Understanding the fast moving farm carbon market's requirements, rewards and traps is not easy, partly because relatively few people know enough to give farmers genuinely unbiased advice about carbon projects.
Carbon credit opportunities also suffered some early credibility hits when some project promoters cooked up fast money sequestration schemes with poor methodologies, which triggered a wave of industry scepticism and bad publicity.
"Some project developers got themselves a bad name when carbon projects first started a decade ago - there were some dodgy deals getting around," said Riverine Plains farming systems chief executive officer, Pip Grant, at Mulwala on the NSW-Victorian border.
"However, now there are more project developers with much better options for farmers.
"Last year's review into the Australian Carbon Credit Unit Scheme also ensured it has a high integrity level.
"Soil carbon sequestration projects, in particular, got a big tick."
However, she believed there were still insufficient people in relatively neutral roles who had the depth of knowledge to give farmers clear, unbiased advice on strategies, expectations, costs and the risks of investing in carbon projects.
Until September, Ms Grant led grower extension and adoption work with private carbon farming and advisory business, Loam Bio.
She noted even independent websites tended to be confusing, and heavy with technical information.
While there was a lot of upskilling happening rapidly across the carbon sector, she said most experts tended to have a commercial affiliation or professional bias.
"This includes bank managers, agronomists and scientists who only understand certain elements, not the whole agronomy, market or logistics requirements of a project," she said.
"Agronomists do tend to be better informed than most, but the best informed people are usually corporate farm ESG managers."
Landholders considering a carbon project should be prepared to ask lots of questions of project developers or aggregators, starting by confirming they had a financial licence.
"A carbon project 'product' with a developer is a financial product, just like a bank loan," she said.
Ms Grant also warned against signing non-disclosure agreements with a developer who may not want rivals to know their terms.
"Farmers shouldn't have to sign an NDA to have a financial product's terms communicated to them - it would be like signing an NDA before the bank tells you its interest rate for a mortgage application," she said.
"You'll need to share project terms and contracts with your solicitor, bank manager, family members, and potentially agronomists."
Farmers should also know the types of carbon projects a developer specialised in.
For example, CarbonLink worked in soil carbon projects in grazing and improved pasture systems, while Loam specialised in crop and broadacre soil carbon projects, and groups like Regen Farmers Mutual did tree planting projects.
They should also delve into the cost model options - fee for service, or project planning in exchange for a percentage of carbon units.
If developers charged upfront costs, landholders should seek quotes relevant to the project's full lifetime.
Contracts with developers should be clear on the percentage of units owed to the farmer and the timeframe the developer must transfer them in.
Risk wise, Ms Grant said it was best for developers to register the projects in their name.
"Building soil carbon is an agronomic challenge which will need a developer to work with your agronomist to understand your farming system," she said.
"These are long projects, so it's important for developers to understand there is a level of trust required between them and the farmer.
"They need to think about that relationship beyond the project registration."
Farmers should know if their developer was also involved in trading or brokering carbon units and to whom, plus what prices they had achieved, and their brokerage fees.
"Most developers will just quote you the ACCU spot price," Ms Grant observed.
"However, those with proper trading teams will be brokering higher prices with various off-takers looking for high quality carbon units.
"Do not lock yourself in with one trader.
"Read the fine print for clauses stipulating you can trade only with the project developer."
A helpful guide to finding the right project planning partner was knowing if a potential candidate for the job understood the typical variables of farming systems in the local area.
"If they are already delivering another project near you, this is a good sign," she said.
"It also means you can reach out to other producers for a reference check."
- The Carbon Series was produced in collaboration with the Australian Science Media Centre with support from the META Public Interest Journalism Fund administered by the Walkley Foundation.
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
