Legislature(2003 - 2004)
02/10/2004 01:31 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 273-ASMI BOARD/ SEAFOOD TAXES & ASSESSMENTS
CHAIR CON BUNDE announced SB 273 to be up for consideration. He
asked Senator Stevens if he wanted to make additional comments
on his bill.
SENATOR GARY STEVENS responded that the goal was to find an
adequate way to fund ASMI in the future, realizing there had
been substantial reductions to its funding because of reduced
salmon price and catch. SB 273 is an attempt to see the funding
continue for the good work that ASMI does in marketing Alaska
seafood products.
A question was raised about whether the seafood marketing tax is
unconstitutional and Senator Stevens referenced a letter dated
February 4, 2004, from George Utermohle, Legislative Legal and
Research Services, which basically answers no.
The second question raised is what ASMI would do with the
additional $2,610,000 in revenue from the proposed .3 percent
tax on non-salmon species. He wanted Laura Fleming, ASMI
representative to address that.
MS. LAURA FLEMING, Director, Public Relations, Alaska Seafood
Marketing Institute (ASMI), said she was asked to answer several
questions and would begin with the shortest answer. The .3
percent tax on other species, if it were enacted, would restore
ASMI's funding to where it was three years ago and that would
allow them to restore their programs to what they were three
years ago and put an additional emphasis on whitefish and
shellfish varieties. The current board has many representatives
of whitefish interests, both harvesters and processors. Very few
processors confine themselves to one species and processing
whitefish varieties has been very lucrative, keeping a lot of
companies, which have formerly processed salmon, on their feet.
She said:
Whitefish varieties include pollock, sole, black cod
and halibut and are an integrated part of all ASMI's
marketing activities. They are part of the Alaska
seafood basket of products that are associated with
the brand. We leverage that brand equity in the U.S.
and overseas. The overseas market is probably of the
greatest interest to the pollock industry. We are
paying for most of the activities in those markets
with federal dollars, because our federal export
activities are paid for through an agricultural
service. We provide year-round assistance to the
surimi industry and to the pollock industry in those
key overseas markets. We have market representatives
in those overseas markets. We do promotions that
retail and do food service with restaurants.
A lot of the surimi processing and so on involves our
educating the trade about availability and superiority
of our products - that means the people who take the
raw product and turn it into wide varieties of
products that you see in their magazines. I just
brought along an example [indicates pamphlet].... The
French and Germans use huge amounts of surimi. The
market in France has grown three times in ten years.
It's tripled in 10 years. So, it's a huge part of it.
CHAIR BUNDE asked what role ASMI has had.
MS. FLEMING replied that ASMI has had trade seminars for the big
importers and exhibits at the European Seafood Exposition, the
biggest seafood tradeshow in the world, where $70 million worth
of business was done last year. A lot of that business was
whitefish. Also, she noted the shrinking of Atlantic cod stocks
has opened up big opportunities for Alaska and ASMI. Pacific cod
and pollock are being used in place of Atlantic cod, until
farming operations ramp up.
ASMI organizes promotions for food service suppliers that use
Alaska seafood to make their products and then brand it Alaskan
in their catalogues. They also do promotions in Spain and
Portugal where fish fillet sandwiches are a huge growth market.
MS. FLEMING said she is not surprised that some pollock
fishermen don't know about ASMI's efforts, because even though
they sell fish at the dock, they don't sell the processed
product. Sometimes the product is used just as a value-added
ingredient and ASMI also promotes those.
ASMI helps the Genuine Alaska Pollock Producers, a trade
organization, in setting up exhibits in the U.S and Europe.
Membership in that organization has a lot of crossover with the
whitefish committee of ASMI. She noted a newspaper with a
circulation of 8 million readers that had an article in it about
the benefits of adding fishing to the diet. About 60 percent of
seafood in the U.S. is consumed in restaurants and ASMI does a
lot of promotions with restaurants and Sysco, a food service
distribution company. For instance, there are 56 Alaska seafood
items in Sysco's food catalogue; of those items, a big portion
are made with Alaska whitefish varieties. "So, about 60 percent
of our promotions with those Syscos of the world are with
pollock and cod."
CHAIR BUNDE asked her for rough numbers on the time, effort and
money ASMI puts into salmon compared to whitefish and other
seafood.
MS. FLEMING replied:
We always do all-species marketing for almost all of
our promotions. Some might be specifically benefiting
halibut or cod or salmon, but we always bring a whole
basket of products to the table. So, it's a little
tricky to split out exactly the dollars, but I would
say...in the past, it has been about half and half,
but now the balance is shifting and the amount of
money from salmon is less. So, the whitefish industry
has been asking us to demonstrate that we are giving
them their fair share. We have on several occasions
tried to break out for them what we are doing for
whitefish. So far, they have always been satisfied -
all the people on our board and on our committees have
been satisfied with the results we are obtaining,
especially since we leverage every industry dollar and
leverage a lot of value out of it....
CHAIR BUNDE asked if she is saying that if the whitefish
industry is paying for a larger portion of their funds, ASMI
would provide them an equal effort.
MS. FLEMING replied that so far industry has been satisfied with
ASMI's promotion of the species. She pointed out that the ASMI
chairman of the board fishes for whitefish and the board is the
entity that tells staff what to do.
CHAIR BUNDE said this would be a good time to bring Mr. Stinson
in to the conversation.
MR. JAY STINSON, Chair, ASMI, added that the apparent needs of
various industries create a different dynamic from year to year
and there is no hard and fixed number for what ASMI's promotions
do every year. Its allocation efforts revolve around
equitability within the industry and where the money is coming
from. Currently, the board has 25 members, but counting ex-
officios, there is a total industry representation of 80
members.
CHAIR BUNDE asked Mr. Stinson if he favors SB 273.
MR. STINSON replied that the board has long-term concerns about
stable funding for ASMI and supports that portion of the bill.
However, it supports a board of 15 members, not the nine in the
proposed language. He rationalized that part of ASMI's charter
is to represent the interests of the fishing organizations as
well as to maintain a certain fiscal responsibility and a
certain tension needs to be maintained.
SENATOR STEVENS countered that whatever the size of the board,
representation of the whole industry is always a concern. He
asked Mr. Stinson to comment on how non-salmon fishermen and
processors are currently represented on the standing committees.
MR. STINSON replied that there are seven standing committees.
3:07 p.m.
TAPE 04-8, SIDE A
MR. STINSON continued saying that there is a Canned Salmon
Committee, a Salmon Marketing Committee, an Export Promotions
Committee, a Seafood Technical Committee, a Shellfish Committee
and a Whitefish Committee. The committees have approximately 90
individuals representing the various aspects of the seafood
industry. Current by-laws say the board has to have 12 members
that are involved in commercial fishing and nothing prevents the
governor from including whitefish harvesters in his
appointments. Any segment that wants to be involved is more than
welcome to come to the table. "Basically, we try to maintain an
equitable representation, both by region and by species, in the
entire Alaska fishing industry."
CHAIR BUNDE asked Senator Stevens to respond to a communiqué
from a gillnetting association about its concerns with the
hatchery cost recovery tax.
SENATOR STEVENS said a letter from the United Southeast Alaska
Gillnetters is supportive of the 1 percent salmon tax, but
opposes applying it to the hatchery cost recovery program,
because of double taxation - an issue that should be discussed
further.
CHAIR BUNDE encouraged him to address that issue as the bill
moves through the process. He closed public testimony.
SENATOR STEVENS recapped that they had heard from Ms. Fleming
what ASMI would do with additional revenue and noted at the last
board meeting Executive Director Riuta indicated that whitefish
was also facing problems in the future with fish farming. So, it
was important to know what ASMI intended to do about that issue.
Figures from the Commercial Fisheries Entry Commission (CFEC)
show that of the 6,848 non-salmon permit holders, 22 percent are
non-resident. The National Marine Fisheries Service (NMFS)
report on federally licensed fisheries indicates 20 percent out-
of-state addresses.
SENATOR STEVENS said the issue of the future of whitefish
farming had not been discussed by Ms. Fleming, but ASMI is
prepared to deal with it.
CHAIR BUNDE quipped that he assumed ASMI would not advocate for
it.
SENATOR STEVENS agreed and added that he felt he could defend a
nine-member board since most boards work best with a smaller
number and this measure maintains and enhances funding to ASMI
at previous levels. With that, he moved to pass SB 273 from
committee with individual recommendations and the attached
fiscal note.
Senator Stevens, French and Bunde voted yea; and SB 273 moved
from committee.
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