Legislature(1995 - 1996)

02/13/1995 05:05 PM House FSH

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
              HOUSE SPECIAL COMMITTEE ON FISHERIES                             
                       February 13, 1995                                       
                           5:05 p.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Alan Austerman, Chairman                                       
 Representative Carl Moses, Vice Chairman                                      
 Representative Gary Davis                                                     
 Representative Kim Elton                                                      
 Representative Scott Ogan                                                     
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 None                                                                          
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 OVERVIEW:  Alaska Seafood Marketing Institute                                 
                                                                               
 * HB 116:  "An Act exempting the Alaska Seafood Marketing Institute           
            from the State Procurement Code."                                  
                                                                               
            PASSED OUT OF COMMITTEE                                            
                                                                               
 (* First Public Hearing)                                                      
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 ART SCHEUNEMANN, Executive Director                                           
 Alaska Seafood Marketing Institute                                            
 1111 West 8th Street, Suite 100                                               
 Juneau, Alaska 99801                                                          
 Telephone: 465-5569                                                           
 POSITION STATEMENT:  Presented Overview of Alaska Seafood                     
                      Marketing Institute and Supported HB 116                 
                                                                               
 JERRY McCUNE, President                                                       
 United Fishermen of Alaska                                                    
 211 Fourth Street, Suite 112                                                  
 Juneau, Alaska 99801                                                          
 Telephone: 586-2820                                                           
 POSITION STATEMENT: Supported HB 116                                          
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 116                                                               
 SHORT TITLE: EXEMPT ASMI FROM PROCUREMENT CODE                                
 SPONSOR(S): SPECIAL COMMITTEE ON FISHERIES                                    
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 01/25/95       131    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/25/95       131    (H)   FSH, L&C, FIN                                     
 02/13/95              (H)   FSH AT 05:00 PM CAPITOL 124                       
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 95-8, SIDE A                                                             
 Number 000                                                                    
                                                                               
 The House Special Committee on Fisheries was called to order by               
 Chairman Alan Austerman at 5:05 p.m.  Members present at the call             
 to order were Representatives Moses, Davis, Elton and Ogan.                   
                                                                               
 HFSH - 02/13/95                                                               
 OVERVIEW:  ALASKA SEAFOOD MARKETING INSTITUTE                               
                                                                               
 Number 026                                                                    
                                                                               
 ART SCHEUNEMANN, Executive Director, Alaska Seafood Marketing                 
 Institute (ASMI) explained the mission and purpose of ASMI.  He               
 stated, "ASMI is a cooperative effort between the seafood industry,           
 harvesters, processors, private and commercial users.  We are also            
 in a cooperative relationship with the Department of Commerce and             
 Economic Development.  We are governed by a board of 25, with 12              
 fishermen, 12 processors and 1 at large member, all appointed by              
 the Governor."                                                                
                                                                               
 MR. SCHEUNEMANN explained, "The purpose is to increase the                    
 consumption of Alaska seafood and to promote the quality and                  
 superiority of seafood products in all marketplaces.  A 1 percent             
 harvester tax assessment was put into place to develop the domestic           
 marketplace.  Our budget for FY 95 is broken into several                     
 components, made up of the 1 percent harvester tax, estimated at              
 $4.2 million landed value tax.  Point zero three percent of the               
 onshore processor tax, which is the landed value tax, is federal              
 Market Promotion Program (MPP) funding.  This MPP funding is                  
 directly from the U.S. Department of Agriculture for overseas                 
 market and trade development.  Part of that program, is the federal           
 MPP cash match, which is state general funds appropriated by the              
 Alaska Legislature.  A carry forward amount for 1995 is present               
 because the strategic planning process was not in place."                     
                                                                               
 MR. SCHEUNEMANN further stated, "Our budget is about $15 million              
 for FY 95.  The federal MPP funding is directed to nine countries,            
 with expansion planned next for Asia.  The $5.6 million you see and           
 the federal cash match are for promotional, trade advertising and             
 buyer/seller development activities in the export markets we're               
 targeting.  The domestic program is about $6.8 million, divided               
 between retail food service and media advertising programs.  The              
 strategic marketing plan was developed because of the competition             
 out in the marketplace.  The plan is driven by the passage of the             
 1 percent salmon harvester tax, the reorganization of the board and           
 the culmination of a starting point in the market arena."                     
                                                                               
 MR. SCHEUNEMANN went on to say, "The program is broken down into              
 retail and food service segments, with the objective of increasing            
 the sales of seafood from Alaska.  Our consumer program also uses             
 a variety of advertising and public relations efforts to leverage             
 a message out to the customer.  We utilize radio programming and              
 tagged television programming to reach the consumer.  During the              
 Lenten season we are utilizing fishermen to act as ambassadors in             
 the marketplace.  The Salmon Marketing Committee set up a program             
 that would get the fishermen out into the stores and producers out            
 into the marketplace.  This would give the necessary exposure,                
 education and training to the potential customer."                            
                                                                               
 MR. SCHEUNEMANN stated, "About 59 fishermen have gone around the              
 country, primarily the Midwest, to act as these ambassadors.  The             
 information flow is not just one way, but educates the fishermen              
 and industry as to what the consumer wants.  We will continue this            
 program on a targeted basis through the Lenten season, and as we              
 continue to develop our marketing plan.  The central core of the              
 United States is our primary focus, which includes having ASMI                
 field marketing representatives full time in two key locations.               
 Eventually, the marketing plan will roll out into the other regions           
 of the domestic market.  A long term objective is to cover the                
 United States with ASMI representatives to assist the program in              
 maximizing the utilization of the marketing dollars."                         
                                                                               
 Number 388                                                                    
                                                                               
 MR. SCHEUNEMANN also mentioned, "The communications program                   
 objective is to communicate to the industry what ASMI is doing and            
 to support the elements of ASMI's other programs.  The quality                
 program is designed to educate the industry and fishermen to                  
 achieve the highest possible degree of quality product.  ASMI will            
 continue to evaluate how they're getting the message out to the               
 consumer.  Performance standards will be developed to account for             
 how ASMI utilizes the industries and Alaska's resources.  ASMI                
 hopes to build on the past, be more strategic in our thinking and             
 build capacity in the marketplace."                                           
                                                                               
 Number 498                                                                    
                                                                               
 REPRESENTATIVE SCOTT OGAN asked Mr. Scheunemann if the fishermen              
 make over $15 million more in profit because of the efforts of                
 ASMI.                                                                         
                                                                               
 MR. SCHEUNEMANN responded, "What we're doing is not geared towards            
 assuring differences in price in the marketplace for the fishermen.           
 We can never guarantee that what we do will have an impact on the             
 price paid to the fishermen.  We could never defend our marketing             
 strategy in a category marketing organization.  What you have to              
 look at is the long term.  If consumption increases, ultimately               
 prices will increase.  Seafood is driven by the international                 
 market.  If we target effectively, and if we build relationships              
 and keep the capacity growing, then ultimately the fishermen are              
 going to become more profitable."                                             
                                                                               
 Number 540                                                                    
                                                                               
 REPRESENTATIVE OGAN followed up with a question about whether or              
 not other organizations have this type of marketing, where they               
 contribute to a marketing plan and what are their budgets.                    
                                                                               
 MR. SCHEUNEMANN stated, "The Norwegian farmed salmon groups spend             
 far more than we do as an industry to promote their farmed salmon.            
 The Chilean's have a farmed promotional organization with unknown             
 expenditures.  All of the major farmed salmon countries have put a            
 million dollars into a fund, that is doing domestic generic                   
 promotion.  Other non-seafood commodity groups have been promoting            
 their products for many years."                                               
                                                                               
 Number 572                                                                    
                                                                               
 CHAIRMAN AUSTERMAN wanted to know what percent of the 8 percent of            
 seafood consumed is farmed fish.                                              
                                                                               
 MR. SCHEUNEMANN stated, "Farmed fish is 30 percent of that portion            
 of the pie.  Alaska's market share has shrunk from 75 percent to 33           
 percent over the last 15 years or so."                                        
                                                                               
 CHAIRMAN AUSTERMAN followed up by asking, "What can ASMI do to                
 raise that consumption rate?"                                                 
                                                                               
 MR. SCHEUNEMANN answered, "We need to deliver a consistent message            
 about salmon and keep the number of categories growing.  The field            
 representatives out in the marketplace will help keep the focus on            
 salmon."                                                                      
                                                                               
 Number 640                                                                    
                                                                               
 REPRESENTATIVE KIM ELTON stated, "The salmon fishermen are putting            
 $4.2 million into this program.  This assessment has four years               
 left, so it also becomes a market test for ASMI.  The fishermen               
 will be in the best position to determine if the program works."              
 He also recommended that all committee members read the ASMI                  
 report.  He additionally stated, "In the last 15 to 20 years salmon           
 production has gone from 800,000 metric tons to 2.4 billion metric            
 tons, with roughly the same consumption rate.  At a minimum, we               
 have to preserve market share and preserve the price as much as               
 possible in a market where production is outstripping the demand."            
                                                                               
 CHAIRMAN AUSTERMAN commented, "The question to ask ourselves is:              
 Without this expenditure, would we as fishermen have less than the            
 market share."                                                                
                                                                               
 Number 684                                                                    
                                                                               
 MR. SCHEUNEMANN responded, "I believe the expenditure does have an            
 impact on the market share.  I'm not sure if the focus on marketing           
 would have changed much had it not been for the reorganization of             
 bringing in the fishermen.  I think that this expenditure by the              
 fishermen will be the catalyst to growth.  But it will be tough to            
 measure, because of the very nature of category marketing.  So many           
 organizations are doing this type of marketing, in so many areas,             
 that somewhere in there is the valid reasoning for this market                
 strategy.  In talking to processors over the last eight or nine               
 months, you're finding more and more interest in investing in some            
 of the risk to...."                                                           
                                                                               
 TAPE 95-8, SIDE B                                                             
 Number 000                                                                    
                                                                               
 MR. SCHEUNEMANN still commenting, "....instead of giving the                  
 consumer what it's been used to giving it."                                   
                                                                               
 HFSH - 02/13/95                                                               
 HB 116 - EXEMPT ASMI FROM PROCUREMENT CODE                                
                                                                               
 Number 035                                                                    
                                                                               
 MR. SCHEUNEMANN testified, "ASMI needs to be removed from the state           
 procurement codes, because ASMI is not a state government                     
 organization in the sense of the word that those codes were                   
 originally designed and enacted for.  The codes were designed to              
 prevent conflict of interest and abuse of competing interests or              
 services, not a market-orientated type of program ASMI is moving              
 forward with.  The process to place two field representatives in              
 the Midwest was encumbered for months by the procurement codes.               
 The procurement system has also been a hindrance in the area of               
 bringing media agencies on line.  Many varied promotional programs            
 are made difficult by all the legal aspects of the procurement                
 codes."                                                                       
                                                                               
 Number 236                                                                    
                                                                               
 REPRESENTATIVE OGAN asked, "Is ASMI an administrative unit of the             
 Executive Branch of state government or a public corporation?"                
                                                                               
 MR. SCHEUNEMANN responded, "We are tied administratively with the             
 Department of Commerce and Economic Development."                             
                                                                               
 Number 263                                                                    
                                                                               
 REPRESENTATIVE OGAN followed up by asking, "Why should we grant               
 ASMI an exemption to the procurement codes?"                                  
                                                                               
 MR. SCHEUNEMANN responded, "ASMI is not a typical state agency,               
 that do business with the same types of private sector individuals,           
 corporations or providers.  We are a market-orientated business and           
 for all intents and purposes, a private organization working in a             
 governmental environment."                                                    
                                                                               
 Number 329                                                                    
                                                                               
 REPRESENTATIVE ELTON stated, "First of all, in marketing, you want            
 the best bidder, not necessarily the lowest bidder.  Secondly, HB
 116 doesn't remove the state oversight of the procurement                     
 procedures.  And last, by making the process a little quicker, we             
 are more responsible to industry."                                            
                                                                               
 Number 377                                                                    
                                                                               
 JERRY McCUNE, President, United Fishermen of Alaska, testified in             
 support of HB 116.  He further stated, "ASMI is hampered by the               
 states' procurement codes and additionally, more of the dedicated             
 funds could be used for advertising and promotional activities if             
 this bill passes."                                                            
                                                                               
 Number 406                                                                    
                                                                               
 REPRESENTATIVE GARY DAVIS commented, "Representative Ogan is not              
 off target, when he questions, what is in the states' procurement             
 codes and how they relate to ASMI."                                           
                                                                               
 REPRESENTATIVE OGAN added, "I applaud the efforts of ASMI's                   
 marketing program.  I have a fundamental problem with the                     
 government taxing people, to fund a private corporation.  For that            
 reason, I am going to vote against HB 116."                                   
                                                                               
 Number 437                                                                    
                                                                               
 REPRESENTATIVE CARL MOSES motioned to moved HB 116 out of committee           
 with individual recommendations and a zero fiscal note.                       
                                                                               
 REPRESENTATIVE OGAN registered an objection.                                  
                                                                               
 Number 452                                                                    
                                                                               
 CHAIRMAN AUSTERMAN called for a roll call vote.  Those voting in              
 favor of the motion were Representatives Davis, Elton, Moses and              
 Austerman.  Representative Ogan voted against the motion.  CHAIRMAN           
 AUSTERMAN announced that HB 116 passed out of the House Special               
 Committee on Fisheries with a zero fiscal note.                               
 ADJOURNMENT                                                                   
                                                                               
 CHAIRMAN AUSTERMAN adjourned the meeting at 6:15 p.m.                         
                                                                               

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