Picture farmer Ramesh. 

He owns 2 acres of land. Usually, he burns crop residue after harvest and ploughs the soil deeply every season. These practices release carbon into the atmosphere.

Climate-led company Varaha, which was started in 2022 to empower smallholder farmers in India, approaches him and suggests a few changes: don’t burn crop residue, plant trees around the farm (agroforestry), use biochar and reduce tillage and follow regenerative farming practices.

These changes help the soil store more carbon instead of releasing it into the air. In other words, Ramesh’s farm is now helping fight climate change.

Varaha maps Ramesh’s farm, uses satellite images and AI to monitor whether he’s following the practices, collects soil data and runs scientific models to estimate how much carbon his farm has stored, and gets the results independently verified by international organisations. Depending on the amount of CO2 that farmer Ramesh’s practices have removed from the atmosphere (measured in tonnes), this becomes carbon credits. 

Who buys these credits? 

International companies that want to compensate for unavoidable emissions. So now, farmer Ramesh has two income sources, one being the usual income from selling crops and the other being the additional income from carbon credits. 

While this model does seem lucrative, the challenge lies in calculating the carbon credits. This needs to be measured scientifically; the land needs to be monitored over time; farmers need to get independent international certification and find buyers in global carbon markets. 

An individual farmer cannot realistically do this alone. This is where Varaha’s expertise comes in. It handles the science, technology, certification, and sales, and then distributes part of the revenue back to the farmers. 

Think of Varaha as a bridge between small farmers and the global carbon market, making it possible for farmers to earn from environmental benefits that would otherwise have no direct financial value.

Carbon credits in Indian agriculture

India has one of the world’s largest agricultural sectors. The country has committed to ambitious national and international climate goals, including doubling farmers’ incomes, restoring 26 million hectares of degraded land, reducing greenhouse gas (GHG) emissions, increasing renewable energy use, and meeting its commitments under the Paris Agreement and the Sustainable Development Goals (SDGs). 

Against this backdrop, a study by the Indian Council of Agricultural Research (ICAR) explores how carbon trading and voluntary carbon markets (VCMs) can transform agriculture from being a significant source of emissions into a powerful tool for climate mitigation while simultaneously improving farmers’ livelihoods.

Agriculture contributes around 14 percent of India’s greenhouse gas emissions — studies suggest that 6.5 percent of agricultural emissions come from manure management, while crop residue burning contributes to 2 percent — but if the right approaches are wielded, it possesses immense potential to remove carbon dioxide from the atmosphere through sustainable farming practices. 

Adopting practices such as agroforestry, conservation agriculture, reduced tillage, improved water management, crop diversification, biochar application, and improved livestock management can significantly reduce emissions while increasing the amount of carbon stored in soils. 

Healthy soils rich in organic carbon improve water retention, increase microbial activity, reduce erosion, improve fertility, and make farms more resilient to droughts and changing weather patterns.

This is where carbon trading could be the key.