Co-hosts Paloma & Anna speak with Max Feinberg, CTO of Verdova, about leveraging data to help farmers make soil-based carbon offsets.
The following is a transcript of the conversation, which has been edited for length and clarity. Listen to the full episode here.
[Anna:] Today we’re talking about the role of data in carbon farming and carbon credits. Carbon farming is basically any agricultural practice that helps soil do what soil does best— and that’s storing carbon. Out of all the active carbon on Earth, soil holds the most. Plants take carbon from the air and convert it, through photosynthesis, into plant tissue. And some of that carbon gets stored in the soil through the plant’s roots, which makes the soil healthy and fertile and increases farmers’ yields. Soil carbon can be released back into the atmosphere through conventional agricultural practices like tilling, so that’s why no- or low- till is encouraged, not only for the purposes of carbon farming, but also for agricultural productivity overall.
[Paloma:] So making that switch from conventional agriculture— tilling and pesticides— can be cost-prohibitive for farmers… which brings us to carbon credits. The fastest and easiest way to get farmers to do carbon farming is simply to pay them to do it. When they can show how much carbon is stored in their soil, they’re basically given this carbon credit to sell to anyone who wants to offset their emissions, whether that’s a company or an individual. Carbon markets aim to reduce the world’s emissions cost-effectively, by setting limits on emissions and requiring groups that exceed the limits to buy offsets.
[Anna:] The system isn’t perfect, though. It definitely has potential issues, and we’ll touch on those later. Now, let’s say hello to our guest, Max Feinberg. He’s the chief technology officer of a company called Verdova, which specializes in helping farmers manage all the data coming in from their farms’ operations, and leverage that for the farmers’ benefit.
[Max Feinberg:] Thanks for that intro, Anna and Paloma. So yeah, Verdova is a grower-first ag data company, and got started just through a number of conversations with real farmers out here in the Midwest, out in Illinois. Through those conversations, we got to this concept of the farmer getting farmed. Essentially, as time has gone on, farmers have increasingly gotten less and less value out of the total food value chain. If you look at every dollar spent in the United States, only about 13 cents of that dollar ultimately make it to the grower.
With the explosive growth of artificial intelligence and the need for data, we sort of see Verdova as trying to use the data that growers have to make them relevant in the modern agriculture conversation. And what do we mean by data? Essentially, all the information that comes from machinery and what they’re doing day to day— going out with a tillage implement on a tractor, planting seeds, spraying fertilizer or pesticides, and ultimately harvesting that crop with a combine.
And basically, we take all that data, we clean it up, and we help farmers market it to generate a new source of income. We provide the data to all different types of companies that use it for analysis, building machine learning models, and lots of other things. 85% of all proceeds that we make through a data deal go directly back to the farmer.
And, fundamentally, we’re able to use the data that farmers produce from their machines to verify and validate carbon credits. When we tie this data with some new form of management practice, whether that’s reducing tillage, changing when things are sprayed or what’s being sprayed, or planting new crops like cover crops, that’s when growers are able to sequester more carbon, and that’s where we’re able to capture the value in terms of carbon credits.
What we’ve identified specifically in this space is there’s a lot of confusion. There’s not one universally accepted standard that everyone can just adhere to and follow. The World Bank has this website that has all the different carbon prices and all the different carbon markets across the world and you can see price fluctuation from somewhere around three dollars per ton in some of the markets in South and Central America— and then prices going up to like $120 to $160 per ton in some European nations. And specifically in the US, there’s a number of companies that have started carbon sequestration and carbon credit programs. Indigo Agriculture is a company based out of Boston and they are one of the bigger players. There’s another one called Nori. And those are just private sector programs.
There’s also this space of government programs, including the California and Quebec cap and trade programs. And the way that we fit into all of this is we’re sitting down and analyzing all the different programs— there’s lots of differences between what it takes to enter them— and trying to figure out what works best for our growers. We really just want to be a good steward. Just like we know our farmers are good stewards of land, we want to be good stewards of their data. We take all this data, we just want to package it in the exact right way so that we’re able to enter them into one of those programs.
[Anna:] Yeah, that makes sense and definitely does sound helpful. I’m curious… Verdova is a pretty young company, right? And there were some groups trying to create this type of platform, but this space of carbon credits and carbon markets is emerging and there’s a lot of lessons to be learned along the way. So what would you say is the key to Verdova’s success?
[Max Feinberg:] Yeah, so I would say our secret sauce and what we’re doing differently from a number of companies that existed before, or are still trying to do something similar to what we’re doing, is we really started with the growers. We were founded in part by two growers— Andy Jenks, out in Monmouth, Illinois, and Matt Bernard in the Gibson City area in more central Illinois.
And we were able to grow to the scale that we’re at now— more than 100 farmers across more than 1.2 million acres of land across 16 states— really just through word of mouth. Agriculture is still a very relational business; people do business with each other for generations, and those bonds are really strong. We found a way to sort of tap into those networks and get farmers to refer other farmers, and that’s really how we’ve gotten here.
And a lot of it comes down to unit economics. And I think that’s where a lot of people have failed in the past. Some of the bigger players have started with these carbon marketplaces with prices somewhere on the order of $15 to about $30 per tonne of sequestered carbon, and if you look at the most aggressive models, if a farmer does the most drastic changes they can— very minimal tillage and planting a cover crop for a significant period of time, usually something like a multispecies legume which, you know, for the majority of growers that we work with who specialize in corn, soybeans, and wheat, is sort of a big departure— the unit economics for doing that just doesn’t make sense.
They’re only making a return of $15 to $30 per carbon credit with those changes, and that comes up to about 0.7 tons of carbon per acre. We can round it up to one. They’re going to be spending something like $60 per acre all-in for the new seeds that they need to buy to plant those legumes, for the labor, for the machine time that’s needed to seed them, and then also for an additional termination plan where they need to remove whatever residue from the cover crops before they’re able to plant their main crop. And those costs come out to $60 to $70 per acre. So the economics just don’t work out. What we’re trying to do is find a way to strike a deal where it does make sense for farmers to make this change to capture that carbon.
What needs to happen for carbon sequestration to really take off?
[Paloma:] Yeah, one of the things you said really spoke to me— how there’s already these local networks between farmers, and I love that. Growing up in a very agricultural region in southern California, everybody kind of knows each other. I think it’s a great network to build off from and am wondering: what needs to happen here for this natural climate solution of carbon sequestration to really take off?
[Max Feinberg:] That’s a really good question. I think it honestly goes back to the education component, because there are just so many different programs offering so much information. It’s really tough to see what has an actual tangible impact, and what is kind of just fluff. I hear all the time from farmers that there’s someone who’s trying to sell them some new mix of adjuvants or herbicides or something like that, that is supposed to be this magical fairy dust that will improve their yields, kill all the weeds, and then also sequester all this carbon. It’s really difficult to sort of cut through all of that and figure out what’s actually real.
Every year, the seed salesman will come up and try to sell a new variety, a new hybrid, a new genome of corn, soybeans, or wheat. And they show you all this data that is supposed to corroborate the impact. We sort of see ourselves [at Verdova] as being able to be the objective party that’s able to show like, okay, these are the actual hybrids that will perform best on your soil type because we have lots of data.
Instead of having a very controlled environment that is, you know, a test plot, we’re able to pull from the actual data, from millions of acres, going back decades. And there are constantly new ideas of cover crops and different practices that people are testing. And we really see farmers being able to adopt those things. But before that can ever happen we need to have the data to substantiate the impact. And then we need to be able to propagate these new concepts to the farmers in a way that meets them where they are, and is convincing enough that they’re willing to take the risk. And we’re getting there on all fronts— building the relationships, building trust with them. And also, you know, using the data to make sure that our decisions are really data-driven.
Are carbon offsets just enabling polluters to keep polluting?
[Anna:] That sounds like exactly what needs to happen, and probably just one piece of the puzzle. I mean, it’s such a vast area that a lot of people are weighing in on and have opinions on. One of the, I guess, arguments that I’ve come across with regards to carbon offsets is, you know— kind of zooming out here— farmers are getting paid for their carbon credits, but who is paying them? Who is needing to offset their carbon? Are carbon offsets just enabling polluters to keep polluting? So if you want to speak to that idea a little bit, I’m very curious.
[Max Feinberg:] That is an excellent point. And you know, I think it definitely comes from a background that is relatively fair, but like you were kind of saying earlier, I think carbon credits are just one small step in the bigger solution of things that need to change. If you look at the Chicago Board of Trade’s carbon instrument, it just corresponds with emissions from air travel. We see more and more things like that. When you say, like, “Okay, who is buying these carbon credits?” Generally, it’s companies that do consume a lot of fossil fuels, a lot of electricity— so, you know, a lot of oil and gas sector, a lot of tech companies more recently.
And while I would definitely agree that using things like soil-based carbon credits to offset some of the impact does not stop them, when we look at these models, there’s definitely more that has to be done. If we want to get to something like 1.5 degrees, all models that climate scientists have been working on that project that far forward, into 2030 or 2050 time range, all have this assumption that we will have an ability to extract huge amounts of carbon from the atmosphere— completely separate from reducing our emissions to net-zero. And the most natural way for us to do this is through agriculture, and through plants.
Current carbon capture systems— this huge machine that has a bunch of fans that sucks in CO2 and through a number of chemical processes of heating and cooling, essentially turn the CO2 from the air into rocks— those processes cost on the order of $300 per tonne. And on the other end of the spectrum we have trees, right? Trees are a great natural way of doing what I was saying the complicated machine does, and that’s where the vast majority of carbon credits come from today, the forestry industry. And those carbon credits are priced in the $12 to $30 range.
And we’re seeing that the price point that agricultural carbon credits need to be at is closer to the $60 to $70 range, which is more in line with the UN’s price target for credits, which is at $100. And we sort of see this as all being in this middle ground, right? Like eventually I hope that we can capture carbon at the price of trees, right, so it costs $20 to $30 for these huge machines to suck carbon out of the air. But until we get to that point, we should use every tool that is at our disposal.
*musical interlude*
[Max Feinberg:] It’s honestly been a whirlwind of an experience for me. We really started doing this just at the beginning of 2021, and it’s moved fast.
[Paloma:] Yeah, what drew you to do this in the first place?
[Max Feinberg:] It’s really my entrepreneurial spirit. I really like talking with people and finding problems that they have and trying to find a solution. And the way that Verdova got started is we got introduced to Andy Jenks, this farmer who lives out in West Central Illinois, and we were originally going to talk to him about crop insurance. One of the early things that Verdova did was build this crop insurance optimizer.
No one wants to talk about insurance; we sort of know that. But in our conversation with Andy that just became incredibly evident. We just sat down and asked him, like, “Okay, this obviously isn’t a problem, this isn’t something that’s bothering you— what are the real issues that you deal with day in and day out? What makes farming so difficult?”
And there’s this story he always tells about how he has a seed dealer that he’s been working with for many decades. And as part of research for this company, the seed dealer brought in a big team— something like nine people who sat in on this meeting to talk with Andy. And when they’re all done, Andy stopped the main person, and he told him, like, “Hey, you know, please, just in the future whenever you’re going out and doing these types of research meetings or sales pitches… don’t do that.” He spends a lot of money on that seed and he knows that he’s essentially supporting all of those salespeople. So from his perspective, it’s just like, he spends so much money on this and he doesn’t get very much out of it.
How do farmers feel about the economics and incentives of carbon farming?
[Anna:] Have you found that the predominant attitude is based on that? Just wondering about the farmers’ attitudes and philosophies around their ability and their responsibility to do soil carbon sequestration, in the face of the economics not quite being where they need to be.
[Max Feinberg:] Yeah, so I think there’s a couple of camps that we find growers in. If you look at farmers in the United States in general, the average size of a farm is right around 400 acres. At that scale, it’s really hard just to make ends meet. Most farmers are just worried about, you know, “Okay, what can I do to make sure that I’m able to plant another crop season next year?”
In the larger scale of farms— the ones who are really at a point where they could be interested in carbon credits, they’re roughly 1,000 acres and larger— the three primary camps are:
1) They’ve heard a little bit about carbon credits, but they don’t know enough information and no one’s presented anything to them that was really convincing.
2) They’re sort of holding out; they’ve seen that carbon prices have been going up and up, and they think that if they keep waiting, they’ll be able to hit the right spot.
3) There’s a lot of farmers who, just for good land stewardship and agronomic purposes, have been doing minimal tilling or no tilling, or planting cover crops, you know, perhaps for decades. They know it’s good for preventing erosion on their land, and it improves the microbial biodiversity in the soil that ultimately leads to better yields. And the issues that we see with those farmers is they feel like they’ve missed the boat. Usually, it’s because the options ahead of them haven’t been explained clearly. But they think that they are no longer eligible to receive compensation for the carbon they’re sequestering because they can’t make a change anymore. And that’s one of the groups that we try to target the most. We can show them through our modeling, like, “Hey, if you just change the type of cover crops that you’re using, the cost impact is actually small.” These are the low-hanging fruit where they’ll have to be able to see the most benefit without much change.
[Anna:] That’s super interesting. Wow. I didn’t even think about how farmers who have been doing these regenerative soil practices that store carbon, for a long time, might actually face more of a barrier than farmers who would be new to that. That’s kind of counterintuitive.
[Max Feinberg:] Yeah, completely, because it always goes back to making a change relative to the baseline. Oftentimes, it’s better to draw the line in the sand now so that you can use that as the basis point for improvement. And you know, I explain this to a grower, and they pose the question: “Okay, why don’t I just throw out my new equipment that’s fuel-efficient and bring out my old diesel, heavy, smoke-burning tractors? Why don’t I just do, like, very deep tilling and mess things up, so that my baseline is better and so that I can make more money on my carbon credits?”
The way that I respond to that is, you know, there was a reason in the past that you switched from those practices. There’s a reason you reduced your tilling or went to no-till. There’s a reason you started planting cover crops. That was not related to carbon credits. That decision was made, you know, likely for agronomic reasons because it would help the bottom line. And it wouldn’t make sense to make those changes because the benefit, especially now for farmers, it’s very incremental. We see it as being like a really good cherry on top of the sundae. It’s not the whole sundae itself. It’s just that little bit of nice thing that we can put on top.
[Anna:] So, what’s the next step for Verdova in this carbon credit data space?
[Max Feinberg:] Yeah, so there’s a lot of really exciting things going on. We have a couple partnerships focused around this idea of being able to connect farmers with some of these larger parties that are purchasing carbon credits. Being able to institute some type of system that would allow us to get the carbon credit prices to a point where it makes sense for our growers to make these big decisions in shifting their practices. There’s a program that was actually started out in California that was designed originally to protect some terrestrial wetlands. It’s like a reverse auction system. Exploring things like that.
There’s a partnership that we’re exploring with an NGO called Foundation Earth, where we’re looking to embed the carbon impact of any consumer good in the pricing and in the label of that good. Think of your favorite brand of corn chip. That corn chip started off as a seed of corn. And with our data, we can track that along its growth cycle and all the way through the food processing until it reaches a store and someone’s actually able to buy it and enjoy it. So we’re looking at projects like that, and also looking to collaborate with a couple of climate analysis, climate impact, data science organizations, including this company called SCS Global that’s based out of London.
[Anna:] That’s super exciting. Do you have any plans to work with the US government around carbon credit subsidies or anything like that?
[Max Feinberg:] Right now, the existing carbon credit systems in the United States are very regional. There’s the cap and trade program that California has. There’s a program in the northeast, a regional group that’s referred to as RGGI, that has a similar emission cap system. We haven’t been directly interacting with those, primarily because a lot of the infrastructure that they have set up has focused primarily on forestry.
If you look at carbon credits as a whole, something like 80% of them come from forestry approaches— either preserving existing forests or planting new trees. As a result of that, the sort of data and validation infrastructure to support the soil-based carbon from agriculture systems aren’t really there. So we haven’t spent a lot of time working with them.
The reason we’ve started working with the groups that we have is because they’re associated with different registries, like the Climate Action Reserve, which developed this special protocol called the Soil Enrichment Protocol. It basically was a collaboration with several hundred soil scientists who wrote up this very detailed procedure that describes how you can actually verify that carbon was sequestered.
We really hope to eventually do more work with these regional US government-subsidized programs. It’s just they haven’t quite caught up with where things in the private sector are. When they catch up a little bit, we’re happy to use our data for all different types of carbon programs. Some of the larger partners that we’re working with definitely do have people who’re trying to talk with people at the EPA or the USDA, because there are definitely a lot of interesting opportunities. There’s this soil stewardship program, I believe it’s called the citizen or community soil program, that is a USDA-funded project, where essentially, the government will reimburse a grower for doing certain cover crop practices. So we have done a little bit of research into trying to help our growers go through those processes. But yeah, still sort of like early days for that.
[Paloma:] All of these practices eventually led to where we have food on the table; I think a lot of people get a bit disconnected from that. And I have really enjoyed hearing more about the farmers’ and growers’ perspectives on this.
[Max Feinberg:] Yeah, that’s honestly been one of the coolest things about working with all these growers. I’ve been able to learn so much by visiting them and working with them on the farms. And I’m able to share it with everyone, just like you guys.
[Anna:] Thank you so much for being on the podcast today, and for all your work with Verdova.
[Max Feinberg:] Thank you, yeah, it’s been a pleasure. Thank you, Anna. Thank you, Paloma. It’s been really fun!
