Legislature(1993 - 1994)

04/25/1994 08:15 AM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  SB 306 - ANTITRUST EXEMPTION FOR FISHERMEN                                   
  SENATOR JIM DUNCAN, PRIME SPONSOR, stated SB 306 confers                     
  state antitrust immunity on fishermen, allowing them to                      
  negotiate raw fish prices with processors in order to                        
  improve the market price of Alaska seafood.  It also permits                 
  fishermen and fish processors to agree to the minimum price                  
  for which processors will sell the processed fish.  He said                  
  in recent years, salmon prices have fallen dramatically.                     
  Alaska needs to offer greater support to the state's fishing                 
  industry, which is the state's largest private employer.                     
  SENATOR DUNCAN pointed out that fishing affects every                        
  segment of the state's economy, from small coastal villages                  
  to the state's general fund.  Ex-vessel value of Alaska                      
  salmon declined by 67 percent between 1988 and 1993, yet                     
  salmon fishermen caught 64 percent more fish.  As raw fish                   
  prices continue to drop, fishing communities and boroughs                    
  suffer from poor local economies, as well as decreased state                 
  revenue sharing from fisheries taxes.  He stated British                     
  Columbia fishermen have consistently been getting higher                     
  salmon prices than Alaska fishermen, in part because of                      
  multi-year collective bargaining agreements with processors.                 
  SB 306 provides for a similar system, allowing fishermen to                  
  form associations to negotiate prices with processors.                       
  SENATOR DUNCAN said this legislation was recommended in the                  
  1993 Alaska attorney general's report on the Bristol Bay                     
  sockeye salmon industry.  A state antitrust exemption is the                 
  first step.  He stated once the legislature has approved a                   
  state exemption, the state will request a federal exemption.                 
  Collective bargaining between fishermen and processors will                  
  help stabilize commercial fishing prices, bolstering local                   
  and state economies.  He stressed stable raw fish prices                     
  also will promote stable consumer prices for processed                       
  seafood products, which means greater sales of Alaska                        
  Number 046                                                                   
  JIM FORBES, ASSISTANT ATTORNEY GENERAL, testified via                        
  teleconference and said SB 306 is a first step in the                        
  recommendation given by the attorney general.                                
  REPRESENTATIVE JEANNETTE JAMES asked if there are any                        
  negatives to SB 306.                                                         
  MR. FORBES replied he cannot think of any negatives.  He                     
  pointed out there is a zero fiscal note.  He said SB 306                     
  will help facilitate communications between the fishers and                  
  REPRESENTATIVE JAMES wondered if there will be fees involved                 
  which might be a burden on the small fishermen.                              
  MR. FORBES stated SB 306 is neutral on that type of issue.                   
  Number 070                                                                   
  REPRESENTATIVE BILL HUDSON asked if it would be possible to                  
  require value-added prior to exportation.                                    
  MR. FORBES replied SB 306 is neutral on that issue as well.                  
  expressed support for SB 306.                                                
  expressed support for SB 306.  He stated the department is                   
  involved in mediation in trying to reach a price and SB 306                  
  will help the entire industry.                                               
  Number 093                                                                   
  UNITED (CFU), testified via teleconference and said CFU                      
  supports SB 306 for all of the reasons mentioned.                            
  said in 1991, she was involved in a five day strike and                      
  realized at that time that fishermen are stuck in limbo, as                  
  they are not the cannery operated and dominated fleet                        
  anymore but are also not independent businessmen either.                     
  She stated the fishing industry is an industry in                            
  transition.  She felt SB 306 will help bridge that                           
  transition to where the fishermen want to be perceived--as                   
  business partners entering into negotiations on price.                       
  MS. TROLL said a group got together shortly after the strike                 
  to determine how they could best help their industry to be                   
  positive and it was felt that supporting value-added                         
  products and price stability was important.  She stated to                   
  get to price stability, there was a need to enter into                       
  multi-year contracts.  She explained they had a conference                   
  to discuss the concept and the major processors were not                     
  allowed to attend the conference.  After that conference, a                  
  pink salmon working group was formed and a formula was                       
  developed to spur the idea of multi-year contracts.  That                    
  formula was sent to the processors.  She noted the response                  
  was silence because the processors had been counseled by                     
  their attorneys that they cannot enter into conceptual types                 
  of discussions without conflicting the antitrust                             
  regulations.  She stressed that is why SB 306 is important--                 
  to get that type of dialogue and constructive negotiations                   
  MS. TROLL noted SB 306 is a first step.  In response to                      
  Representative James's question about fees, she anticipates                  
  the existing associations will take up the initiative and                    
  noted there is a dues structure.  She said there are also                    
  organizations looking at possibly forming a marketing                        
  association, which would be based on a small percentage of                   
  whatever was negotiated.  She urged committee members to                     
  pass SB 306.                                                                 
  Number 164                                                                   
  REPRESENTATIVE PAT CARNEY made a MOTION to MOVE SB 306 out                   
  of committee with INDIVIDUAL RECOMMENDATIONS.                                
  REPRESENTATIVE HUDSON asked if there were any                                
  representatives of the processors association present.                       
  SENATOR DUNCAN said the processors were represented at                       
  Senate hearings on the bill and expressed support for SB
  REPRESENTATIVE HUDSON asked if anyone has talked to Senator                  
  Stevens and the Congressional delegation to get them moving                  
  on the second step.                                                          
  SENATOR DUNCAN responded he has not yet spoken to anyone                     
  because he wanted to ensure SB 306 gets passed first.  He                    
  noted the state of Washington has received a federal                         
  REPRESENTATIVE ELDON MULDER asked if there was a committee                   
  substitute (CS) coming out of the Senate on SB 306.                          
  SENATOR DUNCAN stated no.  He said when the bill was in the                  
  Judiciary Committee, Senator Taylor wanted to look at what                   
  it would take to set up a state agency and have state                        
  oversight, instead of going through a federal exemption.                     
  REPRESENTATIVE MULDER clarified that is one of the options                   
  outlined in the attorney general's memo.                                     
  SENATOR DUNCAN replied it is one option and the other option                 
  is the federal exemption.  He felt the federal exemption is                  
  the option which should be pursued because it does not                       
  require the costs, efforts, etc., involved in creating a                     
  state agency.                                                                
  REPRESENTATIVE MULDER asked how realistic it is to get the                   
  federal exemption.                                                           
  SENATOR DUNCAN responded he is not sure, but pointed out it                  
  has been done in the state of Washington.                                    
  REPRESENTATIVE JAMES felt the simplest way to go is to get                   
  the federal exemption and leave setting up a state agency as                 
  the last option.                                                             
  REPRESENTATIVE CON BUNDE felt the demand for fish is a                       
  driving force and not just individual tastes but also price.                 
  He said a possible negative to SB 306 is these associations                  
  and long-term agreements might increase consumer price.                      
  there will not be any increase in price because of the                       
  negotiations on price.  He said fishermen are currently                      
  being paid less than they have ever been paid and the                        
  consumer price remains the same.  He stressed the middle                     
  person is the person making the money.  He noted fishermen                   
  are currently at the whim of supply and demand and what the                  
  processors will pay.  He pointed out that in Japan the price                 
  is continually going up on the retail level for the export.                  
  REPRESENTATIVE BUNDE said that is his concern.  The                          
  fishermen are not getting paid--it is the middle people who                  
  are marking up the price.  If the middle people do not chose                 
  to reduce their mark-up, the consumer price is going to go                   
  up to reflect the increase to the fishermen and a decreasing                 
  spiral occurs.  He wondered if the middle people will absorb                 
  enough so the fishermen can get an increase without the end                  
  product costing more to the consumer.                                        
  Number 264                                                                   
  MR. MCCUNE stated many processors are cutting out the middle                 
  people, such as the broker, and are going to market for                      
  themselves resulting in less costs to the fishermen.  He                     
  explained in the United States, the fishermen send their                     
  fish to a broker, the broker takes bids and gets the highest                 
  price possible.  Many processors are going direct to the                     
  consumer, so they get lower costs in their business which                    
  does reflect a higher price for the harvester.  However, the                 
  problem is the harvester has no leverage to get a higher                     
  price and the only options are a strike or delivering to one                 
  REPRESENTATIVE HUDSON felt SB 306 could lead to an expansion                 
  of marketing of the state's fish product in the domestic                     
  market particularly because at the present time, the                         
  antitrust constraint against the fishermen talking to the                    
  processors is the same constraint of them talking to each                    
  other.  He said when he was involved on the seafood                          
  marketing side, one of the big problems was that everyone                    
  was cutting their own deal with their own broker and their                   
  own distributors, yet they could not share that information                  
  in order to get a uniformly higher price for the product.                    
  He said the lowest price tended to establish the price on a                  
  regional basis.                                                              
  REPRESENTATIVE HUDSON thought if the federal exemption can                   
  be approved, SB 306 will be revolutionary in providing for                   
  some price negotiations which would expand marketing and at                  
  the same time, improve quality.  He said there would be an                   
  ability to not only negotiate a three year contract for                      
  price but also control the quality, which would ultimately                   
  lead to an increase in the consumer price on the product.                    
  If the consumer perceives the product is going to be                         
  available, the quality is going to be consistent, and the                    
  price is going to be known, the fishermen in Alaska would                    
  get more money for their fish on a raw fish basis.                           
  Number 327                                                                   
  MR. MCCUNE stated if he could stabilize the price on a three                 
  year basis, he could then do some financial planning.  In                    
  addition, the processor would know what he needs to do to                    
  make his profit with the consumer.  He stressed                              
  unfortunately fish are currently like oil, the price is up                   
  and down.  He did not feel it will be difficult to get the                   
  federal exemption.                                                           
  CHAIRMAN WILLIAMS asked if there were any objections to the                  
  motion.  Hearing none, the MOTION PASSED.                                    

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