July is harvest time for a new crop — carbon credits — and farmers who have met the requirements for earning these environmental credits are now reaping the benefits.

Nearly 1,800 farm operators received payments averaging $2,375 from the sale of their carbon credits during the first half of 2008. In all, AgraGate Climate Credits Corp. disbursed more than $4.2 million to customers who have enrolled their no-tilled, strip-tilled or grass-planted land in the voluntary carbon credits market. AgraGate collects credits from farmers who use eligible conservation practices, then sells them as “exchange soil offsets” (XSOs) on the Chicago Climate Exchange (CCX).

Dave Krog, CEO of AgraGate, said the mid-year payments are up substantially from July 2007.

“Our 2008 mid-year payments more than tripled from last year, when we wrote checks totaling just under $1.2 million to 1,141 participants, an average of about $1,050 an operation,” he explained. “We can attribute part of the increase to a larger customer base. The number of customers is up by some 57% from a year ago to 1,794 and we also have considerably more credits registered with the CCX.”

Krog noted that the market price of a carbon credit — the equivalent of a metric ton of carbon dioxide — plunged below $2 early in the year and then rose to a record high of $7.50 in June. Prices are currently around $4/credit.

“We were able to sell a considerable number of our XSO credits during the upswing in the market this past spring,” Krog added. “Farmers, ranchers and landowners who are early participants in this market are the true pioneers and are being rewarded for their conservation efforts.”

“We are seeing volatility in the carbon credit market,” Krog noted. He explained that prices are being influenced by debate over national climate legislation and the potential for mandatory greenhouse gas emission reductions. “AgraGate does not try to ‘out-guess’ the market. We are active in the market most days, and we work to get the best prices that the market has to offer,” Krog explained. AgraGate distributes sale proceeds to customers twice a year, in January and July, he added.