The dairy sector will soon be able to participate in international carbon credit markets thanks to a new methodology that lets farmers and project designers reliably document how they are reducing harmful greenhouse gas emissions - a step that will open up new sources of finance for the livestock industry and help promote investment in smallholder operations.

FAO's new Smallholder dairy methodology, tackles two major challenges facing agriculture today: the need to make agriculture more productive by increasing yields, while at the same time cutting agriculture's carbon footprint. By opening up new sources of finance, the methodology addresses the critical question of how to finance the necessary transition to a greener livestock sector.

The new methodology, developed by FAO and partners, for the first time clearly identifies areas within dairy production where greenhouse emissions can be curbed --  for example, by changing feed composition or feeding practices, or improving the energy efficiency of equipment -- and explains how those reductions can be measured and reported.

Importantly, it has been certified by Gold Standard, an independent body that evaluates climate projects under the UN's Clean Development Mechanism and ensures they deliver genuine emission reductions.

This certification is key to allowing smallholder dairy operations to receive internationally-accepted carbon credits in exchange for emission reductions. These can be sold on carbon markets - a potential revenue stream that creates a financial incentive for the dairy industry to go greener and opens new opportunities for small-scale producers to access investment funding for their farms.

"Investing in ways to make smallholder dairy systems more productive is an efficient way to simultaneously reduce greenhouse gas emissions and ensure food security," said Henning Steinfeld, Chief of FAO's Livestock Information, Sector Analysis and Policy Branch. "This methodology will help to channel finance to projects that have real impacts on the livelihoods of millions of smallholder dairy farmers," he adds.

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