The Wood and Fiber Supply Chain Experts
“Got Trees?” Check-Off Programs in the Forest Products Industry
From the June 2010 Forest2Mill newsletter.
“Wood, the Other ‘Green’ Building Material.” “Got Paper?” “Happy Trees.” In the near
future, slogans like these might be coming to you from your TV or favorite magazine.
In March 2009, after conducting a
feasibility
study, the US Endowment for Forestry and Communities formed a Blue Ribbon Commission and
charged it with developing a check-off program for the softwood lumber market. The check-off would
support a long term strategic program to market wood, increase the volume of softwood lumber sold
and expand market share and returns. In March 2010, the American Forest and Paper Association
and the US Endowment for Forestry and Communities each donated $150,000 to fund a similar
feasibility study on creating a check-off program for the paper and packaging industry.
Traditionally, check-off programs use funds collected from producers of specific
agricultural commodities to promote and perform research on ways to increase demand for their
products. These funds are generally a specific price per unit. In the 1980s, soybean growers
contributed ½-1 cent per bushel, for instance; cattle ranchers contribute $1 per head of cattle.
The feasibility study undertaken by the U.S. Endowment suggests a range of $0.75-$1.00 per thousand
board feet for softwood lumber, a fee that would apply to all but small producers.
One of the primary objectives of a check-off program is to pool financial resources to
create and implement more sophisticated advertising campaigns than could be produced by an
individual company. Through product development and marketing programs, check-offs increase demand
for that commodity and increase income for program participants. Some of the more recognizable
check-offs programs are the American Egg Board, the National Cattlemen’s Beef Association and the
National Pork Board. The marketing efforts of these and more have produced such well known slogans
as “Got Milk?” “Pork, the Other White Meat,” “Beef. It’s What’s for Dinner” and “The Incredible,
Edible Egg.”
How successful are these programs? Since the dairy check-off organization, Dairy Management,
Inc., was started in 1983, the per capita consumption of all dairy products had increased by 16% by
2008. Over the five year period of 2003-2008, the total sales of milk, cheese and yogurt grew by
over 1 billion pounds. The increase in consumption is believed to be in part due to the highly
successful “Got Milk?” campaign. In its feasibility study, the Endowment reports a return
of $4-$10 for each $1 spent on promotional campaigns.
While many see the benefits of these programs, check-offs have their detractors. Many
participants believe that the check-off is not helping as much as the dues that they are required
to pay. And some commodities have continued to experience decreases in demand and market price even
after their check-off’s marketing campaigns and research have spent millions of dollars a year.
The programs are also difficult to end. In 2000, 30,000 U.S. hog farmers voted 53%-47% to
end their program. Due to the National Pork Producers Council’s assertion that there were voting
irregularities, Secretary of Agriculture Ann Veneman ordered that the pork check-off continue.
Around the same time, the National Cattlemen’s Beef Association was also having an internal
crisis. After two rulings against the beef check-off organization by both a district and circuit
court judge, the Department of Agriculture asked the Supreme Court to hear a First Amendment case
based on the issue of “forced speech.” In May 2003, the Supreme Court ruled that the beef check-off
did not violate the First Amendment, which was the basis for the case by participants requesting
that the beef check-off be terminated.
Will check-off programs pay off for forest products companies? The U.S. Endowment for
Forestry and Communities thinks so. “As a not-for-profit we are well aware that we cannot achieve
our mission of healthy working forests and vibrant forest-reliant rural communities without a
healthy and vibrant forest products industry,” said Endowment President & CEO Carlton Owen,
when he announced the formation of the Blue Ribbon Commission.
Perhaps the better question is whether or not the industry can afford not to launch the
types of marketing campaigns a check-off program allows. The Steel Alliance has been targeting the
framing market for residential homes, traditionally a stronghold for the forest products industry,
since the 1990s. One
current
campaign touts steel as the “new green.” The logo for the campaign: a tree constructed out of
steel.
Additional Stories from the June 2010 Forest2Mill Newsletter:
Industry
Performance Overview
Housing
Market Update
Chip
Prices in the South and PNW Near Parity
Common
Ground in the Forest
News:
Georgia Pacific & Dixie Pellet