Legislature(1995 - 1996)
04/03/1996 05:00 PM House FSH
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON FISHERIES
April 3, 1996
5:00 p.m.
MEMBERS PRESENT
Representative Alan Austerman, Chairman
Representative Carl Moses, Vice Chairman
Representative Scott Ogan
Representative Gary Davis
Representative Kim Elton
MEMBERS ABSENT
All members were present.
COMMITTEE CALENDAR
* HOUSE BILL NO. 504
"An Act relating to the types of seafood promotions and promotional
contracts that can be made by the board of the Alaska Seafood
Marketing Institute."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 504
SHORT TITLE: PROMOTION BY SEAFOOD MARKETING INSTITUTE
SPONSOR(S): REPRESENTATIVE(S) NICHOLIA, Foster, Ivan, Long
JRN-DATE JRN-DATE ACTION
02/12/96 2726 (H) READ THE FIRST TIME - REFERRAL(S)
02/12/96 2726 (H) FSH, LABOR & COMMERCE, FINANCE
03/20/96 (H) FSH AT 5:00 PM CAPITOL 124
03/20/96 (H) MINUTE(FSH)
03/27/96 (H) FSH AT 5:00 PM CAPITOL 124
03/27/96 (H) MINUTE(FSH)
04/03/96 (H) FSH AT 5:00 PM CAPITOL 120
WITNESS REGISTER
DAN ALBRECHT, Executive Director
Yukon River Drainage Fisheries Association
7922 Densmore Avenue, North
Seattle, Washington 98103
Telephone: (206) 517-5061
POSITION STATEMENT: Supported HB 504 as starting point.
KARL OHLS, Resource Development Specialist
Division of Trade and Development
Department of Commerce and Economic Development
P.O. Box 110804
Juneau, Alaska 99811-0804
Telephone: (907) 465-5467
POSITION STATEMENT: Provided department's position and answered
questions regarding HB 504.
RODGER PAINTER
P.O. Box 20704
Juneau, Alaska 99802
Telephone: (907) 463-3600
POSITION STATEMENT: Opposed HB 504.
ART SCHEUNEMANN, Executive Director
Alaska Seafood Marketing Institute
Department of Commerce and Economic Development
1111 West Eighth Street, Suite 100
Juneau, Alaska 99801-1895
Telephone: (907) 465-5569
POSITION STATEMENT: Testified on HB 504.
ANDY GOLIA
P.O. Box 663
Dillingham, Alaska 99576
Telephone: (907) 842-5307
POSITION STATEMENT: Supported HB 504.
BRUCE SCHACTLER
P.O. Box 2254
Kodiak, Alaska 99615
Telephone: (907) 486-4686
POSITION STATEMENT: Opposed HB 504.
ACTION NARRATIVE
TAPE 96-16, SIDE A
Number 0001
CHAIRMAN ALAN AUSTERMAN called the House Special Committee on
Fisheries meeting to order at 5:00 p.m. Members present at the
call to order were Representatives Austerman, Moses and Ogan.
Representatives Davis and Elton joined the meeting at 5:06 p.m.
HB 504 - PROMOTION BY SEAFOOD MARKETING INSTITUTE
Number 0050
REPRESENTATIVE IRENE NICHOLIA presented the sponsor statement for
HB 504:
"What House Bill 504 does is amend the current statutes governing
the Alaska Seafood Marketing Institute by allowing the institute to
promote Alaska seafood on a regional basis.
"Currently, seafood promotions must be generic and statewide.
House Bill 504 amends AS 16.51.110 to allow ASMI to promote seafood
on a regional basis, [such] as Yukon River chum salmon, Bristol Bay
sockeye salmon, Copper River reds, et cetera.
"The existing framework for marketing salmon produced in Alaska
waters assumes that generic product promotions will increase
overall sales, thereby providing benefits to fishermen from all
regions of the state. While this works to some extent and is a
necessary part of an overall marketing program, regional
disparities in the cost of production and transportation require
that in certain areas, niche marketing efforts be undertaken.
Promotions by brand names will still be prohibited."
Number 0163
REPRESENTATIVE NICHOLIA pointed out the bill had a zero fiscal
note. The change in law would be permissive, allowing opportunity,
rather than mandating an action from the Alaska Seafood Marketing
Institute (ASMI). Representative Nicholia cited the Arctic-Yukon-
Kuskokwim (AYK) region as an example, saying that was the fishery
she knew best. The AYK fishermen had unique characteristics and
problems. "Arctic Yukon chums are the best in the world, but
transportation and production costs are high," she said. "There
are approximately 1,400 permit holders in this area. The
traditional markets for fish from the AYK have been flooded by
farmed fish, huge Hokkaido chum returns, and by Alaska's own state-
subsidized hatcheries."
Number 0261
REPRESENTATIVE NICHOLIA explained that AYK fishermen usually sold
their product to either the Whitney plant in Anchorage, which
recently closed and was for sale, or the Inlet Fisheries in Bethel,
which had filed for bankruptcy. "ASMI has the marketing
expertise," she said. "We are simply asking to change state law to
allow ASMI to work with Alaska's vital fisheries as they struggle
to find their markets in today's world."
CHAIRMAN AUSTERMAN asked if there were questions and noted that HB
504 was a straight-forward bill.
Number 0347
DAN ALBRECHT, Executive Director, Yukon River Drainage Fisheries
Association, testified via teleconference from Seattle, Washington,
saying the association supported HB 504 as a starting point to
embracing regional or niche marketing for Alaska salmon products.
He referred to the glutted market and suggested that with a generic
promotion campaign, fish that cost more to produce and transport
would be priced out of the market. By promoting salmon by region,
fish unique to an area might find an appropriate market.
Number 0508
MR. ALBRECHT emphasized the permissive aspect of HB 504. "This
bill just gets the process started and ASMI could be the entity
that has the expertise to help design appropriate niche marketing
strategies for salmon from different regions of the state,
depending on their characteristics and the markets they need to go
to," he said. He concluded by noting that HB 504 required ASMI to
conduct a statewide analysis, to include species not currently
being analyzed.
Number 0643
REPRESENTATIVE KIM ELTON referred to Mr. Albrecht's understanding
that HB 504 would require market analysis for chum and said he did
not see that requirement in the bill.
MR. ALBRECHT acknowledged he was referring to some committee
substitute language that he thought had been drafted.
CHAIRMAN AUSTERMAN indicated he had not seen that language.
REPRESENTATIVE NICHOLIA said she had not drafted anything, either.
Number 0718
KARL OHLS, Resource Development Specialist, Division of Trade and
Development, Department of Commerce and Economic Development
(DCED), indicated that although there was little text to HB 504, it
was complex and needed many details worked out. He explained that
it was difficult to work out a position on the bill. While the
Administration sympathized with the sponsor's concerns and the
problem, they were troubled by the solution of opening up ASMI to
regional marketing. "We want to keep ASMI focused on its current
mission, generic statewide marketing of salmon. But at the same
time, we want to address the special problems that are in the AYK
region," Mr. Ohls stated. He noted he was providing written
testimony.
Number 0803
MR. OHLS believed regional marketing could work in concert with
ASMI's current program. Interest could be created in Alaska
salmon; then, in specific markets, the appropriate entity could
sell the higher priced AYK salmon by promoting its advantages and
attributes, for example. Mr. Ohls emphasized the concern that ASMI
not be disrupted in its current program by opening the ASMI board
up into a situation where members would battle over allocation of
ASMI's resources to promote products from specific regions. He
indicated willingness to work with the sponsor, people in Western
Alaska and the legislature toward developing and funding a pilot
regional marketing project. He mentioned there was one limited
project already underway, for about $50,000, involving Yukon
salmon, conducted by the Yukon River Drainage Fisheries
Association. Mr. Ohls indicated that project had potential for
expansion.
Number 0891
MR. OHLS suggested ASMI could play a meaningful role assisting
development of regional marketing strategies and technical
materials. He believed the broad statutory authority, to promote
all seafood species and by-products harvested in Alaska and
processed for sale, allowed this. "Additionally, we think a
marketing project contract, funded by an outside source, could be
administered by ASMI or another appropriate entity," Mr. Ohls said.
"But we think ASMI expertise in marketing should be utilized to the
fullest extent possible, without creating the problems within their
board and their current program." He mentioned that grant and loan
programs in DCED and the Department of Community and Regional
Affairs were currently being reviewed for possible funding sources
for a pilot project.
Number 0959
MR. OHLS pointed out that regional niche marketing was a partial
solution. Marketing programs would take time to develop. Product
and business development also needed to occur in the region. He
said transportation costs were a major factor hurting the
competitive nature of the products.
MR. OHLS concluded by saying whatever the costs of addressing the
problem now, the costs of not doing anything would, in the long
run, be much greater. While development of new seafood markets was
expensive, the cost of dealing with social and economic dislocation
would exceed that sum many times over. He reiterated the
Administration's willingness to work on the problem.
Number 1025
RODGER PAINTER testified that he was an oyster farmer and ASMI
board member, but that he was not representing the ASMI board on
this issue. Although well crafted, the bill was a terrible idea,
he said, and changing the statutes to try to accomplish the goals
was unnecessary. Mr. Painter thought it was important for ASMI to
retain its current generic marketing focus. He foresaw many
fisheries other than those in the AYK region wanting a specialized
focus on their products, which would be extremely disruptive for
ASMI programs. He did not want to see the board divided.
Number 1141
MR. PAINTER said niche marketing worked well tagged onto what ASMI
was currently doing. He himself sold all his product in niche
markets, he said. "Our product is priced so far above our
competitors from the Lower 48 that we're forced to deal with niche
markets," he said. "And we do get the higher price for our
product, and ASMI is very helpful in its broad approach in
establishing a good image for Alaska seafood. And that image and
aura works wonders in marketing our product." He pointed out that
ASMI could help AYK fishermen in many ways, providing technical
expertise, marketplace contacts and "golden opportunities" to tag
onto targeted campaigns. He suggested that ASMI was already
working with fishermen from the AYK on that particular problem.
REPRESENTATIVE GARY DAVIS asked why Mr. Painter thought the bill's
wording was masterful.
MR. PAINTER replied, "What it does is take away the prohibition
that currently exists in statute from geographic marketing. And it
is permissive, indeed. It opens the door for ASMI to be pressured,
I guess, to change its programs from strictly an Alaska seafood to
promoting seafood from particular regions."
Number 1273
REPRESENTATIVE DAVIS said he understood the intent but did not see
how the wording did that.
REPRESENTATIVE CARL MOSES suggested it would be simpler to strike
the language and just say "seafood by specific brand name".
REPRESENTATIVE SCOTT OGAN thought the language almost neutralized
itself. He also thought saying seafood could not be promoted by
specific brand name would accomplish the bill's intent.
Number 1350
REPRESENTATIVE ELTON recommended retaining the sponsor's language.
He explained that a second exception was being added, with the
wording "or from a geographic region of the state", which would
allow regional marketing. He preferred this language, rather than
just the prohibition against a specific brand, because there had
been overtures made to ASMI in the past of joint promotions with
Chilean or Canadian salmon farmers, who wanted to tag onto the ASMI
program. Although he did not envision ASMI being involved in such
a promotion, he preferred to see it confined to the state, rather
than removing the geographic exception. "I don't want anybody to
even entertain a notion that they could do a joint promotion with
Chile," he added.
REPRESENTATIVE DAVIS commented that if the bill passed, it would
give the Kenai River and Cook Inlet an unfair advantage.
Number 1445
ART SCHEUNEMANN, Executive Director, Alaska Seafood Marketing
Institute (ASMI), Department of Commerce and Economic Development,
stated that Mr. Ohls had put the matter into context in terms of
problems, issues and the importance of working on a cooperative
basis to find any way possible to assist, from a marketing
standpoint, areas of the state having problems, "whether they be
structural or whether they be market-driven." He acknowledged the
issue was complicated and said comments by both Mr. Ohls and Mr.
Painter were appropriate.
MR. SCHEUNEMANN said ASMI believed it was not necessary to change
the statutes to hold ASMI accountable to provide marketing and
technical assistance. While niche marketing had its place, it
required structure at the local level to drive it and make it
successful. There were immediate, interim and long-term needs.
For the AYK region, there was an immediate need to stabilize
processing abilities in the region, which was a structure issue,
not a marketing issue. He suggested there may be more immediate
opportunities on the niche basis in export markets than in domestic
markets because of consumer sophistication with salmon in Asia and
Europe.
Number 1589
MR. SCHEUNEMANN said on an interim basis, once there was a plan,
forecasts and evaluations had to be made as to whether the plan had
a chance to be successful. On a long-term basis, issues related to
structure, such as processing and alternative or value-added
products, needed to be considered to create even more of an
identity, he said. Transportation and quality were issues, as
well. "We stand ready to provide technical marketing assistance,
quality training assistance, and working with the folks in whatever
way possible," Mr. Scheunemann said. "And we believe we have the
broad scope and authority to do that within the current statutes."
REPRESENTATIVE OGAN asked about the composition of the ASMI board
and whether it was by region.
MR. SCHEUNEMANN replied that the intent under statute was to
reflect statewide distribution of fishermen and processors. There
were 12 fishermen and 12 processors from a wide range of interests
in the state, plus one public member.
Number 1716
ANDY GOLIA testified via teleconference from Dillingham in support
of HB 504. A Bristol Bay commercial salmon fisherman for 30 years,
he had seen prices drop since 1988. He expected prices to stay
down until something was done to move Bristol Bay salmon. Farmed
salmon were competing directly with wild Bristol Bay salmon. He
understood that ASMI members opposed the bill. However, he felt
that he, as a contributing fisherman, should have a say. He
suggested there had been benefits to Southeast, Prince William
Sound and Kodiak fishermen in terms of ASMI's promotion, with
little benefit to Bristol Bay fishermen, who paid a large portion
of the 1 percent ASMI tax.
CHAIRMAN AUSTERMAN referred to Mr. Golia's indication that he felt
other areas of the state received more from ASMI advertising than
Bristol Bay did. Chairman Austerman understood the advertising was
generic, not speaking to any particular part of the state.
MR. GOLIA responded that one example was the work by ASMI to
request the Governor to get the U.S. Department of Agriculture to
buy canned pink salmon, which came from an important Southeast
Alaska fishery. "We have no pink salmon fishery up here," he said.
"I think we'd feel better if we had some of our canned salmon ...
go to that market, too."
Number 1897
BRUCE SCHACTLER testified via teleconference from Kodiak that he
opposed HB 504. He believed the AYK region had no special
problems. "We've got marketing problems, we've got processing
problems right here in Kodiak," he said. "I personally don't have
a place to sell my pink salmon here this year, or my dog salmon, or
my sockeye, or anything." Mr. Schactler thought the bill was
allocative and would be extremely disruptive to ASMI. "Their
marketing help is there for anybody, anywhere, who wants to do
niche marketing," he said. "They have just volumes of material and
hours and hours of help available to anybody in any organization
that wants to do any type of niche marketing. Everything is
already there." He suggested the legislature acted only as a tax
collector to ASMI. "If you want to dictate to what ASMI will or
will not do, with legislative action, then you should take a
financial interest, not just money generated from higher prices
from ASMI's marketing, into the general fund, to spend on whatever
you want to do," he said, adding that the legislature should leave
ASMI alone.
Number 2070
REPRESENTATIVE DAVIS asked Mr. Ohls to elaborate on his willingness
to work with the sponsor.
MR. OHLS responded they had been in contact with people from the
AYK region about problems there, including the closure of a plant
in Bethel and lack of markets. Regional marketing had come up
repeatedly as a solution. "It's on our list of things to look
into," he said. "We have a variety of grant programs in the state.
When we look through those, there are none, of course, set up
exactly for targeted marketing. So, it's difficult to fit them
in." Mr. Ohls indicated they were looking at starting a pilot
project for AYK fish.
Number 2133
REPRESENTATIVE ELTON expressed conflict over the issue. "This
absolutely needs to happen," he said. "And I think that we need to
have niche marketing; I think we need to encourage regional
marketing." However, he believed it should be done some other way.
He thought that under HB 504, those areas needing the most help,
such as AYK, would get the least. For example, Bristol Bay
fishermen contributing their 1 percent would ask for marketing for
Bristol Bay. "What's going to happen is, if we do this, in this
form, Bristol Bay is going to get a lion's share of the money,
because they contributed a lion's share of the money," he said. He
suggested AYK would not receive enough to do anything, because
their 1 percent assessment would be minuscule compared to others.
Number 2224
REPRESENTATIVE ELTON said the beauty of the current structure, as
well as one of its shortfalls, was that there was a truly generic
marketing program. "And if we begin dividing it up by species and
region, there's going to be an unequal benefit," he stated. "And
the people that are going to lose out are going to be the smokers
in Gustavus and the fishermen in AYK." He noted that this had been
an issue in ASMI for years. He recalled that the legislature had
crafted language to ensure every Alaska fisherman was represented
when the ASMI board had been expanded.
REPRESENTATIVE ELTON noted there was no prohibition on ASMI
providing materials, including footage for television ads, which
was available for free to marketers. "We have consumers that don't
understand the difference between a pink salmon and a chum salmon,"
he said. "If we start confusing the marketplace by saying `AYK
chum salmon,' we're creating even more cognitive dissonance in the
marketplace, more difficulty for the consumers to make a choice.
So, I really believe that ASMI's generic marketing approach is
appropriate. And, having said all that, I absolutely believe that
this state ought to be providing assistance to regional marketers
and to regional groups that organize on their own, as either for-
profits or non-profits."
Number 2430
REPRESENTATIVE ELTON emphasized there were special problems in
areas such as AYK because of high-cost production. "If we're
talking about rural economic development, that's it, in its purest
form," he said. "I'm just hesitant in having it occur this way,
because I think we lose what we've got." He noted that through the
legislation on salmon assessment, a salmon committee had been
created within ASMI that controlled how dollars from salmon
fishermen would be spent in the marketplace.
TAPE 96-16, SIDE B
Number 0015
REPRESENTATIVE ELTON suggested the legislature might want to wait
a year before making any changes to ASMI. He was not sure there
would be an ASMI program if the state was not cooperating but the
fishermen were.
REPRESENTATIVE OGAN mentioned that he had a strong visual memory of
the ASMI logo, in which ASMI had invested a lot of money. He
suggested that if subdivided into many smaller images, it would
lose its effectiveness. He also thought the bill would produce an
allocation fight.
CHAIRMAN AUSTERMAN stated he also had a problem with the bill.
"Right now, the way it's set up, I think it opens Pandora's Box for
an organization that has been set up to specifically, generically,
market Alaskan seafood," he said, indicating that without a plan
in place from ASMI, he could not support the bill.
Number 0137
REPRESENTATIVE NICHOLIA emphasized it was not a mandate to ASMI but
provided an option.
REPRESENTATIVE ELTON said it was an important enough issue that he
would commit to working with Mr. Ohls, DCED, the sponsor, and
perhaps someone from ASMI to discuss other ways to accomplish the
goal.
ADJOURNMENT
There being no further business to conduct, CHAIRMAN AUSTERMAN
adjourned the House Special Committee on Fisheries meeting at
5:52p.m.
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