As billions of dollars flow into agriculture for so-called climate smart farming practices that sequester carbon in the soil, it can be challenging for farmers to keep track of the various offerings and decide which program, if any, is best for their farm.

There are at least one dozen ag carbon programs enrolling farmers, and that number is growing with the influx of money from venture capital and government programs, said Alejandro Plastina, Iowa State University (ISU) Extension economist.  

“The number keeps growing by the minute. I'm sure that most Midwest farmers have already been approached by representatives from these carbon programs or heard about the big menu of options out there,” Plastina said. 

However, a number of barriers are keeping most farmers on the sidelines, at least for now, Plastina said. The emerging market for agricultural carbon credits is a patchwork of programs with different rules, financial incentives and penalties, rather than a cohesive and transparent market, he said. 

A Farm Journal survey found that although 93% of farmers have heard of carbon markets, only 3% are currently participating. Nearly 60% said they are waiting until there are greater financial opportunities and more structure in place to protect farmers’ interests.

“There’s a high demand for these credits, but the prices are not there yet in terms of being able to cover all costs, so participation is limited so far,” said Plastina. 

Typical payments for voluntary carbon markets currently range from $10 to $40 per ton. Those payments could increase dramatically under mandatory programs to $100 per ton or more, Plastina reported. 

Payments could also shoot higher as more entities enter the marketplace. The market for voluntary carbon credits was worth an estimated $2 billion last year, but Bloomberg projects demand for carbon offsets could balloon to a $190 billion market by 2030.

In addition to venture capital that is flowing in, there are also a number of new government programs emphasizing carbon sequestration. 

For example, the Inflation Re­duction Act provides nearly $19.5 billion for agricultural conservation efforts, many of which have carbon sequestration benefits. 

Also this year, the U.S. Department of Agriculture (USDA) awarded $2.8 billion in grants to 70 projects under the first Partnerships for Climate-Smart Commodities funding pool. Proposals will match on average more than 50% of the federal investment with nonfederal funds. Eighteen of the projects involve Iowa, totaling more than $1 billion.

Eligibility hurdles

In addition to financial returns, Plastina said another major burden to farmer participation in carbon credit markets is figuring out what practices and farm acres are eligible for payments. 

Typically, programs will pay farmers for implementing practices such as moving from conventional tillage to reduced or no-till, planting cover crops, re­ducing stocking rates on pastures, reducing fertilizer rates, converting marginal cropland into grassland and planting trees. 

However, farmers who have already implemented those practices are often restricted from participating since most programs only offer to pay for credits earned by the adoption of new carbon sequestration practices, a concept known as additionality.

“For those early adopters, it really depends on which program they are considering,” Plastina explained. 

“Some programs have a ‘look back’ period where those early adopters get recognized for some of their carbon sequestration over the past two or three years, but not all programs offer that possibility. In that sense, early adopters are not really generally accepted into these new programs because of the additionality requirements.”

Along with additionality, many carbon programs provide greater rewards for practices that provide more permanent carbon storage, Plastina said. Some agricultural practices aren’t considered as permanent as other sectors, such as forestry, he noted. 

Permanence is also an issue for farmers who want to enroll rented acres in a carbon program, since most contracts seek multiyear enrollments ranging from two to 10 years.

“If a farmer is renting land, (they) should get permission to participate from the landowner,” Plastina said. “If the land changes hands while the contract is active and the new owner does not allow the farmer to continue participating, then the contract will be terminated.” 

Under that scenario, it’s important for farmers to be sure there are no additional penalties or requirements to pay back money already received if the contract is terminated early, he noted.

Ask questions

Other questions farmers should ask before enrolling in a carbon program include contract length, exit requirements, how carbon storage amounts are measured, record-keeping and reporting requirements, any out-of-pocket costs farmers could incur for verification and whether programs are “stackable” with other public or private conservation incentives. 

Many programs use models to project how much carbon will be sequestered by certain practice changes, but only pay for actual carbon removed as calculated by soil tests or other methods.

“The farmer is not paid on the projection, but on the actual sequestration,” said Plastina. “Knowing beforehand how the program will verify the amount (of carbon sequestered) that will be paid is critical.”

ISU Extension has a number of publications outlining various carbon program offerings and enrollment considerations at its Ag Decision Maker website at ;

Extension personnel are also working to develop an online calculator that farmers can use to estimate the potential net returns from implementing various carbon sequestration practices on their farms, Plastina said. He hopes to have the calculator online by the end of the year.

Major carbon programs, websites

Agoro Carbon Alliance.

Bayer Carbon.

Cargill RegenConnect.

Corteva Agriscience.

Farmers Edge.

Gradable Carbon.

Indigo Ag.

Locus Ag Solutions CarbonNOW.


Nutrien Carbon Program.

Soil and Water Outcomes Fund.