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MARKET WATCH

Paper Check-Off Program Voting Period Set

Posted by Suz-Anne Kinney on October 4, 2013
The USDA has published a proposed rule for the Paper and Paper-based Packaging Promotion, Research and Information Order, also known as the Paper Check-off Program. The Program, which will be supported by a per-ton assessment on paper and paper-based packaging manufacturers and importers, will promote the use of four types of paper and packaging:
  • Printing, writing and related paper, coated or uncoated, including thermal but not carbonless
  • Kraft packaging paper, coarse unbleached, semi-bleached or fully bleached (used to make grocery bags and sacks)
  • Containerboard, including all forms of linerboard and medium (used to make corrugated boxes and shipping containers)
  • Paperboard, including solid bleached kraft board, recycled board and unbleached kraft board (used for food and beverage packaging and tubes)

The USDA has published the proposed rule that will govern the nature of the marketing program, the creation and operations of the Board that will oversee the program and set the voting period for the referendum.

Why the Program Is Needed

Over the last 10-15 years, the paper and paper-based packaging industry has seen a steady decline. According to the AF&PA, markets for these products have contracted by 15 percent between 2000-2010:

  • Cut-size office paper market declined by 20 percent between 2006 and 2010 and fell another 5 percent in 2010; other printing and writing papers declined by 27 percent  between 2006 and 2010.
  • Kraft paper markets declined by 23 percent between 2000 and 2010.
  • Paperboard markets contracted by 10 percent between 2000 and 2010.
  • Containerboard markets declined by 2 percent between 2000 and 2010.

Program Messaging

To replace this market contraction with growth, the Paper Check-off Program will create informational marketing campaigns touting the sustainability of these products. The primary messages that the program will focus on include :

“Broad, fact-based messages highlighting the renewability, recyclability and reusability of paper and paper-based packaging. Paper produced in the United States relies on fiber from sustainably managed forests and fiber recovered for recycling as its raw material. Broad messages about the recyclability of paper should enhance recovery efforts.  Increasing paper recovering for recycling would increase the amount of paper diverted from landfills. Messaging to encourage the use of renewable and recyclable paper and paper-based packaging could help increase the use of bio-based products . . . .

“The industry could also educate the public about the sustainability of paper and paper-based packaging. In the United States, more trees are grown than harvested. Between 1953 and 2006, the standing inventory of trees . . . in U.S. forests increased by 49 percent and has increased by more than 20 percent since 1970.

Additionally, many paper products are manufactured using renewable energy. In 2008, an estimated 65 percent of the energy needed to operate U.S. pulp and paper mills was generated from renewable fuels derived largely from biomass.”

To distribute these messages effectively, the USDA determined that approximately $25 million per year would be needed.

Assessments

To raise the $25 million per year that is needed to develop and publicize these campaigns, the Check-off Program will required companies that manufacture or import more than 100,000 short tons of paper and paper-based packaging annually to pay a $0.35/short ton assessment to the Board, which will then administer the program.

The USDA set this assessment rate based on 2011 data; it deducted the exempt tonnage (tons produced/imported by small companies) and estimated that 72.5 million tons of paper and paper-based packaging were produced/imported that year. They then divided the $25 million by 72.5 million tons and the assessment was set at $0.35/ton.

The USDA estimates that 51 domestic manufacturers and 19 importers will be required to pay the assessment. Another 33 manufacturers and 2,574 importers will be exempt because they produce/import less than 100,000 tons per year.

Board Seats

Under the Proposed Rule, the Board would have 12 members. The make-up of the Board will be guided by the following criteria:

  • 11 will be domestic manufacturers; 1 will be an importer.
  • 10 of the 11 domestic manufacturers will represent regions: 6 from the South, 2 from the Midwest, 1 from the West and 1 from the Northeast; 1 at large manufacturer can be from any region, but must produce between 100,000 and 250,000 tons annually.
  • No 2 board members can work for the same company.

The Board will reassess geographic distribution of production every 3-5 years and recommend changes.

The Referendum

The voting period has been set for October 28 through November 8, 2013. All those who are eligible to vote should receive a ballot in the mail by October 21, 2013. If a ballot is not received by this date, a paper or paper-based packaging company that manufactured or imported at least 100,000 tons in 2012 can request a ballot by calling the USDA’s Agricultural Marketing Service (AMS) at 888-720-9917. Completed ballots must be returned to the AMS by 4:30 p.m. on November 8, 2013.

Read the rule here and the Referendum Procedures here.

Topics: forest industry news, pulp and paper production

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