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In 2020, Crawford County farmer Kelly Garrett became the first farmer in America to sell carbon credits to a corporate buyer.

In early December 2020, news started spreading about Crawford County farmer Kelly Garrett, who found a $341,000 treasure hidden in his soil.

More specifically, that fortune was worth $341,175 — in terms of carbon.

This generated a feature story on Christmas Eve 2020 in the Wall Street Journal, when Garrett became the first farmer in America to sell carbon credits to a corporate buyer.

“Carbon credits aren’t a shell game,” said Garrett, 49, a sixth-generation farmer who runs a 7,000-acre, no-till corn and soybean farm near the Arion/Dow City area. “They’re an incentive to farm in a more regenerative way to effect positive change, plus they can offer another revenue stream for farmers.”

Since 2012, Garrett Land & Cattle has been 100% no-till and has implemented additional eco-friendly practices, such as utilizing manure, cover crops, livestock grazing, crop rotations and more. Garrett also works with the Feed Energy Company in Des Moines. His trucking company not only hauls products for Feed Energy, but Garrett gets a nutrient-rich, liquid plant food product made from a liquid byproduct of Feed Energy’s production process. He applies it to his own acres, plus he custom applies the product on 50,000 acres.

All this attracted the attention of Locus Agricultural Solutions, whose team approached Garrett in 2020 about participating in CarbonNOW, a carbon credit program. “I didn’t think it would amount to anything, because carbon programs in years past didn’t pan out,” Garrett said.

“I was willing to try it, though, because I thought, ‘What do we have to risk?'”

The Locus team connected with Garrett after checking out XtremeAg (www.xtremeag.farm), which Garrett and a small group of like-minded farmers created in 2019 following an Ag PhD field day in Baltic, South Dakota. Their online platform offers a wealth of free videos, along with the opportunity for members to get farming expertise from top growers focused on enhancing crop yields and improving return on investment (ROI) and boosting farm profits.

Garrett worked with the CarbonNOW team to sell the carbon credits at $15/credit in a carbon marketplace called Nori. E-commerce giant Shopify became the first customer when the company purchased 5,000 tons of carbon credits for $75,000 on Dec. 1, 2020.

“They wanted to offset their carbon emissions from Black Friday,” Garrett said.

Within nine months, all of Garrett’s carbon credits were sold. To put a price tag on those credits, CarbonNOW had asked Garrett to send data about his crop yields, crop rotation and fertility plan for 3,000 acres from 2015-2019. The company took this data and also used algorithms to run some numbers.

After going through the documentation and verification process, it was determined that Garrett had removed 22,745 tons of carbon from the atmosphere during that five-year time period — equivalent to offsetting the average annual emissions of almost 5,000 passenger vehicles.

“With 1 ton of carbon equaling one carbon credit, and one carbon credit valued at $15, that’s how we got $341,175 of carbon credits,” said Garrett, who now helps other farmers profit from the carbon credit market.

From sustainable ag to regenerative ag

When Garrett started farming more than 25 years ago, he never envisioned anything like the carbon credit market evolving into a revenue stream the way it is today. He just tried to follow in the footsteps of his grandfather and father and look for opportunities to make the most of their hilly Crawford County farmland in Paradise Township and beyond.

“This area is part of the Dane Ridge Watershed, and my grandfather John Weiss was installing terraces and dams in the 1960s,” Garrett said. “My dad started no-tilling corn into beans. When I started farming full-time in 1998, we began no-tilling our beans into corn. By 2012, we put row cleaners on the planter and went 100% no-till.”

It’s important to be open to new ideas, stressed Garrett, who farms with his sons, Connor, 25, and Cael, 21, along with a number of employees. “The most expensive sentence in farming? ‘I’ve always done it that way.'”

In 2016, Garrett began using drip irrigation on his acres. The system is installed 16 inches below the soil surface. Compared to a traditional pivot irrigation system, drip irrigation uses about 25% less water, Garrett noted. There’s no mud, since the water isn’t sprayed onto the soil surface. This also means less risk of fungal diseases that can take hold when plant leaves are wet.

Drip irrigation also allows for zone treatments, from watering to fertigation.

While all this might sound good, what about the cost?

“An acre of irrigation costs $2,500,” Garrett said. “Let’s say an acre of land costs $12,000. That means the cost of drip irrigation is 21% of the value of the land. With drip irrigation, we can add a 30% to 35% yield boost with corn, and 35% to 50% with beans. Irrigation is not expensive, relative to the value of farmland today, especially when you can achieve these yield gains.”

The same year he began using drip irrigation, Garrett also decided to enter the National Corn Growers Association’s (NCGA) corn contest. Through the years, he has won multiple awards in the no-till irrigated category, including top honors for Iowa. He hit 338 bushels per acre in the 2021 contest.

Now he’s on the hunt for 400-plus.

“I want to break the highest yield that Francis Childs from Iowa got in 2002, which was 442 bushels per acre,” Garrett said.

Taking advantage of the 45Z tax credit

This is just one of Garrett’s many goals. He also wants to make the most of the federal government’s Section 45Z credit. The Section 45Z tax credit will provide significant financial incentive for ethanol producers to make necessary capital expenditures to capture and process carbon dioxide and for farmers to increase production of low carbon intensive corn for ethanol production.

That’s where carbon intensity (CI) scores come in — along with the potential for farmers to profit from carbon credits.

“The average score of an ethanol plant is 55,” Garrett said. “The 45Z tax credit is a 2-cents-per-gallon tax credit for every point a plant is below 50. If you use the Department of Energy’s estimate that 2.75 gallons of ethanol can be produced from 1 bushel of corn, this tax credit equates to approximately 5.5 cents per bushel.”

What’s this mean for farmers? The lower your CI score, the better. Garrett’s score currently is a negative 6, thanks to the regenerative ag practices he uses on his acres.

“That translates to $1.925 per bushel, with the Z45 tax credit,” he said.

To help more farmers profit from carbon credits, Garrett encourages them to visit https://regenerativerootssolutions.com/.

“We represent Truterra and Arva, which we feel are the two best carbon-credit programs for farmers,” he said.

Through XtremeAg (which now includes the XtremeAg TV show on YouTube and AcresTV), Garrett shares how he incorporates a variety of regenerative ag practices, from no-till and cover crops to variable-rate technology, to boost his farm’s yield and profit potential, including carbon credit programs.

“It’s not enough to be sustainable, which means you’re just holding steady,” he emphasized. “Regenerative means you build back. It’s very much attention to detail. There isn’t one silver bullet. On our farm, we’re on two paths of regenerative ag and high yields, and these paths are converging.”