Paper Check-off Final Rule Published

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The final Paper Check-off rule was published by the U.S. Department of Agriculture (USDA) this past week, formally establishing the program and stating that the assessment of $0.35 per short ton on printing and writing, containerboard, paperboard, and kraft paper will begin on March 1. Authorized by federal legislation, a Check-off is designed to maintain and expand markets for an industry’s products. Check-offs are governed by an Order that sets the parameters of the program and are run by an industry nominated board of directors appointed by the Secretary of Agriculture. While program funds may not be used for lobbying or advocacy, they are available for informational, educational, and promotional activities in support of an industry’s products.

"Today’s action marks the beginning of the next chapter for our industry to tell the positive story about the benefits of paper and paper-based packaging," said AF&PA (Washington, D.C., USA) Board Chairman David Scheible, president and CEO of Graphic Packaging International. "The Paper Check-off will build a promotional program to showcase the positive attributes of our products."

The Paper Check-off program was initiated by a panel of paper industry leaders and approved by the companies through a USDA referendum. A check-off is established as a result of an affirmative referendum of a majority of the companies voting who represent a majority of the volume of the paper and paper-based packaging produced or imported that would be covered by the program. Companies producing or importing 100,000 short tons or more of paper and paper-based products annually were eligible to vote in the referendum, conducted by the USDA.

The intent of the Check-off is to improve public perceptions of paper and paperboard products while increasing the sales of paper-based packaging and slowing the decline in demand for printing and writing grades. Covered companies will pay the quarterly $0.35 per short ton assessment for the initiative, resulting in an annual budget of approximately $25 million per year. A program this size will allow the paper and paper-based packaging industry to effectively deliver a common message to targeted audiences that dispels misinformation about its products and also promotes the positive attributes its provides.

A preliminary assessment shows that a $25 million per year Check-off maintained for seven years would only need to lift sales of the four covered categories (printing and writing papers, kraft papers, containerboard, paperboard) by approximately one-quarter of one percent relative to baseline to generate a return of investment of 20%. In addition to tracking market share, measurement of the program will include periodic opinion research among target audiences to evaluate attitudes about paper and paper-based packaging. These measurements will include attitudes about acceptance of paper products as well as understanding of various product assets, from performance characteristics to environmental attributes.

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