By TIM THORNBERRY
Kentucky Correspondent

EASTWOOD, Ky. — As the word “green” becomes more prevalent concerning the environment, some Kentucky farmers are earning a little more of the other kind by participating in the Kentucky Corn Growers Assoc. and the Kentucky Small Grain Growers Assoc. (KyCGA/KySGGA) Carbon Trading Program.

This is designed to help farmers earn and sell carbon credits for their farming operations, and forestry landowners exchange for adhering to various conservation practices for at least five years.
Those credits are traded on the Chicago Climate Exchange (CCX), a process similar to commodity trading associated with corn or cattle.
The first group of Kentucky farmers enrolled in the program was recently on the receiving end of their dividends to the tune of $250,000. According to the KyCGA/KySGGA, more than 100 farms in Kentucky have been signed up through these organizations since the program started in 2006. This distribution of funds marks the first payment in that five-year contract.

Just how much one may earn depends on the number of acres they have available for the program, but early in the year prices were below $2 per metric ton. By May, they had reached $7. KyCGA staff traded the last of the credits for $7.05.

Credits are sold based on the accumulation of carbon in forest trees or agricultural soils, according to CarbonTrading.Com – which defines carbon trading as “a market-based mechanism for helping mitigate the increase of CO2 (carbon dioxide) in the atmosphere.”
Paul Hornback, a producer in Shelby County, said the decision to become involved in the program was easy.

“I have been farming in a compliant fashion for 20 years; beyond that, the only thing I had to do was 15 minutes of paperwork to enroll,” he said. “For me, that time investment was well worth the $5 to $7 per acre that I expect to earn next year for selling my carbon credits.”

“This program is really an untapped resource for many farmers,” said Danny Ebelhar, from Owensboro. “For a small amount of paperwork, farmers can realize income from credits that are getting more and more valuable as carbon credit trading grows in popularity.”

Credits earned during the 2008 growing season will be issued in January 2009. KyCGA/KySGGA staff will then set a trading strategy for those credits.

According to information from the KyCGA/KySGGA, this program has been established entirely as a member-service of the organizations and no service fee will be charged by KyCGA or KySGGA to Kentucky members who participate in soil programs.

A 5 percent fee will be charged to participants in other states, however, and to forestry enrollees.

What farmers must do

While KyCGA/KySGGA staff helps in the administrative process, there are several eligibility requirements associated with the program, many of which farmers are already doing depending on whether they are signed up in a soil or forestry program. Some of those do’s and don’ts include:

•For continuous conservation tillage projects, “a five-year commitment to continuous Conservation Tillage (No-Till or Strip-Till) on enrolled acres
•Projects can be backdated one year to allow credits for previous no-till crop (if applicable)
•Land is not allowed to lie fallow for any year it is in the program
•Ripping/injecting processes are allowed
•No more than one-third of the residue may be removed
•No more than one-third of the surface may be disturbed
•If the implement must be followed by a leveling or smoothing activity, it would not qualify

For permanent grass cover projects, “land must be converted to grass from another land use (for example, row crops to pasture) since Jan. 1, 1999; projects can be backdated as far back as 2003 as long as proof conversion date can be provided (FSA-578); grazing and hay-cutting are allowed (but not required).”
Forestation project requirements include:

•Forest plantings must have occurred since Jan. 1, 1990, on land that was previously “degraded” or “unforested”

•There are two methods of quantification: individually, and per-project, using approved Growth and Yield Model and Carbon Accumulation Tables provided by CCX

•No thinning or harvesting is permitted

For managed forest projects “owners must sign a non-binding ‘letter of intent’ that states an intent to keep the land in forest for 15 years from the original contract inception date; project owner must provide a certificate of Sustainable Forest Management (American Tree Farm Program is most common); thinning and harvesting is allowed (sequestration rate is reduced to account for removed biomass); projects must be quantified individually using an approved Growth and Yield Model (no Carbon Accumulation Tables are allowed).”

There are many more requirements and rules, all of which can be found by going to www.kycorn.org/ccx/index.htm or by calling 800-326-0906. A second group of participants is currently being organized. Those contracts will extend from 2008-12, with 2007 as an optional bonus year.