Navigating the Future of Farm and Energy

In the last few years, carbon pipelines have become a hot topic in the agricultural world. The massive infrastructure projects are designed to transport carbon dioxide (CO2) from industrial ethanol plants and power facilities to storage facilities deep underground. While part of a larger effort to address carbon sequestration, they also faced mixed opinions from farmers. At Farmland Stock Exchange we believe it is key to explore both sides of the debate and provide farmers and landowners the ability to make more informed decisions.

Companies like Summit Ag, Archer Daniels Midland (ADM), and Navigator have been front-runners for their proposed carbon capture, utilization, and storage (CCUS) projects. In the fight to reduce emissions, these three companies have all put together billion-dollar proposals to build networks of pipelines all throughout the Midwest, sequestering carbon from ethanol plants, which in turn would enhance market opportunities for Midwestern corn farmers. At the time of writing, however, the ADM joint venture with Wolf Carbon Solutions has just withdrawn their pipeline petition, and the highly anticipated clean fuel production tax credits expected by the federal government, haven’t come to fruition. So what should farmers make of all this?

When evaluating these projects, it is important to understand the pros and cons of each:

Benefits: According to Summit Ag’s website “Ethanol supports 360,000 jobs and contributes $45 billion to the annual U.S. GDP. But maybe most importantly, ethanol plants purchase approximately half of all the corn produced in the United States.” Between all proposals, the midwest could see over 4,000 miles of pipeline, which would directly offset emissions from over 100 different end users of grain. In translation, ethanol plants would be able to take in a higher supply of corn, thereby increasing the demand placed on the backs of American farmers. This would no doubt be a benefit to all farmers, as the price of corn would rise significantly.

In addition to the rise in commodity prices, there is money to be made for farmers and landowners who are willing to sign pipeline easements for their land. To date, Summit has paid out over $200 million to over 2,700 landowners, a sum that they won’t get back if the project fails according to CEO Lee Blank.

The proposed pipeline projects would also bolster the blue-collar economy. The labor force required to complete these projects is massive. Rural economies would benefit from the $10+ billion expenditures, and permanent jobs would be created to maintain aspects of the pipeline facilities.

Concerns: The main scrutiny pipeline companies are facing is how they will acquire the ground needed for these projects. While many counties and jurisdictions will hold votes on whether or not it should proceed, there has been talk of eminent domain. Many opposed to the pipeline argue whether eminent domain is constitutional and fear government intervention over their land. For farmers, it is a fear to have the pipeline run through ground that has tile in it. While this will surely be a hurdle, some companies have made lease agreements that includes the disruption of drainage tile, and vow to replace any that become damaged.

Other opposition to the pipeline comes in the form of safety concerns. Many activists have questioned what will happen if the pipeline becomes damaged and what are the risks to crops, livestock, and people in surrounding communities. The short answer is that the pipeline could be dangerous if damaged. Companies must be held accountable in the form of strict safety measures, regular inspections, and emergency response plans tailored to rural areas.

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Whether you’re curious, ready to take action, or simply want to understand how farmland fits into the broader financial landscape, make sure to subscribe to The Land Ledger wherever you listen to podcasts. And don’t forget to check out farmlandstocks.com/resources for more information and to learn how to get involved and join us as we bring smart, stable investments back to Main Street.

While we remain neutral on telling anyone whether a pipeline is good or bad for their operation, it is important to take into account your surroundings and the economics at hand. Important questions must be asked and conversed about, such as: Would the pipeline run through your field or affect your operation? Do you have counsel to review legal documents with if approached with a lease? Do you think the benefits outweigh the negatives? At Farmland Stock Exchange, we will continue to monitor the situation closely and provide updates, resources, and support to help our farming community thrive.