Legislature(1999 - 2000)
03/06/2000 05:10 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
March 6, 2000
5:10 p.m.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Carl Morgan, Co-Chair
Representative Fred Dyson
Representative Jim Whitaker
Representative Bill Hudson
Representative Hal Smalley
MEMBERS ABSENT
Representative Mary Kapsner
COMMITTEE CALENDAR
HOUSE BILL NO. 363
"An Act relating to salmon product reports; and providing for an
effective date."
- MOVED CSHB 363(FSH) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 363
SHORT TITLE: SALMON PRICE REPORTS
Jrn-Date Jrn-Page Action
2/11/00 2177 (H) READ THE FIRST TIME - REFERRALS
2/11/00 2177 (H) FSH, FIN
2/28/00 (H) FSH AT 5:00 PM CAPITOL 124
2/28/00 (H) Heard & Held
2/28/00 (H) MINUTE(FSH)
WITNESS REGISTER
JOANIE WALLER, Staff
to Representative Alan Austerman
Alaska State Legislature
Capitol Building, Room 434
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of sponsor of HB 363.
KEN ROEMHILDT, Representative
North Pacific Processors
PO Box 1040
Cordova, Alaska 99574
POSITION STATEMENT: Testified on HB 363.
JERRY BLACKLER
PO Box 605
Cordova, Alaska 99574
POSITION STATEMENT: Testified on HB 363.
STEPHANIE MADSEN, Vice President
Pacific Seafood Processors Association
213 3rd Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified in opposition to HB 363.
ACTION NARRATIVE
TAPE 00-05, SIDE A
Number 0001
CO-CHAIRMAN JOHN HARRIS called the House Special Committee on
Fisheries meeting to order at 5:10 p.m. Members present at the
call to order were Representatives Harris, Dyson, Whitaker, Hudson
and Smalley. Representative Morgan arrived as the meeting was in
progress.
HB 363 - SALMON PRICE REPORTS
CO-CHAIRMAN HARRIS announced the first order of business as HB 363,
"An Act relating to salmon product reports; and providing for an
effective date." There is a proposed committee substitute and
amendment.
Number 0072
JOANIE WALLER, Staff to Representative Alan Austerman, Alaska State
Legislature, came before the committee to testify on behalf of the
sponsor. The intent of the amendment is to address concerns raised
by Representative Dyson at the last hearing in relation to
potential, unforseen consequences of providing fish buyers with
in-season inventory information. The amendment changes the
frequency of reporting that production information to one time per
year as opposed to three times per year. This amendment does not,
however, change the wholesale price reporting requirement of three
times per year. This amendment also changes the department's
report to include one annual report for the amount of quantities
produced, along with a monthly and annual wholesale price average
report for products sold.
Number 0257
REPRESENTATIVE FRED DYSON asked Ms. Waller whether the proposed
amendment would change the Average Wholesale Price Report for
canned salmon or whether it would include all processing types.
MS. WALLER replied it would expand the Average Wholesale Price
Report to include all product types.
REPRESENTATIVE DYSON asked Ms. Waller whether that information
would be reported three times per year.
MS. WALLER replied yes.
Number 0349
REPRESENTATIVE DYSON asked Ms. Waller whether March 15 is the date
that the legislature would get the report and whether January 31 is
the date that the report would be turned into the state.
MS. WALLER replied correct. The three wholesale price reports and
the one annual report on products produced would be combined into
one report for the legislature.
REPRESENTATIVE DYSON asked Ms. Waller whether the six weeks from
January 31 to March 15 would include time for the state to process
the data, which would be held in confidence.
MS. WALLER replied, "Correct."
CO-CHAIRMAN HARRIS called for a brief at-ease in order to determine
which version of the bill the proposed amendment applies to.
CO-CHAIRMAN HARRIS called the meeting back to order and asked Ms.
Waller to continue explaining the proposed amendment.
Number 0530
MS. WALLER further explained that the proposed amendment eliminates
references to secondary processing, which was included in the form
of an amendment at the last committee hearing. It also clarifies
the definition of the term "wholesale" to mean, "the first sale of
a salmon product at wholesale for which the fishery business tax
was paid." It also clarifies the definition of the term "produced"
to mean, "the processing of salmon into a salmon product."
CO-CHAIRMAN HARRIS called for a motion to adopt the proposed
committee substitute.
Number 0640
REPRESENTATIVE BILL HUDSON made a motion to adopt the proposed
committee substitute for HB 363, version 1-LS1298\H, Utermohle,
3/1/00. There being no objection, Version H was before the
committee.
CO-CHAIRMAN HARRIS asked Ms. Waller to continue explaining the
intent of the proposed amendment.
Number 0684
MS. WALLER further stated that the proposed amendment changes the
date that the department's report is made available to the
legislature. The original bill said that it would be made
available by the fifteenth day of session, yet the last report made
available is January 1 creating a lag in time, which is where the
March 15 date came from.
CO-CHAIRMAN HARRIS opened the meeting to public testimony.
Number 0860
KEN ROEMHILDT, Representative, North Pacific Processors, testified
via teleconference from Cordova. North Pacific Processors wants to
go on record as opposing this legislation. 1) It is unnecessary.
Knowing more about a processor's books doesn't necessary raise
prices. Prices still have to work for both sides or they don't
work for either. 2) This proposal may backfire. There is a
probability that knowing the numbers of competitors may encourage
lower prices. 3) This proposal is costly. Both the processors
and the state will incur large costs in bringing these reporting
proposals about, which will play a part in future price
negotiations. 4) This proposal is time and work intensive. North
Pacific Processors transfers fish freely to and from its six
locations around the state, which may result in imprecise numbers.
5) This proposal is discriminatory. No one else has to do this.
6) If by some accident this legislation passes, it should be
applied to all processors. There are many small processors across
the state that target niche markets, which are the higher prices
fishers are looking for. In conclusion, he suggested removing the
240,000-pound threshold in order to level the playing field. Thank
you for the opportunity to testify.
Number 1041
REPRESENTATIVE DYSON explained to Mr. Roemhildt that the proposed
amendment would require one report per year on the quantities of
products produced. He asked whether that would help him in any
way.
MR. ROEMHILDT replied he's not sure. He's not sure how that would
fit in with the three-time reporting requirement without studying
it further.
Number 1182
REPRESENTATIVE JIM WHITAKER expressed concern about the unintended
consequences of requiring processors to divulge information to both
purchasers and sellers. He asked Mr. Roemhildt whether that would
force processors out of business, which ultimately would be harmful
to fishers because of reduced competition.
MR. ROEMHILDT replied he is having a hard time rationalizing how
the one-time reporting fits in with the three-time reporting. He's
not sure how to answer Representative Whitaker's concern.
REPRESENTATIVE WHITAKER said,
As a processor, if your supplier knows what your buyer is
paying and your buyer knows what your supplier is paying,
can they not then put the squeeze on you pretty tight?
MR. ROEMHILDT replied, "Certainly."
REPRESENTATIVE WHITAKER asked Mr. Roemhildt whether that could be
detrimental to processors.
MR. ROEMHILDT replied yes, which is why he indicated earlier that
this proposal may backfire.
Number 1422
JERRY BLACKLER testified via teleconference from Cordova. He
doesn't have the latest version of the bill or the amendment, but
he will go on record in support. He agrees with Mr. Roemhildt's
testimony in that this should be required for all processors.
There is no sense, he said, in just having the "big boys" do this,
if the "little boys" can get away with the catch. A three-time
reporting requirement per year helps everybody make decisions,
especially since sometimes the price is up and sometimes the price
is down. He said, "We can't really go to the processor and say we
want more money, if it's in fact proven that there's no money for
the fish and vice versa."
Number 1518
STEPHANIE MADSEN, Vice President, Pacific Seafood Processors
Association, came before the committee to testify. The association
has been around since 1914 and represents approximately 36
facilities throughout the state. The association, she said, does
not believe that the reporting requirements in this legislation
would benefit the state or result in a higher ex-vessel value.
There are many variables that determine ex-vessel value. She cited
the supply of wild and farmed salmon, inventories, consumption,
prices consumers are willing to pay, competing foods, and an
understanding of the exchange rates as examples. She further noted
that, according to Senator Frank Murkowski, the cost of the state's
energy impacts the ex-vessel value as well.
Number 1638
MS. MADSEN further stated many people believe that processors are
price setters, when in fact they are price takers, just like
fishers. Processors, she said, pay what they think they can get
from buyers. Furthermore, processors often share their profits
with fishers, which can be reflected in an after-season bonus.
Number 1700
MS. MADSEN referred to a meeting in November [1999] that included
fishers, processors and the Department of Fish & Game, at which
time, it was decided that by April 1, 2001 processors will be able
to transmit the Commercial Operators Annual Report [COAR]
electronically, which will help the Department of Fish & Game enter
the data and turn it around to fishers in a timely fashion.
MS. MADSEN further stated that requiring a report three times a
year doesn't allow for any adjustments either up or down. She
referred to a calendar of events which illustrated the time
constraints on the reporting requirements in relation to the
fishing seasons.
MS. MADSEN stated, in conclusion, the association believes that
more information is not better; it does not make the salmon market
less complex.
Number 1856
REPRESENTATIVE HUDSON asked Ms. Madsen whether the proposed
committee substitute, even with the proposed amendment, is still
too onerous.
MS. MADSEN replied, according to her understanding, processors
would be reporting wholesale value, not production, three times a
year. She said,
The difficulty with that Mr. Chairman, Representative
Hudson, is that again you have--you're giving misleading
information. I think, the best example that came to mind
was if you knew that an artist sold one picture for $300
you would assume that every painting he sold was for
$300. That's not really probably true. By knowing what
we sold, you have no idea how much we sold. And we could
have sold a very high-priced, low-volume product and
again I would go back to that--this information in season
in the time slots that you are asking is misleading
information. It doesn't allow us to balance our books at
the end of the year. There's no checks and balances with
this. You're just putting information out there without
any explanation and without tying things together. And
we really do believe sincerely that it is misleading and
the unintended consequences, that I've heard several of
you mention, still exist.
Number 1978
REPRESENTATIVE DYSON asked Ms. Madsen when a report could be done
once a year that would give fishers information to plan an
impending season, without disserving clients.
MS. MADSEN replied, she believes, that electronic reporting would
allow the Department of Fish & Game to turnaround information from
the Commercial Operators Annual Report within a 30-day period,
which would give a snapshot of the previous year including fresh
sales, frozen sales, the previous year's inventory, and adjustments
normally made in a calendar year. She also believes that
processors could make an effort to make that information available
earlier such as, March 1.
Number 2061
REPRESENTATIVE DYSON asked Ms. Madsen whether a March 1 date would
largely remove the problem of confidentiality and competitive
advantage for processors.
MS. MADSEN replied that she is a bit confused. This legislation
deals with the Commercial Operators Annual Report, which is
required one time per year, and the Alaska Salmon Price Report,
which is required three times per year. She said,
And we believe that, given this current reporting form
for the Alaska Salmon [Price] Report, it does not allow
us to make any adjustments. If we sell a pack and we get
more money, we have no way to report that in the Alaska
Salmon [Price] Report. Now, if you're asking me, Do I
believe that the March 1 date would alleviate our
concerns about misleading information on an annual basis?
I believe the answer is, yes.
REPRESENTATIVE DYSON replied that isn't what he asked, but it's an
excellent point. He wanted to know whether the March date would
get processors largely past the time when confidentiality of volume
and prices would compromise a competitive position.
MS. MADSEN replied in the affirmative.
Number 2233
CO-CHAIRMAN HARRIS closed the meeting to public testimony.
Number 2346
REPRESENTATIVE HUDSON made a motion to adopt the proposed
amendment, 1-LS1298\H.3, Utermohle, 3/6/00; he asked unanimous
consent. There being no objection, it was so adopted. It reads as
follows:
Page 1, line 8:
Delete "(1)"
Page 1, lines 10 - 11:
Delete "; and
(2) the quantity of salmon products produced by the
processor or an affiliate of the processor"
Page 2, lines 4 - 27:
Delete all material and insert:
"(b) A report submitted by a processor under (a)
or (c) of this section must include
(1) the requested information for the following
salmon product forms:
(A) thermally processed salmon products;
(B) fresh headed and gutted salmon products;
(C) fresh fillet salmon products;
(D) frozen headed and gutted salmon products;
(E) frozen fillet salmon products;
(F) salmon roe products;
(2) the requested information regarding the total
quantity of each salmon product form sold by providing the
total number of
(A) each size of container in which thermally
processed salmon products were sold by the processor or
its affiliate; and
(B) pounds for each of the other salmon
product forms sold by the processor or its affiliate; and
(3) for sales to buyers that are not affiliates of
the processor, the total quantity of each salmon product form
sold by area of production by species, and the wholesale price
received."
Page 3, following line 5:
Insert a new bill section to read:
"* Sec. 4. AS 43.80.050 is amended by adding a new
subsection to read:
(f) Each fish processor who submits a report under (a)
of this section during a reporting year shall also submit an
annual report of the quantity of salmon products produced by
the processor or an affiliate of the processor between January
1 and December 31 of the reporting year. The report shall be
submitted to the department not later than January 31 of the
following reporting year. The report must include
(1) a description of the products and the total
quantity of each salmon product form produced by area of
production by species for each of the salmon product forms
listed in (b)(1) of this section; and
(2) the requested information regarding the total
quantity of each salmon product form produced by providing the
total number of
(A) each size of container in which thermally
processed salmon products were produced by the processor
or its affiliate; and
(B) pounds for each of the other salmon
product forms produced by the processor or its
affiliate."
Renumber the following bill sections accordingly.
Page 3, lines 22 - 23:
Delete "the 15th day of each regular legislative session"
Insert "March 15 [THE 15TH DAY] of each year [REGULAR
LEGISLATIVE SESSION]"
Page 3, line 25, following "products":
Insert "and a report of the quantity of salmon products
produced during the preceding calendar year"
Page 3, line 27, through page 4, line 3:
Delete all material.
Renumber the following bill sections accordingly.
Page 4, line 10:
Delete "finished [THERMALLY"
Insert "[FINISHED THERMALLY"
Page 4, line 11:
Delete "less than retail"
Insert "wholesale [LESS THAN RETAIL]"
Page 4, line 18:
Delete "a new paragraph"
Insert "new paragraphs"
Page 4, line 20:
Delete "produced"
Insert "processed by a fish processor"
Page 4, line 29:
Delete "."
Insert ";"
Page 4, following line 29:
Insert new paragraphs to read:
"(9) "produce" means to process salmon into a
salmon product;
(10) "wholesale" means the first sale of a salmon
product at wholesale after the fishery business tax was paid
or became payable on the salmon from which the salmon product
was produced;"
Page 5, line 5, following "at":
Insert "first"
Number 2393
REPRESENTATIVE WHITAKER said,
I'm very, very concerned that we are dealing with the
market in a manner that will provide an advantage from
the status quo to one market player. That is, to
suppliers from fishermen at the expense of the
processors. And I think that is a very, very dangerous
position for the legislature to put itself in. We are at
that point putting politics in front of economics. And
we are saying that we, the legislature, want our
constituents, the fisherman, who are more numerous than
the processors - and we all know that - to make some more
money at the expense of the processors. I think that's
fine. I think fishermen should make more money, but when
we, the legislature, start trying to insert our political
influence in the market process, we run the risk of
damaging that industry in a manner that we're not aware
of. So, I speak against the bill and will vote against
it.
Number 2463
CO-CHAIRMAN HARRIS commented that there has been a lot of attempt
at compromise, but obviously this legislation has a long way to go
before it becomes law, if it ever does. Furthermore, he's not sure
whether there would ever be a compromise that includes what fishers
want and what processors want, without some type of legislation.
Number 2498
REPRESENTATIVE WHITAKER said it's important to ask whether the
process and market are broken. If they aren't, he said, should the
legislature try to fix them? He doesn't see that the fishers en
masse are doing poorly. There are poor runs and there are good
runs, which is the nature of the market. But it's very, very
dangerous for the legislature to change the market dynamics because
of political motivation(s).
Number 2547
REPRESENTATIVE DYSON stated that he's not comfortable with this
legislation yet, but he would not object to moving it out of
committee. He really wants the legislature to be the "hammer" that
gets the fishers and processors together under mutual grounds.
Moreover, if electronic reporting, as Ms. Madsen has indicated,
would help solve this problem, the legislature at some point may
have to craft legislation to include progressive dates of
enforcement. Furthermore, he's not sure of the real value for
three times a year reporting, but he's in favor of fishers having
information on what happened last year to help make decisions for
the next season. He's fairly comfortable with the March 15 date in
terms of getting this information out.
Number 2660
REPRESENTATIVE HUDSON stated he believes that information helps
everybody, but he doesn't want it to compromise confidentiality,
especially as it relates to the ex-vessel value. For a healthy
industry, he said, fishers need to know product worth, yet they
aren't getting that type of information in a timely fashion. He
would like to see harvesters come forward and indicate what they
get out of the information. He's uncomfortable with this
legislation in its present form.
CO-CHAIRMAN HARRIS asked Representative Hudson what type of
information he is looking for from harvesters. There was a lot of
testimony from harvesters at the last committee hearing.
REPRESENTATIVE HUDSON replied that this committee has dealt with
the mechanics of the bill. It is now an issue for the House
Finance Committee - the next committee of referral - in terms of
the financial ramifications to harvesters and processors.
CO-CHAIRMAN HARRIS asked Representative Hudson whether he is
comfortable knowing that his answers may be answered in the House
Finance Committee.
REPRESENTATIVE HUDSON replied, "Well, they either will or I won't
vote for it."
CO-CHAIRMAN HARRIS announced that it is his intent to move the
proposed committee substitute, as amended, out of committee today.
Number 2857
CO-CHAIRMAN CARL MORGAN made a motion to move CSHB 363, version
1-LS1298\H, Utermohle, 3/1/00, as amended, out of committee with
individual recommendations and attached fiscal note(s). There
being no objection, CSHB 363(FSH) so moved from the House Special
Committee on Fisheries.
ADJOURNMENT
CO-CHAIRMAN HARRIS called for a brief at-ease in order to prepare
for an overview on shellfish farming.
[FOR THE ABOVE COVER SHEET PLEASE SEE THE MINUTES FOR HOUSE
FISHERIES DATED, 3/6/00 AT 6:00 P.M.]
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