Inside Cargill's experiment to pay farmers for carbon sequestration

Over the past year, agricultural commodities giant Cargill stepped up its global sustainability initiatives substantially, with a series of programs created to support its science-based target of reducing supply chain emissions by 30 per cent by 2030. 

Like many other food companies, it's dedicating resources to promoting regenerative agricultural practices among the farmers and seeking ways that farms can profit from their efforts to sequester carbon dioxide.

That's the backstory behind its relationship with the Soil & Water Outcomes Fund, a program intended to support farmers who design and implement initiatives aimed at improving water quality and mitigating flooding and runoff, increasing carbon sequestration, reducing emissions from on-farm operations, and creating or protecting habitat. These include practices such as planting cover crops, reducing tillage and preserving edge-of-field wilderness buffers or wetland.

The effort, which includes close to 10,000 acres in the pilot phase this year across 15 farms in Iowa, is administered by the Iowa Soybean Association, promoting the idea with members and advising them on best practices; and investment firm Quantified Ventures, helping with cost-benefit analyses and other operational aspects of the effort, including fundraising. The goal is to include up to 100,000 acres in Iowa next year and expand into at least two more states, according to the companies managing the program.

Progress against a farm's individual carbon removal or water stewardship efforts will be measured using COMET-FARM, a carbon reporting and accounting system developed by the United States Department of Agriculture's Natural Resources Conservation Division and Colorado State University.

"[Farmers] come to us with a program. We analyse and pay them on a tiered approach depending on what they do," said Adam Kiel, director of conservation and external programs at Iowa Soybean. Farmers will be paid between $30 and $45 per acre this season, depending on the outcomes. The metrics for success are being defined by the fund in collaboration with local municipalities that feel the downstream effects of agricultural activities within their watersheds.

To be clear, the program isn't limited to soybean operations but it does require that the approaches being adopted are additive or new - farmers won't be rewarded for regenerative practices that were already in place. The program started specifically to address water quality measures but evolved to embrace the broader carbon sequestration mandate.    

Cargill's role is twofold: Not only is it encouraging farmers to participate as way of helping address its Scope 3 emissions, it also will buy carbon credits through the fund on an annual basis. "The innovative nature of this program was compelling," said Ryan Sirolli, director of row crop sustainability at Cargill.

While Cargill is the only named company participating in the new fund, Mark Lambert, director of Quantified Ventures, said it is in discussion with other large companies. "We want a diversity of customers," he said. "We see a variety of opportunities to support sustainability goals." What does success look like? A program that touches "millions" of acres, he said.

Given the disruptive effects of the COVID-19 pandemic across the global food system, it's more important than ever to help farmers reap the financial benefits of investing in a more sustainable approach, Sirolli said. "Agriculture is getting absolutely hammered right now," he said.

Aside from this specific effort, Cargill is a founding member of the Ecosystem Services Market Consortium, which seeks to create a national marketplace by 2020. "We would love to see customers, competitors, others saying, ‘I would love to be in this space,'" Sirolli said.

This isn't the only carbon marketplace scheme in the works - and the model is raising questions about how actions are measured and verified. Startup Indigo Ag, backed by companies including recent investor FedEx, for example, is planning to pay farmers based on how much carbon they have stored in their soil - it collects soil samples to that end. Software company Nori, another rising player, is using blockchain to manage the transactions.

An important actor

Cargill's influence on transforming to a more sustainable food system cannot be underestimated - it employs 160,000 people in 70 countries.

The footprint of its sustainability activities, detailed in its latest sustainability report published in early June, is extensive. Among some notable highlights of its work:

• Using digital technologies and barcodes, the company can trace 50 per cent of its "sustainable cocoa beans" supply from farm to factory; it's also using mapping services, which will be important for identifying regions where forests are at risk.
• The company has reduced its "aggregated gross CO2 reduction" related to its maritime vessels - it owns an ocean fleet of over 600 vessels - by 800,000 metric tons. It's also working closely with the Global Maritime Forum. 
• It's "on track" to eliminate deforestation related to commercial palm concessions in its "third-party supply chain" by the end of 2020. 

Cargill also has completed a Brazilian supply chain mapping exercise related to building "deforestation-free" supply chains for soybeans.

Earlier this year at GreenBiz 20, Cargill CSO Ruth Kimmelshue acknowledged that progress to protect forests has been tougher within the soy supply chain than it has been for cocoa or palm oil. The company's overall pledge has been to halve deforestation within its supply chains by the end of 2020 and to eliminate it entirely by 2030.

This article first appeared at GreenBiz.com

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• Topics
• Supply chain
• Offsets
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• agriculture