Can You Make Money Selling Carbon Credits?
31 May 2247 min 57 sec

We’ve been hearing about the financial promise of carbon markets in production Agriculture for a couple years. What’s the deal? What is required of you and your farm to get paid for carbon? What changes to your practices will be required? How long is the contract and who exactly pays the carbon bill?  How much carbon are you sequestering? And most importantly, is the financial incentive enough to justify the work of signing up?  Those questions and more are answered by Mariah Murphy with Truterra.  Tune in to find out if carbon can be the next income diversification tool on your farm.  

00:01 Welcome to extreme AGS cutting the curved podcast where you get a guaranteed return on investment of your time as we 00:10 cut your learning curve with the information. You can apply to your farming operation immediately extreme AG, 00:16 we've already made the mistakes so you don't have to managing. Your Farm's Water Resources is a critical component to a successful 00:25 and sustainable farming operation Advanced Drainage Systems helps Farmers, just like you increase their yields up to 30% with their technologically advanced 00:35 Water Management products visit ads to see how they can keep your business flowing. 00:43 Now, here's your host Damien Mason well greens and welcome to another fantastic episode of Extreme Ice cutting the curve got 00:52 a very informative program for you today. All right. Listen, you're a farm person. You're a farm operator. You've been around this your whole life starting about a 01:01 year or two three years ago. You start hearing about carbon companies that have sort of been around for a while a couple of which we 01:08 won't name, but I've wondered forever what they do. They send me cards. They solicit me on social media 01:14 via ads and I'm not sure what they do how they do it why they want me you're probably the same way. You're a farm person and you're saying 01:23 wait a minute. I've got all these Acres. I hear that people are getting some sort of payments for sequestering carbon. 01:29 How do I do that? How do the process work who pays me? How much will they pay me? Do I have to change my methods? My practices is this 01:38 a government program those questions and more are going to be answered by Are friends with true Terra here today on Extreme 01:46 as kind of curve carbon markers demystified Mariah Murphy is a member owner engagement representative with trutera. Maria talked 01:55 to me. Let's start with the very beginning who true Tara and what are you doing? So true Terra is the sustainability 02:04 arm of Land O'Lakes. Okay, and what we do is we actually bridge the gap between all of our other sister business units. So you've heard of Winfield United you've 02:13 heard of Purina you've heard of Land O'Lakes dairy foods and food service. And so what we really do is we bridge 02:19 the gap on sustainability between all of those all of those business units. Okay, and we not only bridge the gap 02:25 between those business students, but we're also working with farmers in ag retailers and we are bringing them sustainability options 02:31 or an opportunity for them to provide a return on investment for all their stewardship practices things like no till things 02:40 like cover crop Edition. We are kind of your Nonstop shop for all things regenerative Ag and sustainability. Strattera being an offshore of land. 02:50 O' Lakes still a Cooperative right out of Minneapolis. Yeah. Okay, and I was eight years 02:56 old my first job in the Dairy Farmers mixing up the milk replacer and feeding the dairy cows bottle 03:02 feeding the dairy calves. It was Land O'Lakes branded milk replacer. I've been around Land O'Lakes agricultural products 03:08 since at least age eight. They've been a client of mine and I know that then there's the wind field they've been a client of mine chemistry proprietary some 03:17 generics, whatever they're in distribution, right? Yeah. How what the hell are they doing in carbon? I thought this is for these green pieces 03:26 and the Audubon Society. What are you talking about, man? Yeah, we get that question a lot. Right? Why is Land 03:33 O Lakes investing sustainability? Why are they you know investing in something that clearly you know up to this point is is not something that they would normally invest in 03:42 and I would say that the answer is twofold. Number one. We are currently City all Land O'Lakes products go across 90% of 03:52 grocery store shelves. Okay, that's a really big deal. That means that we have the connectivity truly from a farmer 03:58 to Fork business. We truly are able to make that full life cycle analysis that full chain from please see to fork and that's a really big deal 04:07 companies that are creating science-based Target initiatives. Okay. So those organizations that are making climate based goals. They want 04:16 to work with an organization that is just likely in the lakes that has that ability to connect basically farmer to fork and so I would say that's number one number two 04:25 is that we believe that sustainable practices. We believe that the car. Market will provide an additional Revenue stream not 04:33 only to our Farmers but also our AG retailers and most importantly our role economies. Okay. And so all of these organizations are going to be investing in 04:42 science-based Target initiatives in investing in climate smart Commodities. And so we definitely need to be a key player when it comes to all 04:51 of those items. I get it that obviously. Your whole point is you've got everything from the seed to the chem to the feed in all 05:02 the way up to the stuff at the grocery store. And so this is this is and also it's it's everything's everything's 05:08 right now about environmentalism and what we can do to change the footpreneur culture Etc. How does it 05:14 work? I'm a farm person. I'm out here in Indiana. Let's just say I'm farming a couple thousand acres. Yeah, I buy some of your stuff, you know, 05:24 I'm affiliated with the co-op that handles your job here. Um, now what? Yeah, so 05:30 the first thing if you're if you're truly looking at Carbon, okay, if you want to get enrolled into a carbon Market, we have a survey that we 05:39 will that's on our our landing page of our website. So to chair there's a carbon survey. Basically 05:45 you will take a 30 second survey. You will answer it's literally five or six questions and they will say to you 05:53 Have you done X Y and Z based on your answers. If you have made a practice change within the last within the last three years, you're eligible. Okay, 06:02 and what I mean by that is if you have Incorporated cover crops, if you have reduced till if you have went to no-till I go to your website true. 06:11 Tarot Tru t e r r No true Terra and then I complete the service and I'll 06:23 take me very long at all and the things you just said that we're asking where I are practices. Yeah. 06:31 Yep. So basically we're going to ask you very simple questions around your operation. Okay, and 06:37 what I mean by that is we're going to ask you when did you you know? Have you Incorporated cover crops and you're gonna answer 06:45 simply yes or no, we're gonna ask you, you know, when was the last time that you did tillage on on that field and you're 06:54 gonna be basically say less than five years ago more than five years ago. It's gonna ask you an array of questions. Okay, we're gonna ask 07:00 you if you're interested in soil Health assessments, we're gonna ask you if you have reduced your overall nutrient management. 07:06 There's just a series of I think it's literally six or seven questions. It does not take you more than 30 seconds. We call it the 30 second survey for 07:15 a reason. It's really truly so we can segment Growers that are eligible. It's no harm no foul for taking the survey because you're not 07:24 committing to anything sure I take the survey and do I need to be a customer already? Do I need to be buying your stuff already? No, 07:34 so that's the good thing about true Tara right is that we have the right to operate. We are working with Farmers that work with our AG retailers within our 07:42 Your network of 50 AG retailers that we that we support and then we are also working with Farmers that come to us kind of independently. Okay. And so that's 07:51 the joy of of working with the trutera network is that you can work with an AG retailer that's aligned with us, or you can just come to us kind of independently and you can do do your 08:00 own thing. And so we will take any farmer that wants to participate. Okay. Anybody can do this? I take the survey turns out 08:09 you like what I have to say that I say. Yeah. I'm reduced tillage. Um, I do I don't do any cover crops, 08:17 but I I'm considering doing them, but I want to do this then what happens? What if I haven't done any of those though, right? 08:28 What if I what if I say I still have a moldboard plow I go out there and I moldboard plow on the fall and then I disc get three times. Just beat the hell 08:37 out of the ground just like we did in 1975 and I I do everything the way Grandad did in 1975 because I actually enjoy 08:46 soil erosion of being old fashioned. Can you help me? I yeah, I mean we can help you. Can you get paid for carbon? No, not today, right? But can 08:56 we help you? Yes, absolutely. And that is that is more you know what we are interested in the long-term journey of ecosystem service markets 09:05 which is what falls into the carbon market, right? We want to be able to help all Farmers rather. They are just beginning 09:11 on this soil Health Journey or they are 10 steps down the road like one of your fellow extreme ad, you know groups are farmers Kelly, right? Like 09:20 we want to be able to help anyone and everyone along that journey. And so if you are still doing all of those conventional practices by 09:26 all means take the survey say that you're interested in the soil Health assessment. We can come pull some soil samples. We can create a soil Health assessment for 09:35 you and we can help you get to a point where eventually you can transacting carbon markets with us. You can transact in 09:41 another ecosystem market. So absolutely yes. All right. So regardless I feel this thing out and yeah. 09:50 kind of I remember once. I thought maybe I should be a member of a country club and okay. Yeah fill out the application and we'll get 10:01 back to you. Is that basically what we're doing here? Are we basically just saying? Oh, yeah, it's opening by but we're really screening. Like we're really 10:07 absolutely like saying. Oh, yeah, like we've ever have you in this group is that we're doing him, right? No, absolutely not. We we true a little bit snobby is 10:16 a little bit like kind of exclusionary. I mean, it's like a country club with a pool like we'll kind of like let anyone into the pool, I guess. Um, 10:25 no he handy Shack they let the kids the candies in for 15 minutes one time per summer and next thing, you know, there's Church floating around the pool. So I mean you do 10:34 that to be careful about who you let in right? I feel you. Yeah. So from that standpoint we will take anyone but we'll also 10:40 guide them along this journey, right? So we will we will help those that need to be helped along with journey, but in all seriousness. Yeah, so you will you'll take the survey we will 10:49 help you once you once you've taken the survey if you qualify for that three year look back. So if you've made a practice change in 2019-2020 or 10:59 2021 you're eligible. Okay, and what I mean by that is if you're through you're looking back and that's including this year or it's going back to 18 11:08 19 20. No, so it's 19 20 and 21 19 20 21. Okay. So that's one got it. Yeah, by the way dear listener. We are recording this 11:17 in late spring of 2022 just so you understand so through your look back does not include anything that's happened in this crop season at all. 11:26 It's going to be the prior one. So I just want to let the case somebody's listening to this two years from now. Okay. Yeah when you're listening in 2027 like yes now 11:35 and if they're still listening 27, I lost you know, what you go to True Terror and find out what the news thing is. Okay back three 11:44 years and then go ahead. Okay. So if you if you've made it through and you are you made it through 11:52 Look back a three years. Once you once you've done the survey you get the three year look back. Then you're going to go on what we call kind of the farmer Journey. Okay in the farmer journey is basically 12:01 then going to give you an email that says hey, you're a great candidate for our carbon program and then they're going to be directed to kind of our onboarding website. Okay. So 12:10 if you're onboarding into our website, you're gonna create an account. You're gonna enroll your fields. And then we're going to provide you an eligibility 12:20 determination based off of that. So maybe you have Seven Fields that qualify in one field. That doesn't and we're also 12:26 going to provide you a soft payment estimation. So you're going to know based on after this 12:32 submission of fields kind of what your payment estimation looks like. Hey friends, Damien Mason here host of extreme AG's 12:40 cutting the curve and I want to share something that I learned from extreme AG farmer and founder Kelly Garrett. He said to me once during recording feeding 12:49 a plate of food to an unhealthy person who can't eat it is a waste of nutrition. We know he's right now apply that analogy to 12:57 your crops if your plants are stressed and unable to take up nutrients applying more nutrients isn't the answer. That's why Kelly applies 13:06 agerson's accomplished Max in Furrow for stress mitigation to maximize his yields one healthier plants. Try accomplished Max 13:15 exclusively available from nutrient AG Solutions. So back up here, right Murphy remember owner engagement director truetera. Let's 13:29 just go ahead and use me as an example Field behind my house right here where I'm sitting today. It's in its fourth year of alfalfa there was tillage done 13:38 to establish the Alfalfa Alfalfa though is a perennial basically for five years. Anyway, no no tillage has been done. I would 13:50 think that's really good. You get a bunch of cuttings off at lots of carbon sequestration. Am I eligible because we're going to do in a three 13:56 year look back 21 20 and 19. It was in Alfalfa. We used wheat as it started to get it going. We haven't till since 2018 when 14:05 we got the whole thing established. Am I eligible for some sort of a carbon program through true Tara on alfalfakers? 14:12 Yes, so we can accept Alfalfa. So if you have if you have done the exact scenario that you just described right? So you said that you've had Alfalfa in 14:23 there for three years, right? Is that what you said? Okay, so and you stop tillage in 2018. I'm your first 14:29 year of no-till was 2019. Absolutely you would qualify on those Acres. So we will accept Alfalfa acres for the two year 14:38 and three year look back. Okay, now at the end of the five years usually you've got to do something maybe no till corn into 14:48 it, but the reestablish Alfalfa we generally do use tillage. So I'm just curious from a personal standpoint. 14:54 Since we do use tillage but we only do it usually about every five to six years to get alfalfa established. 15:00 Is that going to kick me out of the program to get Carbon money? It's not going to kick you out of the program now. Ideally 15:06 be a full premise of carbon is that you're actually going to be keeping that same practice in check for 15:15 what we call permanence, right? So you're gonna try and keep the carbon permanently stored. And in that instance, you wouldn't actually be keeping the carbon permanently stored. 15:24 Okay, because you would be doing some form of tillage. So from that standpoint if you were, you know, 15:30 if you were going to do that technically you would not be eligible. If you are going to do some form of tillage every four or five years. 15:39 So if we're on due tillage every four or five years it probably precludes you from participating in this. Large organizations that are buying carbon offsets. They want to 15:54 buy permanently stored carbon. Okay, and the only way that you can have permanently stored carbon is if you never till up the ground or release a carbon from from the 16:03 soil got it makes sense. What about then? The person that says hey, this is cool and I'm about minimum tillage but I I still have 16:12 to do some level of tillage because whatever problem I you know geographically soil type whatever if they do some form 16:22 of tillage, they're probably not going to be eligible that I'm here. You can do some like 16:28 feed bread prep. You can do some minimal tillage items and still qualify in the carbon Market. I think that is a myth that people always think like, 16:37 oh my gosh, you have to be only know so that's not actually accurate right away. You know, 16:43 what there we got it. That was the thing. I was looking for those looking for I want you to say that because I kind 16:49 of was wondering then Right that mean that you've got to be 100% no-till you're saying. Nope. Don't know don't have 16:56 to be generative don't have to okay. That's definitely a myth. Right and I think that's where a lot of farmers get all up in 17:05 arms about it. They feel like oh my gosh. I have to fit into this one box, but that's not the reality. We're you know, 17:11 you have many different options that you can fit into and as long as you are continuing to reduce the amount of tillage that you're doing. You're actually eligible for carbon Market. 17:21 What what is the investigation, you know, are you going to come out here? 17:30 Just like getting like FBI clearance. Are you gonna be like asking my grandmother if I maybe drink beer during prom when 17:39 I was underage is this what we're doing because you're doing a look back what happens you just look back and by 17:45 the way, so the way just you know, I'll go ahead admit it in case you find it out. Yes. I did drink beer Milwaukee and I was 8 years old. Wow 17:54 old Milwaukee you even went for like just like Really high quality. I know Milwaukee I'd say that that was kind of the beer of 18:03 choice when I was in high school. Sure. I feel you. I feel you, um, 599 up 599 or 12 was a case 18:09 at Walgreens. Go ahead. Walgreens even sounds like it's yeah, you look back history. And I mean 18:17 are we banging on the neighbor's doors and saying hey he says yeah. Well that field the lion just because you know, some Farmers might knock out the 18:26 other farmer. Yeah for sure. So verification is definitely part of the carbon Market we have what is called third party verification. So you 18:35 will see a lot of organizations that will say we will pay you upon full completion of verification 18:41 and day to collection what that means in the most simplest terms is basically they are going to have a third party. I'm gonna use the 18:50 term really Loosely like auditor or fact Checker right? It's going to basically maybe do farmer interviews. They are going to 18:59 just use some source of like India imagery. It's possible that you know, they may They may look at your data. They're not going to do that on every 19:09 single farmer, but they're going to do it on a subset of farmers to make sure that the information that they are being provided that 19:15 the information that we are providing is actually verified and basically fact checked 19:21 right? I mean they want to make sure that what they're buying is is what they're getting. I like to verify better than fact check because I think fact check 19:28 I think social media and it seems like a little it's a little dirty pool but or maybe has an agenda behind it. Let's talk about then. How much work am I 19:37 doing? I want to get this done. I like to make money. But if you give me a couple bucks an acre and it's gonna take 19:43 me, you know, two weeks of me digging up some sort of receipts to prove to you that I put the alfalf and then you're you know, fall of 18. It's gonna 19:52 get worse like man, this ain't worth it. What? Yeah, what do I gotta do after the initial filling out the survey? 19:59 Yeah, so the key thing is we talk about Baseline data. Okay, and so once you get into the program and you said hey, I have a three-year look back. You will have 20:08 to provide Baseline data. So in order for us to be able to say Hey, you know, we need to we need to see what your Fields looks like prior to the 20:17 practice change so prior to adding cover crops or moving to different tillage system. We actually need to be able to track that 20:23 and so we may be looking for three years of Baseline data. We may need four years of Baseline data. It just depends on kind of what your actual 20:32 full cropping rotation looks like. So be prepared number one to provide to provide Baseline data. Number two, you don't really 20:41 have to provide receipts. Okay. And so I think that's also a misnomer that people are like, oh my gosh, I need receipts for cover cropsy. Not 20:47 technically, right? What we are focused on is when did you plant the cover crop? When did you terminate the cover crop? How was it terminated? There's 34 to 20:56 35 specific data points that we're really looking. For in all of the data points are going to be the same no matter if you're working on Baseline data, 21:05 or if you're working on your current year your current year carbon data. So I think there's just a couple things there 21:11 that they're a little bit misnomers when it comes to the carbon Market. We are paying them basically on the total organic 21:17 carbon or the additional carbon that they have sequestered. Right? So once you make that practice change, I'm just gonna use no tell once you make a 21:26 practice change to know till you're gonna start sequestering carbon what we do at trutera that is different than other organizations 21:32 as we are actually going to pay you on that total organic carbon or that additional carbon store. Okay, some organizations, you will see 21:41 Damian that are just paying on practice. So they may pay you three dollars for cover crops. They may pay you six dollars for tillage and they're just gonna pay you on 21:50 practice what we do and what we believe is that farmers need to be paid and compensated for the actual carbon that they have been sequestering not just 21:59 Create on practice mostly because if you're sitting in Western, Iowa, and we pay you three dollars on cover crops or we pay you $6 on tillage. You're 22:08 quite in fact going to be leaving money on the table. Okay in Iowa last year, we found that farmers were sequestering anywhere between 22:17 0.7 and one ton per acre. And so if you think about that, we're paying 20 to 25 dollars a ton, right 22:26 you're gonna be getting anywhere between basically 18 and 25 dollars an acre on. your carbon 22:35 and so if you sign up with another program that is paying you $3 an acre, you're leaving a significant amount of money on the table. 22:44 So potentially 20 plus dollars per acre on a table. Okay. All right, we get going on this thing. But before 22:51 we go on it do I get do do you all for me the money do I do I submit you my paperwork under the idea that I 23:00 might get up to $25 per acre and then somebody says yeah. Well, you're gonna get 17. Okay. I might still take the deal. 23:08 Is this before I sign anything do I know what the numbers are not the price is totally. 23:15 Totally so we will send you that soft offer. Okay, and then you will know even before going into full data collection. So up to this point you will 23:24 have just submitted your Fields your crop rotations. Then you're gonna go into full data collection. Once you 23:30 go to full data collection. So sample, then you're gonna go into final Contracting phase and that's when you can finally decide. 23:36 Yes. I'm going to sign sign on the dotted line or not. Okay, and so you you have a long ways to go before you actually have to commit to something. Where's the 23:45 money come from? So great question somebody whoa, first comment I've gotten from my girl right? It's just 23:57 true Tara money where they just said, let's just give money to farm people we like this. Yeah, I think so. No, that's not it at all. So the 24:06 money really Tara is the Spy branch of Land O'Lakes and the because I maybe if I've maybe heard this from some Farm people when I'm out here bopping around 24:18 North America speaking engagements. Is it really just the Spy arm of Land O'Lakes saying we want to 24:24 find out what's happening on America's acres and once we get these people bought into our system for a few dollars 24:30 per acre, we will control them. I have maybe heard that in different circles in my travels. Are you gonna tell me the truth? Is this just that creativity which 24:40 by agency Moriah? Yeah that creativity is really that's great creativity. The money is actually coming from organizations. I 24:50 can tell you our first fire was Microsoft, right? So Microsoft invested heavily in our soil health initiative and our soil Health 24:59 carbon initiative. And so all of the money that we are giving to Farmers is actually coming from purchasers of these offsets. This must be limited then I 25:09 mean even at some point Microsoft runs out of money then what then who Yeah, so I use Microsoft as an example. Yeah, 25:17 right. There's a few companies are gonna do this. There's other companies ain't gonna give money up for carbon unless they're required to by 25:26 law, you know, so, where do you see this going? Where do I see what's going? Well, I think you just said unless they're required to by law. I think that's a really important 25:37 point. I I don't think it's going to be a bylaw scenario, but I do think that it's going to be a really 25:43 critical a really critical movement here even in the next year. So, I don't know if you saw that the SEC just announced a couple 25:52 weeks ago that they're going to be requiring anyone that falls within a certain bracket of 25:58 theirs that they will have to have some sort of ESG plan on file right in publicly state that ESG plan. 26:04 So I I don't anticipate that this is going to go away there is billions of dollars being invested into this Market every single day. The board 26:13 rooms are getting on enormous amount of pressure on the CEOs to actually create these science-based Target initiatives make this make these change 26:22 happen and not only that, you know, I think that consumers are also a little bit curious about how 26:31 know or how to how to make things more climate friendly or environmentally friendly 25 bucks. I'll just use the number 25 bucks 26:39 an acre. You used Western Iowa our own Kelly Garrett. One of the founders of extreme AG is doing carbon stuff 26:45 and we're going to get more of the extreme ad guys likely to do it but a couple of them are really 26:51 struggling to get to that whole note or reduce till thing either way use number 25 bucks an acre. 26:57 That sounds like a pretty good number, especially if it's not having to change many of my practices right now. 27:04 is there an inflation index because right now we're at allegedly eight and a half percent of transitory inflation, which 27:12 we heard that a year ago and transport supposed to mean temporary. I believe the inflation is here for a while. I believe these land prices are probably 27:18 going to Plateau at some point, but right now they're up about 30% year over year. My diesel is 27:26 up to almost six bucks a gallon was three bucks. You're two ago 25 bucks an acre sounds okay. Now three years from now 25 bucks 27:35 an acre. Don't buy much. Is there an inflationary index is there a cost of living adjustment is this got a rent bump on it the way if I had a 27:44 shopping center with a tenants tell me about the money. So I think that's a good point. Right? And I think that that's one of the questions that I 27:53 get asked the most is do I think that we're gonna see a hundred dollar carbon credit. I'll be honest with 27:59 you not for a bit. I don't think that right today. We're at 25 dollars a time. We are up five dollars a ton from our from our previous offer 28:08 that we just had in February. So things things are escalating, but I'll be honest with you the soil Health carbon Market is already the 28:17 most expensive carbon Market to invest in okay. We're talking about these 1100 companies that have science based Target initiatives soil Health carbon, 28:26 wait, wait, you said as we're talking about these limited we hadn't yet, but that's a big number. There are 1100 companies 28:32 right now that are investing money in the carbon thing. Yeah, that's not just carbon but also, you know climate in general. Okay, but there are doing things 28:42 like carbon offset paints. Yes, that's a good number right there because I'm sure that the listeners saying okay, you talked about Microsoft as 28:50 an example. How many companies are there 1100 so far and like you said seems to be societal investor shareholder pressure on more companies 28:59 to to be involved in this so 25 bucks will possibly go up based on market prices. But if I sign up for 25 bucks right now, is that what I'm 29:09 We'll be blocked in on no. So the way that our contract works is a year by year market price. So next year if the price goes to 50. 29:18 Then you as the farmer our grandfathered into our program. Obviously you get 25 the first year 50 the next year. Maybe it drops back to 35 you get 29:27 the market price. And how long we how long? yeah, so what we do is we actually have a year by year contract. Okay, so we have a yearly contract 29:38 but it has a five-year reporting tale. Okay. So what that means is if you sign up for with us for one year. 29:46 Then you're going to commit to a five-year reporting tale. Meaning that you're going to provide us the data and the insights that you have for that 29:55 field for the next five years, right? Because we're still going to continue to report for many years to an organization like Microsoft or 30:04 others around that permanence that we talked about earlier. Okay, so I sign up right now and we're doing this 30:11 through your look back and then I'm committed to True Terra and the buyer of the carbon. 30:17 My contracts with Tutera though is not with Microsoft or whatever but contracts with you, correct? 30:23 Right. Yeah, so the contract is is with trutera. We is trutera contract with the Farmers or contracts are you and it's and I'm locked in or I 30:32 we've done the look back how long again? How long is the look back? How long am I in bed? I'm all how long am I in bed 30:43 with true Terror? So it's a it's a one-year contract with the five-year reporting too. Okay? 30:49 So you're getting paid that one year with the option of optionality. So every year you can get market price. Okay, but then every year you have a five-year reporting to okay to 30:58 go back. Um, right no, no, the five-year reporting tale is basically going to has anyone ever talked to you about reporting Tails. No. 31:10 Okay, so the reporting deals is really important because that's about time we got to it. I'm sorry and out here 31:19 the questions and you you just pulled out reporting tail. Like I would know I'm sorry. I you know, I I live in this 31:28 every day, right? So I'm sorry. So we're here today and I'm trying to be the person asking the questions because this is new to me. So yes reporting tale. 31:37 So I knew the three year look back that made sense to me. And then yeah, the reporting sales is important because this 31:43 is what a lot of organizations like fail to like provide like they forget to mention this to a lot of farmers okay to disclose it and 31:52 then all you're kind of this happened to me once I was on one of those record deals you're too young to remember this, but you only paid like one penny for 32:01 your Pablo Cruise album, dear listening. Wow, if you're in your mid 50s, you probably know what Pablo Cruise is. You paid like one. 32:10 For a record deal on your Pablo Cruise album and you're like, that's great. I got this album. Now, I'm listening to like kind of disco Rock Pablo Cruise and then the 32:19 next week you get another album. You got pay full price next. It's like it's like a screw deal because you didn't 32:25 know the deal. Am I gonna walk sign up for something. I'm not sure of five-year reporting tale talk to me. So a five-year report. So what that 32:34 means is that you are basically committing to the organization that you sign the contract with that you are going to continue to do the same practice that 32:43 got you qualified for a carbon market for the duration of that reporting too. Okay, so that means that even though you got paid for one year carbon, 32:52 you still are committing to doing five years of the same practice so that way we can track all the permanence and the carbon in the ground. But then 33:01 again keep in mind every year you can continue to sell your carbon. So it's a five-year reporting tale. Meaning. We're just gonna continue to capture your data. 33:10 But it's really important because it's it's part of the contract that you sign in it's required and that's by the way that's going from this point forward. 33:19 Correct. Yeah, so I owe you my data for five years forward by the way on the payments. When I sign up with you now doing through your look back what 33:27 money do I get do I get money for 2019 2020 and 2021. Yeah, like 25 dollars in a ton. Let's just call it $25 an acre. I 33:36 mean if I'm getting a ton of an acre, so I get $25 an acre for 2019 2021 and this year trying to do so, I'm gonna get a hundred bucks an acre right now. 33:45 Yep, so you so you're gonna get the three year in one lump sum and then 2022 will come later. So you're gonna get the three lumps on and then 33:54 I might stay with it or I might not and if I stay with it, I can I've just I've got to keep giving you information for the next 34:04 five years, even if I don't stay with. Right. Now what if I don't you come and take my money back? No, so that's one of the things that Land O'Lakes 34:12 Central chair has done exceptionally. Well, we have tried to make the contract is farmer friendly as possible. So 34:18 we know that at times you may have Mother Nature events things may be you know, you may have to do some tillage and you may have to throw a 34:27 field out or maybe you have to sell a farm. We are not going to ask for recourse on on that, you know on those Acres because we want to be farmer friendly. We want to be farmer facing 34:37 now that said we also have a very high expectation that the farmer will continue to do that practice. Okay, and you 34:46 probably will because of the money and also yes, it's built once it's already going it's getting things going through the 34:52 pain and once it's already going you probably stay with it assuming the market price is competitive Etc because it's like 34:58 the same reason you stay with the deal but there's no given and also we're still new at it. You don't know if you 35:07 don't have you don't have 10 years of Track record right now because we've only been doing this for what's true Terror been a company for a couple years, right? Yeah. 35:19 I was like we're trying to do what's best for the farmer. We are trying to keep the farmers best interest to our here and we know 35:27 that there's a lot of uncertainties a lot of complexities when it comes to the carbon market and so we're trying to structure our contract in a way that is 35:36 beneficial for not only our AG retailers but also our Farmers. All right. What are the things that you the ones 35:44 we've already not covered? hesitancies reluctancies Mis misinformation where we're like, I'm not going to sign up 35:57 for the carbon deal. I'll tell you why boom what's what do you think? We have a discussed or covered or clarified yet to help that person that's 36:03 sitting on the fence but has reluctance because something they Been Told 36:10 yeah, you know for me one of the questions that always comes up is when Farmers I I get this all the 36:16 time and that's why I'm bringing this up Farmers. Tell me well, I'm not gonna help XYZ company meet their climate goals. Like I'm not gonna do that 36:22 right and to me If you're a farmer and you're sitting here and you're thinking more so about who the buyer is of these carbon 36:30 offsets, then you are about the the ROI on your own operation to me. That's a little bit one-sided. Right? We have these organizations that are 36:39 willing to invest in the farming communities in our rural economies and they want to be help and strengthen 36:45 our livelihoods. Yes, they're using things for for their organizations as well. But they're also investing in us as agricultural community and we really need to 36:54 kind of embrace that because like I mentioned earlier soil Health carbon is the most expensive carbon Market to actually participate in okay. So if you're if you're 37:03 sitting there near Microsoft and you're one of these organizations and you're saying man, I need to meet these carbon goals. 37:09 How am I going to do it? Right the first answer for most of them probably isn't I'm gonna go work with a bunch of farmers that are gonna make my life. It's very 37:19 difficult. And so, you know from my standpoint we Be thankful and embrace the fact that they want to invest in real agriculture. 37:31 Yeah, I mean I can see that and I've kind of heard that also but there's at some point. If you're looking at your business operation, you 37:40 should look at ways to diversify income sources. And right now come out of the prices are really good. I know input prices are up but 37:50 for god sakes trust me I was a kid in the 80s. I saw I saw Farms down the road third generation go belly up right now. You're not worried about diversification of 37:59 income because you got really high priced corn soybeans and wheat, let's say but there will be a time when you're gonna say boy. I 38:08 really like some way to get 25 dollars more per acre because there's been plenty of times when $25 per acre 38:14 would have been your net margin and you'd have been happy with it. So that's a true story a little history therefore. Hey, 38:20 um, what did we not cover about this entire situation as we're talking about carbon? Demystifying carbon markets and true Terror so 38:29 additionality is the basically the idea that you are adding something to your operation. Okay. And so in order to be part 38:38 of one of these ecosystem Market opportunities, you have to have some source of additionality and that means that you are adding cover crops you are reducing 38:47 tillage adding no-till. Um, you are adding something and so that is basically the premise of all of these carbon markets today is 38:56 around the option of additionality. Okay? Yeah, the other thing yeah like that that we now explain you're talking about we're we're gonna stay 39:05 with it for a bit longer and we go do more is kind of what we're hearing here. You can't just so in your laurels you gotta 39:13 Keep the thing. Keep making it better. Yeah, that's the most critical piece. Right? These organizations are paying for the karmic carbon to be permanently stored and 39:24 that is ultimately what we as true Terra Linda lakes and the farmer are committing to do is keep the carbon permanently stored last 39:33 question. I think it's last question unless there's something else I forgot to ask. 39:38 What does the farm operator right now need to know that we've not covered looking forward because I've been hearing about it for a while. I've had number of companies 39:47 some of which one of you know, send me stuff have a consultation. Whatever. What is it that I'm not what do I not know? What are 39:56 we not what thing is is that we need to know that we're not getting what thing do? We not cover. What question is? Yeah answering. 40:04 I would say that just generally, you know, we're sitting here talking about carbon markets today. Okay? Carbon markets 40:10 are are just one piece of sustainability. They are one piece of regenerative Ag and while we're talking about carbon today, you know, it's very likely that we're 40:19 going to be talking about water quality credits in the future. It's very likely that we're going to be talking about low carbon intensity grain, 40:25 like all of these other opportunities are going to be coming down the pipeline as it relates to regenerative agriculture, but the key thing 40:35 for all of these Farmers is that they have to have Baseline data. Okay, and so if you don't have a place for your data to be stored, you 40:43 know, that's important and if you want to participate in these marketplaces, that's something that you need 40:49 to strongly consider. How are you going to do that? Who are you going to work with find someone that you can trust? 40:55 Baseline data start doing that you should have that. Anyhow, if you're a modern Progressive success minded farmer listening here to The Cutting the curve and keeping up with this great 41:04 stuff. We're doing extreme egg. You're already in that camp where you you know that and you're already looking at your production and now 41:10 it's gonna be a question of Are you doing things that can help you get qualified and if you're out here, you know till and telling 41:18 it's gonna probably hurt you a little bit. But if you're reducing your tillage and implementing a few practices, it 41:24 can help you obviously get your score your approval what not. You want to have cropping records. You gotta be willing to let people do a look back of three years not just 41:33 this year but being the prior three cropping years, if you do cover crops, you're probably going to bump To The Head of the 41:39 Class. I think I'm hearing if you're a no to losing cover crops, you're gonna be bumping the head of the class, right? Yeah. You're definitely 41:45 going to be sequestering carbon at I farming in the end and I know things are gonna be different and say Western Kansas and they would hear based on climatological reasons, but 41:54 you gave me a number of about point seven to one a ton of carbon capture per acre and you're selling that carbon credit off for about 25 bucks 42:03 an acre in 2022 rates right now. So 25 bucks an acre I could get I think I do think I do think it's important though. 42:14 Sorry, I don't cut you off but I think it's important because I just have to do this that. 42:18 The point seven to one ton, right that is very much what we saw and I will last year if you are in Western Kansas, you're exactly right. You're going to see more 42:27 of like a 0.3 to point for if you're in Indiana, it's gonna be more of like a point six to point eight. Okay. And so the key thing to know is that it's very very variable. You 42:36 know, I don't like you just basically told me that I was better than me. I'm sorry. I have to do that because that's 42:45 the truth when it comes to carbon markets I want is you are being subjective versus objects because you yourself are Iowa native and 42:54 resident and I think that you're letting some of your personal biases shine through them, right? I'm quite certain that 43:00 if Kelly Garrett's Farm can support your carbon so good mine and there is no doubt. He does more square foot per acre though. 43:09 And you're saying how can that be? He has slopes are like 35% So he's getting oh, I'm aware for Syria per acre out there that I am out here on 43:18 my flatterground. So there maybe there's that. I don't know. I mean you can take it up with him though, and he can tell you how much better he 43:24 is. Oh, We we've we've gotten nearly physical before me. That was the 9th. I was the 9th best soil judger in the country in 43:33 1987. And you know that keeps him at Bay. Hey. I think we've got everything in about a year. This is going to continue to evolve. We're pretty 43:45 still we're not wild west but we're pretty damn close to Wild West can we agree on that? Pretty close? So in 43:51 one year you want to come back and tell me the updates and what's changed because one year from now, we're gonna have our farm operators that say I started 44:00 doing this. It's not it's not exactly what Mariah told me it was because it's changed because that's probably gonna happen, right? Yeah. I mean, it's it's most definitely gonna 44:09 happen. I you guys have worked in this for four years. And what I was talking about four years ago is not even on the same page of 44:15 what I'm talking about today. So definitely, you know, you need to keep having these check-ins and we need to keep updating people because this is one of the fastest moving 44:24 Pieces of the AG industry that I've ever worked in. Yeah, it's it's it is there, you know, well, we've 44:30 got the technology and we've got all kinds of things from autonomous Machinery to drone technology to new genetics 44:36 to the Biologicals that we're using to replace the chemistry. That's really there's an exciting stuff going on in ag and I I say all 44:45 the time that there's gonna be more change in the next 10 years in ag that there wasn't the last 100 last 100 has more 44:51 chains that happen in the first 10,000. That's a true story part of that's going to be this stuff right here this climate 44:57 oriented payment and you know, I think that right now to that farmer that you said doesn't they're bristly I don't want to I 45:06 don't want to help out Bill Gates. All right, I get that whatever. but 45:11 I would rather be getting money. To do things that help my soil. and 45:18 do it any voluntary fashion than the government comes to us and says, well, you know what you have this me acres and we as 45:27 an Administration say that we're going to set these climate goals you're gonna do this. So I think I'd still like the idea that it appears to be more free market 45:36 capitalism and by choice right now then by decree Yep, I could not agree more and that's in fact, you know something that the EU has struggled with a little bit because we 45:47 are we're operating in sort of this voluntary Market. They're operating in more of a regulatory market. So all of your comments are spot on we 45:56 definitely want to make sure that we're staying down the path of the voluntary and not just about that. Right? I think if you 46:02 looked at any comment ever in my life, they would all be spot on like that. But we're just your name 46:10 is Mariah Murphy if people want to learn more about this because you are the obvious resource here. Let's face it. How 46:16 do they get a hold of you to find out more about this specifically not just go into true Terra, which I'm sure they can 46:22 all do you would encourage them go to True Tara? Yeah, but to find you. 46:27 Yeah, most certainly you can reach out to me and my email address is MK Murphy at land o' MK Murphy. Yes land 46:36 o' and they can go to True Terra last comment leave it to 46:48 you. What do you know? I just would say thank you for the opportunity. I hope you guys have learned something today. I hope that you 46:55 you know, you've gotten some questions answered if you need anything at all reach out to Kelly reach out to Damian reach out 47:01 to myself and we're happy to help. Yeah, that's the cool thing Kelly Garrett. Also if you're an extreme AG listener follow or subscriber has been 47:09 doing carbon and that's in fact how he and I met I read about him and the Wall Street Journal two years ago and hunted them down and said I want to talk 47:18 to you because I want to learn more about this. That's how we met and that's how I actually became evolved with extreme magnets because of my involvement with 47:24 Kelly Her name is Mariah Murphy. My name is Damian Mason. This is cutting the curve from extreme AG check out all of our other great informative and 47:31 insightful stuff over at extreme agnot farm. So next time close you off a little Pablo Cruise. Thank you. That's a wrap for this episode of cutting the curve, but there's 47:42 plenty more check out where you can find past episodes instructional videos and articles to help you squeeze more 47:51 profit out of your farm.