Farmers in Victoria and South Australia are taking part in a world-first carbon capture scheme to generate a new source of income.

The farmers won a bid under the latest round of the Federal Government's Emissions Reduction Fund (ERF) announced in April.

One of the farmers, Mr Farmer Steven Hobbs, said the scheme was a bit tokenistic, but that ''a little bit of tokenism was better than none''.

Dean Belfield is testing the carbon levels in soil. ( ABC Rural: Jess Davis )

"Unfortunately, there's a lot of double standards in the way our Government is approaching our emissions and it's very tokenistic in many respects," he said.

But Mr Hobbs said it was a good first step that the Federal Government had recognised soils were capable of storing carbon.

"I see this as a way to dip my toe in the water and see if this could be a possible alternative income stream for agriculture."

Farming Soil Carbon

The ERF is an auction available to farmers and land managers for projects to capture carbon, similar to the capture of methane in landfill or piggeries.

For soil carbon, farmers are paid roughly $10 for each carbon credit based on how much carbon they can sequester in their soil over a 10-year period.

Farming is like mining soil, said project leader Deane Belfield, Director of Regenerative Australian Farmers.

Mr Belfield said a lot of carbon had been released through farming over time and the plan was to try to reverse the process.

"The incentive for the farmer is to implement regenerative farming practices, to draw down the carbon into the soil, and that's what they get paid for," he said.

Mr Belfield said the project was the world's first carbon market to engage farmers around regenerative agriculture.

"Lots of countries are looking very closely at what we're doing." he said.

Farmer's soil is tested for carbon levels at the start of the project and again in 10 years' time. ( ABC Rural: Jess Davis )

"It's a terrific opportunity to capture the imagination of farmers who might be sitting on the fence."

Louisa Kiely, of Carbon Farmers Australia, said the $10 carbon credit price for soil price was too low.

Healthier food, healthier land

"Carbon farmers of Australia has always maintained soil carbon is a gourmet carbon because of it's ability to sequester, but also it's side-effects of healthier food, healthier land."

Ms Kiely said despite the low price it was important for people to engage in the program.

She said as carbon soil farming evolved farmers would be able to tap into the private market.

"There is scope for people who raise their soil carbon under one of these methods to sell it outside of the government ERF system," she said.

Mr Hobbs said many farmers were sceptical of the carbon soil farming, but would give the project a try and might find in a few years time that they could trade carbon in global or domestic markets.