1.
Carbon and Agriculture: The Big
Picture
Shefali Sharma
Institute for Agriculture and Trade
Policy
6 December 2010, Cancun

2.
Agriculture: The Complex Story
• Agriculture Sector is much more than a
“source” or “sink” of greenhouse gas
emissions
• It is multifunctional and touches on many
aspects of our lives (food, fuel, fiber, culture,
biodiversity, trade)
• Provides livelihoods for over 70% of the
population in the Global South

3.
Problematique: Growing food demand and population by
2050 requires massive increases in food production
Proposed Solution: Intensification of Agriculture using which
methods? Which Technologies?
Problematique: Bulk of mitigation potential for agriculture in
Global South and in soil carbon
Proposed Solution: Soil carbon sequestration, both as means
of financing ag investment and reducing greenhouse gases
Ignores: Current causes of food insecurity; drivers of
deforestation. Fails to address extreme market
concentration and the “hourglass” shape of the agriculture
sector that drives production and consumptions choices;
land tenure and rights; financial markets and price volatility

4.
We currently produce enough food to the feed the world;
but over a billion people are food insecure today

5.
Hourglass Shape of the Sector
Consumers
Vertical and horizontal
Mkt Concentration of
Agribusiness in ag inputs,
grain trading, milling and
processing, retail
Ability to set buyer and
seller price by oligopoly
structure
Producers

6.
1.5 billion peasants on 380 million farms
800 million people growing urban gardens
410 million gathering the hidden harvest of forests
and savannas
190 million pastoralists
100 million peasant fishers
In addition 370 million of these are also indigenous
people
Source: IAASTD
Who Produces Our Food?
Small scale farmers, Fisher-folks and Pastoralists
(Women)

7.
A viable Food Future 2010

8.
Yet disenfranchised by
• Ever decreasing agriculture investment in agriculture
(public); failure of private sector to deliver
• Agriculture prices below the cost of prod; price
volatility
• Land tenure issues—insecurity of land; control over
natural resources
• Increased risk—export markets; no safety nets
• No infrastructure: roads; storage
• Lack of affordable/ecological inputs that are adaptive
as well as contribute to mitigation
• Incentives for proprietary, costly technologies and
practices that do not necessarily result in increased
yields but increase risk

9.
Solutions should focus on adaptation
• Put food producers at the center
• Focus on “Not just Carbon” but practices that
are able to deliver on mitigation benefits
(organic; agroecological approaches)
• Address biodiversity, essential for resilience
• Put animals back on the farm and out of
factories
• Internalize costs of production and address
systemic issues

10.
Soil Organic Matter
Living Carbon
• Holds water
• Cements soil particles
and reduces soil
erosion
• Increases nutrient
storage & availability
• Humus can last 2000
years in the soil
(slide reproduced from IFOAM)
Electron micrograph of
soil humus

11.
K
The IAASTD Reports
(www.agassessment.org)
Multi-stakeholder: 400 authors, 52 countries
Multi-disciplinary
Multi-locational: Global / sub-Global Reports

12.
Mitigation: Where do we begin?

13.
“Please eat less meat. Meat is a very carbon intensive commodity.”
Rajendra Pachauri, Chair IPPC, Nobel Laureate 2007
(Reproduced from Niggli, U. Fibl www.Fibl.org)

14.
Soil Carbon and Markets
• Will carbon mkts provide reliable funding for
small holders?
• Who will control the price for carbon?
• What role of speculators?
• Leakage and permanence; MRV of soil carbon
• Transaction costs?

15.
Climate change
policy
Governments
Caps
Allocations
Sellers:
-co’s/ compliers
- proj developers
-speculators
Exchanges/
Brokers
Buyers:
- compliance
- speculative
GHG offset
projects
GHG
reductions
Verifiers
Certifiers
Crediting
agency
Carbon funds &
other financiers
Project
developers
Carbon trading
Other strategies
to reduce GHGs
establish
set
certify
verify
create
finance
develop/
finance
apply to
issue
trade
trade
return return
distribute
Host
government
apply to
approve
Allowances
Offset
credits
trade

16.
The “private” carbon market without
government subsidies, supply and demand

17.
Price and volume volatility in the EU’s ETS trades:
2006-2008 (J. Mason)

18.
OTC metric tons of carbon vs metric tons in
regulated exchanges

19.
Unregulated and non-transparent financial trade
window called “over the counter trade” (OTC) has
helped to severely destabilize commodity markets.
Financial speculators can make unlimited bets through
this window. The US market in Over the Counter trading
is worth $300 trillion (Bank of Int Settlements, 2008).
Unfair price info. advantage to traders since OTC not
reported.
In 2008, 44% of carbon traded on the European
Emissions Trading Scheme was through over the counter
trade. And EU looking to include terrestrial carbon into
ETS.

20.
Role of Speculation in food and ag
• Between 2007 and the spring of 2008, the food price index
shot up by 85%, then in a few months, agriculture
commodity prices fell by 60%.
• Massive price spike and drop was devastating for
developing countries, particularly net-food importers;
increased price of inputs because linked to oil
• Drove another 150 million people into hunger. According
to UNCTAD, the extent of price volatility during the food
crisis cannot be attributed to supply and demand alone
• Wide consensus that speculation on commodity markets by
financial traders had a significant role to play in creating the
crisis.

21.
Concluding Remarks
• Proposals seeking to include all land-based activities into
calculations for emissions and for sinks
• Expansion of CDM into soil carbon
Yet numerous questions remain about rights; science; equity,
risks and benefits to small farmers
Transaction costs are real: FAO estimates close to 17 billion
euros between 2010-2030 to run mitigation projects. IPCC
and FAO estimates for adaptation range in the billions (60
billion USD).

22.
•These schemes cannot work without financial support from
governments, intergovernmental organizations like the
World Bank (which is public money).
•No data on the breakdown of payments between carbon
developers/managers and actual small holders.
Our responsibility to prioritize adaptation with mitigation
benefits. Solutions exist.
Business As Usual Is No Longer An Option.

23.
Thank You!
ssharma@iatp.org