Low carbon farms balance would be: "low carbon" profit + subsidy - small carbon tax

High carbon farms balance would be: "high carbon" profit + subsidy - high carbon tax

If ["low carbon" profit - small carbon tax] > ["high carbon" profit - high carbon tax] (e.g. if the carbon tax is high enough), farms have an incentive to lower their carbon emissions.

The subsidy is here to make sure ["low carbon" profit + subsidy - small carbon tax] > 0

That makes sense - thanks!