The Federal Register is soliciting public comments on the creation of a hardwood checkoff program.
Background on Checkoff Programs
Checkoff is an industry-funded generic marketing and research program designed to increase demand for U.S. agricultural commodities. The Agricultural Marketing Service (AMS) within the U.S. Department of Agriculture has oversight of these programs, but each industry with a checkoff has its own board that administers the program and collects assessed fees. The board can ask AMS to assist in enforcement issues.
“Milk does a body good,” and “Got Milk?” are examples of marketing campaigns developed by the dairy industry checkoff program funding. A softwood checkoff program was launched in 2011; fee collection began in January of 2012.
Hardwood Checkoff Costs and Process: Who Pays if Checkoff Approved?
Green sawmill producers and kiln operating facilities with annual sales in excess of $2 million will be subject to checkoff. The checkoff fee applies to all hardwood lumber, cants and railroad ties produced from American hardwood logs. Other finished goods such as pallets will not be directly assessed a rate by the checkoff; however, hardwood lumber contained in pallet stock is assessed if produced and transferred within the same company (e.g. scrag mills and other integrated pallet manufacturers).
Exemptions exist for hardwood lumber product manufacturers and hardwood lumber value-added products manufacturers with combined annual sales of less than $2 million, and hardwood plywood manufacturers with annual sales of less than $10 million. These are annual exemptions and must be reapplied for each year. If an exempt company exceeds that sales volume, they will be responsible for paying the fees within 30 calendar days after the end of the fiscal year and submit any necessary reports to the Board at that time. The initial assessment rate for the Hardwood Checkoff would be:
- $1.00 per $1,000 in sales of hardwood lumber and hardwood lumber products (includes cants and pallet stock);
- $0.75 per $1,000 in sales of hardwood lumber value-added products;
- $3.00 per $1,000 in sales of hardwood plywood
Hardwood Checkoff Costs and Process: Who Receives the Funds? Who Audits the Process?
The Checkoff Board, not the federal government, collects the contributions. The Board, composed of 28 members who are owners or employees of hardwood lumber manufacturers or hardwood plywood manufacturers, is obligated as required under the proposed Order to receive, investigate and report to the Secretary of Agriculture complaints of violations of the proposed Order. Ultimately, the USDA’s Office of General Counsel may begin legal action against companies using customary civil sanctions such as tax liens and fines.
Hardwood manufacturers, including those who are exempt, would be required to maintain books and records needed for verifications. This paperwork needs to be made available during normal business hours for inspection by the industry Board or USDA employees/agents upon their request.
The deadline for submitting comments has been extended to February 18, 2014. Read the Federal Register Notice on the Hardwood Checkoff Program.
A federal agency review will consider all comments received and then submit final rules to the industry for a vote by all eligible companies. A simple majority (over 50%) of those voting, based on volume of sales, will be required to approve the checkoff. Timing suggests that it is possible to see the checkoff program operational by late 2014 or early 2015. NWPCA is reviewing the Federal Register notice and welcomes all comments and input from members. Please email Brent McClendon.
The hardwood checkoff website details answers to many additional Frequently Asked Questions.