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Source: blog by Todd Janzen, Janzen Ag Law

Nearly every large food industry corporation today has pledged to combat climate change by reducing its own carbon footprint. McDonald's has pledged to be net zero by 2050. McDonald's Accelerating Climate Action to Reach Net Zero Emissions by 2050, McDonald's (Oct. 4, 2021), PepsiCo has pledged to be net zero by 2040. PepsiCo Doubles Down on Climate Goal and Pledges Net-Zero Emissions by 2040, PepsiCo (Jan. 14, 2021), Walmart has pledged to remove a gigaton of greenhouse gas emissions from its value chain by 2030, the equivalent of removing 200 million cars from the roads every year.

Climate Change, Walmart, (last visited Dec. 12, 2021). These companies will work to reduce their own emissions, but these goals are only achievable by reducing the carbon footprint of their supply chains. This means using their enormous purchasing power to push climate-friendly practices down the supply chain all the way to the soil where crops are grown.

Midwestern farms are learning they are sitting on an untapped resource to meet climate change goals, namely, millions of acres of farmland that have always been farmed to maximize production. Soil and climate scientists are finding that, with some production changes such as planting cover crops during fallow periods to ensure soil is always pulling carbon dioxide (CO2) out of the atmosphere, farmers can increase soil uptake of carbon in farmland. Noah Wicks, Saving the Planet by Saving the Soil: Can Cover Crops Help?, Agri-Pulse (Nov. 29, 2021), If this carbon is locked down and remains in the soil for years, it becomes an act known as "sequestration."

This task seems simple-a cereal company buys corn from farmers who maximize soil carbon sequestration, and the company lowers the carbon footprint of a box of corn flakes. From a contract standpoint, however, getting a farmer to change how corn is grown is more complicated. A typical corn farmer has no direct contract with a food processor. The food processor has no ability to require the farmer to continue sequestering carbon on the farmer's field for multiple years after the crop was delivered.

The traditional legal tools to accomplish these long-term land restrictions have historically been achieved through deed restrictions, leases, or easements. However, companies searching for ways to sequester carbon in farmland are mostly choosing to bypass traditional real estate contracts and instead create new "soil carbon" contracts. Let's examine how these new contracts work, how they bypass traditional real estate agreements, and how our real property legal system can be modernized to help fight climate change.

Who Are the Parties Involved?
There are typically four parties with roles in a soil carbon sequestration contract. At one end is the farmer who is growing crops on land, and a rancher who manages grazing land (both referred to as "farmer" for purposes of this article). The farmer does the actual work to sequester carbon in his or her farmland's soil.

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