It sounded like a great idea.

When carbon trading first began to be talked about in the mid-1990s, members of the Iowa Farm Bureau Federation thought it might be an opportunity for farmers to get in on the ground floor of something big.

After considerable study, IAFB leaders put up $3 million to start the AgraGate Climate Credits Corp. Over the ensuing months, AgraGate representatives signed up 200 producers who put about 80,000 acres in the program.

But things haven’t quite worked out the way Iowa Farm Bureau members envisioned, says David Miller, director of research for the Iowa Farm Bureau Federation who helped set up AgraGate and the Climate Credit Exchange where carbon credits are traded.

“The carbon market in the U.S. is pretty much, to a degree, in disarray,” said Miller, a speaker at the University of Missouri-Columbia’s Breimyer Seminar. “About a year and a half ago, carbon prices dropped to about 10 cents per ton in terms of the allowances on the Chicago market. Offsets have been trading, to the extent they are trading, in the 30 cents to about a dollar range.”

Those with multi-year contracts are focusing on fulfilling those contracts, he said in an interview following his speech at the seminar organized by the Food and Agricultural Policy Research Institute at Missouri.

“Farmers do what farmers do, which is to produce crops,” he said. “But they also honor contracts. So we’re fulfilling our contracts, many of which end at the close of 2010. Beyond 2010, it’s hard to say what’s going to happen in this carbon market.”

Under the contracts on the Climate Credit Exchange, farmers and landowners are paid for the amount of carbon they return to the soil. The payments come through offsets purchased by electric-generating plants and other industrial facilities that emit large volumes of carbon.

Most participants rely on no-till farming for the carbon sequestration practices required by the contracts, but some farmers are also planting trees for a longer-term benefit.

Uncertainty over what Congress will do on the legislative front has been one of the major hindrances for carbon trading. Members of the Senate continue to debate which of several bills it will report out to be reconciled with the House-passed Waxman-Markey legislation.

Iowa Farm Bureau members, meanwhile, are watching and waiting to see what happens to their initial investment in the carbon trading enterprise.

“We’ve learned a lot,” Miller said. “But we’ve not made any money.” Because of the low price placed on carbon credits now, the Iowa carbon credit aggregator, AgraGate, stopped signing new contracts last year.

“Iowa has more at stake than anyone else because we invested $3 million in this effort, and we could lose all of the $3 million. This is a case where it didn’t pay to be the first to try something new.”