Legislature(1997 - 1998)
03/10/1997 03:21 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 167 - DISCLOSURE OF SALMON PRICES Number 048 CHAIRMAN ROKEBERG announced the first order of business would be HB 167, "An Act repealing certain requirements relating to posting and reporting of prices paid for salmon." Number 094 REPRESENTATIVE IVAN IVAN, sponsor of HB 167, read his sponsor statement into the record: "House Bill 167 repeals two provisions of Alaska statute that mandate fish tickets for salmon reflect the current salmon price and that a processor will post the current salmon price at each location where salmon is purchased. "With salmon prices changing throughout a fishing season, the posted price on a salmon ticket does not necessarily reflect the final price. This leaves the possibility that a dishonest buyer could claim a preliminary price as a `final' price because once the fish ticket is signed by the fisherman, it conceivably becomes a binding contract. "Processors usually do not know the final price before or during the season. The current law is unenforceable and impractical. For example, some processors, before the start of the fishing season, are posting a 5 cent per pound price since they do not know what the wholesale price will be. Posting prices before the start of the season puts both the harvesters and the processors in a non- competitive situation." REPRESENTATIVE IVAN explained that in reviewing the legislation that was previously passed, the intent was to give both the processors and the fishermen an opportunity to come forth with a price that the fishermen count on throughout the season, with the intent of trying to get the best possible price for the fish. Number 259 BRUCE SCHACTLER, Kodiak Seiners Association, testified via teleconference from Kodiak. He said he is happy to see HB 167 introduced. Mr. Schactler said he thought the law was a mistake when it was passed, even though the intentions were good. Since then, it has actually exaggerated the problem that it was intended to be a cure. He said the fish prices have stayed artificially low because of the law. One of the big problems is with the wholesalers. For example, the Japanese will look at the price on paper, which is artificially low, to make sure they don't get burned. The processors don't want to have too high of a price to begin with because they don't know what the price will actually be. The wholesalers look at the artificially low price and compute their wholesale offer using that as a base price. The law has helped the wholesalers to the fishermen's disadvantage. The price should be proprietary. Mr. Schactler said he supports HB 167. CHAIRMAN ROKEBERG asked Mr. Schactler to forward the association's written position to the committee. He then asked Mr. Schactler to give his testimony on HB 73. HB 167 - DISCLOSURE OF SALMON PRICES Number 678 CHAIRMAN ROKEBERG announced the committee would continue to take testimony on HB 167, "An Act repealing certain requirements relating to posting and reporting of prices paid for salmon." JERRY MCCUNE, United Fishermen of Alaska, came before the committee to testify on HB 167. He said when the law was passed, people behind the bill thought they were going to force the processors into a corner to give a real price. A lot of the time the processors in different areas don't know the price as the wholesalers aren't giving them a price. They were pushed into a corner to give a low price. Mr. McCune said the whole thing kind of backfired, but at the time people thought it would be helpful. He noted it is unenforceable unless someone went to every plant and forced them to put the price out. It isn't realistic. Mr. McCune said 99 percent of the fishermen he has talked to in Alaska would like to see the law repealed. CHAIRMAN ROKEBERG asked Mr. McCune to give a background as to why the law was passed in the first place. MR. MCCUNE explained it was centered around the Bristol Bay area as the fishermen were having problems with prices. They thought that by cornering the processors, they would put out a real price. The backfire was the processors don't always know the final price until the product is sold, but they know what the base price roughly should be. Number 861 DEAN PADDOCK, Executive Director, Bristol Bay Driftnetters Association, came before the committee to give his testimony. He said the record shows that he testified in favor of the bill when Senator Jacko proposed it a few years ago, but as Mr. McCune testified, it's the attitude of the bulk of the catchers that the law depresses the final price rather than forcing it upwards. Mr. Paddock said they would like the law to be repealed. Number 968 CHAIRMAN ROKEBERG asked Mr. Paddock if the association originally supported the legislation and didn't have anything more to do with it. MR. PADDOCK responded they only supported the legislation. It was not introduced at their request and they had no part in the design of the bill. Number 996 CHAIRMAN ROKEBERG referred to Mr. McCune's comment regarding 99 percent of the fishermen he knows supports HB 167 and asked who might want to keep it on the books. MR. PADDOCK said he suspects that on any issue there is always a minority opinion. He said he is fully in support of their ability to disagree with the majority. Mr. Paddock referred to the way the prices are ultimately determined in the Bristol Bay fishery and said Bristol Bay is the largest red salmon fishery in the state and anywhere else. He informed the committee that virtually all their red salmon that isn't canned goes to Japan. It is in the interest of the Japanese to try to keep that price down. They have not in recent years, ever since there has been the competition from pen- reared fish from other countries, been willing to state an up front price. There hasn't been competition between Japanese companies to get their hands on Bristol Bay fish. On the other hand, they've shown a great interest in purchasing fish elsewhere to try to suppress their need to fill their requirements for red fleshed salmon to keep that Bristol Bay price down. Mr. Paddock said they don't know how big the supply is going to be until those fish have all been caught and by that time the season is over. He said last year some of the Bristol Bay companies posted a price. Some posted 50 cents, some posted 60 cents. At the end of the season, they were given a 15 cent retroactive payment that brought the price up to 75 cents, which is virtually the standard for practically all of the companies in the bay. He said that is the way it works. Number 1199 RICK LAUBER, Lobbyist, Pacific Seafood Processors Association, came forward to give his testimony. He informed the committee that when the law was enacted, he could see no way that it would help and he could possibly see that it would harm. Mr. McCune indicated that he thought that the fact of posting of a low price might have an impact on the buyer, the wholesalers in this case. By starting out with a low price, it may give a false signal to the wholesalers that the price is going to be low and their expectations are for a lower price. Mr. Lauber stated he can't say that it has had a major impact. He said when the legislation was passed, it called for an independent group to be contracted by the state of Alaska to apprise fishermen, processors, etc., of what the current market situation is worldwide, particularly in Japan. The University of Alaska has contracted to do that and their price information has helped fishermen and processors in their price negotiations. Mr. Lauber noted that HB 167 doesn't repeal that portion of the law. He commended the sponsor for introducing the bill and urged passage. MR. LAUBER said we need good strong prices. Fishermen can no longer continue to fish for lower prices, particularly in the area of pink and chum salmon. He has heard some processors say that the market is so bad for some of the product that if the fishermen gave them the fish, they couldn't sell it at a profit. CHAIRMAN ROKEBERG questioned Mr. Lauber as to how many processors he represents in his association. Number 1423 MR. LAUBER said there are approximately 30 processors and they process about 50 percent of the product caught in Alaska. He said his association is a trade association that has been operating in Alaska for 83 years. Number 1520 CHAIRMAN ROKEBERG asked Mr. McCune how many fishermen he represents. MR. MCCUNE responded he represents 21 individual groups and about 8,000 fishermen. Number 1607 KAY ANDREWS, Gillnetter Deck Hand, testified via teleconference from Ketchikan. She said she has concern regarding the fish tickets. She explained they add up the amounts on the fish tickets for tax purposes. Ms. Andrews said she doesn't receive W-2 forms or a end-of-the year statement from the particular processors they sell to. She said if there isn't a price on those tickets, how is she supposed to keep track of what she is receiving for what fish. CHAIRMAN ROKEBERG asked Mr. Lauber to respond. Number 1670 MR. LAUBER said he isn't sure that's common practice. Most large companies he is familiar with give a final fish ticket price or a final statement. He said as stated in other testimony, the original fish ticket might have a price of 60 cents, but the eventual price kept going up. There are also cases where there are bonuses or post-season adjustments. CHAIRMAN ROKEBERG said he would assume that most of the processors issue a 1099 miscellaneous form of some type at the end of the year. MR. LAUBER said he would think so. He explained that Mr. McCune had indicated to him that in his personal business dealings he does receive a 1099 statement from his buyers. It deals with the posting of a price. The law had no affect on the fish tickets. Number 1786 TOM WRIGHT, Legislative Assistant to Representative Ivan Ivan, came before the committee. He noted he has a drift permit for Cook Inlet. Under 16.05.690(c), which is being repealed, it states that the fish ticket recording the purchase of salmon must include the current price paid, per pound, for reach species of salmon purchased. He said the price listed on the fish ticket doesn't necessarily mean that's going to be the final price that a person will receive for that species. He said what started out in Cook Inlet, for example, at 75 cents a pound ended up at $1.15 with most processors. Mr. Wright explained if the 75 cents a pound was the price they were going to stick with at the beginning of the season and not see any retroactivity, they would have lost 40 cents on the final price. He noted the final prices aren't posted until the end of the year. Mr. Wright pointed out the processor he delivers to issues a 1099 form at the end of the year. He noted he also can get a list, at any time, of what he has delivered to the cannery at a specific time. Number 1843 CHAIRMAN ROKEBERG asked Mr. Wright if the practice of issuing fish tickets won't be affected by the legislation. MR. WRIGHT said he doesn't see where it would be. Number 1867 CHAIRMAN ROKEBERG asked if there was any further witnesses. There being none, he closed the public hearing. Number 1871 REPRESENTATIVE JOHN COWDERY made a motion to move HB 167 out of committee with the fiscal note. CHAIRMAN ROKEBERG noted there is a zero fiscal note. He asked if there was an objection. Hearing none, HB 167 moved out of the House Labor and Commerce Committee.
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