USDA Hardwood Checkoff Program – Is It Good For YOU?

In my humble opinion anytime the government says, “I’m here to help” you should be concerned. As a former sawmiller and logger, after reading the entire program, I do not believe this is a good program for the hardwood industry and it will not accomplish its stated goals. The program, like every government program, has page after page of confusing regulations, makes unreasonable demands upon all hardwood producers, plus the exemptions and “opt out” options are full of regulatory requirements and fees that are nothing more than a hidden tax.
I encourage all hardwood producers, regardless of your side of this debate, to comment on the Federal Register website and visit www.nohardwoodcheckoff.com for more information. Don’t wait, the comment period closes on July 9th.
Below are some parts of the “new order” that are worse than the original that I recently received from a local hardwood producer from NHLA.
Brady Carr
Publisher
LUMBERMEN’S Equipment Digest

The new order is vastly more complicated than previous because it provides so many exemptions from qualified sales, e.g.
For purposes of this Order, hardwood lumber does not include industrial products which remain in board or block form such as ties, cants, crane mat material, and pallet stock or products which are transformed from boards or blocks of lumber into other products such as furniture, tight cooperage, cabinetry, and constructed pallets
But as the Federal Register also says: exempt manufacturers would still be required to keep records. By providing various other exemptions the new proposals further complicates the $2 million exemption. Now producers near that threshold will have to keep track of sales by category and customer on a separate set of books that would be submitted to the Hardwood Checkoff Board to determine the amount of assessment that company would pay, or whether it would be exempt with revenues under $2 million. The Checkoff set of books would have nothing to do with annual profits, losses or taxes – it would just be another regulatory burden and accounting exercise that cost companies money.
Because of this extra recordkeeping burden which will be particularly cumbersome and costly for small business – they should be granted a vote in the initial referendum with or without having to pay assessments under the program. This equitable given a company may one year have $2 million in revenues from qualified products, and the very next year may not.
The new order exempts industrials, which is 60 percent of hardwood utilization. That is on top of exempting all companies under $2 million in revenue from voting or participating in the check-off. That is more than half of all hardwood lumber manufacturers. With 60% percent of the product volume and 50% of the producer based exempted, how is the check-off to benefit the industry?
USDA does not explain why it dropped industrials from the checkoff, and could not decide on whether to keep plywood – an obvious competing product to hardwood lumber. This is an obvious failure of AMS to provide a balanced analysis and assessment of the industry and demonstrates AMS lacks the insight to proceed with this checkoff plan.
By exempting many products, the Checkoff will promote certain hardwood products over others. This could create an imbalance in the timber supply and negatively impact those exempted. This does not benefit the industry overall.
While the referendum issue is addressed by making the voting threshold a majority of both companies and a majority of volume, the referendum process still exempts more the half the industry and is thus still skewed toward large companies. According to the USDA in the Federal Register, those companies with less than $2 million in annual sales comprise 52 percent of the industry. How can an industry impose a checkoff exempting more than half that industry?
This proposed checkoff is so very different than the original proposal (exports included versus excluded in the original, so many products excluded, that this proposal should be sent back to the industry to consider before moving on as an AMS imposed plan.
The checkoff excludes brokered sales. All manufactures could engage brokers and avoid all assessments. That is not the intent of a promotion and research order.
Comments on the "revised" Hardwood Check-Off are accepted until July 9. NHLA encourages everyone to share their opinions on this matter. Comments can be submitted online at: http://www.regulations.gov.