Carbon credits are an evolving market as more players enter the space and demand rises. So how do you make sure that you’re making the right decision when or if you decided to enter the carbon market on your farm?
Here to offer some perspective is Travis Kraft, director of sales for Indigo Ag. Indigo Ag entered the carbon credit arena a few years ago.
There’s not tangible thing that you can hold to represent carbon, which is why the carbon market can be hard to understand, Kraft says. But, he says growers are in a good position where the demand for carbon credits is high, but the supply is low right now as farms contemplate whether its a good idea to jump in or not.
“There are over 175 different carbon credit financial models in the world. Ag fits a very small space — only 8 percent of the entire market,” he says. “But they’re worth the most because it’s the largest amount of opportunity to sequester more carbon.”
When it comes to the worth of carbon, Kraft says there are multiple metrics that influence prices.
“Whether you’re sitting at $37, $47, $57 a credit, the longer that thing stays in the soil or the more practices that you can prove that you’ve done over time, the higher that credit value will be worth today and in the future,” he says.
Interested in getting into the carbon market? Kraft recommends taking some risk management considerations.
“If you can’t see where the money is coming from, don’t get involved,” he says. “If you can’t see where the tangible money flows and how it gets from point A to point B, it’s probably not going to be in your best interest.”