Softwood lumber companies would assess themselves a fee on their production to pay for a multi-million dollar research, consumer education, and softwood promotion fund under a proposal the U.S. Department of Agriculture (USDA) requested comment on recently.
USDA's notice, published last week in the Federal Register, invites comments by Nov. 30 on an industry-financed, industry-managed program designed to promote the use of softwood lumber. The program--developed by a Blue Ribbon Committee of 21 major softwood manufacturers from the United States and Canada--calls for all softwood companies to pay an initial assessment rate of 35 cents per thousand board feet of softwood lumber shipped within or imported into the United States. The Blue Ribbon Committee projects assessment income between $12.4 million and almost $19 million per year with shipment levels ranging from 40 to 60 billion board feet, USDA said.
If the idea does go to a vote, a majority of domestic manufacturers--as measured both in terms of industry count and volume of output--would have to support the program for it to be implemented.
"The purpose of the program would be to strengthen the position of softwood lumber in the marketplace, maintain and expand markets for softwood lumber, and develop new uses for softwood lumber within the United States," USDA's proposed rule said. "A referendum would be held among eligible domestic manufacturers and importers to determine whether they favor implementation of the program prior to it going into effect."
The proposed assessment represents the latest attempt by softwood lumber interests to join together and promote their wood in the face of competition from products such as vinyl siding and fiber cement. "In the past, the industry attempted voluntary efforts to promote forest products, but they were sporadic, underfunded, and narrowly targeted," USDA said. "These campaigns did not last long enough to succeed." The Blue Ribbon Committee that's behind the current proposal was formed in 2008 and submitted its proposal to USDA in February.
If successful, the proposed program would grow softwood lumber markets "by stopping the erosion of market share in single-family residential market, increasing the market share in multi-family residential construction, significantly increasing the use of softwood lumber in non-residential markets, and rebuilding softwood lumber's share in the outdoor livingmarket," USDA said. It cited a Blue Ribbon Committee estimate that the longterm market growth opportunity in thenon-residential market and the raised wood segment of the residential market would total between 10 billion to 12 billion board feet.
While the benefits of the proposed program are difficult to quantify, the benefits are expected to outweigh theprogram's costs," USDA said.
U.S. sawmills produced about 29.5 billion board feet of softwood lumber in 2007-2008, the USDA's Forest Service reports, while Canada exported about 12 billion feet of softwood lumber to the United States annually at that time, and another billion board feet came from other countries.
While the assessment would be imposed on all softwood lumber companies, entities that domestically ship or import less than 15 million board feet would be exempt. USDA figures that about 232 of the 595 domestic manufacturers--or roughly 39% of the total--would thus be exempt from the assessment scheme. Larger entities would not pay any assessments on the first 15 million board feet shipped or imported into the U.S. Of the 883 importers, USDA estimates 780, or 88%, would be exempted.
"Thus, about 363 domestic manufacturers and 103 importers would pay assessments under the order," USDA said.
