Pulp Magic

SEPTEMBER 28, 2015

In Support of Checkoffs

If you read or listened to a recent NPR segment (“Why Does Government Act As Tax Collector For Agribusiness?” September 23, 2015) you’d come away with a less than clear understanding of how USDA commodity checkoff programs work.

Checkoff programs have been around under federal law since 1966 when Congress passed the Cotton Research and Promotion Act. Often referred to as “self-help” programs, they are designed to give American farmers and businesses involved in a given agricultural commodity the chance to work together for the purposes of research and product promotion.

To be clear, checkoffs are not government subsidy programs, much less “Tax Collectors for Agribusiness,” as the NPR headline claims. Like the agricultural commodity boards behind iconic campaigns like “Beef. It’s What’s for Dinner®”, and “Cotton. The Fabric of Our Lives®,” Paper and Packaging — How Life Unfolds™” is self-funded and self-directed by the paper and packaging industry. No federal funds are used. The USDA provides guidance and oversight, and is actually compensated for its work.

An overwhelming majority of manufacturers and importers of paper and paper-based packaging in the United States support the checkoff. Eighty five percent of those firms voting in the 2013 referendum, which combined represented 95 percent of the volume of our products sold in the country, supported its creation.

Why does the government need to be involved at all? The answer is simple: under most circumstances these companies would be barred by anti-trust laws from working together. Those laws protect free competition — consumers. But checkoff programs aren’t about increasing any one company’s profits over another’s. They are about supporting the agricultural commodity as a whole.

Why is that important? The paper and packaging industry is 2.6% of U.S. GDP, employs 375,000 people, and generates $132 billion in sales. In other words, its continued good health is vital to the American economy.

There are two other things you should know. First, checkoffs are held accountable. They must demonstrate a positive impact. In the case of the paper and packaging industry, an independent economic analysis of the campaign is required within the first five years of the campaign. Secondly and of equal importance, checkoffs do not run in perpetuity. In the case of paper and packaging, the industry will vote in five years on whether or not to continue the program.

So for checkoffs like ours, the paper and packaging industry pays our way. Our checkoff is a self-governed, self-sustaining, and widely popular venture working to maintain and expand markets for paper and paper-based packaging.