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Published June 29, 2010, 01:32 PM

VALLEY CITY, N.D. — What does a good ag offset look like? That is the question from Bruce Knight, former chief of the U.S. Department of Agriculture’s Natural Resources Conservation Service, as he starts his duties as moderator of a panel on agriculture and carbon policy, June 10, at the Valley City (N.D.) Eagles.

By: Mikkel Pates, Agweek

VALLEY CITY, N.D. — What does a good ag offset look like?

That is the question from Bruce Knight, former chief of the U.S. Department of Agriculture’s Natural Resources Conservation Service, as he starts his duties as moderator of a panel on agriculture and carbon policy, June 10, at the Valley City (N.D.) Eagles.

Knight notes that this may “be one of the first times you’ll have an opportunity to be a part of the establishment of a market.”

The event drew about 30 people, and included state leadership from sugar, corn, barley and ethanol groups. Also in the room were biomass and wind experts.

North Dakota Agriculture Commissioner Doug Goehring, had expressed concerns after recent discussions he’s had with EPA officials. Goehring reports the agency is moving forward on establishing greenhouse gas emission levels.

“Ag is on their radar, but the only thing on their radar is animal ag,” Goehring says.

In apparent disbelief, Goehring adds that wildlife and nature are “off the table,” and that even though wildlife and wild areas such as wetlands emit greenhouse gases. He says that agriculture is designed to produce food, fuel and fiber.

“If we are going to design a program that’s just for carbon, we’ve missed the mark. We haven’t served society, not only the people of just this country, but globally,” he says. “I believe that agriculture — if this is done right — can benefit. But we have to be the ones designing that policy.”

Some producers are seeing the potential income from “offsets” a system of rewarding individuals and companies for safely storing more carbon than they are releasing.

Gene Goven, a farmer and rancher from Turtle Lake, N.D., spoke about the benefits of cover crop cocktails and other efforts to improve productivity and enhance soil qualities, but others aren’t as excited.

Questions, not answers

Nick Sinner, executive vice president of the Red River Valley Sugarbeet Growers Association, says his industry “doesn’t have a lot of answers but we do have a lot of concerns.”

He says no-till practices don’t work with beets in the Red River Valley, and that if “we go out of business” then sugar will come from “parts of the world that have less regulation than we do.”

Steve Edwardson, executive director of the North Dakota Barley Council, notes that the malting and brewing industry is “not a small energy user.” He only half-joked that if the government over-regulates the malting and brewing industry, then “you don’t have any beer, thank you very much.” Hitting a more serious tone, he says there is “a lot of fragmentation in the whole cap-and-trade and sequestration program and it needs to be refined and narrowed.”

Tom Lilja, executive director of the North Dakota Corn Growers Association, speaking in place of Bart Schott of Kulm, N.D., who will become president of the National Corn Growers Association next year, says the cap-and-trade plans have huge implications because things like diesel fuel are expected to go up 32 cents per gallon because of it, by 2020. He says there is “no guarantee” that fertilizer industries will receive “sufficient allowances” for being energy and trade sensitive.

He says there is a concern that “every corn grower will recognize a cost of production increase” but that no-till producers in the Southern seaboard, would benefit the most from credits.

Coming, regardless?

Laura Sands, consultant and coordinator of the Ag Carbon Market Working Group, has been working for several years to help organizations discuss what kinds of climate policies will work with agriculture.

Sands spoke about “marketplace drivers” for carbon policies, some of them led by companies such as Wal-Mart, Costco, Kroger and Safeway who are asking suppliers for information about carbon footprints.

“Applications” are coming available on devices like for iPhones, for example, that will help them see not only the price per unit on an item in the store, but also its “sustainability score,” which includes a carbon footprint analysis.

Sands says agriculture still is seen as a source of “offsets” for industries that are net carbon emitters beyond their caps.

She says a recent study by the Memphis, Tenn.,-based Informa research company in 2009 says that agriculture, in one version of cap-and-trade, would see a rise in production costs of 1.2 percent for corn and soybeans and 1.9 percent for wheat through the year 2025 when a provision runs out that exempts fertilizer. Wheat and corn will see higher cost increases than soybeans because they use more nitrogen.

Sands says that some farm organizations want to think that climate change legislation can just be killed, but she notes that the U.S. Supreme Court ruled several years ago that the U.S. Environmental Protection Agency should and can regulate greenhouse gases. There is a Senate bill to push back on EPA regulation, she adds, but the House is unlikely to pass it and President Obama “won’t sign it.”

Farmers face the threat that if not regulated directly, the EPA would regulate greenhouse emissions for “all things within agriculture.” She says the best option for agriculture likely is to be the cap-and-trade, where at least there will be some payments coming back the other way.

China, India moving

She says that while Americans fear the U.S. will be acting alone, that other emitters, including India and China, are moving ahead. She says China has announced a 20 percent reduction in those emissions in 10 years. She says that while the federal government is moving slower, some states are taking action on their own, and there are now “greenhouse gas nuisance suits” cropping up around the country. And some of the nation’s largest companies, including John Deere and Caterpillar are asking Congress to enact carbon caps — some, while enjoying exceptions.

Sands says agriculture must be “at the table” to make sure any cap-and-trade policies are reasonable.

As an example, she says, agriculture helped derail an earlier proposal that would have led to massive “afforestation,” a word the government uses for tree planting, as one of the “only options for agriculture” to get offset credits.

Among the current keys for agriculture is to make sure the U.S. Department of Agriculture, not the EPA, is the lead agency for agricultural and forestry offsets. She says the policy should be flexible, meaning shorter-term contracts. She says there will be “stackability” of credits from other conservation or stewardship program payments, and that there will be generous crediting for holders of early offsets.