Legislature(1995 - 1996)
02/13/1995 05:05 PM House FSH
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
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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