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A Farmer-Friendly Carbon Credit Model is Needed for the Hemp Industry

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A Farmer-Friendly Carbon Credit Model is Needed for the Hemp Industry

By PanXchange

Voluntary carbon offset markets offer corporations a way to reduce their carbon footprints, under growing pressure from shareholders and consumers. Organizations can now buy carbon credits, a monetization of the environmental services of removing CO2 and greenhouse gasses from the atmosphere to offset the corporation’s carbon emissions..

Planting hemp, with its superstar CO2-sequestering properties, is a prime example of a high-value environmental service to mitigate climate change. Hemp draws down CO2 from earth’s atmosphere during photosynthesis and stores it in biomass and the soil below. Hemp agriculture is well-positioned to earn substantial financial incentives within the emerging carbon market. 

Carbon offsets are a demand-driven market. These markets are experiencing massive growth as a way to quantify and reward climate-smart practices, especially through carbon sequestration of farmland, grassland and forests. Voluntary carbon credits are now tradable financial commodities, which – if done right – will subsidize climate-smart farming practices and reward farmers for implementing them.

However, existing carbon credit programs are cumbersome in both time and cost, which is why PanXchange has created a carbon credit program. We have contracted for more than 31,000 acres of cropland with small-scale US farmers for the 2023 crop year.

If we want to substantially reduce greenhouse-gasses, we need a path to participation which keeps more cash in the small-scale farmer’s pocket and gives the grower more agency and control.

Typically, only commercial agricultural  producers can afford the verification fees, set-up costs, sales commissions and opaque broker arrangements. Carbon sequestering projects are financially unreachable to small-scale and underserved producers who still make up the majority of US farming operations.

A farmer-friendly model is needed to get the most benefit directly to smaller-scale producers and reduce costs that are barriers to participate. Farmers must receive more than a minor cash incentive for adopting climate-smart practices and be allowed to reap the full benefit of their labor.

Lowering Costs for Carbon Project Development:

  • New innovative methodologies are needed to ensure the credits brought to market receive the highest possible sale price. Currently, costly verifying methodologies, such as those developed by Verra and CAR, charge premiums over $200,000 driving up the cost of developing a project.
  • Remote remote sensing technologies must be employed to replace the high cost of soil samples.
  • Lower project management fees should be in place to reduce the barriers that keep small-scale or underserved producers from participating.

Farmers need to see the big picture

  • Producers must accurately assess the economic pros and cons of implementing a climate-smart program focused on costs, yields, and estimated revenue streams from the sale of earned carbon credits.
  • Farmers should know their options. Adding high-sequestering crops like hemp to a farm’s rotation can illustrate the dramatic benefits of sequestering soil organic carbon.

Transparency in payments

  • A fair and transparent payment system must be in place to keep costs down and encourage innovation. Currently, larger entities pay growers with an allowance for carbon smart farming. Others offer a minimum price guarantee, but profits on credits sold higher than that price must be shared with the project developer. Credit brokers operate in an opaque process where the highest trust must be invested in the broker that they’re working in the farmer’s best interest and not that of the buyer.

Reaching buyers directly. Shifting fees to buyers

  • Farmers must have their own agency to buy and sell for the highest price. Producers need a platform where they can interface with buyers directly to cut out transaction and broker fees.
  • Trading fees and commissions must be shifted to the buyer in this demand market, keeping more money in farmers’ pockets.

Growers need an affordable path toward implementing climate-smart agricultural practices. Producers need full agency over the sale of high-integrity verified credits in a direct exchange with demanding buyers.

PanXchange has built our new carbon program and trading platform around these recognized needs.

Voluntary carbon credit programs – designed with farmer-friendly priorities – can put financial rewards into the pockets of the very producers who are creating a better climate for the world.

Denver-based PanXchange is launching a vertically integrated and inclusive agricultural carbon
program with 31,000 acres of cropland enrolled for the 2022-23 growing year. Julie Lerner is a commodity industry veteran who founded PanXchange and was awarded two patents on the trading platform.  She was in the inaugural class of both Forbes 50>50 and Denver Business Journal’s Outstanding CEOs.

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