Promotion Education Research

2. Hardwood CheckoffGrowing Future Markets Promotion Education Research

3. Hardwood CheckoffGrowing Future Demand • Generate ongoing funds Promote American Hardwoods To Architects, Specifiers and Consumers Fund Research On American Forests, Hardwood Lumber & Plywood Production • DEMAND INCREASES FOR • AMERICAN HARDWOOD What’s the goal?

4. Hardwood CheckoffGrowing Future Demand Strategy • Industry approves fee on hardwood lumber, value added & plywood sales • Industry nominates Board to direct Promotion and Research. USDA appoints Board and overseas the process • Promotion & Research begins • American Hardwood demand INCREASES

5. Hardwood CheckoffGrowing Future Demand Checkoff Provides • Fairness –captures fee on lumber & panel sales – clear fee structure • Flexibility –allows adaptation to changing circumstances • Experience – learn from other agricultural sectors • Durability – longevity to make a difference

6. Hardwood CheckoffGrowing Future Markets Process • Hardwood Checkoff Committee works with USDA on plan

7. Hardwood CheckoffGrowing Future Markets Jim Howard (Co-Chair), Atlanta Hardwood Corp. Ted Rossi (Co-Chair), Rossi Lumber Nancy Arend, Northwest Hardwoods Victor Barringer, Coastal Lumber Chris Bingaman, Bingaman & Son Lumber, Inc. Bill Buchanan, Buchanan Hardwoods John Crites, Allegheny Wood Products Don Finkell, Anderson Hardwood Floors, Inc Jamey French, Northland Forest Products, Inc. Pem Jenkins, Turn Bull Lumber Jeff Meyer, Baillie Lumber Co., Inc. Jack Shannon, The Shannon Group Brad Thompson, Columbia Forest Products Chris Zinkhan, The Forestland Group LLC

8. Process Hardwood CheckoffGrowing Future Markets • Hardwood Checkoff Committee works with USDA on plan (“order”) • 60-Day Public Comment period (published in Federal Register) • USDA considers input / can amend order • USDA Validates list of companies, conducts vote • Companies who pay into program VOTE • Majority vote by sales value approves

9. Hardwood Checkoff Board Hardwood CheckoffGrowing Future Markets • Industry nominates– USDA selects • Representation includes: • All segments paying into checkoff • All hardwood regions of US • Board is unpaid • Board Governs the program USDA reviews decisions

10. Process Hardwood CheckoffGrowing Future Markets • Committee works with USDA,drafts order • 60-Day Public Comment period (published in Federal Register) • Companies who pay into program VOTE • Majority vote by sales value approves • Industry nominates board – USDA selects • Board directs projects and work begins • Other industry segments considered • Checkoff revisited at least every 7 years

11. Hardwood CheckoffGrowing Future Demand • Timing: • Now: Drafting the Order, Details • Next: USDA reviews – may change • Comment period – later this year • Vote – likely 2012 (first/second quarter) • Who will it include: • Hardwood lumber and Plywood producers • Including those who dry and process into strip flooring, moulding, etc.

12. Hardwood CheckoffGrowing Future Demand Funding Plan Sawmills • Facilities with over $2 million in sales • $1 for every $1,000 in lumber sales

13. Hardwood CheckoffGrowing Future Demand Sawmill example Company Sales Fee Joe’s Sawmill $1.75m $0 Carl’s Sawmill $8M $8,000 Bob’s Sawmill $15m $15,000

14. Hardwood CheckoffGrowing Future Demand Funding Plan Concentration Yard / Dry Kilns Facility • Facilities with over $2 million in sales • $1 for every $1,000 in lumber sales • Deduct for green lumber purchased

15. Hardwood CheckoffGrowing Future Demand Dry Kiln example Company Sales Fee Fred’s Kilns $1.9m $0 Gary’s Kilns $4m $4,000 Gary’s Kilns $2.5m(grnpurch.)-$2,500 Gary’s Kilns $1,500 Sam’s Kilns $20m(sales) $20,000 Sam’s Kilns $16m(grnpurch.)-$16,000 Sam’s Kilns $4,000

16. Hardwood CheckoffGrowing Future Demand Funding Plan Value Added • Integrated facilities (sawmill or dry kilns) with over $2 million in sales • No furniture, cabinet • $.75 for every $1,000 value added sales

17. Hardwood CheckoffGrowing Future Demand Value Added example Company Sales Fee Bill’s VA $16m(millwork) $12,000 Bill’s VA $4m(KD sales) $4,000 Bill’s VA $12m(grn. purch.)-$12,000 Bill’s VA $4,000

18. Hardwood CheckoffGrowing Future Demand Funding Plan Hardwood Plywood • Producers over 10 million square feet • $4 per 1,000 square feet

19. Hardwood CheckoffGrowing Future Demand Sawmills-Green $3.5 mil. Sawmills-KD $2.5 mil. Yards & value added $1.5 mil. Hardwood plywood $3.0 mil. TOTAL $10.5 mil. Projected Revenue

20. Commodity Checkoffs • Established Yearly revenue • Cotton 1966 $66 million • Potatoes 1972 $20 million • Eggs 1976 $21 million • Pork 1986 $65 million • Beef 1986 $80 million • Honey 1987 $3.8 million • Watermelons 1990 $1.6 million • Soybeans 1991 $90 million • Milk 1993 $281 million • Mushrooms 1993 $2.6 million • Popcorn 1997 $1.5 million • Peanuts 1999 $6 million • Avocados 2002 $24 million • Lamb 2002 $2.3 million

21. Hardwood CheckoffGrowing Future Markets Allocation of funds Egg Board

22. Hardwood CheckoffGrowing Future Markets Checkoff’s PotentialFor the Hardwood Industry?

23. Hardwood CheckoffGrowing Future Demand

24. Hardwood CheckoffGrowing Future Demand Cotton Inc. has estimated a return of $8 for every $1 of investment

25. Hardwood CheckoffGrowing Future Markets Dairy Inc. reports the per capita consumption of all dairy products increased 16% from 1983 to 2008

26. Hardwood CheckoffGrowing Future Markets Potato Board estimates $4.74 return for every $1 invested

27. Hardwood CheckoffGrowing Future Markets USDA reports:Very few agricultural commodity checkoff program have ever been rescinded

28. Hardwood CheckoffGrowing Future Markets Why do WE Need Checkoff?

30. Hardwood CheckoffGrowing Future Markets WV Sawmills by Size Class 2005 2010 >10 million 29 14 5 to 9.99 m 24 19 1 to 4.99 m 25 20 < 1 m 2 4 Total 80 57

31. Hardwood CheckoffGrowing Future Markets Hardwood Lumber Consumption 1999 2005 2009 Total 12.9 11.7 6.8 Pallets 4.5 4.0 3.0 Furniture 2.6 1.3 0.3 Exports 1.2 1.2 0.9 Millwork 1.3 1.2 0.4 Cabinets 1.2 1.5 0.5 Flooring 1.4 1.6 0.7 RR Ties 0.7 0.9 1.0 billion board feet

32. Hardwood CheckoffGrowing Future Demand This is our once-in-a-generation opportunity for our FAMILIES

33. Hardwood CheckoffGrowing Future Markets Jim Howard (Co-Chair), Atlanta Hardwood Corp. Ted Rossi (Co-Chair), Rossi Lumber Nancy Arend, Northwest Hardwoods Victor Barringer, Coastal Lumber Chris Bingaman, Bingaman & Son Lumber, Inc. Bill Buchanan, Buchanan Hardwoods John Crites, Allegheny Wood Products Don Finkell, Anderson Hardwood Floors, Inc Jamey French, Northland Forest Products, Inc. Pem Jenkins, Turn Bull Lumber Jeff Meyer, Baillie Lumber Co., Inc. Jack Shannon, The Shannon Group Brad Thompson, Columbia Forest Products Chris Zinkhan, The Forestland Group LLC

34. Hardwood CheckoffGrowing Future Markets • Increase Demand • ForAmerican Hardwoods!

35. Hardwood CheckoffGrowing Future Markets Questions?