Farmers are be cautious about their selling carbon credits.

They should first understand the carbon footprint of their own business before entering into any agreement, says a land agent.

Jonathan Armitage, head of farming at Strutt & Parker, says: “Carbon has become a major talking point for UK farmers and landowners, but most of the talk is about how to monetise it and not enough is about how to go about working towards net zero targets.

“One of the questions I am asked most frequently by farmers is how they can sell their soil carbon.

"However, from our conversations it is clear that many people are operating with limited information, for example they haven’t worked out whether they actually have any surplus carbon to sell.

"Nor do they know the difference between the voluntary carbon market and the compliance carbon market.

“Understanding the basics is important to make informed decisions and enable farmers to ask the right sort of questions before entering into an agreement.

"Selling carbon may be an opportunity to generate a new income stream, but there are also potential pitfalls making it an area that requires careful navigation.”

Strutt & Parker has produced a short guide to help farmers understand more about how carbon credits markets work and highlighting some of the wider considerations worth bearing in mind.

Its advice for farmers thinking about selling their carbon includes first understanding how much carbon their land can sequester, how much carbon they are emitting as a business and whether there is any surplus that can be sold to third parties.

“It’s about minimising the risk of unintended consequences further down the line, which might arise if a business is unable to demonstrate its own low-carbon credentials,” says Mr Armitage.

“For example, if a farmer has sold all the carbon their land can sequester to third parties, they could find themselves in a position where they cannot easily offset their own emissions, which might prove costly if carbon offsets are made a requirement for land-based businesses.

“Once a landowner has sold sequestered carbon, this will appear on the buyer’s balance sheet.

"Looking into the future, it seems inevitable that supermarkets and food processors will want their own supply chains to be low carbon and if a farmer has sold all their carbon credits to another emitter for offsetting purposes, they will not be able to use the ‘sold sequestration’ against their own emissions.”

Establishing baselines now by measuring activities and soil carbon levels in a verifiable way will assist farmers to make informed decisions, says Mr Armitage.

It might also prove important in the future to be able to demonstrate the impact of any positive actions taken now.

For a copy of Strutt & Parker’s new guide visit struttandparker.com/article/a-guide-to-carbon-markets-for-farmers-and-landowners.