In Purdue University's January 2024 Ag Economy Barometer Report, 8% of respondents said they have discussed carbon capture and carbon contracts with a company.
While Purdue did not state specific reasons behind the numbers, cost is most likely the biggest reason for the single-digit percentage of producers interested in carbon. In a McKinsey survey from last year, half of farmers surveyed cited “low ROI” as the top reason for not participating in carbon programs. Agricultural carbon credits account for just over 1% of total carbon credits issued.
The majority of producers to Purdue’s Jan. 2024 Barometer said they were offered a payment rate for carbon of “less than $10 per metric ton,” while just 12% were offered a rate of $30 per metric ton.
Farmers have stated in the past that payments don’t justify the extra expense of compliance and other tasks associated with carbon programs. And a 2023 report from Nature on farmer sentiment noted that, “The most consistent complaint that participating farmers raised about carbon markets was that the payment was simply too low” to “incentivize new activities that a farmer was otherwise not inclined to adopt.”
Purdue notes that the 8% of farmers engaging in carbon talks is in keeping with figures from the last few years. (The Barometer started asking carbon-related questions in 2021.)
“Reviewing nine barometer surveys conducted in 2021, 2022 and 2023 that included this question, the percentage of producers who discussed carbon contracts with a company ranged from a low of 2.6% to a high of 9%, suggesting relatively consistent interest among producers in this regard.”
Key Takeaways:
- Nearly 10% of farm producers have engaged in talks about carbon capture, says the latest Purdue University/CME Group Ag Economy Barometer report.
- The percentage of producers discussing carbon contracts in 2024 is consistent with survey responses from previous years.
- Low adoption is likely due to the economic and logistical burdens placed on farmers in order to participate in carbon sequestration programs.
- The Ag Economy Barometer calculates data from US agricultural producers that participate in a survey each month.
