by Kayla Sargent
Discussions regarding climate change dominate every major news source – and agriculture has been front and center in the bulk of the conversations. This new spotlight has now created the opportunity for agriculture to highlight careful management practices and capitalize on an emerging market.
Carbon farming, or carbon ranching as it pertains to the Montana grassland project, may be a new concept to producers, but the practices involved are not. In fact, carbon farming promotes regenerative agriculture practices that may seem like a blast from the past. For example, no-till farming and integrating livestock into farming operations is incentivized through carbon market payments.
For Indreland Angus Ranch, owned and operated by Roger and Betsy Indreland near Big Timber, Montana, this new opportunity fit well with practices that they were already implementing. Indrelands said they had been utilizing intensive cell grazing for years and noticed an improvement in the variety and volume of grass species. Then in 2013, they really dug into regenerative agriculture by shifting their mindset to the soil beneath the grass.
“We started thinking about the soil more than the grass,” Roger said. “That was the overriding thing. You’ve got to think about what’s feeding the grass, not just look at the grass — it never really dawned on us that we’ve got to look at our soil.”
Betsy explained that the couple had the change in mindset after meeting Nicole Masters of Integrity Soils at a Ranching for Profit workshop. Indrelands worked closely with Masters to begin testing their soils for baseline measurements of nutrients. It was with her guidance that they introduced more rotations, longer rest periods for pastures, and “soil amendments” that work to kickstart nutrient cycles. Over the past two years, these practices have not only increased the ranch’s carrying capacity, but have introduced Indrelands to the opportunities provided by the carbon market.
A New Market…
The carbon market is a voluntary marketplace where “carbon offsets” — a representation of the reduction, avoidance, or sequestration of one metric tonne of carbon dioxide — are bought and sold. Companies and individuals hoping to offset their own Greenhouse Gas (GHG) Emissions purchase carbon credits to help them meet their carbon footprint reduction goals.
NativeEnergy, a company that offers investment solutions to help businesses meet sustainability goals, recently launched the Montana Improved Grazing Project in partnership with the Western Sustainability Exchange. This is the first project of its kind and NativeEnergy began research and development in 2015. NativeEnergy Development Manager Kirsten McKnight said finding a carbon standard and creating methodology, along with researching ranch practices and costs, drafting contracts, and ensuring that the project will result in verifiable carbon credits has taken several years of work. Now in its beginning phases, the company is offering Montana ranchers financial compensation to develop infrastructure needed to implement improved grazing practices.
“Bringing some of that money upfront will enable ranchers to implement practices above their ‘before project’ management. It might be that we are accelerating their ability to implement infrastructure plans they would like to do when capital is available over the next 15-20 years. Or maybe we’re getting them to take on practices they otherwise thought might be too risky. In any case, we are creating an additional asset that can be monetized by these ranches,” McKnight said.
Betsy said even though their ranch management techniques were already on the path of those required for the carbon program, “you can start from anywhere.” In fact, she explained that the project may target people who are practicing more conventional grazing management.
“The bigger impact would be on places that aren’t doing anything at all,” Betsy said. “Maybe they have four big pastures that they go through every year and if they can get help with infrastructure they could divide those into sixteen big pastures that they go through, which maybe isn’t really ideal yet for grazing management, but it’s an improvement.”
The upfront payments are called “Help Build” credits and they are not directly tied to the carbon market pricing, which can be volatile. This payment is guaranteed and it helps reduce the risk for ranchers. Specific payments depend on the ranch size, previous management practices, soil types and other variables.
Interested ranchers are to submit a letter of interest (LOI) to NativeEnergy that describes their current practices and the changes that would be implemented in order to increase rest and rotation of pasture grazing should they qualify for upfront capital. Roger said the LOI is very specific to each operation.
“We submitted a list of projects, totally from our perspective, that we felt we needed and what our next steps would be,” he said. “For some people it may be fencing, for some it could be water development, and some could need both. It could even be as much as saying you need to buy a camp wagon and hire a herder, it could be the labor to do it.”
Betsy added that rancher input, time and resources were all taken into account in their LOI as well.
“The LOI includes the full cost of those projects, typically undertaken within five years, with a proposal for a cost-share between the rancher, NativeEnergy, and any other grants or NRCS funding,” McKnight explained. “We estimate how much additional carbon could be sequestered with those practice changes and then we determine whether the costs to implement those practices are economically feasible given how many credits can be generated.”
A contract is then drawn up between the rancher and NativeEnergy — a process that Indrelands and NativeEnergy both found to be time-consuming as they hammered out the details of one of four first-ever project contracts. A very detailed grazing plan, written by the rancher, is needed for the contract, followed by a report at the end of each year. Contract terms also include carbon prices, clauses for drought years, language for leased ground, etc, all of which had to be written from scratch with the first participating ranchers.
Betsy said there was a lot of dialogue between the two parties to ensure that the language in the contract reflected the needs of both. Indrelands were pleased that the end result was a very flexible and individualized product. The contract is split into two terms. The “Help Build” term of the contract generally lasts for five to seven years then the “Vintage” term starts. The “Vintage” term is more directly tied to the traditional carbon market.
“Ranchers are then paid annually for their practices and the amount of carbon sequestered at a fixed price per carbon credit,” McKnight said. “The assumption is that the ‘Help Build’ period enables them to hone the practices and put in the fencing and water needed to be able to continue managing above baseline practices and continue receiving carbon revenue for the effort.”
As ranchers partake in the “Help Build” phase of the project, NativeEnergy is working to establish a baseline carbon measurement for Montana grasslands. To do so, 160 sites across eastern Montana are being sampled and sent to a lab for carbon analysis. After the baseline is established and participating ranches hit the “Vintage” term, individual measurements will be compared to the baseline in order to calculate annual payments. Roger said at this point in time, the contract price is approximately two to five dollars per acre, this is relatively low compared to the current carbon market but gives NativeEnergy flexibility while launching a first of its kind project.
The True Benefit Is In The Bottomline
The “Help Build” three-five year time period is when Roger and Betsy Indreland agreed they began to see noticeable differences in their range quality, grazing capacity, and plant species variety — the real reward for the practices.
“Ninety percent of ranchers are going to have to go through some paradigm shift in their mind before they can successfully implement that stuff,” Roger said. “If they’re only doing it for the carbon payment and don’t recognize that they’re going to get a lot better grass, I think they will be very disappointed. We had done enough of it that we recognize the value of our grass and soil health. We also recognize the value of all the other ecosystem services that are coming along with it.”
Considering the price of real estate, Betsy said the increased carrying capacity they’ve experienced is well worth the effort. In some pastures, they’ve nearly doubled it.
“It’s like you’ve just bought another hundred acres, but nobody can really afford another hundred acres — but you’ve essentially just done that for the cost it took you to implement the practices. The benefits from regenerative ag are enough to do those practices, the carbon deal is just a bonus,” Betsy added. “It’s a good way to get the upfront money to fund the infrastructure improvements needed to expand your regenerative grazing. It allows us to do some of the things faster than we would have otherwise.”
Indreland’s advise others beginning a regenerative agriculture journey to be educated. Whether it is grazing seminars, literature, ranch consultants, or neighboring producers, there are many opportunities to learn about new practices.
“You can avoid a lot of mistakes by spending some time seeing what other people are doing and then trying to see how that fits you,” Roger said. “People are out there doing it so there’s no sense in just learning it on your own.”
Betsy encourages other ranchers to “just do something.”
“Even if it’s just on five or ten acres, just try something. Don’t be afraid to try, you have to prove to yourself that something’s going to work,” she said.
And it’s important to experiment, because despite all the research and footwork, Indrelands have definitely discovered “there is no recipe.”
“We’re geared to want to know ‘what’s the answer?’, ‘what do we do?’. That’s where the paradigm shift comes in,” Roger said.
“Yeah, maybe it’s ‘how do you do that’, and ‘what works right?’,” Betsy added.
“We’re not geared that way naturally. We just want to do something and see the results — the sooner the better,” Roger concluded with a laugh.BACK