Avoiding carbon tunnel vision
As the focus on carbon has increased so have warnings of ‘carbon tunnel vision’. Carbon will become increasingly important to farm businesses, however, the greatest rewards will be reaped by businesses who go beyond carbon to take a holistic view of farm natural capital.
There are 600,000 results on Google for “carbon farming”; the third result is an EU report called “Carbon Farming: Making Agriculture fit for 2030”. AgFunder profiled 75 companies on its recent “Ag Carbon Map”. McKinsey, a consultancy, says the voluntary carbon market will be worth $50billion in 8 years (from $1billion today).
Combine this with the NFU’s net-zero ambitions, volatility, and the loss of BPS and its unsurprising that farmers are looking to carbon as a new revenue source. However, farm businesses must be realistic about what carbon can deliver in isolation.
Most of the UK’s leading carbon trading platforms promote prices between £15-30 per credit, with 2-3 credits/ha typically available. This is no substitute for BPS even before the brokers take their cut, which can be as high as 40%.
Counter-intuitively, carbon trading may result in a drop to farm income. Transitioning to the regenerative practices rewarded by carbon schemes may result in lower yields, though these can recover, and lower input systems mean the transition may not actually harm profitability.
Carbon + biodiversity + water = more £/ha
Incomes from carbon farming can be much higher than the quoted £15-30/credit, but only if farm businesses look beyond carbon. Natural Capital is defined as the world’s stock of natural resources. It includes biodiversity, air, soil, and water – and it’s a huge opportunity for farm businesses.
Carbon is more valuable with biodiversity
Michael Kavanagh, a Shropshire farmer and member of The Green Farm Collective, recently sold carbon+biodiversity credits generated on Sandy, the Smart Natural Capital Navigator, for £100/credit. This is four times the credit price advertised by some leading competitors.
Trinity Natural Capital Markets, a marketplace for carbon and natural capital, recently saw carbon credits traded at more than £100 per credit. Several factors influenced the high price, but the leading factor was the addition of a biodiversity co-benefit.
Environmental co-benefits, such as biodiversity and water quality, can be associated with carbon credits. Buyers with a broader sustainability agenda will pay significantly more for carbon credits associated with these co-benefits.
Most farms will be able to claim co-benefits alongside carbon credits provided they have the correct technology because biodiversity and carbon reduction are often complementary.
Cover cropping, regenerative hedgerow management, or wild bird mixes in unproductive field sections all create more nature-friendly habitats, whilst having a positive effect on carbon.
A data-entry time sink
Carbon-centric software, whether established carbon calculators or trading platforms have a clear limitation. They’re silos. And this creates a data-entry headache that farmers don’t need.
Recently, one farmer who investigated a popular carbon trading platform estimated that it would take a full week to onboard his farm. The platform required that data be entered manually, field by field.
This is especially frustrating for farms that have made the investment in digital farm management systems. Farmplan’s Gatekeeper and Muddy Boots’s Greenlight Grower Management cover almost all the UK’s arable land. And they include much of the information required by carbon tools, such as input, cropping and cultivation data.
Integrations between farm management systems and carbon/natural capital solutions speeds-up onboarding, reducing barriers to entry for busy farmers. Other potential benefits include evidencing compliance with ELMS, water directives, and supply chain obligations.
It’s surprising, therefore, that only one solution, Trinity Agtech, offers data integrations.
Connecting natural capital, farm, finances
Connecting natural capital, agricultural, and financial data can yield immediate benefits. It moves the dial on scenario planning from art to science.
To plant or not to plant?
Planting new trees and hedges is one of the most impactful things a farm can do to reduce its net carbon footprint; however, removing land from production will also impact profitability and food production.
Sandy, the Smart Natural Capital Navigator, combines natural capital and agricultural data in one place to make it easier to predict the outcomes of management changes.
Sandy, by Trinity Agtech, applies predictive intelligence to joined-up data, to forecast the outcome of management changes and plan tailored ‘improvement journeys’. For example, a farm manager could tell Sandy their budget, acceptable yield loss, and agroforestry strategy and Sandy will recommend a range of costed strategies.
These could include a move to no-till, an alternative nutrient management strategy, agroforestry, or a move to holistic mob grazing. Sandy can predict the productive, financial, and environmental impact of moving to these strategies and many others.
For a farmer, this removes some of the risk and uncertainty that accompanies a move towards sustainable farming practices. Furthermore, it provides them with the tools and insights they need to confidently hedge their natural capital assets in the best way for their own businesses.
Safeguarding the food-centric farm
The conversion of upland farms into plantations to offset corporate emissions has been well documented in the trade press. Commercial farmers have been priced out. This has knock-on effects for rural economies and domestic food production.
There is no need to choose between farming and environmental gain
Carbon sequestration and trading, nature and habitat restoration, and water protection can - and do - happen in conjunction with profitable, productive agriculture. The right software makes understanding and evidencing these dynamics far easier.
Not all carbon trading platforms adopt this model. Many reward productive farming practices, though farmers have little control over how the credits are sold. The standard model has been for farmers to sell to brokers who sell on farmers’ behalf; it’s possible that farmers will not be pleased about who those credits are offsetting, nor do they have full control of the sale price.
Trinity Natural Capital Group set out to challenge this model. Sandy, by Trinity Agtech, provides a means of navigating natural capital opportunities, including and beyond carbon. They estimate that 80% of their customers will never trade carbon; farmers are looking to biodiversity net gain (BNG), provenance-backed produce, compliance, and holistic business intelligence.
Their sister company, Trinity Natural Capital Markets, has spurned the broker model in favour of an ethical Marketplace. Farmers set their own carbon price and have complete control over what happens to their credits. New features and technologies keep costs affordable, lowering barriers to entry for farms.
Carbon has the potential to improve business resilience, but it’s not the only option. Farm businesses should explore the full range of natural capital and traditional opportunities. The right technology will make navigating these opportunities far simpler.