“Got Trees?” Check-Off Programs in the Forest Products Industry

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.