Legislature(1995 - 1996)
04/24/1995 01:12 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 3 - ANTITRUST EXEMPTION FOR FISHERMEN Number 850 SENATOR JIM DUNCAN, bill sponsor, introduced SB 3. This is the first step in stabilizing a very important industry in this state. It will allow fishermen to form associations to collectively negotiate fish prices with fish processors. It provides a measure of state anti-trust immunity for the processors when they negotiate with fishermen, in addition. It does not allow processors to agree among themselves on the prices they will pay fishermen. Fishermen must always be present during those discussions, so it cannot be one sided. In order to collectively bargain, fishermen must be allowed to ... TAPE 95-51, SIDE A Number 000 SENATOR DUNCAN continued...that first of all, this does not provide that fishermen can collectively sell a catch, or fish products, although the corresponding federal law does expressly permit this. SB 3 has a provision that would make state law consistent with the federal law. Due to the incongruities between state and federal law, some Alaska fishermen's organizations have found themselves in compliance with federal anti-trust law, yet they are breaking state law, or vice versa. SENATOR DUNCAN stated this is only the first step towards stabilizing the Alaska fishing industry. Section 2 changes existing law by allowing fishermen to discuss prices with more than one processor at the same meeting. After that is done, and while it is only a first step, it will take congressional approval for a federal anti-trust immunity. The state and the fishing industry together could request a federal exemption. A federal exemption would be favorable, and passage of SB 3 would put us in a position to request that exemption. SENATOR DUNCAN noted that the fishing industry is Alaska's largest private employer. It affects every segment of our economy from small coastal villages to the state's general fund. Long term price agreements, which would result from collective bargaining will help stabilize commercial fishing prices, bolstering local and state economies, as well as consumer prices for seafood. He had received many letters of support for this legislation, some of which came from the United Fishermen, Cordova District Fishermen United, the Bering Sea Fishermen's Association, the director of the Alaska Commercial Fishing Agricultural Bank, the state Department of Commerce and Economic Development and the Department of Labor. REPRESENTATIVE VEZEY asked why we would want to go to the trouble of making this a law if there is nothing that specifically precludes us from doing it in the first place. SENATOR DUNCAN answered that we cannot exempt ourselves from the federal anti-trust law, only from state anti-trust law. Number 150 KRIS NOROSZ, Executive Director, Southeast Alaska Seiners Association, testified via teleconference. She said they are in full support of SB 3. It clarifies ambiguities currently found in state law concerning the fishermen's ability to collectively bargain their catch. Secondly, the bill will move us closer to obtaining a most needed federal exemption so that fishermen and processors would be allowed to negotiate prices. Passage of SB 3 would put the state and fishing industry in a position to request such an exemption from the federal government. This type of progressive action is an important and very critical step towards stabilizing commercial fish processors. The result would be greater value for Alaska seafood products which will directly affect the state and local economies. We appreciate the forward thinking presented in this bill and urge support of it. ED CRANE, President, Commercial Fishing Agriculture Bank, (CFAB) testified via teleconference and also submitted written testimony: "I have noted and read Senate Bill 3. In my view, SB 3 serves a relevant and highly significant purpose. "I have been directly or indirectly involved with individual producers of food and fiber, and with both formal and informal associations of such producers, for nearly 30 years. That includes almost continuous and intense involvement with producers and marketers of agricultural commodities of all kinds from 1965 through 1981. "As contrasted with manufacturers, an individual producer of food and fiber commodities is greatly disadvantaged by his or her isolated status within what may be huge conformation of economic forces. The producer is further made vulnerable by the limited- life nature of most commodities and by the pressure to capture whatever value may exist on a timely basis. "There has probably been no more positive statutory force affecting commodities producers than the limited anti-trust exemptions in federal and most state statutes. While a superficial glance may suggest they are merely the extension of privilege to a few, such exemptions are in actuality the cornerstones of the stability which is critical to any food production and distribution system and which provides immeasurable benefits to each of us as consumers. "Senate Bill 3 establishes and clarifies this important exemption for harvesters, producers, and marketers of Alaska's seafood resources. While it will solve no problems by itself, its enactment will provide significant opportunities for the creation of stabilizing forces which will benefit all of Alaska as well as seafood industry participants. "I would be most interested in knowing of any opportunities to express support for Senate Bill 3." Number 250 RICHARD W. ISETT, Commercial Fisherman, said he fishes in Bristol Bay out of his drift/gillnet boat. He has fished there since 1986 and gave the committee a little background from an individual fisherman's point of view. Nobody has time to sit down and negotiate fish prices in June or July. We have about 1,700 boats fishing in five districts in Bristol Bay and we sell to a market that is dominated, arguably by less than ten buyers. We do not have any way of preserving these fish past the 12 hours that we catch them, and so when we deliver these fish, we prepare nets and gear and wait for tenders to deliver these fish to processors. These processors in Bristol Bay will head and gut the fish, take the eggs, freeze them, and often deliver them in very short order to tramp steamers that are tied up next to the processing facility. Most of these fish go to Japan. In Japan the fish are reprocessed since they are not in retail ready condition when they leave Bristol Bay. Prices range from about 60 cents per pound to about $1.20. MR. ISETT said their relationship to processors is interesting. He does not hold any particular allegiance, since he does not owe them any money, but a lot of fishermen owe processors money, and he has owed them money in the past. You can receive financial aid from processors in the form of in-season advances, or if you have a break down, and a new engine is a $15,000 - $20,000 event, you can write this up on a purchase order. You do not call your banker, you tell the processor you have broken down and need a new engine and they help you get a new engine. He does not know many fishermen that are not dependent upon processors during the season. They provide net barges, logistics, helicopters, and it is quite an operation. There are just not people running around being independent of processors, so we are all tied to processors to one degree or another. Furthermore, the processors increase the market for fish, and they may put you on a limit if they cannot process any more fish during a big season when the processors processing capacity is taxed. Still you want a processor who has an adequate capacity and does not put you on limit during the height of the season. MR. ISETT explained that there is a fishermen's meeting around June 20 in which the processors tell them how terrible the market is. We will have a big carry over on inventory from the prior year. That will not be the case this year, but the dollar is expensive in relation to the yen. There are other sources of fish that are barely attractive to the buyers, and it goes on and on. What is established is a price that is a posted price that is put on their fish tickets under law. Typically it is going to be a low price that nobody worries about meeting. We are assured every year by these processors. Every year it is the same script. They are going to be competitive. He does not know what competition means to them, but it does not mean the same thing to them that it means to us. They are going to be competitive. They want the supply of fish, and they will pay us the least amount that they think is required to keep us fishing for them. That is basically the way this works. When we leave Bristol Bay, we will have a settlement at a price that is probably above the posted price, but we are all assured that there is more money coming, maybe. We just do not really know. This year, we have had a couple of adjustments from Icicle Seafoods after their preliminary settlement at the time we left the bay. We need that preliminary settlement because we pay crew shares out of that, boat payments, and so forth. So we have an investment of maybe a half million dollars in a boat, and it all has to happen within a month. We have essentially no leverage in this process. We can either fish or not fish. If we fish, we have to deliver the fish or we cannot keep them. Another thing that processors do is have a loyalty bonus. Loyalty bonuses discourage competition. They tell you that if you deliver all your fish to us, we will give you a bonus. It may be ten cents a pound. They do not tell you in addition to what. And there may be some breaks if you catch more than 100,000 pounds, but the so-called loyalty bonus is part of this scheme, that they have, and it seems to work very well. We do not negotiate with processors. They say we will give you all of these services. We have barges, helicopters, and all of that, but they do not talk about prices to individual fishermen, because we need them, when we are talking about one fisherman to processor. The closest thing he has seen to even coming close to negotiating prices is when they had a strike in 1991 in Bristol Bay. DONNA PARKER, Fisheries Specialist, Department of Commerce and Economic Development, testified in support of SB 3. She stated that the commodity markets stabilize the prices of salmon, by doing all of the buying and selling. The Japanese would like to do this, as they have with shrimp. What this bill helps solve is to expand marketing, product development, consistency of price, supply and quality. JERRY MCCUNE, President, United Fishermen of Alaska, testified in support of SB 3. Back in 1935, the Cordova District Fishermen United was a union. Then the federal government told them they could not be a union so they had to collective bargain, because they were a group of individual business people. This section just gives you the opportunity to bargain, it does not mean anybody is going to bargain with you. The federal law says that you can only talk to one processor at a time, so in order to collectively bargain, you have to go talk to individual processors one at a time. Section 2 would allow us under state law, to go to the federal government and see if we can get this exemption lifted, and the key thing is that it will allow us to talk to more than one processor at a time in the same room, and maybe come up with some kind of agreement. DWIGHT PERKINS, Special Assistant, Office of the Commissioner, Department of Labor, testified in support of SB 3. He mentioned that under AS 16.10.280, it provides that the Department of Labor serve as a mediator of disputes between fishers and fish processors on the price to be paid for salmon. The department's experience has revealed that the inability of fishers to form associations to negotiate with processors has been a primary factor in such disputes. This legislation would provide a mechanism to stabilize raw fish prices, thereby protecting Alaskan fishers and processors from the debilitating and fluctuating fish prices. A stable fishing industry will have a direct and positive affect on Alaska's economy. It is only reasonable that Alaska fishers and processors have the legal ability to protect themselves in this important resource from the price setting by outside interest. REPRESENTATIVE BUNDE moved to pass SB 3 on with fiscal notes as attached and individual recommendations. Hearing no objection, SB 3 passed out of committee.
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