Voluntary Agriculture Carbon Credit Market Poised to Grow at 31.5% CAGR as Climate-Smart Farming Gains Momentum

[New York], [USA] - December 9, 2025 - The voluntary agriculture carbon credit market is set for strong expansion, growing at a 31.5% compound annual growth rate (CAGR) as food companies, corporates and investors turn to climate-smart farming as a practical source of verified carbon reductions and removals. Farms are emerging as key climate assets, with new projects turning improved practices into tradable carbon credits.

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Agriculture offers large-scale, relatively low-cost options to store carbon in soils and biomass and to cut emissions from rice, livestock and fertilizer use. Voluntary schemes reward farmers for practices such as regenerative cropping, agroforestry, rice methane reduction, better manure management and biochar use. These practices generate verified carbon credits that can be sold to corporate buyers looking to support net-zero and nature-based strategies.

By project type, soil organic carbon and regenerative cropping projects currently generate the highest volume of credits due to their wide applicability across major grain, oilseed and row-crop regions. Agroforestry, biochar projects and mixed climate-smart agriculture packages are expected to record some of the highest growth rates as new methodologies are approved and buyers seek more diversified and resilient portfolios.

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From a credit design point of view, removal credits based on carbon sequestration in soils, trees and long-lived materials such as biochar are rapidly gaining prominence. Corporate buyers see these credits as better aligned with long-term net-zero and neutralization goals. Avoided emissions credits - from lower methane in rice and livestock or improved fertilizer and manure management - still account for a significant share of traded volume and remain important for near-term mitigation and cost-effective scaling.

"Climate-smart agriculture is moving from pilot stage to a core part of many companies' climate plans" and "Voluntary agriculture carbon credits give farmers an extra income stream while helping buyers to address Scope 3 emissions in their supply chains."

Strong Drivers from Net-Zero Targets and Digital Tools

Market growth is supported by a combination of corporate and technology drivers:

1. Rising corporate net-zero and science-based targets, especially in the food, beverage, consumer goods and retail sectors.

2. Growing pressure to address Scope 3 emissions linked to agricultural raw materials.

3. The search for nature-based solutions that can be deployed directly at farm level.

At the same time, advances in remote sensing, soil sampling protocols, digital farm management tools and modeling platforms are improving measurement, reporting and verification of farm-level climate outcomes. This reduces transaction costs, makes aggregation models more practical and supports large project pipelines.

Policy and investor interest in nature-based solutions and climate-smart agriculture is another important driver. Technical assistance and blended-finance programs help project developers work with farmers, test new business models and bring credits to market. At farm level, carbon payments can supplement crop income and help de-risk the switch to regenerative practices and new inputs.

Key Challenges: Measurement, Integrity and Farmer Access

Despite strong momentum, the market still faces important restraints:

1. Measurement uncertainty around soil carbon changes and non-CO2 gases across diverse landscapes.

2. Concerns about additionality, permanence and reversals due to drought, fire or management change.

3. Differences between methodologies and standards that make credits hard to compare and fragment the market.

4. Barriers for smallholder farmers, including complex data requirements, contracts and payment timelines.

5. Price volatility and periods of weak demand in the wider voluntary carbon market, which affect project revenues.

6. Regulatory uncertainty over how voluntary agriculture credits will connect with future compliance markets and national carbon frameworks.

These challenges create a strong focus on robust project design, clear farmer value, conservative baselines and transparent reporting.

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Diverse Project Structures and Buyer Groups

On the ground, projects are structured through smallholder aggregation programs, medium and large commercial farms, farmer cooperatives and agri-corporate or input-company-led programs. Smallholder aggregation is vital in regions dominated by smaller farms and delivers strong social co-benefits, but requires strong monitoring and farmer engagement. Larger farms bring better data, machinery and digital tools, which support precision practices and lower per-hectare transaction costs. Input companies and agribusinesses are increasingly building carbon programs into their advisory and financing offers, and are expected to be among the fastest-growing channels.

On the demand side, food, beverage, consumer packaged goods and retail companies are leading buyers, as agriculture forms a large share of their Scope 3 emissions. Agriculture and food supply chain firms, traders and processors also use credits to support their own targets and strengthen supply chains. Corporate buyers outside food - in technology, finance, manufacturing and services - add agriculture credits to wider portfolios, often valuing co-benefits for biodiversity and water. Financial institutions, carbon funds and intermediaries provide pre-financing and investment products linked to credits, while public and quasi-public actors support projects with strong rural development value.

Regional Outlook

North America and Europe currently lead project development, supported by strong corporate commitments, advanced agritech capabilities and active advisory networks. Large row-crop areas and mixed farming systems provide significant opportunities for soil carbon, nutrient management and livestock projects.

Asia Pacific - including India, Southeast Asia and parts of East Asia - is expected to record strong growth, especially in rice methane reduction, agroforestry and smallholder-based climate-smart agriculture, often supported by digital platforms and development partners. Latin America offers major potential in grazing systems, agroforestry and row-cropping, driven by global buyers seeking both emission reductions and deforestation-free supply chains. Africa presents large long-term opportunities in soil carbon, agroforestry and integrated farm projects, with strong development benefits but higher capacity and cost challenges.

Regions that combine supportive policy, digital infrastructure and strong links between agribusinesses, standards and project developers are set to see the fastest market expansion.

Competitive Landscape

The competitive environment includes specialist agriculture carbon platforms and broader carbon project developers. Agriculture-focused players work directly with farmers and cooperatives to design practice changes, manage data and generate verified credits, often using digital tools and tailored financing models. Project developers with experience in forestry and other nature-based solutions are extending their portfolios into agriculture, bringing proven skills in methodology selection, risk management and market access.

Standards and registries continue to refine methodologies for soil carbon, rice methane, livestock, agroforestry and biochar. National voluntary frameworks and pilot schemes are emerging, and alignment between global and domestic systems will be important to avoid double counting and to support both corporate buyers and national climate targets.

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