Conservation and carbon credits

Chris

Barron: Welcome everybody to another episode of the Ag View Pitch, and today we have Bill Northey with us who is Iowa Secretary of Agriculture and the Undersecretary of Ag for the U.S. and now is working as a consultant on the conservation side of things. Bill, how's it going today?

Bill

Northey: Great to be with you, Chris. It's wonderful.

Chris

Barron: Yeah, it's awesome to have you on. And, and so really the purpose of this conversation here today is to talk a little bit about conservation And some of the things that you were doing as Under Ag Secretary, you were working with the farm program and a lot of the things to do with conservation and carbon credits and those kind of things. So what I'd like to do is have you give us a little introduction of, of kind of what got you into this space and, and then we'll kind of get going on the conversation around conservation.

Bill

Northey: Yeah, I'd go back as far as even my farming operation. We were around Spirit Lake and Okoboji and so care a lot about water and, and conservation and, and just those kind of environmental issues, uh, growing up. Did no-till and cover crops and, and those kinds of things. And then as Secretary of Ag in Iowa, we focus a lot on water quality and create a water quality initiative saying each farmer needs to figure out how they fit in this, but let's figure out ways to keep more of that nitrogen and phosphorus on our farms rather than allowing it to leave the farm. Then at USDA, NRCS is, is a huge part of what we did, about 10,000 employees, offices all over the country, all those conservation programs, and, and really got a chance to be able to see how different it is in different places. Obviously, and it's different in Iowa than it is in Louisiana or, or Arizona or California.

And so got a chance to be able to see how local it is, how different it is. When I came back from USDA in January of '21, I first started to reach out to folks and said, what are you working on? What are you interested in? It kept coming back around conservation, sustainability. What's that all mean? Is there something real or is it just a political flavor of the month or is it something that has some legs. And I believe from my time at USDA and watching things, watching things now, this thing has legs. Investors care about this, companies care about it. You know, certainly the carbon piece and climate. I'm not a fan of blaming every storm on climate change, for sure. And I'm not even— I don't spend any time really on that.

The science of all that, but I sense there's such a momentum around this that, that climate and, and the understanding of the carbon cycle and, and the other, you know, methane and other things is something we're going to all need to be aware of and figure out how it fits in our operations. Just like most ethanol plants right now know what their carbon intensity score is if they're selling their ethanol in California. We all are going to figure that out over that time, or over time, whether we're selling to an ethanol plant or whether we're selling to a, you know, selling our corn to a hog producer. We're going to need to know those kinds of things as well as time goes on.

Chris

Barron: Yeah. So what I'd like to do is if we could, if we could drill down to the farm level, one of the things that we see and hear a lot in the media is kind of what's going on at the at the big picture level of, you know, ethanol and, and, you know, your— what, what companies are looking at for carbon credits and that kind of thing. What I'd like to ask you is, as a farmer, and as our farmer listeners hear this conversation, what things specifically do we need to be looking at for 2022? What things on the farm, actionable, can we do that are not only beneficial for the environment, beneficial for our businesses as producers.

Bill

Northey: So I think we all want to figure out ways to be able to do things that are, are, are soil-friendly. So, so health-friendly. Let's understand if there's better ways to measure our own soil health a little bit, you know, whether it's soil testing that we— let's just take it, start in one field. Don't, don't try and do it everywhere all at the same time. Try cover crops if you haven't tried cover crops, very small scale, just try them. And if you're doing a lot of COVID crops, try them in different ways. Try, try planting them earlier, seeding them earlier or later, or different rates, or different combinations of COVID crops. But try little pieces. If you're, if you're not using no-till or strip-till now, do that with the field. Have somebody custom Calm down, change all your equipment before you figured it out.

Every place is a little different, every operation is a little different. Try to see if somebody comes to you in the next 3 to 5 years and said, "I want carbon intensity of X and here's our measurement. Can you do it?" You need to know whether you can do it or want to do it and what's that value worth for you. Are you not going to do it unless you can get $50 an acre, or are you going to do it because you want to do it anyway and you'll do it for $10 an acre? None of us know what folks are going to come at. And then go out and, and learn from your friends and neighbors and, and talk to them. Get to field days and hear somebody talk about, you know, do you end up with extra bug problems? Do you end up being able to not use as much herbicide and if you use the right cover crop seeded the right way against some of our weeds out there. Try those things just a little bit.

You don't have to race towards selling your carbon credits off the farm. In fact, I'm one of those that say slow walk any of that. We don't know what carbon is going to be worth. 3.25 corn looked pretty good about a year and a half ago. Maybe $10 an acre carbon sounds good. To some people, but it may not really be enough to do the kinds of things that we need to do. We need to let it play out.

Chris

Barron: So what do you think farmers, you know, going into the next year or two with the farm bill and some of the things that will be coming at us, do you have any insight or any, any thoughts on some of the things that may be coming from the farm program and some opportunities that we need to be watching for specifically or looking at?

Bill

Northey: I do think that there will be, um, some program incentives, whether it's cost share, other things. I really think the focus is going to be voluntary, um, and so you will have a chance to be able to engage or not. Um, I, I don't think you want to use that as an excuse to just not pay attention to it because it may be worthwhile financially. You may have a landlord or future landlord that really cares about this. Your, your first purchaser may really care about this later. And if your grain elevator says we're going to pay, you know, an extra 20 cents a bushel for, for corn that had a cover crop and that was no-till, you need to know whether you want to participate in that or not. So, so I do think it'd be voluntary. It's not going to be mandatory. I do think this administration is very interested in it. I think our businesses are interested in bringing technologies that can help.

There's a lot of conversation is around soil carbon. And, and I do think that's important for us to be aware of, but it's also going to be around what fertilizer we use or whether we use an inhibitor on that fertilizer or whether we, uh, the timing of that fertilizer, or if we can replace it with manures in certain cases, uh, those things all contribute towards a carbon intensity score as well. Figure out if you can find somebody that can do kind of a rough carbon intensity score too, and you can start to figure out where you're at. None of us know exactly what that looks like yet, but there's folks out there trying to come up with some of those, and the earlier that you're in on it, the more ready you'll be when it gets some form to it.

Chris

Barron: Okay, so you know you're doing consulting in this area, so specifically— if I'm a farmer and I, I call Bill Northey and say, hey, I'm interested in learning more, what, what's that look like? What, what do you go through, um, with regard to that conversation and, and where does that take you?

Bill

Northey: So mostly I'm doing it with companies. I'm doing it with a machinery manufacturer that says, okay, so we've got some data on our equipment. Should— how, how do we help a farmer prove their activity or lack of activity. How do we be able to do that? How do we make a farmer— sure, a farmer can turn that on or turn that off or send it to the right place. Others that are, you know, co-ops that are saying, what should we be involved with here? Should we offer this to our farmers? What should we do about biologicals and others? Will there be extra incentives in the market for some of those if they create some fertilizer efficiencies and other kinds of things. So mostly helping associations or companies, certainly with farmers. I do some speaking, and in those cases it is sharing, get engaged yourself, find ways.

There may be somebody in your area that's doing something, and so find those other folks, get to field days, and encourage folks to do that. I don't, I don't think there's anything— some of the larger farmers have stepped up and the big carbon buyers are interested in being able to have lots of acres and they're making some sales. And they're willing to do that and it dollars up when you got thousands and thousands of acres.

Chris

Barron: Right.

Bill

Northey: So I think it's worthwhile for some of those folks to be able to do that. For the bulk of the folks, We're still in the learning and growing kind of mode out there.

Chris

Barron: Okay, anything else that you think farmers need to be aware of what's coming our way? Any, any final thoughts on, you know, these are some key things we need to be watching from a conservation perspective?

Bill

Northey: Well, you know, the train hasn't left the station. There's plenty of things, you know, it's just key things to watch, as you say. And so, I'd say watch and pay attention. Don't just because you see 4 headlines in a row doesn't mean this thing is all settled. In fact, my line is, I think more— there have been more headlines written in than there have been farmers that have sold carbon credits so far. So, but there are some, it's developing, watch it. There are some of these. I saw an announcement the other day that was really— there was nothing in that announcement for a farmer. They're just telling their investors how, how they're protecting themselves. And I would say to me, that's one of those signals that this likely has legs. Investors care about this. Companies care about this because the people that invest in those companies care about this.

So as you watch that, I think that'll convince you that, that there's some ways to get engaged here and learn from things. I think we're going to see Lots of new players, extensions, uh, getting more and more involved, uh, your local co-op and others are getting involved, your association, whether it's corn, beef, pork, dairy, soybeans, everybody's getting involved and figuring out how they can help their farmers through this. You're going to get some help, but, but help yourself and trying some things and learn some things. And there's an old line that any kind of technology or big kind of shift, whether it's electricity or maybe it's going to play that way in carbon, it takes longer than any of us think that it's going to take, but it's more consequential than we think as well, that it kind of changes the whole perspective of what we look at.

You know, when electricity came, it took a long time to happen, but it changed everything. Now, will carbon do that same kind of thing? A reason to pay attention without knowing exactly what that endpoint looks like.

Chris

Barron: Yeah. Good points. I think the main, the main message here is there's a signal here for us as farmers to pay attention to. The opportunities are coming and there's some things we can do to help ourselves in the meantime with, you know, like you said, trying some of these things on a small scale, whether it's a little strip till, It is, you know, working toward, you know, different things on the farm with conservation and cover crops or whatever it is, so that we're ready for what's coming our way.

Bill

Northey: Perfect summing it up, Chris.

Chris

Barron: Very good. Sounds good. Well, hey, Bill, Bill Northey, thank you very much for joining us today. We really appreciate it.

Bill

Northey: Very good. Thank you, Chris.

Chris

Barron: You bet. Thanks everybody for joining us again on the Ag View Pitch, and we will catch you next time.