05/03/2004 01:36 PM Senate CRA

  CSHCR 28(FIN) am -STUDIES OF SALMON HARVESTING COOPERATIVES                                                               
                                                                                                                              
                                                                                                                                
CHAIR STEDMAN  announced HCR  28 to be  up for  consideration. He                                                               
asked the sponsor's staff to come forward.                                                                                      
                                                                                                                                
CAMERON   YOURKOWSKI,  staff   to  Representative   Paul  Seaton,                                                               
explained  that   the  resolution  is  sponsored   by  the  joint                                                               
legislative Salmon  Industry Task  Force and asks  the University                                                               
of Alaska to  continue to study the effects  of salmon harvesting                                                               
cooperatives. They  are to  focus on  the socio  economic impacts                                                               
that the cooperatives  might have on coastal  communities and the                                                               
processing sector.                                                                                                              
                                                                                                                                
Currently the  one salmon cooperative that  has allocative rights                                                               
is operating in Chignik Alaska.  The Board of Fish established it                                                               
in 2002 and this season will be their third year of operation.                                                                  
                                                                                                                                
Noting  that  the  co-op  has  been  somewhat  controversial,  he                                                               
pointed  out that  the Salmon  Industry Task  Force reviewed  the                                                               
policy  issues associated  with  salmon  harvesting co-ops,  they                                                               
found that the  economic data to try and weigh  the pros and cons                                                               
of  the co-ops  really  wasn't available.  Because  of that,  the                                                               
resolution  simply  asks  the  university   to  study  the  issue                                                               
further, hence the zero fiscal note.                                                                                            
                                                                                                                                
CHAIR STEDMAN  commented that the Chignik  fishermen are probably                                                               
ready to renegotiate their co-op.                                                                                               
                                                                                                                                
MR. YOURKOWSKI said he didn't understand.                                                                                       
                                                                                                                                
CHAIR STEDMAN said, "A merger."                                                                                                 
                                                                                                                                
MR. YOURKOWSKI said, "Oh right."                                                                                                
                                                                                                                                
SENATOR GARY STEVENS raised a  question about the cost of further                                                               
study and  asked if the hope  is that the university  will absorb                                                               
the cost into their other studies.                                                                                              
                                                                                                                                
MR. YOURKOWSKI said the university  has indicated that they would                                                               
like to continue to study the issue.                                                                                            
                                                                                                                                
SENATOR THOMAS WAGONER  said he had several  questions for Gunnar                                                               
Knapp, an economist with UAA.                                                                                                   
                                                                                                                                
Mr. Knapp was not on-line.                                                                                                      
                                                                                                                                
SENATOR  WAGONER  stated  that  he has  voiced  his  concerns  at                                                               
previous hearings. He was aware  of one major fiberglass business                                                               
in Homer  that went bankrupt  and knew  that a number  of crewmen                                                               
would be  put out of  work so he favored  a good study  on co-ops                                                               
before  going  forward.  "Co-ops  can do  some  good  things  and                                                               
there's some  good things about  co-ops, but if you  look overall                                                               
at all  the people that have  been involved in fisheries  such as                                                               
this and you  do an economic study, I think  you're going to find                                                               
that the spin off  of that is that there's a  lot of other people                                                               
that  are   indirectly  and  directly  penalized   by  the  state                                                               
establishing these co-ops so I think it's a catch-22."                                                                          
                                                                                                                                
SENATOR  KIM ELTON  commented that  there  are justifiable  fears                                                               
associated with the  establishment of co-ops. He  also noted that                                                               
other  entities  would  get  involved deciding  on  the  type  of                                                               
economic  data that  is needed  before  additional decisions  are                                                               
made on co-ops. He stated support  for the resolution and said he                                                               
would be happy to make the motion to move it forward.                                                                           
                                                                                                                                
SENATOR WAGONER wanted  it on record that of the  100 permits, 70                                                               
some percent form the co-op.  When an economic study is conducted                                                               
consideration should  be given to  what happens when you  pull so                                                               
many boats from  service and potentially put them  on the market.                                                               
"How  much of  a  depression  does that  have  when  it comes  to                                                               
somebody else wanting to market a 58 foot limit seiner?"                                                                        
                                                                                                                                
SENATOR  GARY  STEVENS pointed  out  that  farmed fish  represent                                                               
stiff competition and that will  likely increase as time goes on.                                                               
"What we have to  do is find a way to improve  the quality of the                                                               
product  and find  a way  to reduce  the cost,"  he said.  Co-ops                                                               
might not be  the right answer, but they do  represent an attempt                                                               
to  find an  answer to  reducing cost  and improving  quality. He                                                               
said he'd be happy to have Senator Elton make the motion.                                                                       
                                                                                                                                
CHAIR STEDMAN  summarized that a  co-op may work in  select areas                                                               
in the state,  but the socio-economic downside could  be huge for                                                               
the  state.  "Hopefully  the  university,   when  they  do  these                                                               
studies, will definitely broaden the  scope enough to pick up the                                                               
adverse  impacts  of [what]  moving  away  from free  competition                                                               
market place brings," he said.                                                                                                  
                                                                                                                                
SENATOR ELTON  motioned to move  CSHCR 28(FIN) am  from committee                                                               
with  the   attached  two  zero   fiscal  notes   and  individual                                                               
recommendations.                                                                                                                
                                                                                                                                
SENATOR LINCOLN said she was  curious whether it would take three                                                               
yeses to get the bill out of committee.                                                                                         
                                                                                                                                
CHAIR STEDMAN answered  through the chuckles that,  "The way this                                                               
committee will  run, we'll have  three affirmative votes  to move                                                               
any bill forward."                                                                                                              
                                                                                                                                
There being no objection, CSHCR 28(FIN) am moved from committee.