Frequently Asked Questions
What is a Check-off Program?
What will a Check-off do for my business?
Who is included?
How is a Check-off formed?
How are imports assessed?
What is the anticipated level of investment?
What return on investment is expected?
How much of the assessment will go to administrative costs?
Is the money spent in the same year it is collected?
What is the duration of a Check-off?
How would the Check-off be governed?
What is the role of the Check-off Board?
How long do Board members serve?
What kind of messaging is appropriate for a Check-off?
How will this impact existing sector-specific programs and messaging?
What are the next steps for a paper and paper-based packaging Check-off?
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.
Check-off programs have successfully turned the tables for a wide array of industries providing returns on investment ranging from:
- A 17.5 percent increase in annual propane sales, thanks to a $39 million a year investment
- For each dollar invested in the program, the pork industry estimates a return of $4.79, while the beef industry reports $5.55, the soybean industry $6.75, and the watermelon industry slightly more than $10
In the case of the paper industry, current research indicates that environmental messages provide significant opportunities to change consumer behavior and educate purchasing decision makers. Messages highlighting that our products are reusable, recyclable, and come from trees that are replanted, for example, resulted in meaningful improvements in overall industry perceptions. These perceptions will contribute to an increase in the sale of paper-based packaging and slow the decline in demand for printing and writing grades.
Companies annually producing or importing 100,000 short tons or more of paper and paper-based packaging would be included. Companies annually producing or importing less than 100,000 short tons would be exempt from this effort. Converters would not be included in this assessment.
If a company is a producer and importer, the combined domestic production and imports of paper and paper-based packaging would be counted to determine whether the company is exempt from the assessment.
A Check-off is established by 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 are eligible to vote in the referendum conducted by the U.S. Department of Agriculture.
Imported products are assessed by the U.S. Customs Service upon arrival in the United States.
An annual assessment of 35 cents per short ton would be paid quarterly by included companies, resulting in an annual budget of approximately $25 million per year. A program this size would allow the industry to effectively deliver a common message to targeted audiences that dispels misinformation about our products and also promotes the positive attributes we provide.
The intent of the Check-off is to improve public perceptions of our products while increasing the sales of paper-based packaging and slowing the decline in demand for printing and writing grades.
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, containerboard, paperboard) by approximately one-quarter of one percent relative to baseline to generate a return of investment of 20 percent.
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 likely will include attitudes about acceptance of paper products as well as understanding of various product assets, from performance characteristics to environmental attributes. To track improvements in this area, a benchmark survey will be conducted prior to beginning public outreach and communications.
Based on experience from other programs, administrative costs are anticipated to average between five and eight percent. This will allow the industry to maximize resources available for promotional purposes while ensuring appropriate oversight and program management.
By law, a Check-off may not expend more than 15 percent for administration and functioning of the Board with the exception of the first three years. As a comparison, the propane industry’s cap for administrative fees is 10 percent, the blueberry, olive oil, and watermelon industries specify no more than 15 percent of assessed funds for this purpose, and the dairy industry’s cap is five percent.
The intent is for funds to be spent the same year in which they are collected on a promotion program for paper and paper-based products. Funds may be carried over from one year to the next, but by law, the carryover may not exceed the amount to be collected in one year’s time.
An approved Check-off would undergo a follow-up referendum no later than seven years after the assessments begin and referendums can be requested at any time by the board or 10 percent of those eligible to vote. In addition, by law an evaluation of the effectiveness of the program must be undertaken every five years.
Currently, a volunteer Panel of industry CEOs is working to shepherd the Check-off exploration and development phase. The Panel is responsible for oversight regarding the parameters of the program; the development of the draft Order for the USDA; and outreach and education for industry companies that will be included in a public referendum.
Assuming a positive referendum, the Panel will then submit two nominations for each initial Board seat to the USDA Secretary, who appoints the Board members. Once constituted, the Board then will submit nominations for future vacancies. The 12-member Board will be comprised of producers and importers subject to the assessment.
By law, the Board must reflect the geographic distribution of the quantity of domestic production and the quantity of imports. Accordingly, the Board will include 11 domestic producers, one of which must be less than 250,000 tons (seven from the South; one from the Northeast; two from the Midwest; one from the West) and one importer representative. The distribution of these seats will be reviewed at least once in every five-year period.
Among other responsibilities, Check-off Board members will administer the Order, develop annual budgets, invest funds, accept voluntary contributions, and contract to carry out the Order.
Board members also provide oversight to ensure that no Check-off funds are used to lobby or engage in false or disparaging advertising.
Initial Board seats will have staggered durations, after which members will serve no more than two full consecutive three-year terms.
The industry Board will determine the message and marketing campaign. A common, broad message that advances the industry by changing consumer-buying behavior will be created.
Initial research is very clear – when misperceptions about products’ environmental performance are corrected, perceptions improve, and consumers indicate their purchasing decisions will change.
Examples of Check-off messages used by other industries include the “Incredible Edible Egg”, “Got Milk?” and “Beef – It’s what’s for dinner”. These programs have successfully increased visibility for specific products while highlighting their positive attributes. A “Paper is Good” type of moniker likely will be developed for the program once approved.
The Check-off will be a new and distinct promotional campaign created to benefit the paper and paper-based packaging industry. The program will be based on foundational messages intended to improve public perceptions of our products while increasing the sales of paper-based packaging and slowing the decline of printing and writing grades. Positive results gained from the Check-off will improve the effectiveness of sector-specific programs and messages.
The proposed Order has been submitted to the U.S. Department of Agriculture and additional details and information will be communicated to industry members included in the referendum. USDA will provide for a public review of the Order after which the industry referendum will be conducted, affording each included company the opportunity to vote.