Hey there, dairy disruptors. Welcome to the Bullvine
Podcast, where we dig into the real stories and
real profits shaping our industry. Today, we're
cracking open a topic that's turning manure into
money. You've heard the hype. Carbon credits
could net you $1 ,200 per cow. But is this a
gold rush? or a green mirage. We're cutting through
the barnyard BS to expose how methane reduction
is flipping environmental compliance into cold,
hard cash. From anaerobic digesters that fuel
trucks to feed additives that slash cow burps,
we'll break down the tech, the risks, and the
payouts. Strap in. This isn't your granddad's
dairy farm. Forget milk price volatility. The
next big profit center on your dairy farm might
just be the area your cows are breeding. Or maybe
more accurately, what they're belching. Exactly.
We're diving deep today into this, well, surprisingly
real potential of turning methane reduction into
cold, hard cash. Yeah. It sounds a bit wild,
maybe, but this could actually be a game changer.
It really is a fascinating evolution, isn't it?
Dairy producers are already masters at an incredible
conversion. Right. Feed into milk. Precisely.
Taking feed, turning it into that essential product.
And now we're looking at a, well, a similar kind
of opportunity. But this time it's about transforming
what's often seen as, you know, an environmental
headache. Yeah. Another cost center. Into a genuine
revenue stream. Yeah. It's really about spotting
value in a whole new place on the farm. Absolutely.
And let's face it, the moment we hear environmental
initiatives. The first instinct for many of us
is probably to brace our wallets, right? It often
feels like just another cost, you know, right
up there with keeping somatic cell counts low
or navigating the latest farm program updates.
But our sources this week, they actually paint
a, well, a pretty different picture. They highlight
some really forward -thinking producers who are
kind of quietly tapping into profits. That could
maybe even rival those top tier component premiums
we all chase. That's interesting. Yeah. The core
message seems to be either you're positioning
yourself to gain from cutting methane or, well,
you're potentially leaving a serious chunk of
change on the table. And that really is the core
of it. Yeah. Dairy farmers are experts at optimizing
one biological process, right? Milk production.
Right. Now, there's a pretty strong case to extend
that expertise to another emissions. Okay. Look.
The global push to address agriculture's environmental
footprint, that's not going anywhere. No, definitely
not. So the real question for you, the listener,
isn't necessarily if you'll need to think about
reducing emissions, but how you'll approach it.
Right. Proactive or reactive. Exactly. Will you
proactively turn this into an advantage, maybe
a new income source, or will you find yourself
sort of playing catch up later? And this whole
system, by the way, revolves around something
called carbon markets, driven by regulations
like the Low Carbon Fuel Standard, the LCFS in
California, and the Federal Renewable Fuel Standard,
the RFS. These are basically systems that put
a value on reducing emissions. Okay, let's unpack
this because I know what's going through a lot
of your minds right now. Is this carbon gold
mine talk actually legit? Or is it just, you
know, the latest shiny object being waved around
by consultant? Maybe right up there with those
milk price forecasts that always seem a little
optimistic. Yeah, I agree. We've even seen some
pretty eye -popping figures circulating like
$800, even $1 ,200 extra per cow. annually from
these programs. Right. So what's the real story?
What's the unvarnished truth here? Yeah, it's
really crucial to inject a strong dose of reality
here. That $800 to $1 ,200 figure, our sources
suggest that's definitely way up in the realm
of an extremely optimistic best case scenario.
Okay. It's not the typical result you should
be, you know, factoring into your budget. Like
expecting every heifer to catch first service.
Exactly. Or every cow hitting some record peak
milk. theoretically possible, maybe, under perfect
conditions, but certainly not something you'd
bet the farm on, literally. Okay, so what's the
more down -to -earth picture then? Give us the
realistic numbers. Okay, so based on recent analyses
of anaerobic digester projects, the ones that
are actually up and running producing renewable
natural gas, or RNG, the typical annual revenue,
it's looking more like... $400 to $450 per pound.
$450, okay. Now that's when you combine the credits
you get from California's LCFS and the federal
RFS credits. Yeah. So look, it's still a significant
amount. No, it's not nothing. No, it's in the
neighborhood of $1 .25 to $1 .50 per hundred
weight equivalent, according to our sources.
But it's definitely not the guaranteed carbon
gold mine that maybe some folks are leading you
to believe. Right. So the opportunity is real,
but maybe not quite the instant riches some are
suggesting. Precisely. Which leads to the obvious
question then. If this is such a potentially
profitable area, why aren't more dairy producers
diving in head first? What's holding the industry
back? That's the million dollar question, isn't
it? Or maybe the $450 per cow question. Uh -huh.
Yeah. Is it just a natural caution about venturing
into unfamiliar territory? Could be. Is there
a healthy skepticism towards yet another green
initiative that might promise more than it actually
delivers? Always a possibility. Or perhaps it
reflects the dairy industry's, well, let's be
honest, sometimes well -known tendency towards
a more measured pace of change. That if it ain't
broke mentality. Yeah, that ingrained, if it's
not broken, don't fix it. approach that sometimes
maybe leaves us a bit behind the curve on new
opportunities. Well, let's dig into why our sources
indicate that the dairy sector might actually
be sitting on a particularly valuable methane
-shaped asset. What makes our methane special,
so to speak? It really boils down to two main
things. First, the sheer power of methane itself
as a greenhouse gas. Right. And second, the specific
ways it's accounted for within these carbon crediting
programs. Okay. Methane power. Break that down
for us. Right. So it's been known for, gosh,
over a century now. Methane is way more effective
at trapping heat in the atmosphere than carbon
dioxide. Significantly more, right? Yeah. Roughly
28 times more potent over a 100 -year time frame
based on the science our sources cite. 28 times.
Wow. So to put it simply. Every little bit of
methane we cut has a much bigger bang for the
buck environmentally. Makes sense. And that's
what the carbon markets are recognizing. Think
of it this way. Reducing just one ton of methane,
that is the same short -term warming impact as
cutting 28 tons of CO2. So that immediately amplifies
the potential value of any methane reduction
efforts in the carbon market. It's kind of like
the difference between hauling a load of whole
milk versus a super concentrated protein supplement.
Ah, okay. Same truck, different value. Exactly.
Same truck, but vastly different impact and value.
That's a great way to visualize it. So where
does all this potent methane actually come from
on a working dairy? Primarily two main sources.
First, you've got enteric fermentation. The cow's
digestion. Yeah, the natural digestive process
happening in the rumen, that amazing fermentation
vat inside the cow. Right. Microbes in there
break down feed. And, well, as a byproduct, they
produce methane. And that comes out how? Mostly
through belching. Erectation is the technical
term. Gotcha. And those high -producing Holsteins,
the ones cranking out incredible milk volumes.
Yeah. Each one can release over 500 liters of
methane. Yeah. Every single day. 500 liters per
cow per day. Yeah. Now, while your jerseys might
produce a bit less methane per head, it's worth
noting they can actually have a higher methane
intensity when you look at it per pound of milk
solids produced. Interesting nuance there. Okay,
so that's the cows themselves. What's the second
big source? The second major contributor is manure
management. Ah, the lagoons. Exactly. When manure
decomposes in an anaerobic environment, meaning
without oxygen. Like in a big lagoon or a deep
pit. Right. It also releases methane. And just
to give you a sense of the scale, our sources
mention a large... say 5 ,000 cow freestall operation
with a sizable lagoon. Yeah. Could potentially
generate enough methane to power maybe a thousand
homes. A thousand homes for manure. Yeah. That's
a significant energy source just, you know, going
up into the atmosphere currently on many farms.
Wow. Okay. So potent stuff coming from both ends,
so to speak. Pretty much, yeah. Now you mentioned
this exceptionally favorable treatment under
California's LCFS. What's so special about that
particular? Okay, this is where it gets really
interesting from a market perspective. The LCFS
assigns negative carbon intensity scores to dairy,
renewable natural gas, or RNG. Negative scores,
how does that work? They specifically give credits
for what they call avoided methane emissions.
Essentially, they're recognizing and actively
rewarding the prevention of that potent methane
from ever entering the atmosphere in the first
place. So it's not just capturing it. It's the
avoiding part that gets the credit. Exactly.
And this particular accounting approach is what
creates this really significant value for dairy
RNG projects that can tap into that California
market. These carbon intensity scores, they basically
represent the life cycle. greenhouse gas emissions
of a fuel. Right. And a negative score means
producing and using that fuel actually reduces
overall emissions compared to, say, baseline
fossil fuel. So it's almost like we're getting
credit not just for capturing the methane, but
for preventing it from being emitted, like a
double bonus. You could kind of think of it that
way. And our sources are quite direct about this.
They state the Gary industry has essentially
been handed a gift with this LCFS accounting.
A gift. OK. But. they also raise a really valid
concern. Which is? How long will regulators keep
such a generous approach if the dairy sector
doesn't really demonstrate a widespread effort
to adopt these methane reduction practices? Ah,
the use it or lose it scenario. Kind of. There's
a real sense of urgency here in the sources.
Yeah. A call to action, really, to seize this
opportunity before that regulatory landscape
potentially shifts. Okay, so methane is potent.
We've got two main sources on the farm cows and
manure, and there's a favorable regulatory environment,
at least for now, especially in California. Right.
So how do we actually go about capturing this
value? What tools are in the methane reduction
toolkit right now for dairy producers? Well,
the current landscape really offers a couple
of main pathways. Each one has its own set of
economics, its own level of accessibility for
different farm sizes. Okay, let's start with
the big one. The technology that seems to offer
the most significant potential revenue. Anaerobic
digesters. Right. Anaerobic digestion, or AD,
is definitely considered the leading option right
now if you're aiming for the highest potential
carbon revenue. Especially when the biogas produced
is upgraded into renewable natural gas, RNG,
for use as transportation fuel. That's where
the big credits often are. But we touched on
this. They're not exactly a small investment,
are they? No, you're absolutely right. The economics
are heavily, heavily dependent on scale. The
bigger is better, usually. Generally, yes. Farms
with larger herds typically say over 2 ,000 cows.
They benefit from economies of scale. Okay. That
scale can make the substantial upfront capital
investment, we're talking often $3 million, up
to maybe $10 million. Wow. It makes that more
financially feasible. So what about the medium
-sized farms, you know, 300 to 1 ,000 cows maybe?
Yeah, for them, the viability of AD often hinges
on a few other factors. Securing significant
grant funding is a big one. Finding opportunities
for co -digestion. Bringing in food waste from
off -farm sources. Right, and getting paid for
taking the tipping fees. Exactly. Those tipping
fees can really help the economics. Or participating
in these cooperative hub -and -spoke models.
Where several farms share a central digester.
Precisely. Sharing the cost and the output. And
it's not just about the carbon credits and the
RNG, right? Digesters produce other valuable
things, too. Oh, absolutely. Beyond the carbon
credits and the gas, digesters generate several
valuable co -products. Such has. Well, one key
one is renewable energy that can often be used
right there on the farm. Cutting electricity
bills? Potentially, yeah. They also produce separated
solids. For bedding. Exactly. Which can be really
comfortable, cost -effective bedding. Yeah. Our
sources estimate potential savings of maybe $80
to $100 per cow annually compared to buying sand
or sawdust. That adds up. It does. And finally,
the liquid digesting. The leftover stuff. Yeah,
but it's nutrient -rich material. Great fertilizer
for your forage crops. Right. It can potentially
reduce your reliance on and the cost of commercial
fertilizers. It's sort of a closed -loop system
with multiple benefits. Sounds promising. But
our sources also mention some practical challenges,
hurdles producers need to know about with digesters.
Yeah, there are definitely practicalities. One
significant one is sand bedding. Ah. Great for
cows, maybe not for digesters. Exactly. Sand
is excellent for cow comfort, helps with mastitis,
but it can be pretty problematic for many traditional
digester systems. It can settle out, cause wear,
often requires sophisticated and expensive additional
separation equipment. Okay. What else? Another
crucial factor is the dry matter content, the
DM of the manure going in. Right. Too wet, too
dry. Ideally for scraped manure, you're looking
for a DM content somewhere in the 8 % to 12 %
range for optimal biogas production. Okay. Farms
using flush systems, though, which use a lot
of water, often end up with manure that's way
too watery, sometimes below 3 % DM. And that
hurts biogas production. Significantly. Makes
a whole system less efficient. On the flip side,
really thick scraped manure might need different,
maybe more specialized, digester designs too.
So it's not a one -size -fits -all technology?
Definitely not. It sounds like the industry hasn't
quite figured out how to make digesters a universally
accessible solution, especially for those mid
-sized farms. Our source seemed a bit critical
there. That's a key point raised. Yeah. Our source
argues that the way things have developed, it's
largely created a system where only the really
big operations can realistically tap into those
highest value carbon pathways from AD. And the
question is posed. Why aren't we seeing more
of these cooperative models? Multiple mid -sized
farms pooling resources for a shared digester.
And the suggested answer was? It points towards
what's called our stubbornly independent mindset.
That again. Yeah. That, you know, deeply ingrained
tendency in agriculture to operate individually.
Right. And the source argues this same mindset
has maybe hindered progress in other areas, too,
like faster adoption of advanced genetics or
more equipment sharing or even developing more
innovative collective marketing efforts. It's
an interesting, maybe uncomfortable point to
consider. It is. Are we sometimes our own worst
enemy when it comes to collaboration? Maybe.
OK, so digesters are one path. Mainly for larger
farms or through serious collaboration, what's
the other main option our source highlights for
cutting methane and maybe getting credits? For
those farms where a digester just doesn't pencil
out, feed additives offer a much more accessible
entry point. Okay. Additives that work directly
in the cow. Exactly. They target that enteric
methane production right there in the rumen.
And there are a couple of key players emerging
in this space right now. That's correct. Our
sources highlight two leading options becoming
more available in North America. First what?
First is 3 -nitroxypropanol, usually called 3
-NOP, sold under the brand name Bovar, developed
by DSM Firminic, marketed here in the U .S. by
Alonco. And how does that one work? It basically
works by inhibiting a specific enzyme in the
rumen, an enzyme that's crucial for making methane
during normal digestion. Gotcha. And the reduction.
Studies pretty consistently show 3 -NOP can cut
enteric methane in dairy cows by somewhere in
the range of 25 % to 30%. 25 % to 30%. That's
a pretty significant chunk. It really is. But
what about the economics? Our source indicated
they're a bit nuanced. They are. The additive
itself, it has a daily cost. Somewhere around,
say, 15 to 30 cents per cow per day. Okay. Now,
economic analyses suggest that direct performance
benefits, like maybe slightly more milk, might
not always completely offset that cost on their
own. Ah, so you need something else. Exactly.
This is where the revenue from carbon credits
becomes really critical for the overall economics
of using 3NOP. Makes sense. Brink and estimates,
they vary, of course, depending on the carbon
price and farm performance. But they can range
from maybe $0 .10 up to $0 .45 per cow per day
needed from credits. So it really hinges on what
those carbon credits are worth at any given time.
Absolutely. It's not necessarily a guaranteed
profit driver just from the feed efficiency side.
Right. Our source actually makes an interesting
comparison to RBST back in the day. Oh, yeah.
How so? Well, RBST was an additive with a proven
physiological effect, right? Well, sure. But
its adoption required farmers to really pencil
out the return on investment for each dose. Right.
You had to do the math. Same idea here. With
these methane feed additives, a precise economic
calculation, carefully factoring in that potential
carbon credit revenue, is absolutely essential
before you commit. Good analogy. Okay, what's
the other feed additive mentioned? The second
one highlighted is aglan ruminant. Aglan. This
one's a blend of essential oils. It's received
certification from the Carbon Trust for its methane
-reducing properties. That's reduction level.
It's generally more modest with aglan, somewhere
around 10 % to 11%. methane reduction. Okay,
less reduction than 3 -NOP. Right, but the suggestion
is it might offer a more favorable overall economic
picture. How? Through potential improvements
in feed efficiency and maybe increased milk production.
Some analyses cited suggest benefit -to -cost
ratios over 12 to 1 just from performance improvements
alone. Wow, 12 to 1. Yeah, with any carbon credits
generated them being sort of additional financial
upside. So the economic justification might be
stronger even without relying heavily on the
carbon market. Potentially, yes. It's presented
as maybe a more holistic benefit proposition,
less solely dependent on fluctuating credit prices.
Interesting. How easy are these additives to
actually use day to day on a farm? For dairies
already using computerized feed management systems,
you know, platforms like FeedWatch, Easy Feed.
TMR tracker. Yeah, lots of farms have those now.
The implementation can be pretty straightforward.
How so? Those systems can easily track and document
the inclusion rates of the additives in the TMR.
Okay. And they often track dry matter intake
too. Both are absolutely critical data points
for that verification process you need for carbon
credits. Right, the MRV we talked about. Exactly.
So if you're already using those systems for
managing feed, adding another layer to track
an additive isn't usually a huge leap. That makes
sense. If you're dialed in on feed management,
this fits right in. Pretty much. But our source
also had some rather printed words for dairy
nutritionists in all this. Yes, the source was
quite direct there, stating that many dairy nutritionists
aren't yet proactively bringing up methane reduction
strategies or these feed additive options with
their clients. Why not? Supposedly. The suggestion
is they might still be somewhat entrenched into
more traditional mindset. Focused only on milk
per cow. Primarily, yeah. Maximizing milk output.
Maybe haven't fully embraced the growing importance
of, you know, environmental sustainability and
the potential revenue streams tied to cutting
emissions. Okay. So the call to action from the
source is for producers, for you, to actively
engage your feed advisors. Ask them. Demand,
they bring these methane reduction opportunities
and the economics behind them to the table. Push
the conversation. Yeah. It represents a potential
shift in what we traditionally expect from nutritional
consulting. Okay, so we figured out some ways
to actually reduce the methane digesters, additives.
Now, the big question, how do we actually translate
those reductions into dollars? What's the step
-by -step for generating credits and getting
paid? Right, the show me the money part. Exactly.
The journey from cutting methane on your farm
to seeing it hit your lank account involves several
really crucial steps. And our source emphasizes
it's a process many might underestimate at first.
It's kind of likened to the effort and detail
needed to consistently hit those top quality
premiums from your co -op. Ah, yeah. Takes work.
Definitely. The reward's there, but you have
to actively work the system, meet the criteria,
follow the protocols diligently. So what's step
one? Where do you start? Step one is project
identification and then doing a really comprehensive
feasibility assessment tailored specifically
to your farm. Okay. Feasibility. Yeah. That means
clearly defining your strategy. Is it AD? Is
it additives? Something else. Then rigorously
evaluating if it's technically suitable for your
setup. Makes sense. Then you need to realistically
estimate the potential methane reductions you
can actually achieve. Not just pie -in -the -sky
numbers. Right. Carefully project all the costs,
upfront capital. ongoing operational costs, and
thoroughly explore all potential revenue streams,
not just carbon credits, but co -products, efficiencies,
everything. Treat it like a major investment.
Absolutely. The analogy used is perfect. You
wouldn't build a new parlor without calculating
throughput, labor needs, projecting ROI, right?
Of course not. Same level of due diligence needed
here. And be really wary of developers who only
show you those rosy best case scenario projections
without a transparent look at risks and downsides.
Good advice. Okay, feasibility done. What's next?
Step two is selecting a recognized, reputable
carbon crediting program. And identifying the
specific methodology within that program that
fits your project. Okay. Programs like VERA,
CAR. Exactly. VERA, the Climate Action Reserve,
CAR, American Carbon Registry, ACR. Those are
some of the main ones. Right. Choosing a program
is sort of like deciding, you know, are you going
for organic certification, conventional, A2.
grass -fed ah okay each has its own rule book
precisely each comes with its own specific set
of rules management practices verification protocols
you have to follow gotcha so picture standard
picture methodology step three step three is
often a critical sometimes tricky one establishing
your baseline emissions and crucially demonstrating
additionality additionality meaning meaning you
have to accurately figure out what your business
as usual emissions, specifically methane, would
have been without the carbon market project.
Okay. Your starting point. Right. And then you
have to rigorously prove that the reductions
you're achieving are a direct result of your
project and the carbon market incentive. Prove
they wouldn't have happened otherwise. You can't
get credit for something you're going to do anyway.
Exactly. It's compared to trying to get an operating
loan. Yeah. If your books show you're flush with
cash, the lender isn't likely to give you more.
The carbon market wants to pay for new reductions
driven by the incentive it provides. Makes sense.
Okay, baseline set, additionality hopefully proven.
Step four sounds like paperwork. You could say
that. Step four is all about implementing rigorous
measurement, reporting, and verification. KMRV.
Measurement, reporting, verification. Okay. Carbon
markets put a huge premium on integrity and accuracy,
so they demand meticulous documentation to back
up your claims. What kind of documentation? Well,
for digesters, it typically means continuous
tracking of biogas flow rates. Periodic lab tests
for methane concentration, detailed records of
animal numbers, manure inputs, stuff like that.
And for feed additives? You'd need to diligently
track inclusion rates in the ration. measure
feed intake, maintain really comprehensive herd
health and production records. Sounds like DHIA
verification or an organic audit level of the...
The very similar level of detail and consistency
required. Yeah. The good news is many progressive
dairies already have systems that can help with
this. Right. Farm management software. Exactly.
But as our source points out, farms still relying
on very... basic or incomplete records, they'll
likely face real challenges meeting these strict
MRV requirements. So data -driven farms are better
positioned? Generally, yes. If you're already
tracking somatic cell by string or preg rates
by lactation group, you likely have the infrastructure
and the mindset for MRV. Gotcha. Solid records
are non -negotiable. Okay, finally, step five,
the payoff, getting paid. Yes, step five, monetize
your reductions. How does that work? Once an
accredited third -party verifier successfully
confirms your claim reductions are real and meet
the standard. Right. You get issued carbon credits.
Each credit represents a quantifiable amount
of avoided or reduced emissions. And then you
sell them. Yep. You can sell these credits through
various channels. Specialized carbon brokers
exist. Okay. You might have direct contracts
with companies looking to offset their own emissions.
Right. Or you might work through partnerships
with the project developer or an aggregator you
teamed up with. Like selling milk, different
channels, different buyers. Exactly. Just like
milk can go fluid, cheese, powder. Carbon credits
can be marketed differently depending on the
buyer, the project specifics, and the market
they're sold into. Okay, so it's a definite process.
Demands detail, data. Good partners. Now let's
zoom back out. Think practically for farms of
different sizes. What's the most sensible approach
for small, medium, large dairies looking at this?
Yeah, the optimal strategy really does vary significantly
with scale and resources. Our source gives a
helpful breakdown by herd size. Okay, let's start
big. Over a thousand milking cows. What's the
play for them? For these larger operations, the
recommendation really leans strongly towards
seriously considering those capital intensive
technologies. Anaerobic digesters. Especially
RNG for compliance markets. Exactly. Especially
systems designed to capture biogas, upgrade it
to renewable natural gas, and get it into pipelines
for those compliance markets like California's
LCFS and the federal RFS. Because they have the
scale. Right. Their sheer volume of milk and
manure means they can achieve the economies of
scale needed to make that big upfront investment,
the $3 to $10 million potentially pencil out.
Especially when they can access those higher
value LCFS and RIN credits for transportation.
Any examples? Yeah, our source shares a pretty
compelling anecdote. A large Western dairy, about
5 ,500 Holsteins. Okay. Their on -farm digester
is apparently now generating more annual profit
from carbon credits and RNG, about $1 .4 million
after expenses. Wow. Then their core milk production
business, which netted $1 .2 million in what
was considered a good year. That's incredible.
The environmental side project out -earning the
main business. It's a dramatic illustration of
how this can evolve from a side benefit to maybe
even a primary economic driver for some large
operations. Okay, really highlights the potential
at scale. Now, what about the mid -sized farms,
say 300 to 1 ,000 cows? Standalone AD sounded
tougher for them. You're absolutely right. The
economics of a big standalone digester are definitely
more challenging for mid -sized farms, spreading
that capital cost over fewer cows. So what are
their options? Our source highlights several
paths. Actively pursuing and landing significant
grant funding is key. Federal or state programs
supporting renewable energy or emissions reduction.
Okay, grants. What else? Aggressively exploring
co -digestion. Bringing in off -farm organic
waste, food processing waste, maybe municipal
waste. And getting those tipping fees. Exactly.
Those fees can really bolster the revenue side.
Makes sense. And finally, that cooperative hub
-and -spoke model becomes really relevant for
medium farms. Pooling manure, sharing the digester
cost. Precisely. Several neighbors going in together.
And of course, for this size farm, feed additives
become a much more financially accessible, less
capital intensive option, too. Right. The overall
advice for midsize farms is also just focus on
improving overall farm efficiency everywhere
and implement sustainable cropping practices.
Those can have their own carbon benefits, too.
Like deciding whether to buy your own combine
or just hire custom harvesting. That's the analogy
used, yeah. The combine is expensive capital.
Custom harvesting might cost more per acre, but
avoids the huge outlay. Maintenance may be underutilization.
Sometimes this is the smarter financial choice
for a medium operation. Good comparison. Okay,
that covers medium farms. What about the smaller
dairies? Under 300 cows. Sounds like individual
AD is mostly off the table. Generally speaking,
yeah. The economics for an individual on -farm
digester just typically don't work for smaller
farms under 300 cows. Unless there are really
exceptional local circumstances, massive subsidies
may be a golden co -digestion opportunity right
next door. So what should their focus be? Primarily,
carefully evaluating those methane -reducing
feed additives. But with careful math. Absolutely.
thorough cost -benefit analysis, factoring in
any incentives or premiums they might access
for lower -emission milk, optimizing their existing
manure handling and storage to minimize emissions,
maximizing overall production efficiency and
animal health, adopting sustainable cropping
and grazing that build soil carbon. And for carbon
markets specifically. To really participate effectively
and get marketable credit volumes, smaller farms
will almost certainly need to collaborate. partner
with aggregators entities that bundle credits
from multiple small farms right bundle those
smaller reduction volumes into a larger more
attractive package for buyers and the source
was a bit pointed here too about collaboration
among smaller farms yeah quite direct pointing
out that while smaller farmers are often vocal
about challenges they face they've historically
been maybe slower to form the kinds of collaborative
structures needed to effectively tap into emerging
opportunities like these carbon markets. Ouch.
But maybe a fair point. Something to consider
anyway. Okay, so collaboration and finding the
right scale seem key, regardless of size. Now
this idea of early adopters, is there a real
tangible advantage to getting in sooner rather
than later? Our source strongly suggests, yes,
there is a significant early mover advantage
to be gained. How so? What are the benefits?
Several potential ones. First, early players
often get the chance to lock in more favorable
contract terms and pricing for their credits
before the market gets more crowded, potentially
more competitive. Okay, better deals early on.
Second, they gain invaluable hands -on experience.
They develop operational efficiencies with the
tech, navigating the complex MRV stuff. That
can lower costs and improve performance over
time. Learn and curb advantage. Exactly. Third,
being seen as an early adopter, a leader in sustainability
that can seriously enhance your farm's brand.
Build goodwill with processors, consumers, your
local community. Good PR, basically. Can be,
yeah. And finally, having verifiable reduction
projects going early. could strategically position
you better if, or maybe when, future regulations
mandate broader emissions cuts. Getting ahead
of potential mandates. Okay. There are always
risks to being first, right? Downsides to being
on the cutting edge. Oh, absolutely. Early adoption
isn't risk -free. Carbon markets themselves can
be volatile. Credit prices can fluctuate significantly
based on supply -demand policy shifts. Market
risk. Definitely. Plus, the very policies underpinning
these programs, LCFS, RFS, they could be changed,
modified, maybe even sunsetted over time. That
could alter eligibility rules or the value of
credits. Policy risks. Right. The analogy used
in our source is insightful. Compare it to the
early days of robotic milking. Okay. Those pioneers
who jumped in early. They often faced higher
initial costs, a steeper learning curve, more
uncertainty about the long -term ROI. Sure. But
many of those early adopters now enjoy significant
labor savings. Better management insights. Operational
advantages that farms who waited are now trying
to catch up with. So it's a trade -off. It is.
It's about carefully weighing the potential benefits
of moving early against the inherent risks and
uncertainties of a new, evolving market. Our
source notes, the most profitable operators are
rarely the absolute first, but they're never
the last either. Interesting observation. It's
that classic risk reward calculation again. You
don't want to be left behind, but you don't want
to bet the farm on something unproven. Precisely.
Now, are there any common pitfalls or specific
mistakes our source warns producers to watch
out for when considering these carbon projects?
Yes. Several common mistakes are outlined that
can really derail things, lead to disappointment.
First big one, insufficient due diligence. Rushing
in? Yeah. Jumping into projects without a truly
comprehensive, unbiased understanding of the
tech, the real costs, the market risks, the fine
print in the contracts. So the solution? Conduct
thorough, independent feasibility studies. Get
extra review of proposals from reputable consultants
who aren't tied to the developers. Don't just
trust the sales pitch. Basically, yes. It's like
into buying cattle without seeing them or their
records. You got to do your homework or you risk
costly surprises. Makes sense. What's another
potential pitfall? Poor partner selection. This
is huge. Choosing the wrong developer or broker.
Exactly. Engaging with project developers, brokers,
or even verifiers who are inexperienced, lack
a solid track record, or worse, might be disreputable.
How do you avoid that? Thoroughly check credentials
and experience. Demand references from similar
successful projects and actually check them.
Verify they adhere to industry codes of conduct.
Like vetting your AI tech or feed supplier. Same
level of scrutiny needed? Absolutely. A bad partner
choice here can lead to significant financial
loss and project failure. Okay. Partner integrity
is key. What else? Inadequate record keeping.
We keep coming back to this, but it's critical.
The MRV Foundation. Right. Robust, accurate systems
for consistently collecting, managing, and reporting
all that monitoring data are essential for the
credibility and the value of your credits. Solution.
Clear, documented. MRV protocols, calibrated
maintained equipment, meticulous auditable records.
Like antibiotic treatment records consequences
for messing up. Good analogy. The consequences
might be different, but the need for accuracy
is just as high. Got it. Any other common mistakes?
Misunderstanding the complex rules. Of the carbon
programs themselves. Yeah. not fully grasping
the nuances of additionality criteria, or maybe
long -term permanence obligations for some projects,
or the very specific technical requirements in
the methodology you chose. So how to tackle that?
Work closely with knowledgeable advisors who
really understand these intricacies. Take the
time to study the program rules and guidelines
yourself. Don't just skim the surface. No. Our
source Riley comments that navigating carbon
markets can sometimes make federal milk marketing
orders look straightforward. That's saying something.
Underscores the need for expertise. It really
does. Okay, and is there a final key pitfall
producers should be aware of? Yes. Guarding against
unrealistic financial expectations. The initial
hype we talked about. Partly that, yeah. Not
overestimating potential credit prices or co
-product values, while at the same time underestimating
the total costs, capital, operational, administrative
transaction costs. So be conservative. Use conservative
assumptions in your projections. Run sensitivity
analyses what happens if credit prices drop.
What if costs are higher? Plan for reality, not
just the best case scenario. Exactly. We've all
seen optimistic projections where everything
goes perfectly. Real farms, real projects rarely
unfold without bumps. A realistic financial understanding
is crucial. Okay, so the key takeaway seems clear.
Go in with eyes wide open. Do your homework.
Pick partners wisely. Keep meticulous records.
Understand the rules. Be realistic about the
money. That sums it up pretty well. All right.
We've covered a massive amount of ground in this
deep dive. Let's try to bring it all together.
What's the ultimate bottom line for our listeners?
Is carbon farming the right move for every dairy
operation today? Well, our source concludes by
reiterating that while that $800 to $1 ,200 per
cow figure might be the optimistic upper limit.
Right. Genuine, potentially significant financial
opportunities do exist for producers willing
to do the due diligence and strategically engage.
But success isn't guaranteed. No. The real key
lies in those things we just discussed. Thorough
independent feasibility studies, selecting appropriate
tech and trustworthy partners, implementing robust,
verifiable MRV, and proactively managing the
risks. And the source expressed some frustration.
Yeah, a palpable sense of frustration about farms
maybe delaying decisions while external consultants
or developers might be shaping the narrative.
So the call is for producers to take control.
Exactly. Take control of the conversation. Proactively
develop carbon reduction strategies that prioritize
the long -term economic and environmental sustainability
of their own farms first. Like that Wisconsin
producer example. Right. That anecdote about
the producer who integrated carbon capture, offset
their supply chain footprint, earned a processor
premium, and got betting savings. That really
underscores the tangible potential for those
who take a strategic, proactive approach. So
it sounds like the core message is really a shift
in perspective. I think so. Time for producers
to start seeing environmental stewardship not
just as a cost or burden, but as a legitimate
potential revenue stream that can contribute
to the farm's long -term profitability and resilience.
Okay. So for our listeners who are intrigued,
maybe thinking, okay, I need to look into this,
what are some immediate actionable steps they
can take right now? Our source provides a solid
starting list. First, proactively request a baseline
greenhouse gas assessment for your farm. Know
your starting point. Yep. From a qualified, reputable
consultant. Understand your current footprint.
Identify the main emission sources. Okay. Step
two. Take time to explore and evaluate multiple
technology and management options. Don't just
jump at the first proposal you see. Shop around.
Compare. Exactly. Third, make a real effort to
talk to other producers who've already done this.
Learn from their experience. Get first -hand
insights, the successes and the challenges they
faced. Nothing beats peer -to -peer learning.
True. Fourth. Get involved in your industry organizations.
Demand they prioritize developing collaborative
models, providing resources to make carbon markets
more accessible and beneficial for all farm sizes.
Push for industry support structures. Right.
And finally, number five. If you haven't already,
start diligently improving your farm's data collection
and record -keeping systems now. Even if you're
not ready to commit yet. Especially then. Having
accurate, accessible data is absolutely foundational
for any future participation. Get your data house
in order. Solid advice. Okay, so the carbon opportunity,
it sounds like it isn't going to patiently wait
for those who hesitate. Seems unlikely. It's
there for the proactive, the well -informed.
So the final question for you, our listeners,
is this. Are you ready to actively explore and
potentially mine the carbon gold mine right there
on your dairy farm? Or will you watch from the
sidelines as your more forward -thinking competitors
potentially cash in on this evolving landscape?
And looking ahead, we definitely plan to dig
even deeper into some of these specific technologies
and the practicalities of the markets in future
discussions. Yeah, maybe get some early adopters
on to share their stories. That's the plan. Feature
interviews with producers navigating these markets,
sharing real -world lessons. So we strongly encourage
you, send us your questions, share your own experiences.
Let us know what specific parts of this you want
us to explore further as we all try to navigate
this really important area for the dairy industry.
Thanks for joining us on the Bullvine Podcast.
If you're ready to turn methane into revenue,
head to thebullvine .com for our full deep dive
article, case studies, and tools to calculate
your farm's carbon cash potential. Got a hot
take on carbon credits? DM us at The Bullvine.
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so you never miss an episode. Until next time,
stay bold, stay profitable, and keep milking
every opportunity.