Farming is a unique business in which we buy all our inputs at retail and market our production at wholesale. Unlike most of the other business world, we as farmers have not differentiated our products by adding value. Instead, our industry has been content with selling a homogeneous product that cannot be distinguished from one farm to another. With increased input costs, and higher land values, many of us are seeing our margins reduced.
As progressive producers, we must remind ourselves that we are not competing in the same economic environment that we did in the 1970’s. I am guilty of this mindset as well. This year, with the lack of moisture I questioned my selection of hybrids, and considered what things I could have done differently to increase yields on my operation. Yield is and always will be important to farming, but what if I could get paid more for the same amount of grain by keeping track of a few simple records that we already have?
This fall I had the opportunity to meet and work with a company called Continuum Ag. This company, on November 20th, launched a billion-bushel challenge to farmers across the nation. This entails getting farmers to establish a carbon score on their farm that can be used to add value to grain going into the renewable fuels industry.
We have all heard the hype and became immune to companies wanting to buy carbon credits from our operations. This approach has never been attractive. The Continuum Ag program is much different.
It was best described to me as a 3-way partnership between producers, grain buyers and the company that does the carbon scoring. In this partnership each of the three will have economic gain due to the carbon value that is added to the grain. This money will be made available by the federal government though the Inflation Reduction Act section 45Z on the crops that we will be planting this spring.
To make this new program work it will require all three parties mentioned to join for a common goal of certifying carbon scores. I have been through the scoring process and have agreed to use my farm as an example for you. This will allow you to see if this is something that could work on your farm. As you will see in the article below, written by Continuum Ag, these benefits could be big. Will it work? I hope so because the gains are substantial, and the company is very professional.
The following was written by Continuum Ag.
LOW CI GRAIN
Carbon Intensity (CI) is the total amount of energy that goes into producing a bushel of corn. The CI score itself is generated using the federally approved Department of Energy’s (DOE) GREET model. Today, the DOE standard score for CORN is 29.1 . . . the lower that score is, the more attractive it is for end users. Thus, allowing farmers access to a premium for their grain.
GIBSON FAMILY FARM
Dean Gibson’s personal farm preliminary CI score is -30.1. This score represents 59 points below the Department of Energy’s 29.1 standard CI score. Gibson’s farming and land management practices are a major factor in lowering his CI score and unlocking his potential payments. Premium payments for lower carbon grains encourages growers to implement practices that lower carbon emissions and ultimately result in lowering their CI score.
CHANGING THE GAME = LOW SCORE WINS
The Inflation Reduction Act, Section 45z now assigns a direct value to a CI Score. This transparency allows growers to securely monetize their farm data by attaching its value to their farm’s production.
Section 45Z allows sizable tax credits to ethanol plants that consume low CI grains. That tax credit value to an ethanol plant is estimated to be $.054 cents per CI point below the industry estimated standard CI Score of 29.1.
The IRS is still finalizing details but it is anticipated that the majority of these premiums will be shared with producers. Sustainably sourced, “low CI grain” puts farmers in control and keeps an equitable balance of reward for carrying the risk.
HOW CAN YOU PARTICIPATE
Ethanol facilities stand to profit for each sustainable farming practice that the grower incorporates, measures, and verifies within their production. Growers carry a bulk of the risk, but could be rewarded with an estimated 50% of that tax credit in the form of a premium payment. Sustainability-focused producers are providing substantial new value to ethanol plants by providing them with verifiable low CI grain. For bushels that are carbon neutral, or CI Score 0.0, it is worth $1.57/bu in the form of a tax credit to the ethanol buyer
Example: 45Z Tax credit = (29.1 – 0.0) X $.054 = $1.57/bu.
WHY CONTINUUM AG?
Continuum Ag is a soil health data intelligence company using their proprietary TopSoil Tool to enable farmers to profit from improving their soil health. Our CI Score & CI Certificate products from Topsoil are made for farmers, from farmers. This certification helps farmers who want to earn a premium for a low carbon intensity (CI) grain but do not know how to participate or get paid.
Continuum provides the easy button to aggregate this data to help farmers earn a premium on their corn and soybean crop. Farmers still own their data we simply provide the method for farmers to get paid.
After you unlock your CI Score with Continuum Ag, you can use their CI CI Calculator tool to see how adjusting your farming practices could help you improve your score.
Continuum’s team will work with you to improve your CI Scores and verify your acres so you can start unlocking the extra value of your grain.
Creating New Markets
Continuum Ag is working collaboratively with producers and industry personnel across the country to develop and open new markets for farmers to market their grain accordingly. We have partnered with cattle producers in Nebraska, and poultry producers in Maryland to showcase their livestock as being fed by Low CI grain. Rewarding them by differentiating their products and fetching a premium at the store. We need your help as producers to create and grow more opportunities for farmers to market their grain and products. A United Front for Agriculture.