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“We've got to reduce tillage. That's the principle. Reduce tillage, maintain the armor, get the living roots.”

— Mitchell Hora, CEO & Founder of Continuum Ag, No-Tiller, Washington County, Iowa.

In this episode of the No-Till Farmer Influencers & Innovators podcast, brought to you by Martin-Till, editor Frank Lessiter sits down with Mitchell Hora, a 7th generation farmer from Washington County, Iowa, and current CEO and founder of Continuum Ag, a soil health data intelligence company.

Hora talks about his background as an agronomy consultant, why he has been conducting a Haney Soil Test on his farm once a week for nearly 7 years, his carbon-negative corn and potential markets for it, and more.

If you are interested in more no-till history, you’ll find great stories like these and many more in the newly released 448-page second edition of From Maverick to Mainstream: A History of No-Till Farming that includes 32 more pages than the first edition. Order your copy here.

The No-Till Influencers & Innovators podcast series is brought to you by Martin Industries.

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Full Transcript

Welcome to the No-Till Farmer Influencers & Innovators Podcast, brought to you by Martin-Till. I'm Mackane Vogel, assistant editor of No-Till Farmer. For this episode, editor Frank Lessiter sits down with Mitchell Hora, a seventh generation farmer from Washington County, Iowa, and current CEO and founder of Continuum Ag, a soil health data intelligence company.

Well, I want to start with the thing that most people are going to wonder about why you do it, and that would be weekly soil sampling. So why don't we start with that and you explain the program and what it means.

Yeah, on our farm, we've been doing weekly soil testing for six, seven years with the Haney test. And the intent is that we want to see, how are the nutrient availability changing throughout the year as driven by the biology, which is what's cycling those nutrients of course, which is then being driven by our management practices and by the weather. So that was the intent is, how are my nutrient availabilities changing throughout the year? That way we can help our customers to best interpret the Haney test, because a normal farmer, at scale, we're only going to pull a Haney test once a year, even every other year is what we typically do in a zone precision ag fertility management type of program. But in order to interpret that result, we need to understand, how is the weather and the conditions influencing the result? So that's been the intent. And then also I want to see how much nutrient is my cover crop sucking up and holding, and then when do I get that back? And utilize the cover crop as a nutrient stabilizer, and that's part of my fertilizer program.

So when you do this weekly test on a plot, how many times during the growing season would you do it? I mean, you start June 1-

Every week. Yeah, we start usually last of March, 1st of April, and we'll go all the way through until the ground freezes up. Okay, gotcha. In the past, I have gone all the way over the winter as well, did a project a couple years ago where we pulled samples twice a month for our entire year.

Wow.

Yeah. We pulled, also what, 24 samples, 24 occurrences we did, and that was really interesting. We had to pull it with a... We had to use a drill over the wintertime because of course the soils were frozen, so that took a little bit of extra work and scraped the snow away and grab samples. But really interesting. And I think the key thing, the takeaway on all this is as a farmer, we need to be able to best understand that our soil is dynamic. It's not the same all the time, and all kinds of parameters change. I'm amazed at the fluctuation I can get, even with parameters like organic matter and pH, and just by basic P and K and calcium magnesium stuff. Some of those parameters, even those results can vary significantly throughout the year. And I'm sure a lot of that is human error, lab error, standard error that just happens. This is not a perfect science, but amazing to see some of those things that fluctuate quite a bit throughout the year.

So did you see changes when you pulled these tests in January and February?

Oh, yeah. What was really interesting, if I recall there, I think in how we pull samples, there's some noise to it because what's happening in the field is different than when that soil is pulled. It's shipped to a lab, it's warmed up to a nice warm 70 some degrees. It's rewetted. It goes through the grinding process, we're reactivating some of these soil properties, and that might not necessarily perfectly reflect what's the reality of the actual soil condition. But what I thought was really interesting with that trial is we saw, we had a warmup in February of that year.

Our activity became very aggressive, and especially where I did not have cover crop, we had a lot of nutrients come available. Then the rain turned back on and we were able to watch and quantify those inorganic nutrients left that upper soil profile, they were leached away, we lost them or they went down deeper in the soil profile. But where we had cover crop, we were able to hold onto those soil nutrients and we were able to quantify that and factor that into our nutrient management program and not have to buy as much fertilizer because the cover crop is holding onto those nutrients for us.

So you got a client, corn and soybean grower, 2000 acres in central Iowa. He takes the Haney test in the fall, and then how do you look at these results and make some changes based on your weekly soil samples at home?

Yeah. So at Continuum Ag we've built our own software called TopSoil to map out fields, create zones with a proprietary zone creation system. We evaluate that field spatial variability, and then we've built the algorithms into TopSoil and worked directly with Dr. Rick Haney, Dr. Jerry Hatfield, folks like that who have helped us to build out those algorithms. Dr. Carlston Malero leads our software development team. We've built in the algorithms to create variable rate recommendations with that data, and we just tweak the recommendation based on the weekly data. Understanding that the nutrient availability is going to be slightly different based on when we pull those samples, when it makes sense to pull them at scale across farms, and we just make slight tweaks to factor in the weekly data.

So what's the biggest thing you've learned off the weekly tests that would relate to this same farmer with corn and soybeans?

What I think is really interesting when we are adopting, especially cover crops, the first thing that changes in our soils is the water extractable organic carbon, which is the liquid carbon that is put into the ground via photosynthesis. That's basically that carbon that's being taken out of the atmosphere, put it in the ground. And then the biology responses, the biology responses to the food. And then the nutrient availability changes, and then the potassium availability changes. And the last one that I've seen makes significant improvement is my phosphorus availability. I thought that was interesting from a nutrient availability and a cycling perspective, but the biggest nutrient availability is typically over the summer. The biggest biological activity is typically over the summer. Now again, I think there's some anomalies happening there with those microbes are likely quite active, but when they're taken into the lab and given a drink of water, they really respond in the summer.

Yeah. How are you measuring nutrients in the biomass particularly of cover crops?

Yeah, so actually my lead agronomist, Carolyn, is in the agronomy master's program state, and she's doing some research actually on this direct topic. What we do is we go out to the field and measure off a one-meter by one meter area and clip all of the biomass off just with a scissors or a pocket knife, collect all that biomass. And in the early part of the year, we can put it into one gallon Ziploc baggie later in the year, we've got to put it into a larger bag. We ship that off to the lab and that's where they dry it down and they do analysis on it. There's forage analysis and cover crop analysis that can be done at a variety of labs. Now we primarily work with the Regen Ag Lab, but especially for those tissue analysis, there's a variety of labs that can get that done. I think the biggest thing there is farmers just make sure that you recognize that there's a lot of nutrients in the above ground residue, the above ground biomass. We need to make sure that we account for that in our in-season fertility management program.

If I'm this 2000 acre corn and soybean grower, do you have a preference for the number one cover crop you ought to be growing?

It depends on the next year crop. So what I would tell that guy... So I'm assuming... Typically, it's that corn soybean producer ahead of soybeans, I like to keep it simple and just use cereal rye, and if we're planting it early, if we are putting the seed in the ground with a drill early part of the year, I'll go all the way as low... If we're talking central Iowa, so again, it depends on your geography as well. 2000 acres, central Iowa, corn stocks going to soybeans. If we were putting it in the ground, I'd start in the 40, 45 pounds per acre type of application rate, maybe a little bit heavier based on cost share programs, stuff like that. Making sure that we mined our Ps and Qs, but then I would increase that all the way up to usually around 60 pounds, maybe 65 pounds as we get later into the fall because we're not going to get as much growth and tiller in. So we need to apply some more seeds to make sure that we've got the coverage come next spring.

In the spring is when we're really going to get the benefit out of the cover crop. I think farmers need to be mindful of being patient in the spring with these covers. Now, in a year like this where we're really dry, sure it can bite us in the butt. I understand there's a lot of horror stories when you're looking within the cover crop space here this year. And all stuff on our farm, we've got a couple spots that are not great either. We've only had just over a half an inch of rain since the 1st of May at planting. So I mean, we are incredibly dry in Washington County, but southeast Iowa. But the best thing to do is plant that through around the fall, plant your swimming directly into it green in the spring, have nice light rate of cover crops. For example, we're we planted our beans this year, the week of April 10th, and we're using all the way up to a 4.0 maturity soybean, which is nearly a full maturity group long for our region in southeast Iowa, but very full season soybeans in order to utilize that early planting.

And then we terminate the cover crop based on soil moisture. And in dry years we kill it, get it killed early to preserve moisture. When we're wet like we typically are, we let that cover crop keep on growing, kill it when things start getting dry. I had of corn, I like using cereal rye on our farm, but in early stages we use a lot of winter wheat, typically blended as much as we can with maybe a hairy vetch has worked extremely well. Crimson clover's an option. There's some other grasses, maybe some Brassica like a Essex rape seed, some crops that can over winter. There's of course opportunities to plant cover crops that are not going to survive the winter. But for our operation, if we're planting the cover crop in the fall, I want to maximize my dollars that I'm spending to make sure I get some benefit out it. So we typically are planting cover crops that we think are going to have a good chance of surviving the winter and getting us a benefit from a nutrient and a weed suppression standpoint for our corn the following spring.

So it sounds to me like you're sold on using a reasonably priced cover crop in the fall and not spending $30 on a multi mix, right?

No. I mean, I love the multi-species mix. I'm a firm believer that we need those multi-species, but the issue is just for the mass majority of farmers, keep it simple at the beginning. Get more aggressive as you go. I love that stuff. I know, and I've got the data to show that you will absolutely get better nutrient cycling. You'll absolutely improve your soil health faster if you do more of those diverse covers, but also it costs more money. I can put together a 12 to $15 cover crop blend or keep it really simple.

Spend small amounts of money to help the cost share dollars go further or just heighten the chances that they're going to be successful. As you get aggressive, play with more of those diverse covers. We've tried more than 25 species of cover crops on our farm, and especially for interceding into wide row corn. That's an awesome opportunity. If you're chopping silage, have a small grain in the rotation, have some type of opportunity to plant early, absolutely hammer it with diversity. Get the six, eight, 15 species out there for sure. But just the vast majority of farmers. Keep it simple, keep it inexpensive, and understand that this is a process and we need to be baby stepping here.

Yeah. So what have you learned from these weekly tests? Have you taken a look at the microbiology in these or with these tests or with these tests or [inaudible 00:13:17]?

We've started to look at that? We have. We've started to look at that. What I've seen is across our farm, we've increased our biological or we've increased our biological activity by about threefold over the last couple years. We've increased our food supply, the water extractable carbon by about threefold over the last couple years. We've increased our organic nitrogen availability in a lot of cases from 10 part per million organic nitrogen to over 60 and even 70 part per million organic nitrogen. So that's an increase in well over a hundred units of nitrogen that we have added to the system in the stable organic form. It's really, really awesome to see that.

We've done some analysis to this year with the biomakers assessment. We did some total nutrient digest and some biomakers assessments here this year. We are seeing that we're getting some pretty good diversity of our microbial species and really helping to balance out our fungal, the bacterial ratios, which has been a key focus. Overall though with the Haney tests or just our basic sheep biological assessments, we're seeing that we're increasing the biological communities. And I have confidence that by implementing these principles, we're getting more good guys than bad guys and building up the... The system wants balance. Mother nature wants balance and wants osmosis, so we'll get that over time, just sticking to those principles.

Yeah. Speaking of nitrogen, the traditional idea in the corn belt, a farmer might put some nitrogen on and the fall might put some on with the planter in the spring, and then side dress. What is your weekly analysis showing about when it ought to go on?

So actually with our stuff, I'm liking to put on a little bit more at and around the planting time. That has been a change for our operation. We still use a little bit of fertility in the late fall, but we are adding more around planting time, which is a little bit counter to maybe what you were thinking that I'd say here. And the reason being is what we're quantifying with that weekly testing is I'm planting corn and soybeans green. Keep in mind, okay, I'm planting corn into a 12 to 20 inch tall cover crop, and I'm waiting five, 10, 14 days before I terminate that cover crop. So I need to supplement for the tie-up of nutrients by making sure I've got nutrients on with the planter or banding our dry fertilizer directly over the row. We are still using some anhydrous, which I don't necessarily like from a soil health perspective, but it's one of those things, the typical quote, "It's what we've always done."

We've decreased our anhydrous by about 50% and we put it on in mid to late November into the living cover crop and getting good stabilization and trying to go late when we're not completely annihilating our microbes. But then we're trying to put a good chunk of the nutrients on right around planting time. So when we kill off our cover crop, we add liquid 32% with the herbicide, usually three or four gallons of 32% UAN, 28% fine. That really helps to heat up the burn down herbicide and helps to get a good aggressive kill on the cover. Now, I've seen some mixed results on that because some farmers get too aggressive with that application. That's why it's important to note here. I'm saying at burn down, I planted my corn green. I've got now a 24-inch tall cover crop, mostly cereal rye.

I'm coming in usually with Roundup with three to four gallons of 32% UAN. Its wind guys start getting in the six, eight, 12 gallons of UAN. That's when then your herbicide's not going to be as effective. You burn it too much and the plant doesn't take in the herbicide correctly. So light rates of herbicide, it's helping to balance out my carbon to nitrogen ratio of my actual rye, get a good aggressive kill. And allow for balancing the food source for those microbes so that they can return the nutrients back to my corn crop. And basically I'm utilizing my cover crop as my nutrient stabilizer for that later season nutrient availability.

So would your weekly tests show foliar application in July or August is beneficial?

Especially for micronutrients, that's what we are really focused on, okay. Micronutrients we're some major negatives for dad on our farm is to utilize micronutrients in a balanced fertility program, including micros, humic, biologicals, sugar, utilizing that instead of fungicide. Okay, so we've got a variety of no-nos that we do on our farm from a hardcore soil health perspective. The anhydrous, I already mentioned. The roundup, I was just talking about. Fungicide, our corn still does have a seed treatment on it, just the typical treatment that our corn comes with. Our soybeans are all a hundred percent naked soybeans, but using some of that fungicide, we really want to get away from that. Number one, they're just not as effective as what they used to be, and that's going to continue to be a problem. Number two, we know that some of those systemic fungicides are not good for our soil health, especially our fungal community. So we're really playing around with a lot of those micronutrient packs as a foliar and then also going in furrow, putting the micronutrients and the humic in furrow directly on the seed.

So you and your dad don't have any huge farming operation. How many acres are you farming?

Yeah, we're 700 acres in southeast Iowa. It's about 50/50 corn and soybeans. We're actually harvesting about 140 acres of cereal rye this year as well, but that rye is all over the top of soybean. It's a relay crop, and as we're reporting this, we're late June, we're going to be harvesting our cereal rye over the top of our soybeans the first week of July. This is our fifth year doing that where we have our cereal rye that was planted last fall into cornstalks. We planted the soybeans this spring, the week of April 10th, into the cereal rye with a small knee-high, and we're going to pull the combine out and go harvest this rye and utilize as cover crop seed. My thought on that just being, we started doing that practice a couple years ago when cover crop availability was low, it was expensive.

And we saw the writing on the wall that this is going to continue to be a trend if we're going to scale up the use of cover crops, which is absolutely going to continue to happen. We need to make sure that there's seed availability. And we need to have local production, and it's a great way to diversify our agricultural landscape, diversify our revenue streams on our farm, be able to really just capitalize on the equipment and the effort that we already are partaking in. Yeah, so we're just harvesting the rye over the top of those beans and forcing our soybeans to get us an even better nitrogen credit for next year, and we've had incredible luck of maintaining upper sixties and 70 bushel acre soybeans, plus harvesting 30 bushel acre rye.

We'll come back to the episode in a moment, but first, I'd like to thank our sponsor, Martin-Till for supporting today's podcast. As farmers themselves, the people at Martin-Till know the frustration that unforeseen obstacles can bring, especially weather. While no one can control drought or untimely rains, Martin-Till can help equip your planner to allow for more time spent planting and less time waiting to get seed in the ground. Thank you for considering Martin-Till products. Now let's get back to the conversation.

So you don't damage those soybeans what height are you cutting the rye at?

We do, we damage some of the beans, but we keep the cutter bar over the top of the soybeans, so we do not want to clip the beans. Now, our relay crop is a little bit different than how other guys like [Lawrence Dilogie inaudible 00:22:01] and Michael Vittetoe, some of these guys that are really crushing it. It's all solid seeded together, there's no rows. So I'm running over soybeans. It's not perfect, I'm not able to keep the cutter bar really low and get every single rye seeded in. There's some of the spindly ones, they're just too low and we don't get them, but those ones fall down, they reseed and that's fine. I was going to plant the cover crop anyway, and we leave some of that out there in the field and we just keep the cutter bar a little bit high, go over the beans. And like I said, we've been doing it for a number of years and our typical yield loss on the soybeans is only three quarters of a bushel yield loss.

Wow, that's amazing.

Yeah, it's been awesome. And really just maximizing that principle of diversity and adding a new revenue stream and directly being able to monetize our cover crops.

Well, that's great. We did a couple stories on it in the past and you said you're doing plots on the farm. I'm going to joke a little here. You said you had 150 variables, it's a whole farm in the plots.

Oh, yeah. Yeah, this year we've kind of toned it down a little bit and my company, Continuum Ag has been really pushing on a lot of on-farm research of different biological products. Those different variables would include we variable rate seed, we have different hybrids, we have different varieties, we have different fertilizer rates for all variable rates. We're trying different biologicals, we're trying different foliar products. Just tons and tons of stuff throughout our farm. And we've toned it down a little bit this year. We only have probably in the 50 to 75 different variables this year. Not 150 or 200 like in the past. We're getting our system kind of dialed in for what works for us and just leaning into that more. Dad is very busy too with some of the boards and things that he's on. Continuum Ag is just going bonkers as well. So that's keeping me really busy and we found some things that we really like that are working for us and working for our customers and just trying to ramp those items up.

What's the hottest biological area that looks great to you?

I mean, I really like a lot of these biological products. We've tested a bunch of them. Every farmer, I think there's not a silver plate for any of these different biological stuff. You've got to try them yourself. But I mean, it's going to depend on your soil type, your climate regions, how you're going to apply it, what's your current biological system. You got to play with it on your own. The ones that I've had good success with are products from Dakota Bio and from Ag Biologic. I like products from other companies as well. I think pretty much all these biological products can work. They just don't always work.

Yeah, right.

So you got to [inaudible 00:25:08] now, and even if they don't work on your operation one time, doesn't mean that they don't work. It's just in that year's weather and that condition, it didn't work and that's fine. Maybe don't try it on the whole farm next year, but try another 10 acre plot, experiment with this stuff and scale up the products that you get consistent results with or that maybe your neighbors or your buddies are getting consistent results with. It's just about trying, which I know it's slow and I wish it wasn't that way. I wish there was better silver bullets, but I just am not seeing that being the case.

Yeah. Well, you talked a little about the weather affecting the biologicals and you've probably got a few clients this year, maybe not, but somebody said, "Hey, you talked me in the using cover crops and we didn't get any rain and it's a disaster and I'm not so sure I'm not so sure I'm ever going to try these again." What do you say?

Yeah, it's tough is what we got to say. I'm in the same condition. I've got some of my corn that doesn't look amazing. Both of our stuff looks pretty darn good and it's going to compete really well with... We're always comparing how we trend above county average. So we just want to maintain or grow our spread beyond county average. It's how we've been monitoring. But I mean, it's not going to be perfect every year. We're in an extreme situation on our farm since the first week of May. Yeah, we've had 0.5 inches of rain. That is tough. We've built some amazing soil health. We've built some awesome resiliency into our system, but we're not there yet. I mean, we're not ready for this extreme, and we're 10 years into cover crops and more than 40 years into No-T`ill, and we're still not fully there now.

We're not going to have an insurance claim. We're still going to be profitable. We're not going to pose a liability on the taxpayer, which I think... I'm saying that because it's just really empowering. I don't know. It just makes you feel better that you're more in control. We feel like we're more in control. We feel like we're more resilient and prepared for any scenario, and this year it's tough and next year it's going to be different. And we're going to live to fight another year and our systems in a good resilient spot. And luckily, our cost of production is incredibly low and therefore our risk is incredibly low.

But I mean, I've got some of my farmers that we've got a disaster and I think what we've got to continue to make sure that we do to avoid issues in the future is I like keeping to the light rate to cover crop. Planting green is still what I recommend. And then we just need to be maybe not quite as aggressive on waiting a long time to terminate if we do think it's going to be dry or if we are a little scared or if we don't have that resiliency yet. We've just got to factor some of that in, maybe swallow some of our pride when we're in the heat of it, which is talking out loud for myself here. I want to go full bore. I want to go full speed ahead, but also we have to keep in mind we're playing the long-term game here and we need to make sure that we keep profitable in the short term and still maintain those long-term outcomes.

Well, and it's like driving down the road. I mean you know that things are tough for you. You drive down the road and you see other farmers that aren't doing what you're doing and they're worse off this year.

Yeah. And it's all over the place. I mean, some guys crop looks really good. The rains have just been so incredibly spotty that it's just really variable. And I haven't been out and about quite as much this year as what I have over the last couple years. My wife and I had a son a week and a half ago, so-

Oh, congratulations.

... I've been mostly hanging out close... thank you. Yeah, I've been mostly hanging out closer to home, so I haven't got quite as much crop scouting in or 55 mile an hour crop scouting. Haven't done as much here this year, but I know this drought situation is pretty widespread and luckily our commodity prices are still good and we need to, like I said, continue to be resilient.

Right. Let's switch topics here a little. You recently came out with some new ideas on carbon and carbon sequestration. Explain those to our listeners.

Yeah, Frank, I was hoping, if you were going to bring it up. I was going to bring it up because-

All right.

... this is the biggest thing. I'm just so convinced and I'm so excited to chat. Okay, so we've been talking carbon, carbon, carbon for the last multiple years. It's all been about carbon and these carbon offset programs. Forget about all that. For listeners for you, don't put these two things in the same bucket. Those are carbon offset programs plan into voluntary carbon markets where we're trying to create a carbon credit as a new commodity on its own and sell it for 30, 40 bucks a time. Where things are shifting is towards carbon intensity, which is essentially the carbon footprint of the bushel or of your actual production. Basically your farm's carbon footprint and your bushels coming off your farm or the milk or the meat or whatever is coming off, it all has a carbon footprint.

That carbon footprint is part of the next guy's carbon footprint and more specifically it's part of their scope three carbon footprint. So a company, let's think about ethanol here for a second because that's the big driver of this carbon intensity and the 45Z tax credit, which is what I'm inferring here. A ethanol company has a scope one carbon footprint, which is their impact at their facility, their direct emissions. They have a scope two carbon footprint, which is their indirect emissions, more specifically usually the energy usage, whether that be fossil fuel energy or renewable energy. Then their scope three carbon footprint is their supply chain, especially the grain that's going into that facility of the corn. A ethanol plant has a average carbon intensity score across the country. There's a variety of metrics, but the one that I use is ethanol has a carbon intensity of 56, and the units on that are 56 grams of GHG equivalent per megajoule of energy.

This is what the units Department of Energy utilizes. Gasoline has a carbon intensity score of around 96, ethanol is 56. And that's grams of GHG equivalents or CO2 equivalents rather than tons like the offset market. So ethanol is 56, 29 of those points come from the corn on average 29. And we have the ability to document a farm's carbon intensity score. We built that into our software. We utilize a tool called GREET, which was developed by the US Department of Energy, but this GREET tool can get you the score and like I said, we've automated the process, corn coming off of our farm, we're getting as low as of a score. It's all field by field, but we're all the way down to, in some cases, a score of negative 10.

Wow.

So instead of our corn having a footprint of 29, we're negative 10. So when that ethanol plant buys our corn to produce ethanol, we are selling them carbon negative corn. That when it gets to them, it is already offsetting their carbon footprint and now they are producing very low 45Z tax credit, gives them a tax credit opportunity, which has a maximum value of two pennies per CI point reduction per gallon. Now the stipulation is they have to get below a score of 50. So if a plant is at 56 today, they get nothing until they get below 50. That's why they got to get it going now. That's why there's so many pilot projects going on. Farmers are being asked to share data. The pipeline projects here in Iowa are really being pushed and talked about a lot. It's because these groups need to get their CI below 50. A way to do that is by buying corn that instead of contributing 29 points to your carbon intensity score, it contributes closer to zero or in the case of our corn even negative.

And that has significant dollar value opportunity for these ethanol plants. Now the caveat here is this is one of the biggest opportunities in ag, in conservation ag, 40% of corn in this country goes into ethanol, 40%. So that's why the legislature targeted this with the 45Z credit. With the inflation reduction act, it's the big behemoth here, and these ethanol companies can earn all the way up to a dollar per gallon, is the maximum amount. Now this is tax credit, so it's not necessarily cash value of a dollar a gallon and the cash value is still what's yet to be known. However, there is a great opportunity here for us in the ag sector, the farmers, the folks with data, the agronomists, the team around that farmer. We need to be working with our buddies at the biofuel facility saying, "Hey, let's go after these credits together. Let's maximize this opportunity and make sure that we have equitable share of those dollars throughout the ag supply chain." Where the farmers that are contributing are getting paid their fair share.

Yeah, this is fascinating. So the ethanol plant, instead of just buying run of mill corn, what kind of premium should they pay for your minus 10 or whatever?

I'm not sure yet, okay.

All right.

I'm not sure yet, and that's why I wish I had a better answer. And I would love anybody that wants to talk about it, I would love to talk about it. I've got some videos on the continue my YouTube page about it. This is my biggest priority right now is figuring out the answer to your question. And the problem is we don't know the answer yet. And the reason we don't know the answer yet is the IRS has to take the 45Z tax code, the law and actually put it into play. They have to put it into play. And in the law it states that they have to have it put into play no later than December 31st, 2024, basically meaning 2025. So 2025, this starts, but biofuel produced in 2025 is being produced with crop grown in 2024, which the carbon intensity of that crop is influenced by the practices that were going to be doing this fall 2023.

The big influencers to your carbon intensity include cover crop, reduced tillage or no-till your fertilizer usage like your nitrogen, the yield, your diesel fuel and energy usage. It's all these things that you've been talking about within your publications for a long, long time. It's these same principles. It's these same principles that help us build soil health. They help to lower our carbon footprint as well, and we need to document that as our carbon intensity score. The opportunity for farmers today is make sure that you know what your score is because you don't want a score of 29. That's the default. And if you don't have the data and if you don't have your ducks in a row, you're the default and then you get nothing. You need to know what is your score, and you need to have an understanding of how to have a optimum score so that you can get an optimum dollar amount.

And because the better your score, the more you help out the biofuel company and the more credits they can earn and the more they have to pass along to you. So what I'm hoping for here is that there will be direct like premium opportunities where when I go and sell corn or when a farmer goes and sells their corn, they say, "Here's my 50,000 bushels of corn that I have to market." And it's got a weighted average carbon intensity score of 10. Therefore instead of being 29, I'm now at 10. And the delta between 29 and 10 creates advantage that the ethanol company can monetize, and the farmer needs to get a significant cut of that. And the ethanol company's going to retain a significant cut. They're going to make great money on this as well.

How does this farmer know when he delivered 50,000 bushels? And the processor says, "How did you measure this?"

So it's got to be third party verified, so that's where we help. So we are working through that process right now. So there's a couple different groups that are starting to do this. What you need to do is... How I start it and what we do on TopSoil, and there's some free tools on TopSoil that people could play around with as well where basically you're able to plug in your management practices or you can utilize some of our defaults that we've already got in there for free. But we ask, "What crops do you grow and what are your basic management practices about those crops? What is your cover crop? What is your tillage? What is your yield? What is your fertilizer? What's your pesticide usage?" It takes about 10 minutes, 10 minutes worth of a survey of data or even less than that in a lot of cases. It's just what kind of practices do you do as a default? And then we run your score based on that. Now, in order to monetize, you have to document every single field and all the practices that happen on every field.

And we help our customers do that in our software. And we work with a third party verifier who gives a stamp of approval saying, "Yes, I verified that this is accurate." We have to prove it with [inaudible 00:39:21] tiles, receipts, all that good stuff. A farmer's got to sign off saying, "I verified this is legit." Just like when you're sealing green or when you're reporting, doing proper reporting at the FSA office, it's the same type of process. You're verifying that this is legit. The third party verifier provides a stamp of approval and that is then taken to the actual ethanol off taker. Now at the ethanol facility, they've got a major verification and audit process because they have to report to the IRS. So on the farmer side, yeah it's a lot of data, it's a lot of management. But we're also talking here the ability to create hundreds of dollars per acre worth of value. Back to my score, that negative 10, that is worth over $500 an acre.

Wow.

Growing 240 bushel corn with the score of negative 10. Okay, now that's the total pie. I'm not going to get $500 an acre. The ethanol guy's not going to get $500 an acre, and if we don't play ball, neither one of us are going to get anything. Okay, we've got to play ball. We've got to be able to have some equitable share and make sure that farmers are compensated correctly. That's my major worry in this is I don't want farmers to get taken for a ride where they only get five or 10 cents a bushel because they're creating significant value here. And the biofuel companies could make a lot of money not just in these tax credits, but also in the low carbon fuel markets and in other premium driven markets. There is significant opportunity here, and I just want to make sure that farmers and everybody involved understands how big of a deal this is. Because it's billions and billions of dollars of opportunity here and I think is a game changer in how it's going to influence ag outside of renewable fuels.

So when you're talking 500 bucks per acre and you got 250 bushel per acre, you're talking two bucks a bushel regardless of how it gets split. Yeah, amazing.

$2, it's amazing. It just blows my mind Frank. As I've dug into this, that's why that's I'm so hot on it, is I don't know yet what my cut is going to be. I don't think I should get 10 cents. I don't think I'm going to get a dollar 90, but it's somewhere in the middle. It's somewhere in the middle. And I hope that this is going to provide some good free market opportunity for these companies that are saying they want low carbon and they want sustainability. And now here's a scoring mechanism and a business model where you can get it done. What this is going to do is most of my corn today goes to feed pigs, but those pigs don't have low carbon tax credits that they can utilize to compensate purchasing low carbon grain. What's the pig guy going to do?

Or the beef guy or any other buyer, any other processor, they're going to have to figure out how to compete if they want to buy the low carbon intensity grain. Or they just buy grain that doesn't necessarily have the score or the farmer is not aware of these programs or whatever, that's fine. But what I think they're going to really need to do is they've got corporate sustainability goals that they need to meet as well. Whether it be that actual hog producer or the packer, they sure as heck have carbon and sustainability goals.

Absolutely.

And the financial institutions absolutely have corporate sustainability goals. And what I'm so sold on here is 45Z will go away. It's a federal tax credit, like they ebb and flow a swipe of a pen and it's gone. However, the concept behind it of farmers, we have got to document the things that we're doing, turn that into environmental outcomes, whether it be carbon footprint, a water quality, a biodiversity, it's going to be a bunch of different things, but it's all the same data. So collect the data, turn that into these environmental scores that you can utilize to tell your story. And when you sell your product, whether it be grain or otherwise, when you sell your product, the company that's buying your product is buying the physical product and the data.

And you've got some real opportunity to make sure that you know what the data is worth and you get your equitable share because they're marketing with your data, they're meeting their corporate sustainability goals, maybe they're getting a tax credit like in this case. We're creating value out of this story. And I think it's just such an amazing opportunity for agriculturalists to show the work that is already happening. But then it also incentivizes going further and all of us can go further. Whether you've already got a carbon negative score like ours or whether you maybe have a score that's not that great, you can choose the practices that you want to adopt. You can choose what type of score you want to garner based on what works well for your management, your soils and your operation.

Yeah, that's great. Seems like a great opportunity. Yeah, I want to wind this up, but I got another key question for you. Cover crops, we talk about wanting to double or triple or more the acreage of cover crops. Something like the federal government says 8% of farmers nationwide are using cover crops, and our surveys show that 83% of no tillers are covered are using cover crops. So is my premise right or wrong that we won't be able to expand crops unless we get more no-till?

Well, I think they go hand in hand.

Exactly.

Now my family's been using no-till since 1978. We didn't start really getting into cover cropping until 2016, 2017. It's amazing what the two practices do together. No-till is great. We've got to continue to do no-till or at least strip till are very minimum. We've got to reduce tillage, that's the principle. Reduce tillage, maintain the armor, get the living roots. But I just think so many farmers, I worry that they're going to be chasing these carrots or participating in some of these government programs or there's sustainability initiatives or the climate smart commodity programs or whatever. There's a lot of dollars out there now, and if you just go from a conventional tiled system and just try to no-till corn into it in year one, you have a very good chance you're going to have a disaster. You don't have structure, you don't have good biology where it needs to be and your systems in a degraded state. The best opportunity to really fix it and not just necessarily fix it, but transition it to a different system. The best way to transition it is to stack these practices together.

Exactly right.

And to also, I mean, if you're reducing the tillage and reducing your cost from that, that helps to be able to offset some of the additional cost, which can come from buying a cover crop seed and applying cover crops. So I like to look at it very holistic to make sure that we're maintaining continual profitability as we transition to a more soil health driven system.

Hey, this has been fabulous. Thank you very much for doing this. Are you driving while you're talking?

I am. I am, but I'm paying good attention. I am back in Washington County, Iowa, where we are covered in a haze of smoke from our buddies up in Canada. And hopefully that's helping to not take even more moisture out of my soil here, but it's not great conditions for our crops. So we got to be looking very holistically and from a global perspective here too, when it does come to sustainability, resilience for the long haul of our operations. But I mean, in conclusion, it's all these things that you've been preaching this stuff for such a long time. It's really the right path here. That's my takeaway on this is everyone listening, if you've been at this for 50 years like my family, like Frank, the work you've been doing, you've been at this for forever. Hey, guess what? It's really coming to fruition.

People are catching on. The technology is really there to make this work. If you tried no-till or cover crops in the past and had a bad experience, get the right advice, get good advice, get good help, get the right technology and resources because it absolutely can work. And we're going to need to continue to go more in this route. You can absolutely make more money doing these things. You're going to have opportunity from outside influence to drive those dollars to your farm. Whether it be the tax credits like I was talking or other programs like there is [inaudible 00:48:30] dollars out there and we need to make sure that we have a balance here of conservation plus yield. And overall it's got to be profitable because we're running businesses and I really think we can do that.

That's it for this episode of the No-Till Farmer Influencers & Innovators Podcast. Thanks to Mitchell Hora and Frank Lessiter for that great conversation. And thanks to our sponsor, Martin-Till, for helping to make this podcast possible. A transcript of this episode and our archive of previous podcast episodes are both available at no-tillfarmer.com. For our entire staff here at No-Till Farmer, I'm Mackane Vogel, thanks for listening, keep on no-tilling and have a great day.