Legislature(1993 - 1994)

04/14/1993 08:30 AM House FSH

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
              HOUSE SPECIAL COMMITTEE ON FISHERIES                             
                         April 14, 1993                                        
                            8:30 a.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Representative Carl E. Moses, Chairman                                       
  Representative Harley Olberg, Vice-Chairman                                  
  Representative Gail Phillips                                                 
  Representative Cliff Davidson                                                
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  Representative Irene Nicholia                                                
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  Fisheries Development Foundation Discussion                                  
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  Paul Fuhs, Commissioner                                                      
  Alaska Department of Commerce and Economic Development                       
  P.O. Box 110800                                                              
  Juneau, Alaska  99811-0800                                                   
  Phone:    465-2500                                                           
  Position Statement: Supports endowment                                       
                                                                               
  Carl L.Rosier, Commissioner                                                  
  Alaska Department of Fish and Game                                           
  P.O. Box 25526                                                               
  Juneau, Alaska  99802-5526                                                   
  Phone:    465-4100                                                           
  Position Statement: Supports endowment                                       
                                                                               
  Chris Mitchell, Executive Director                                           
  Alaska Fisheries Development Foundation                                      
  508 W. 2nd, Suite 212                                                        
  Anchorage, Alaska  99501                                                     
  Phone:    276-7315                                                           
  Position Statement: Supports endowment                                       
                                                                               
  John French, Director                                                        
  Fisheries Industrial Technology Center                                       
  Kodiak, Alaska  99615                                                        
  Phone:    486-1500                                                           
  Position Statement: Supports endowment                                       
                                                                               
  Kim Elton, Executive Director                                                
  Alaska Seafood Marketing Institute                                           
  Alaska Department of Commerce and Economic Development                       
  1111 W. 8th Street, Suite 100                                                
  Juneau, Alaska  99801-1895                                                   
  Phone:    586-2902                                                           
  Position Statement  Supports endowment                                       
                                                                               
  Jerry McCune, President                                                      
  United Fishermen of Alaska                                                   
  211 Fourth Street, Suite 112                                                 
  Juneau, Alaska  99801                                                        
  Phone:    586-2820                                                           
  Position Statement: Supports endowment                                       
                                                                               
  Bart Watson, Executive Director                                              
  Armstrong/Keta Corporation                                                   
  P.O. Box 21990                                                               
  Juneau, Alaska  99802                                                        
  Phone:    586-3443                                                           
  Position Statement: Supports endowment                                       
                                                                               
  Dean Paddock, Executive Director                                             
  Bristol Bay Driftnetters Association                                         
  P.O. Box 21951                                                               
  Juneau, Alaska  99802                                                        
  Phone:    463-4975                                                           
  Position Statement: Supports endowment                                       
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  Tape 93-22,Side A                                                            
  Number 000                                                                   
                                                                               
  CHAIRMAN CARL MOSES called the meeting to order at 8:36                      
  a.m., and said the committee would be hearing from a group                   
  of people who had been working together on a project to fund                 
  salmon development in Alaska.                                                
                                                                               
  PAUL FUHS, COMMISSIONER, ALASKA DEPARTMENT OF COMMERCE AND                   
  ECONOMIC DEVELOPMENT (DCED), talked of how everyone has seen                 
  the reduction in salmon prices and the problems and impacts                  
  it has had on fishermen and the local communities that                       
  depend on salmon revenue.  He said the state also has a                      
  significant amount invested ($130 million) in fishing boats,                 
  permits and hatcheries.  The DCED and the Alaska Department                  
  of Fish and Game were concerned about the situation and came                 
  up with a plan that they took to Governor Hickel which he                    
  "put his blessing on."                                                       
                                                                               
  MR. FUHS explained that marketing assessment is a critical                   
  piece of this plan.  It would assure more money would go                     
  into domestic marketing.   He stated the way Alaska is                       
  trying to sell its fish is very outdated and the seafood                     
  industry has not kept up with other industries.  He felt the                 
  Alaska Seafood Product Development Fund is probably the most                 
  important part.  The idea behind this is to set aside a                      
  suggested amount of $50 million dollars for ten years, from                  
  which the interest would be used to develop new products and                 
  the technology necessary to produce those products.  He said                 
  the source of funds has not yet been identified                              
                                                                               
  MR. FUHS further explained that this would generate about $4                 
  million dollars a year and it would be the responsibility of                 
  the departments working with industry to come to the                         
  legislature with a budget each year explaining how this                      
  money would be spent.  It would be totally within the                        
  control of the legislature to appropriate, not setting up a                  
  constitutional endowment.  If at any time the legislature                    
  feels it is not worth doing, the $50 million can be put back                 
  into the general fund, or at the end of ten years it would                   
  automatically go back into the general fund.  He noted that                  
  this process really worked with surimi using federal funds                   
  that are not available now.                                                  
                                                                               
  MR. FUHS talked about the last aspect of the plan which is                   
  tax credits to promote value added salmon production in                      
  Alaska.  For a few years, Alaska had a 50% tax credit to                     
  anyone who invested onshore in Alaska.  It was very                          
  successful and led to hundreds of millions of dollars being                  
  invested in the shore site industries.  There was a proposal                 
  to extend that, but the DCED testified against that because                  
  more primary production is not what is needed.  What is                      
  needed is incentive for value added processing for new                       
  product forms and improvements to the quality of the                         
  products, he declared.                                                       
                                                                               
  Number 118                                                                   
                                                                               
  CARL ROSIER, COMMISSIONER, ALASKA DEPARTMENT OF FISH AND                     
  GAME, testified that Alaska has not yet peaked as far as                     
  salmon production goes.  He felt there is a lot of concern                   
  amongst the industry, and fishermen are extremely concerned                  
  about fish prices this year.  There is also concern about                    
  people getting out of the salmon business, because of the                    
  low economic return.  He stated the industry needs our help                  
  at the present time, and this foundation is the next logical                 
  step in support of the industry.                                             
                                                                               
  Number 188                                                                   
                                                                               
  CHRIS MITCHELL, EXECUTIVE DIRECTOR, ALASKA FISHERIES                         
  DEVELOPMENT FOUNDATION (AFDF), explained they are an                         
  industry membership organization whose project, programs and                 
  activities are to try to collectively move the industry                      
  forward and solve problems that are generic to the industry,                 
  or too big or expensive for a sector or component of the                     
  industry to take on by itself.  He represents a consortium                   
  of people in the fishing industry who feel that now is the                   
  time to collectively come together to make the industry                      
  better and bring it out of the crisis that it is in.                         
                                                                               
  MR. MITCHELL said the legislature's joint economic task                      
  force's mini summit was the stimulus behind the endowment                    
  asking what the legislature can do to help industry                          
  problems.  He stated that the fishing industry is a very                     
  large, important industry that has invested heavily in                       
  itself and is a big contributor to the state's economy.                      
                                                                               
  Number 296                                                                   
                                                                               
  MR. MITCHELL spoke of how low fish prices are and how a near                 
  record harvest is coming up this year, with declining                        
  markets in Japan and a decline in North America for canned                   
  consumption.  He felt all of these signs indicate the                        
  industry is in distress.  Mr. Mitchell said the endowment                    
  can be the unifying factor to bring all of the pieces                        
  together.  Alaska must look at the problem in its entirety                   
  and interact and attack in a comprehensive way, from ocean                   
  to market.  He said only in that way can the business                        
  effectively move forward and ahead.  The concept behind this                 
  is where the legislature, through the creation of the                        
  endowment would help the industry help itself.  Mr. Mitchell                 
  felt only the industry can make those changes.                               
                                                                               
  Number 377                                                                   
                                                                               
  CHAIRMAN MOSES said he had run into sentiment that there is                  
  considerable duplication between the Alaska Seafood                          
  Marketing Institute (ASMI), the Fisheries Industrial                         
  Technology Center (FTIC), and the DCED.  He asked how to get                 
  everyone under one roof, or going in the same direction.                     
                                                                               
  Number 386                                                                   
                                                                               
  MR. MITCHELL said there is a bill being drafted which                        
  outlines how the concept might work.  A board could be                       
  developed to decide what projects are to be undertaken and                   
  provide the framework for each of the projects.  The board                   
  would be industry based and have each of the components of                   
  industry, from fishermen to processors, to offshore                          
  processors and the DCED, all working together.                               
                                                                               
  Number 432                                                                   
                                                                               
  CHAIRMAN MOSES said legislators and fishermen who are going                  
  to contribute to the project are going to want to know that                  
  they have an entity that is going in the right direction and                 
  under one roof.                                                              
                                                                               
  Number 435                                                                   
                                                                               
  MR. FUHS responded that one month ago a meeting was called                   
  in Anchorage, of all of the groups who, for the first time,                  
  sat down together and came up with this proposal.  He said                   
  the groups are all speaking with one voice now, and there is                 
  no division among them.                                                      
                                                                               
  Number 445                                                                   
                                                                               
  REPRESENTATIVE CLIFF DAVIDSON asked who the other members of                 
  the board would be.                                                          
                                                                               
  Number 450                                                                   
                                                                               
  MR. MITCHELL answered that honestly his wish list would be                   
  an industry member appointed by ASMI's board of directors,                   
  one appointed by the FITC's board of directors, one                          
  appointed by the AFDF, one appointed by Pacific Seafood                      
  Processors Association's board of directors, one appointed                   
  by United Fishermen of Alaska's board of directors, and one                  
  appointed by the DCED; the executive director of ASMI, the                   
  executive director of AFDF (Mitchell) and a marketing                        
  industry member elected by the preceding nine members.  That                 
  is the way Mr. Mitchell visualizes it:  To make it industry                  
  designed, industry directed and industry managed.                            
                                                                               
  MR. MITCHELL felt with that kind of makeup the board would                   
  undertake programs that the industry feels are real and                      
  needed.  He stated he had recently spent some time in                        
  Seattle speaking with some of the major Pacific Seafood                      
  Processors Association members to get their support for this                 
  kind of concept.  They ultimately said they could support                    
  it.                                                                          
                                                                               
  Number 490                                                                   
                                                                               
  REPRESENTATIVE DAVIDSON told Mr. Mitchell he felt the                        
  committee members had heard the negatives and would like to                  
  hear some ideas or positive project specifics coming as a                    
  result of this coordinated effort.  He wanted to know who                    
  would be the entity or individual to place the pieces of the                 
  puzzle to get the big picture.                                               
                                                                               
  Number 502                                                                   
                                                                               
  MR. MITCHELL said the idea behind this was an endowment for                  
  ten years that would sunset after that point in time.  The                   
  income from it would generate $3-4 million annually.  He                     
  said the stimulus behind making it happen right now is the                   
  salmon situation.  He felt there are two distinct salmon                     
  industries in the state:  Pink salmon, a very large fishery                  
  with very low values which has some very interesting food                    
  market opportunities in food categories rather than fish                     
  categories; and sockeye, where there is a relatively                         
  directed market into Japan where stress is coming and doors                  
  are closing and prices are falling.                                          
                                                                               
  MR. MITCHELL envisioned the first two projects would target                  
  those two immediate needs.  What they will do as a                           
  consortium, he said, is put together an outline on both                      
  projects the way they see a development project taking                       
  place.                                                                       
                                                                               
  Number 530                                                                   
                                                                               
  CHAIRMAN MOSES said it cannot be an industry driven program.                 
  He envisioned an all encompassing entity to try and solve a                  
  problem.                                                                     
                                                                               
  Number 535                                                                   
                                                                               
  JOHN FRENCH, DIRECTOR, FISHERY INDUSTRIAL TECHNOLOGY CENTER                  
  (FITC), passed out an informational packet entitled "Turning                 
  Research into Reality".  (A copy of this packet may be found                 
  in the House Special Committee on Fisheries' Room, Capitol                   
  Room 204, and after the adjournment of the second session of                 
  the 18th Alaska State Legislature, in the Legislative                        
  Reference Library.)  He said they are talking about being                    
  able to effectively introduce new research and development                   
  ideas into the industry.                                                     
                                                                               
  MR. FRENCH agreed with the previous speakers that it is very                 
  critical that the industry be a significant part of that                     
  process so they can utilize the results.  If the end results                 
  are not of value to the industry operations, he felt it is                   
  not worth spending state money to do it.  He spoke in favor                  
  of the tax credits on low interest loans as they could be                    
  used to increase the industry's cash contribution towards                    
  projects that require matching funds for federal monies.                     
                                                                               
  Number 588                                                                   
                                                                               
  KIM ELTON, EXECUTIVE DIRECTOR, ALASKA SEAFOOD MARKETING                      
  INSTITUTE (ASMI), said he managed a marketing arm of state                   
  government and emphasized that an important component of                     
  marketing is being ignored.  He felt this endowment would                    
  make his job much easier.  Generic promotions such as ASMI                   
  does are much easier when you have diversified products.  He                 
  said there had been a lot of cooperative work done by groups                 
  that in the past had been divided in coming up with a piece                  
  of legislation that establishes a harvester assessment for                   
  marketing programs that ASMI does.                                           
                                                                               
  Number 615                                                                   
                                                                               
  MR. ELTON felt they had come up with a piece of legislation                  
  that marketers, processors and many major fishing groups                     
  could buy off on.  He was encouraged by the fact that these                  
  different groups have been able to work together to do this.                 
                                                                               
  Number 628                                                                   
                                                                               
  JERRY MCCUNE, UNITED FISHERMEN OF ALASKA, stated that Alaska                 
  used to have a world share market and could force prices on                  
  the world market, but that is not so anymore.                                
                                                                               
  TAPE 93-22, SIDE B                                                           
  Number 000                                                                   
                                                                               
  MR. MCCUNE suggested getting into a domestic market.    He                   
  felt if all the groups can work together then it is a good                   
  proposal.                                                                    
                                                                               
  Number 074                                                                   
                                                                               
  BART WATSON, EXECUTIVE DIRECTOR OF ARMSTRONG/KETA, a salmon                  
  hatchery in the Baranof Islands, stated that they only                       
  employ 35 people, but bring hundreds of thousands of dollars                 
  of value into the fishing industry by mainly seining and                     
  trolling.  He said facing the challenges of the current low                  
  prices is not the problem of too many fish in the world, but                 
  that marketing has not caught up with the increased supply.                  
  He was really encouraged to see this consortium come                         
  together, and noted that the hatchery had donated several                    
  thousand pounds of pink salmon this year to the AFDF for                     
  processing research.                                                         
                                                                               
  MR. WATSON felt this consortium really had the ability to                    
  create new markets for salmon in Alaska if it were funded                    
  properly.                                                                    
                                                                               
  Number 163                                                                   
                                                                               
  DEAN PADDOCK, SEVEN YEAR MEMBER, ALASKA COMMERCIAL FISHING                   
  AND AGRICULTURE BANK (CFAB), stated that the CFAB has been                   
  very concerned with the changes in the industry.  Concerned                  
  enough that in 1992 they devoted approximately $100,000 to a                 
  program to educate fishermen that their world was indeed                     
  changing.   Fishermen feel they are at a crisis point as                     
  their collateral is at stake.  The CFAB is a longtime                        
  supporter of the AFDF and has granted money to the AFDF for                  
  some very worthwhile programs with some very worthwhile                      
  accomplishments.  He thought this plan was brilliant and                     
  would urge the committee to support this plan.                               
                                                                               
  MR. PADDOCK said this approach offers hope because it                        
  proposes to attack the problem of the changes that are                       
  facing those involved with this industry.                                    
                                                                               
  Number 219                                                                   
                                                                               
  CHAIRMAN MOSES expressed his feeling that one big problem                    
  was in the past they were told by the canned salmon industry                 
  that salmon could not be frozen, which turned out not to be                  
  the case. They just did not want to change with the times                    
  and he felt there was another stalemate in the industry in                   
  not wanting to change with the times.                                        
                                                                               
  Number 243                                                                   
                                                                               
  MR. ELTON agreed and went on to discuss some changes that                    
  have been made.  He stated that there is some resistance to                  
  product form change, but that is because of investments the                  
  industry has made.  He was, however, very optimistic.                        
                                                                               
  CHAIRMAN MOSES said one of the big problems is concentrating                 
  too much on catching or buying the fish and not determining                  
  where or how the market is going to be.                                      
                                                                               
  Number 324                                                                   
                                                                               
  MR. FRENCH talked about how originally only a small group                    
  believed in the surimi project.  The AFDF board went and                     
  found some federal money and it proved to be very                            
  successful, and as the project went forward it gained more                   
  industry support.  The industry dollars were far greater                     
  than the federal dollars, but the federal dollars helped to                  
  ease the risk.  He said the monies in this endowment could                   
  be used in the same way.  They could provide the incentive                   
  for industry to take some of those risks.                                    
                                                                               
  MR. FRENCH said the industry realizes it has problems.  He                   
  didn't think industry appreciates what the real solutions                    
  probably are, but solutions are being sought.  All of the                    
  ideas for the projects will not necessarily come from                        
  industry, but certainly industry needs to be an active                       
  partner.  It is not putting a lot of state money forward,                    
  except for delaying the monetary return from the money in                    
  the endowment.                                                               
                                                                               
  Number 365                                                                   
                                                                               
  MR. PADDOCK shared with everyone his pleasure in hearing                     
  that Governor Hickel approved of the idea of approaching the                 
  problem this way.                                                            
                                                                               
  Number 394                                                                   
                                                                               
  CHAIRMAN MOSES felt the governor was in favor in principle                   
  and everyone was in agreement.  Everyone just needs to                       
  figure out how to do it, he added.                                           
                                                                               
  Number 402                                                                   
                                                                               
  MR. MCCUNE mentioned legislation that is being drafted and                   
  suggested that the committee request it from drafting and                    
  take a look at it.                                                           
                                                                               
  Number 426                                                                   
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  CHAIRMAN MOSES adjourned the meeting at 9:55 a.m.                            

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