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MARKET WATCH

Paper Check-Off Proposed

Posted by LeAndra Spicer on February 25, 2013

A proposed Check-off for the paper and paper-based packaging industry is currently under review at the U.S. Department of Agriculture. The proposed program is intended to improve public perception of paper products, and in turn, increase sales of paper and packaging. Industry leaders hope the program will also slow the reduced demand for writing and printing grades.

The Order under review was drafted by a volunteer panel of CEOs within the paper industry. The panel continues to oversee the exploration and development of the program, which includes establishing parameters and educating companies of the public referendum, during the review phase. To date, 46 companies have pledged support for the Check-off.

If implemented, the Check-off would include companies that either produce or import 100,000 short tons or more of paper-based packaging or paper each year. The companies covered under the Check-off would be required to pay an assessment of 35 cents per short ton each quarter. The resulting annual budget would amount to approximately $25 million. Return on investment is estimated at 20 percent.

Sales across four covered categories – printing and writing papers, containerboard, Kraft and paperboard – would need to improve by one-quarter of a percent relative to the baseline to result in the aforementioned ROI. These results assume a Check-off with an estimated $25 million annual budget will run for seven years.

To assess effectiveness, the program will track market share and conduct periodic research to evaluate opinions about paper and paper-based packaging. Consumer attitudes of interest include acceptance of paper and paper products as well as an understanding of product characteristics such as environmental attributes.

Why a Check-Off Now?

Recent research has identified an opportunity to change consumer behavior by educating purchasing decision makers about sustainability practices within the paper industry. A Check-off would allow the industry to effectively deliver a common message to targeted audiences. Such messages would dispel misinformation and also promote positive attributes such as products that are reusable, recyclable and sourced from sustainable forests.

The Check-off would come at a time when the Millennial generation enters the marketplace with purchasing power. These individuals, whose current ages range from 18 to 32 years, make up the first generation to embrace technology as a first language. In lieu of paper-based solutions – from bank statements to calendars and paychecks to newspapers – Millennials readily turn to digital formats.

A majority of Millennials believe overall paper usage is wasteful and that its consumption has negative environmental impacts. This generation expects paper companies to play a role in sustaining paper resources. Despite these views, Millennials both want and expect paper to serve some needs throughout their future.

Preliminary research indicates messages focused on paper recycling and ongoing tree planting in private forests is associated with positive paper product consumption. Informative messages regarding the use of biomass by paper mills to produce power were also effective. Based on these findings, a Check-off would likely focus on messages of sustainability as wells as emotional and sentimental attachments to paper.

About Check-off Programs

Check-offs are implemented with the goal of maintaining or expanding product markets for a particular industry. Most Americans are familiar with popular “Got Milk?” and “The Incredible, Edible Egg” Check-offs. Federal legislation authorizes such programs, and the Secretary of Agriculture appoints a board of directors to oversee any one Check-off. Program funds are used only to support informational, educational and promotional activities.

A public review of the Check-off Order and Referendum Procedures are available at Regulations.gov. Those who wish to comment may do so online by March 4. Additional information is also available at the Paper Check-Off website.

Topics: forest policy

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