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Survey: farmer interest in carbon contracts remains, but sign-up is slower

Farmer interest in carbon contracts has been relatively consistent over the past three years, according to the latest Purdue University/CME Group Ag Economy Barometer.

Purdue Center for Commercial Agriculture Director Jim Mintert says between 7 and 9 percent of farmers surveyed from 2021 to 2023 have spoken with companies about carbon capture payments on their farms.

“There’s so much interest in carbon contracting so we keep asking questions about it to see what farmers are thinking about it. The first time we asked this question was in the first quarter of 2021. At that time, about seven percent of the people in the survey said they had been engaged in a discussion of some sort with a company about contracting for carbon sequestration. The last two times we asked it were August 2022 and the current survey in January 2023. In those two surveys we averaged it out and about nine percent of producers say they’ve been having some discussions. There’s clearly some interest among producers in having some discussions and talking to companies about carbon sequestration but so far at least it doesn’t look like very much of a change in terms of the number of producers talking to companies.”

But, he says, “just about one percent of the producers in our survey report actually signing a carbon contract. So, there’s interest and people are talking to the companies but not many people have signed a contract to date.”

He tells Brownfield a few follow-up questions explored why producers haven’t signed a contract despite being interested.

“We’ve asked producers who haven’t signed a carbon contract, what would it take on a per-acre basis to get you to sign a contract. Almost half of the people in the survey say they would need a per acre payment north of $45 an acre. That’s a lot more than most people have been offered so far,” he says. “One way to look at it is to say that if you’re going to see more people sign, you’re going to have to raise the rates. That’s the direction I lean. On the other hand, there are some people in our surveys who say they would be willing to sign a carbon contract at low rates and that percentage is larger than the percentage that has signed. It’s a little unclear why they’ve chosen to hold back even though they’re telling us the rates being offered are large enough. So, there’s a little bit of a disconnect. When I talk to people individually outside of our survey, some are holding back and waiting to see how this shakes out. They’re reluctant to sign a contract just yet and they want a little more time before they sign something that has a multi-year component in it.”

The Ag Economy Barometer is a monthly national survey of 400 U.S. agricultural producers.

Audio: Jim Mintert