The U.S. Department of Agriculture (USDA) recently released a revised Hardwood Checkoff proposal and indicated its intention to go ahead with a vote on the measure by the hardwood industry. An industry trade and promotion as well as research and development program, the Hardwood Checkoff would fund a wide variety of industry programs with mandatory assessments collected from hardwood lumber and plywood producers.
In its latest draft, the USDA decided to exempt industrial grade products, such as pallets, cants, crossties, pallet stock, crane mats, etc. from required assessments. Opposition from industrial sectors as well as multiple state organizations led the USDA to limit the scope of the Hardwood Checkoff.
One of the biggest changes in the proposal is the voting criteria to approve the checkoff. After complaints were received that the initial voting procedure favored larger companies, the USDA decided to add a requirement that the proposal in order to pass must be approved by the majority of manufacturers voting in the referendum as well as the original criteria for the majority of the volume to vote for the program. Currently, only hardwood lumber and plywood producers affected by the assessments have a right to vote in the referendum, which must take place before the checkoff can begin. Small sawmills and plywood producers are exempt from the assessment; this includes hardwood lumber manufacturers with annual sales under $2 million or hardwood plywood manufacturers with sales under $10 million.
The new voting criteria will make it harder for the measure to pass. If the referendum fails, the checkoff will not be implemented. There are other ways to pass a checkoff without industry approval, such as Congressional action, but this is not likely to happen for hardwoods. Given the number of comments against the proposal as well as the move by a number of state forest products organizations to voice opposition, the addition of the vote by company requirement significantly increases the difficulty of passing the program.
Grace Terpstra, the spokesperson for the committee behind the Hardwood Checkoff, said, “We are studying the proposal now and are very pleased that the USDA has moved forward with the checkoff.” She admitted that the voting change would add difficulty to the voting process, but she thinks it is unclear how the industry will vote.
Jeff Edwards, co-chairman of the U.S. Hardwood Industry Coalition and president of Edwards Wood Products in Marshville, North Carolina, suggested, “The Hardwood Checkoff is a very contentious issue, and the new order is not clear.” He pointed to the need to clarify the role of hardwood plywood producers as well as varying comment period deadlines.
The U.S. Hardwood Industry Coalition is the major organization leading the charge against the Hardwood Checkoff because its members believe the program is not needed and will unfairly burden hardwood producers.
Edwards added, “Given the overwhelming opposition from the hardwood industry to having a Checkoff imposed on it, we’re disappointed that USDA continues to pursue this. The new proposal from USDA requests a number of specific comments about hardwood lumber and hardwood plywood that frankly should have been considered prior to issuing the initial proposal back in November 2013.”
USDA is seeking comments to a number of questions to identify the impact of inclusion of the hardwood plywood sector as well as the current design of the assessment computation. The USDA has requested that the industry review and make general comments by September 7, 2015. To read the proposal and comment, visit https://goo.gl/2w2HK4
