ROSTHERN, Sask. – Cash-strapped farmers hoping to supplement their incomes by signing carbon sequestration contracts should take a slow, cautious approach, say officials from the Saskatchewan Soil Conservation Association.
SSCA director Laura Reiter told farmers last week that the risks and liabilities involved with signing a carbon sequestration contract could outweigh the benefits.
In particular, she warned against signing contracts that oblige farmers to sequester carbon permanently. Permanent sequestration could mean forgoing tillage for up to 20 years.
“There are two companies out there that I know of that are talking to farmers and trying to get them to sign up acres,” Reiter said at the Seeding Trends 2006 field day, held June 7 near Rosthern, Sask.
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“But right now, there are no federal rules regulating carbon sequestration and the markets are limited. We strongly recommend that farmers read the fine print on everything they’re considering signing and watch liabilities very closely.”
A couple of years ago, there was considerable interest in carbon sequestration among farmers who saw it as a potential source of income.
But Ottawa has yet to establish guidelines to regulate the industry, and brokers that operate in Canada have little or no track record.
Blair McClinton, executive director of the SSCA, said carbon sequestration is an environmental friendly practice that could one day be used to augment farm incomes.
For now, however, there are too many unanswered questions.
“I think if there’s a dollar in it, farmers are probably still interested as long as it’s not too much of a hassle for the money involved,” McClinton said.
“I guess my question at this point is why not take a wait and see approach until we see a system that is more concrete? I think that’s the most prudent approach for most farmers to take.”
Warnings aside, the SSCA is continuing to investigate the potential of carbon sequestration in the West.
The association is administering a three-year pilot project under a federal program called the Pilot Emission Removals, Reductions and Learning initiative, or PERRL.
Under the initiative, the SSCA has signed nonbinding sequestration contracts with more than 200 farmers in British Columbia, Alberta, Saskatchewan and Manitoba.
Farmers who sign a contract receive an annual, per-acre payment for agreeing to manage their land according to guidelines established by Environment Canada.
Farmers can opt out of the program but those who do forgo the annual payment, which ranges from $2.50 an acre up to $5, depending on the type of soil involved and the management practices used.
According to McClinton, the project was designed to learn more about the administration of carbon sequestration contracts and to identify potential problems such as farmer liabilities, contract obligations, monitoring and compliance.
“Basically, we wanted to learn about setting up a system and identify any administrative challenges that might be involved.”
About 205 farmers signed on the PERRL project last year and another 30 will be added in 2006, McClinton said. About 50,000 acres were under contract in 2005.
Interest in carbon trading is still high among farmers but expectations of large payouts have been tempered, Reiter said.
“I don’t think there’s anyone out there that’s looking at this like it’s a silver bullet.”
