S1:E3 Carbon Collaboration

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In this episode, podcast host Morgan Seger is joined by Ceres conservation specialist Sina Parks and Truterra representative Amanda Bahn-Ziegler to discuss some of the choices for farmers regarding carbon offsets, and the implications they could have for your farm.

Show Notes

Here's a Glance at this Episode: 

(00:33) Host Morgan Seger sets the stage for this conversation on measuring carbon and products available to farmers surrounding carbon offsets. 
(03:51) Amanda Bahn-Ziegler of Truterra provides background on the relationship between Ceres and Land O' Lakes/WinField United and the Truterra Sustainability Tool.
(05:22) Amanda reviews some of the benefits to engaging with carbon tools for farmers. 
(09:30) Amanda provides an overview of what's driving the demand in the carbon markets.
(13:04) It's not a bandwagon issue - Amanda emphasizes the importance of making management decisions like this with your farm's long-term success and goals in mind. 
(17:55) Looking ahead - here's Amanda's take on what the upcoming year will look like compared to last year. 

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Morgan Seger
Sina Parks
Amanda Bahn-Ziegler

Guest Bios

Sina Parks grew up on a small corn and soybean rotation farm in Montgomery County, Indiana, and was an active member of 4-H and FFA. She studied at Purdue University and in 2014, after several years of experience with farm credit, Sina transitioned to a role in conservation. She joined the Ceres Solutions team as conservation specialist in April 2021. 
 
Amanda Bahn-Ziegler grew up in Central Wisconsin on a small dairy farm. She attended the University of Wisconsin-River Falls to gain a degree in Ag Studies with a Crop Science emphasis. After 7 years with WinField United and various roles focusing mostly on CROPLAN seed, she joined Truterra, LLC as an account manager in Ohio in January 2021. Within her role, she supports Truterra retailers and their farmers to advance on-farm stewardship and conservation. Amanda has always enjoyed the service and creative marketing aspects of her roles both at work and at home.

Transcription

Microsoft Voiceover (00:00):
Scientific consensus is clear. The world today is confronted with an urgent carbon crisis.
Morgan Seger (00:08):
In this episode, we're going to be addressing carbon, whether you are in agriculture or not, it's likely you've heard about this carbon crisis that Satya Nadella, Microsoft CEO mentioned in the January 2020 announcement that Microsoft made about their impact on carbon.
Microsoft Voiceover (00:26):
Today, we are making the commitment that by 2030 Microsoft will be carbon negative.
Morgan Seger (00:33):
While companies like Microsoft have implemented these changes, they rely very heavily on agriculture for carbon offsets. In the 2022 October issue of successful farming in the article measuring carbon, they said today there are nearly as many technology companies claiming to deliver solutions to measure carbon as there are programs for farmers to choose. On today's episode, we're gonna work to unpack what those choices are and the implications they could have for your farm. Every day we rely on food, fuel, and fiber, but how much do you know about these industries we depend on? In this podcast, we dive deep into the production and processes of these everyday essentials. This is field points in original podcast production from Ceres Solutions. This is the third episode of our stewardship series, and I'm joined once again by my co-host Sina Parks. Sina is the conservation specialist at Ceres Solutions. She walks us through what Ceres Solutions is doing to partner with growers and help them work through these carbon market decisions. And she starts by sharing information about their partner, Truterra.
Amanda Bahn-Ziegler (01:44):
So today we're gonna talk a little bit about Truterra and all the offerings that they have. So that could be the sustainability tool that could be Carbon. Tru Terra is a partner that Ceres Solutions has and they're part of the Winfield / Land O'Lakes cooperative. And so we use them as a resource for us to help our customers with stewardship.
Morgan Seger (02:05):
Our guest on today's show is Ceres Solutions, Truterra representative Amanda Bahn-Ziegler.
Amanda Bahn-Ziegler (02:12):
I'm Amanda Bahn-Ziegler. I grew up on a dairy farm in Wisconsin. Really thought I would milk cows for the rest of my life. And then when I was in college my dad sold the cows and so I had to really figure it out. So I took intro to everything in college. That's what I tell people. My degree is, it's actually Ag Studies, but I just took a lot of intro classes. I was fortunate to get hired as an intern with Winfield United right after college. So I sprayed the answer plots across Wisconsin, put on a lot of miles that summer. Learned a lot about agronomy and that's kind of the path that I followed for a while. So I worked for Winfield United for about eight years and in that time I moved to Ohio, which is where I currently live now, and met my husband there.
(03:00):
I supported seed chemistry, adjuvants, plant nutrition. It was a lot of fun. And about a year and a half ago an opportunity came up to join Truterra, which is the sustainability business at Land O' Lakes. And in my personal life, over the last few years, I've just become a lot more interested in sustainability and kind of what that means for different pieces of my life and my life as a whole. So I jumped at that chance to join Truterra and was fortunate enough to become a part of the team. But Tru is the sustainability business unit at land. So just like we have dairy foods as a business unit, that's the butter that everyone knows and loves. Winfield United is a business unit for crop insights and inputs. Purina is for animal feeds. And then Truterra is kind of unique in that we're the sustainability business that can support all the other businesses.
(03:51):
So Land O'Lakes as a company, we're in a unique spot in this space because we are a food company. So we're familiar with consumer demands and what the grocery stores wanna see and what other food companies are asking for when it comes to purchasing ingredients. But we also have access to the farm gate through our awesome retailer network like Ceres, where they work directly with farmers. They understand front to end how the products are being produced out in the field. So we take that power and we harness it into a tool called the Truterra Sustainability Tool that helps farmers and retailers track all those pieces of the puzzle when it comes to what might be considered an ingredient. So we operate mainly on row crop acres, and you can measure your level of stewardship on the land that you operate on a field by field basis. From there, a farmer can kind of figure out what pieces of my farm would have an opportunity to improve and what are those opportunities, Where are my highest risks for things like erosion? Where are my biggest opportunities to improve water quality or nutrient use efficiency or even sequester more carbon? And if they choose to make a change, then we would like to help them bring a new revenue stream to their farm to incentivize them for the good stewardship work that they're doing and the positive environmental outcomes they're producing.
Morgan Seger (05:13):
These programs are designed to help growers measure and manage their conservation efforts. This can improve their overall marketability.
Amanda Bahn-Ziegler (05:22):
I think that they go hand in hand. I think that grower marketability and being able to prove how you're farming, improve the practices that you're using on the land and being able to have a document that you can take to a landlord or a grain buyer or any type of commodity group or different organizations to show them that this is how I'm farming, this is the results that I have, these are the changes that I've been able to make. And just being able to really market yourself I think is gonna be very valuable in the future. So sometimes it's about unlocking a new opportunity for funding. So if a farmer can identify, here's the field where I wanna make a change, here's the change that makes sense for my operation, and here's the outcome that it may produce. Our tool helps them model all that out.
(06:11):
And also provide suggestions on, here are some programs that you could apply for the exact program code. They can take that right down to the FSA office and say, Here's the field, here's how many acres, here's what I wanna do, and here's the code that I think lines up with what I wanna apply for. That hopefully would save them a lot of time and effort. And some places it's easier than others to figure out what those opportunities are, but a lot of times it takes some effort and research to find those. Another way is if they do make changes over time and track that progress, they can participate in some of the markets that are coming, such as the carbon market. We can facilitate a transaction for growers who qualify the fields that qualify. And also we have a network that can help support farmers who are interested in learning more or making changes.
(06:59):
So we host field days, we have learning events, we have people like Sina out in the field, ready to support farmers that have questions. And even if they haven't started at all, we can be a great resource and a great network for them. So the carbon market exists. I know a lot of people feel like it's very messy and it's kind of the wild west, but I will say in the last year and a half there's a few things that I would say are just about standard across the market. So for a farmer to participate in the carbon market, it requires recent or new practice change. That's the first step. By making that change and being aligned with a program that can quantify the impact, meaning the additional carbon you're storing, that's what creates your carbon credit. So first of all, you have to make a change.
(07:47):
Second, you have to quantify the additional carbon you're storing as a result of the change that gives you a carbon credit. Those are measured in tons of carbon. So you can have a carbon credit that's a half ton for this season, and annually you produce another carbon credit. It's the amount of additional carbon you're storing based on the practices you've implemented. So the carbon market is where you can market that new asset that you've developed. There's buyers and farmers would be sellers. There's people in the middle that are true terra where we can aggregate a whole bunch of people that wanna sell their carbon credits together to be more attractive to a buyer that wants to make a big transaction all at one time with similar quality across the board. So currently it's mostly offsets that are being purchased. It's companies that want to lower their overall carbon footprint, but they don't have a great fast way to do that in their own system today.
(08:45):
So they're looking outside of their system and purchasing what's called an offset. There's also going to be an, it's building right now, the insetting market, where more so food companies that they know these ingredients that I purchase, there's emissions associated with the production of those ingredients. If I can lower the emissions associated with the production of my ingredient, it lowers my own emissions. And that would be more like an insetting market. And that's going to be a huge opportunity for farmers because when you think about the ingredient for anything, almost all of it comes from a farm. So that's another opportunity building in the carbon market.
Morgan Seger (09:26):
Amanda then walks us through what's driving the demand of these carbon markets.
Amanda Bahn-Ziegler (09:30):
There's a lot of drivers, we call 'em motivators, reasons that people are purchasing carbon offsets or exploring insets. Some of it is consumer driven. So the American consumer is getting pretty savvy as a nation. We're fairly wealthy and people have choices at the grocery store and they gravitate towards the choice that they feel better about, whether that means it's organic or a sustainable label or a carbon neutral label. So some of it is consumer driven. Consumers are demanding what they consider to be more and better from the companies they're purchasing their food from. Some of it is also investor driven. So for a food company who likes to access capital from investors, some investors are now demanding that companies have a solution or a contribution to fighting climate change. They see that as a good business practice. They see climate change as a huge risk, which if you think about higher temperatures, more limited rainfall, less soil moisture, that is a huge risk risk to producing the ingredients that go into their food products. So consumers and investors are probably the loudest voices. But then you also have environmental advocates that are accusing companies of greenwashing and kind of making it public, making it well known the impact that you're having on the environment. So in their own marketing, corporations are having to do something about that to be able to maintain their shelf space at a grocery store, for example.
Morgan Seger (11:04):
So what's the feedback you're getting from growers?
Amanda Bahn-Ziegler (11:07):
It's across the board. Some are really excited about the opportunity. Some are still not sure about it, some are still just asking a lot of questions. The ones who have chosen to participate though in the carbon programs, I think overall have been pleased with the results and the payments that they've received for those carbon credits. Others are still kind of like they start the process and then maybe they're not so sure. But overall, I think as we continue to build more standards and more just more experience in the carbon markets, I think people will continue to look at them as another way to bring incentives to their operation.
Morgan Seger (11:53):
In the second episode of this series, Betsy Bowers talked about how some of these decisions are a three or four year outlook, and some growers have been working alongside Ceres Solutions to improve their conservation efforts for several years. Sometimes this makes them ineligible to capitalize on certain parts of the market because they require a new or recent change.
Amanda Bahn-Ziegler (12:18):
I think for when you're planning ahead, I think the people who are probably most likely taking advantage of the programs right now are ones who were already gonna make that change. For whatever reason, they decided that was the right timing for their operation to go ahead and add cover crops, reduce their tillage, go to no-till, whatever that recent change is for them. But I think there are starting to be some new opportunities for customers who are starting to think about, Well, maybe I wanna make these changes. So they're getting a little bit more exposure to the carbon markets. And so they're finding some ways to be able to add a little bit more incentive while they think about making that change or trying that change for the first year without having the full risk of what happens if I'm not completely committed to making this change long term.
(13:04):
I also think when farmers are considering practice changes for their farm, they should do it at a time and do the practices that make sense for them as an operation. The carbon market should not be seen as the primary reason that we're farming the way that we farm. People adopt these practices because of the benefits that you gain long term. So even if you've already had the practice in place for 10 years and you don't qualify for today's carbon market, it's more valuable to you to keep that practice in place and gain all those benefits on your soil and your land and in your crop versus reversing that just to get a carbon payment. Current carbon payments are probably gonna be less than $10 an acre by the time you quantify your carbon if you're getting paid per ton. So it's not a big enough incentive for you to change the way that you're farming, just to qualify for the carbon market. And that's why Tru Terra, we didn't start when the carbon market came around. We started years ago helping people measure where they're at today on their stewardship journey and get ideas for what might fit best for their farm. It needs to be profitable for you, even outside of a carbon payment in order for a farmer to implement and maintain a new practice.
Morgan Seger (14:18):
So the carbon payment isn't enough to justify making that change. Well, and it's kind of like what Betsy was saying in the nineties. A lot of people went to no-till just because they had labor shortages and it saved fuel and saved manpower and that kind of thing. But then they got this wonderful benefit of increased oil health. So now for people who are thinking about making the change, they also may get the benefit of this carbon payment. But yeah, it's not necessarily the driving force.
Amanda Bahn-Ziegler (14:45):
I don't think it should be the driving force for the reason a farmer changes the way they farm. And as you just mentioned, when you're already in a no-till system you have a benefit that maybe you don't see because you've been doing it this way for a while. You're saving yourself labor, you're saving wear and tear on your equipment, fuel costs while building soil health that hopefully is helping you produce a more productive crop with lower input costs
Morgan Seger (15:09):
For those who are new to carbon markets. I asked Amanda if she had any tips or tricks to ensure they complete this process correctly
Amanda Bahn-Ziegler (15:18):
From a programming standpoint. I can share one story. There was a farmer who wanted to enter the carbon market. They submitted all of their data. Long story short, they were expecting a large payment at the end of the process. And one piece of the carbon market is third party verification. And when those verifiers called this farmer to verify that the data he submitted was accurate, the farmer actually provided different answers over the phone than what he provided on paper. And so he failed verification. So to me, that's worst case scenario. You've already invested time in this, and then just because your data in one spot didn't line up with what you provided in another stage of the program you're kind of exiting the program at that point. So that's worst case scenario for me. It's only happened one time in my experience, but it was really unfortunate.
(16:13):
And this farmer, he had the opportunity to schedule the call for a time that worked for him, and he chose to schedule it for when he was doing other things like combining a field. And so he didn't have his paperwork in front of him and he was trying to recall from memory what he wrote down for practice changes four years ago, for example. And he didn't remember it accurately. So he reported over the phone a different practice change than what he recorded in his data. So if you ever get called for third party verification, schedule it for a time when you can have your information in front of you.
Morgan Seger (16:49):
If your practice changes qualify and you've collected all of the data and it's accurate, the payments are real.
Amanda Bahn-Ziegler (16:57):
So last year was the first year that our customers were able to participate in this Tru Terra carbon program. And Tru Terra paid out 4 million last year to their customers. And of that serious customers received almost 500,000. So we had a very large successful percentage for our customers in that program. And so overall, I would say it went really well for those customers that wanted to participate. It was pretty impressive to see the carbon sequestration potential in the east. I wasn't sure what that would look like. None of us had ever done a carbon program before, but Northern Indiana all the way to the East Coast, that whole northern stretch of the US is actually pretty good at sequestering carbon. Yeah, Yeah, it's been really fun to watch. <affirmative>.
Morgan Seger (17:51):
Do you anticipate this year to be similar to
(17:54):
That?
Amanda Bahn-Ziegler (17:55):
I would just say that the payments per ton are going up a little bit, but at the same time, buyer demand is looking for a shorter look back period. So some of those farmers from 2021, we were buying four or five years of carbon in a lump sum, and now we're buying more like one, two, or three years at a time. So it's a little hard to estimate what payments might look like this year. I think we have slightly lower number of new and enrollees, so new participants to the program is slightly lower, and we have a slightly shorter look back period, but payment amounts are slightly higher. So hard to say. I was gonna say, I think it's gonna be hard to tell how it's gonna play out just given that there have been some changes in the offer. There have been some changes in how many years. Cause we have customers that re-enrolled and so they're only doing one year versus the five years that they sold. So all of those impact what those final numbers look like.
Morgan Seger (19:00):
Gotcha. So for those of us who are maybe a little bit on the sidelines here, that number in itself isn't gonna tell the whole story.
Amanda Bahn-Ziegler (19:05):
Correct. Gotcha.
Morgan Seger (19:07):
As Amanda mentioned earlier, the size of Truterra working with cooperatives like Ceres Solutions gives them a position to work with buyers who are looking for large amounts of carbon credits.
Amanda Bahn-Ziegler (19:20):
Microsoft is still purchasing from us. They're purchasing more from us in 2022 than what they purchased in 2021 as far as I know. And they've been a great partner really because they're allowing, they're accepting of the look back periods and at least rewarding farmers for recent practice change and not demanding brand new practice change like some other buyers. So we do have Microsoft still. We hope to continue that. And we have also attracted some other newer buyers as well.
Morgan Seger (19:47):
BlackRock, one of the world's leading providers of investment advisory and risk management solutions, said in their CEO letter, Foresighted companies across a wide range of carbon intensive sectors are transforming their businesses and their actions are a critical part of decarbonization. We believe the companies leading the transition present a vital investment opportunity for our clients and driving capital toward these phoenixes will be essential to achieving a net zero world. And since this letter came out, Amanda shared that they have seen a big influx of companies creating these carbon statements and initiatives. Tru, Terra and Ceres solutions are working together to stay on top of these growing developments in this market, so growers can best capitalize on these opportunities. Next Sina walks us through how to get started.
Sina Parks (20:41):
They can get started to hear more about the opportunity just calling their local salesperson that they work with and they can reach out to me and then together we can come talk with the farmer at the farm gate and come meet with them and talk about what are their goals, where do they want to go what they're thinking, And then we can get the process moving for them and get their data in the tool. If you're not quite ready to go for the full law sustainability tool, you can still reach out to your salesman or to me through series and we can sit down and talk about some of your different goals. And maybe you just wanna talk about cover crops, or maybe you just wanna talk about making a small change in conservation or your tillage and just wanna kind of talk about what that process might be. Sir has a lot of resources and we can help you talk through that
Morgan Seger (21:28):
In our next episode of Field Points. We're going to continue our conversation with Amanda, but dive into true Terra's sustainability tool. So I hope you join us again as we wrap up our last episode of this series on stewardship. The show notes for this episode will be available at ceres.coop. If you enjoyed this deeper dive, be sure to subscribe and leave us a review. Your review and feedback will help other listeners like you find our podcast and we are so thankful for that.