Legislature(1997 - 1998)
02/19/1997 05:06 PM House FSH
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 73 - SALMON MARKETING ASSESSMENT & ASMI Number 056 CHAIRMAN AUSTERMAN stated that the first order of business is HB 73, "An Act extending the termination dates of the salmon marketing programs of the Alaska Seafood Marketing Institute and the salmon marketing assessment; and providing for an effective date." He stated that Melinda Green would present HB 73. Number 076 MELINDA GREEN, Legislative Assistant to Representative Bill Hudson, read the following sponsor statement into the record: "HB 73, if enacted, would extend the current 1 percent domestic salmon marketing assessment when the law will sunset on June 30, 1998. "In 1981, seafood processors elected to tax themselves in order to form a single marketing voice for Alaska seafood. Each processor who purchases at least $50,000 of seafood products in Alaska pays a .3 percent marketing assessment. From 1981 to 1993 this tax, along with the state's general fund appropriations were the basis for Alaska Seafood Marketing Institute's (ASMI) domestic marketing efforts. As marketing pressures grew from the heavily subsidized farmed salmon industry, it became apparent that Alaska needed to increase its domestic marketing efforts. In 1993, in order to provide additional funding for this effort, a 1 percent salmon marketing tax was enacted by the legislature, stipulating that limited entry permit holders shall pay a market tax at the rate of 1 percent of the value of salmon that is either removed from the state or transferred to a buyer within the state. Current law will be repealed on June 30, 1998 unless legislation is passed to extend the tax." Number 205 MS. GREEN stated that much like the Idaho Potato Commission does for Idaho potatoes, ASMI is working to create a brand identity for Alaska seafood. ASMI's domestic salmon marketing program is paying off with more sales in the Lower 48. Their marketing programs include the ASMI Food Service Program which targets commercial chain restaurants, hotel chains and food service management firms. 5 million pounds of Alaska seafood were sold in restaurants and hotels in FY96 as a result of the ASMI'S retail program. She stated that during the period between the summer of 1995 and the fall of 1996, 10.7 million pounds of seafood were sold as a direct result of ASMI's retail promotions. She stated that ASMI has a program that places 156 fisherman in midwest and southeast stores to give demonstrations, tour warehouse facilities and meet with buyers. She stated that as a result there as been a 7 percent increase of canned salmon sales and over 3 million pounds of seafood were sold in one season. She stated that salmon consumption has increased 27 percent nationwide according to the National Marine Fisheries Service. She stated that at a time when Alaska salmon harvests are at an all time high and foreign produced salmon are threatening Alaska's markets it is important to work on increasing Alaska's seafood markets. She stated that Alaska salmon prices are a product of supply, demand and consistency in marketing. She stated that this program is just beginning to pay off, and Representative Hudson believes that the program should have an extension of five years. She stated that without ASMI's marketing efforts there would be no united marketing effort for Alaska's salmon. HB 73 will enable harvesters to continue underwriting this valuable marketing program. Number 428 REPRESENTATIVE GENE KUBINA asked if there was opposition to HB 73, because he is in support of the bill and would move it out as soon as possible since he has to leave the meeting shortly. Number 450 REPRESENTATIVE MARK HODGINS stated that he is also under a time constraint and is in support of HB 73. He stated he would be interested to see if there was any opposition to HB 73. Number 500 REPRESENTATIVE IVAN IVAN stated that he wanted to hear from fishermen in the Bristol Bay area regarding what they think of ASMI and he would like to ask questions of the ASMI representatives. CHAIRMAN AUSTERMAN stated that he would continue to take testimony and if the committee ran out of time, he would hold the bill over. Number 598 JOHN SERVIERE, Chairman, Alaska Seafood Marketing Institute, stated that without the protection of ASMI in the world market, Alaska's share in the world market will continue to decrease without funding from the legislature and the match funding from the state. He stated that if oil were to evaporate the fishing industry would still be here, there are 12,000 limited entry salmon permits. He stated that they have a myriad of markets that need to be penetrated through the continuation of the marketing scheme. Number 753 REPRESENTATIVE IVAN stated that it was indicated in the sponsor statement that 27 percent of the salmon consumption has increased nationwide and that salmon orders in diners have increased by 60 percent. He asked if there was a breakdown of the species of salmon to the primary benefactors of these increases. Number 795 MR. SERVIERE stated that his guess is that it is most likely silver salmon and possibly pinks. He stated that there has been a huge increase in the Copper River salmon in the Northwest markets. Number 828 REPRESENTATIVE IVAN asked if there was a breakdown on what fishery has benefited from the increase of the market. Number 846 MR. SERVIERE stated that probably the only way that could be figured out is by looking at tax statements since an assessment is paid back to the state and the communities. Number 968 ART SCHEUNEMANN, Executive Director, Alaska Seafood Marketing Institute, stated that ASMI is the generic marketing organization whose job is to engage the consumer and brand the Alaska seafood image to the consumer which will result in sales of Alaska seafood. He stated that salmon is the primary effort of ASMI, since most of the funding comes from salmon derived assessments. He stated the competition has done an excellent job in positioning themselves in the domestic market. ASMI is directing the 1 percent to the domestic market. He stated that the 1 percent assessment on salmon fisherman, in the last three years has provided the opportunity to create a structure to execute programs that will enable Alaska salmon to get into competition with other salmon in the domestic marketplace, as well as with beef, pork and chicken. He stated that ASMI does not get involved with the pricing or the sale of salmon, ASMI focuses on branding Alaska salmon in the minds of the consumer through contemporary marketing tools. He stated that the most effective thing that ASMI does is getting salmon to the consumers in the stores through demonstration and promotional activities. He stated that quality training is important and is part of ASMI's program. He stated that the 1 percent puts people into the market place that represent Alaska seafood's interests on a day to day promotional basis. He stated that in addition to salmon being up 27 percent in the domestic markets, it is rated as the fastest growing species of seafood. It is the number two food service species at restaurants and the number four best selling species overall. Number 1336 RANDY RICE, commercial fisherman, stated he has been fishing for 12 years as a gillnetter for salmon and longlining for halibut. He stated that he supports the 1 percent assessment. He stated that the industry is in need of ASMI as it is in difficult times. He stated that fisherman should pay a share as Alaska needs to increase its share in the domestic market and the 1 percent assessment will continue to assist in doing that. Number 1412 MR. RICE stated that he has had some experience with ASMI as a participator in the fisherman in the store program. While in a midwest store a consumer inquired if the salmon being demonstrated was a wild salmon and was concerned about eating a wild salmon when it was not known what it was eating. He stated that there are perceptions that people who are not familiar with salmon have and ASMI is an educational program that helps in changing perceptions and as a result market habits. He read from the seafood special section on a menu from a restaurant in St. Louis, "Grilled wild salmon, these are not fillets of lazy farm raised slacker fish but beautiful quick witted wild swim for your life King Salmon taken from the clear cold water of Alaska." Number 1529 JERRY MCCUNE, President, United Fisherman of Alaska, stated that there are a lot of individual groups that support HB 73 and there are two groups that have some concern on HB 73. He stated that his job is to bring all fisherman together to support the 1 percent and through education he believes this can be achieved. Number 1577 CHAIRMAN AUSTERMAN indicated that HB 73 will go to the House Finance Standing Committee next. Number 1597 DEAN PADDOCK, Executive Director, Bristol Bay Driftnetters Association, stated that the National Fisheries Institute gives ASMI and the farmed salmon industry credit for raising the U.S. consumption of fisheries from less than .5 pound in 1989 to a 1.5 pounds in 1995. He stated that the 300 members of Bristol Bay Driftnetters Association are supportive of the tax, when everyone else from Bristol Bay are raising questions about where their money is going. He stated that this is because the members of the association are better informed than nonmembers. He stated that members believe they need to be concerned with the product as it goes into the market and feel that it is "advertise or die." He stated that people must be convinced to eat salmon in general before they can be convinced to eat Bristol Bay red salmon. He stated that the advertising needs to be done in the domestic market because the Bristol Bay products are captive of the Japanese markets, and the members would like that to change as the Japanese market can not be depended upon. Number 1802 CHERI SHAW, Executive Director, Cordova District Fisherman United, testified via teleconference from Cordova, in support of HB 73. She stated that ASMI has been extremely effective in both the foreign and domestic markets. She stated that promoting Alaska salmon is essential in keeping the market share. Number 1900 SYLVIA SULLIVAN, Alaskans for a Just Society, stated that she would like to see the fish hatcheries closed down and turn into shellfish hatcheries as the farmed salmon is hurting the Alaska salmon market. She stated that ASMI's budget consists of $3 million in federal receipts, $520 thousand in a general fund match, and $7.9 million in general fund monies. She asked which part of the budget is coming from the fisherman. Number 2045 CHAIRMAN AUSTERMAN replied that $7.9 million is coming from the fisherman and the fish processors. Number 2117 MS. SULLIVAN asked how the legislature can justify using public money for private industry and felt that the money that the state is contributing should go to getting rid of fish farms instead of to ASMI. Number 2130 CHAIRMAN AUSTERMAN stated that the reason ASMI has been so successful is that it is the fisherman who are contributing $7.9 million into the program and the state is contributing $500 thousand to match the $3 million from the federal government. Number 2191 CHRIS BERNS testified via teleconference from Kodiak, in support of HB 73. Number 2236 BRUCE SHACTLER, Kodiak Seiners Association, testified via teleconference from Kodiak, in support of HB 73. Number 2277 JOE MACINKO testified via teleconference from Kodiak, in support of HB 73. Number 2313 CHAIRMAN AUSTERMAN stated that the committee has lost its quorum as a result HB 73 will be set aside until committee members return and a vote can be taken. HB 73 - SALMON MARKETING ASSESSMENT & ASMI Number 1339 CHAIRMAN AUSTERMAN stated that a quorum is present so he will set aside CSHB 19 and take up HB 73 again. Number 1353 REPRESENTATIVE KUBINA made a motion to move HB 73 with individual recommendations and any accompanying fiscal notes. Number 1363 CHAIRMAN AUSTERMAN stated there being no objection, HB 73 is moved out of the House Special Committee on Fisheries.
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