4-H workshop gives landowners new revenue options
January 21, 2009
On the night of Jan. 12, the Crawford 4-H Fairgrounds hosted a carbon credit workshop put on by AgraGate Climate Credits Corp. AgraGate is the nation's largest supplier of carbon credit aggregation services to agriculture. The company basically helps farmers with no-till or strip-till planted crops make money by selling the carbon credits the farmer has obtained by either letting a field lie fallow or by planting new grass seed.
Before the presentation from AgraGate, Steve Meng from Base Camp Leasing and District Forester Mike Coggeshall both gave talks. Meng spoke about leasing hunting rights. His company works with both landowners and hunters by arranging leases so that landowners can lease their land to a group of hunters who want a place to hunt.
Meng said that leasing hunting rights has been growing in popularity. Hunters along the coasts of the United States and in big metropolitan areas are losing hunting grounds to development, state projects and other practices. These people are willing to pay to have a place to hunt so they decide to lease the hunting rights to land in the Midwest where there still exists large tracks of hunting ground. The lease is not a transfer of ownership; the landowner still owns the land.
Both the hunter and the landowner sign a contract that details the terms agreed upon for the lease. Meng assured those present that any kind of terms the landowner has, like no four-wheelers, will be present in the contract and the hunters must abide by those rules. He said that problems between hunters and landowners are rare, and he's only had to kick people out of the program three times in nine years.
"They're not going to spend this kind of money and then screw it up," Meng said.
The amount a person get for a lease and the number of hunters allowed to hunt on the property is determined by the hunting value of the land, which usually translates into how much woods there are on the property. Fields and crops are pluses, as well, as they provide variety and food sources for large game and hiding places for smaller game.
Landowners who lease their land are put under the protection of a $1 million umbrella policy. This insurance policy holds the landowner harmless, which means they can't be held liable if something like a hunting accident were to happen on their land.
After Meng, Coggeshall spoke about the Indiana Classified Forest and Wildlands Program and the American Tree Farm System.
The definition of a classified forest or wildland is land that contains a minimum of 10 contiguous acres supporting growth of native or planted trees, native or planted grasslands, wetlands or other acceptable types of land cover that have been set aside and managed for the production of timber, wildlife habitat and watershed protection. There can be no buildings nor livestock grazing on the land either.
The advantage of having a forest or wildland classified is that it eliminates the property tax on that piece of land. The property owner can also still sell timber on the land if it is done correctly and according to the Forestry Division, Coggeshall said.
The American Tree Farm System is not a government program but one promoted by the logging industry. Like the classified forest, a certified tree farm must have 10 contiguous acres to qualify. Unlike the classified forest, there is no tax abatement.
Coggeshall said there are no current big advantages for getting a certified tree farm, but that there is a push for all the lumber in the state to be certified. This means that in the future if a person's forest isn't certified, they won't have a market.
AgraGate soil specialist Chad Martin gave his presentation last, starting by going over the history of his company and exactly what it is it does.
AgraGate was created in 2003 as an expansion of the Iowa Farm Bureau Federation Carbon Credit Aggregation Program. The company combines carbon credits from offset projects from farmers, ranchers and forest owners into large pools. The pools are verified by a third-party auditing service and then offered for sale on the Chicago Climate Exchange (CCX).
The CCX is like the New York Stock Exchange except instead of selling and buying stock, it is selling and buying carbon credits. The members of CCX voluntarily agree to reduce their emissions of greenhouse gases by 6 percent below their 1998 to 2001 baselines by 2010. They can do this by reducing emissions internally, purchasing carbon credits from other CCX members who have exceeded their required reductions or purchasing offsets. Only half of the reduction — 3 percent — may be done with the purchasing of offsets; the other half must be done internally.
The offset aggregators are different members of the CCX. They don't buy credits; they only supply them. The aggregators are usually firms, like AgraGate, that handle pools of agricultural offsets. Research has shown that no-till or strip-till planted crop stores an average of 0.6 ton per acre more carbon that normally tilled land in Zone A (the Midwest and the Southeast). It's a little lower than that in other parts of the country. If a new grass stand is planted on top of a previously cropped land, then an additional one ton of carbon dioxide is sequestered per acre. The stored carbon creates an offset that can be sold on the CCX.
If a person's land is a forest, the amount of carbon depends on the species of trees, the number of trees and the age of the trees. The carbon credit per acre level is determined after a forester evaluates it.
Martin said the prices on the CCX are extremely volatile and to not be discouraged by a low price. The price can change by as much as a dollar on a daily basis. AgraGate constantly watches the market so it knows when to sell. It usually doesn't sell when the price is under $3, Martin said.
So, since the price right now is $1.90 per credit, it isn't selling. The highest the price, so far, has been has been $7.90 and that was last summer when gas prices rose to record levels. During that time, the company was dumping as many as three million credits a day, said Martin.
While joining the CCX is voluntary now, Martin said that his company sees cap-and-trade regulations as something the federal government could be getting into within the next decade. While the credits may not be worth a lot now, they will be in the future, he said.
One day they might even catch to up the European prices on the Euro CCX, which currently trades at $30 a credit.
For more information on AgraGate or to see a sample soil or forest contract, visit www.agragate.com. Its toll-free number is 1-866-633-6758. For more information on Base Camp Leasing, visit www.basecampleasing.com or call 1-866-309-1507. For more information on the Tree Farm or the Classified Forest and Wildlands Program, contact Coggeshall at 738-7694.