Dollars in the dirt: Big Ag pays farmers for control of their soil-bound carbon

The biggest global agriculture companies are competing on a new front: enticing farmers to join programs that keep atmosphere-warming carbon dioxide in the soil.

Fertilizer producers Nutrien Ltd. and Yara, agribusiness giant Cargill Inc., and seed and chemical dealers Corteva Inc. and Bayer AG are paying growers for every acre of land dedicated to trapping carbon underground, known as sequestering it. The companies' ambitions stretch from the United States to Canada, Brazil, Europe and India.

Farmers capture carbon by planting off-season crops, tilling the ground less and using fertilizer more efficiently. They log their practices on digital platforms to generate a carbon credit. Agricultural companies use the credits to offset the climate impact of other parts of their businesses or sell them to companies looking to reduce their own carbon footprints.

Agriculture covers nearly 40% of the world's land and is responsible for 17% of global emissions, according to the United Nations. Changes to farm practices could sequester as much as 250 million tonnes of carbon dioxide annually in the United States, or 4% of the country's emissions, according to a 2019 report by the National Academy of Sciences.

Agriculture is therefore increasingly seen as a potential ally as companies and governments attempt to meet lower greenhouse gas emission targets and fight global warming.

Some farmers view the programs run by the giant agricultural corporations with suspicion - as a method to harvest their data that will be used to sell them more products, according to interviews with more than a dozen farmers, analysts and farm groups. Other critics question whether it is even possible for farmers to guarantee they are keeping carbon underground because simply turning the soil can undo efforts to store it.

Sequestering carbon, however, can provide a new revenue stream for farmers looking to diversify in a volatile industry. The farming techniques required by such programs offer the additional promise of realizing higher yields from healthier soils that are less reliant on chemicals.

He remains happy with his decision even after Bayer, whose program requires a 10-year commitment, began offering sign-up bonuses of up to $1,000.

"I didn't want to be tied up for too many years in a contract ... I want to see how it goes before I jump in whole-hog," he said. "I think these programs could become more and more popular and we're going to get paid more than we are now."

Agriculture companies can measure success through the number of acres farmers devote to their programs and commitments from other corporations to eventually buy the credits generated, said Alejandro Plastina, associate professor in economics at Iowa State University. Most of the corporate commitments are vague, however, and the acres in pilot projects remain small, he said.

For little cost, agriculture companies get to showcase their social responsibility, while securing farmers' loyalty to their digital platforms that can turn into greater farm supply sales down the road, Plastina said.

"It gives [ag companies] the opportunity to associate their brands with caring for the world," Plastina said. "I don't expect them to make money on these projects anytime soon."

Norway-based Yara is running a pilot program on 50,000 U.S. acres and plans to have 1 million U.S. acres under contract by year-end.