Legislature(2013 - 2014)BARNES 124
02/13/2014 11:15 AM House ECON. DEV., TRADE & TOURISM
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Seafood Marketing Institute | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, TRADE, AND
TOURISM
February 13, 2014
11:19 a.m.
MEMBERS PRESENT
Representative Shelley Hughes, Chair
Representative Bob Herron
Representative Pete Higgins
Representative Harriet Drummond
MEMBERS ABSENT
Representative Lynn Gattis
Representative Craig Johnson
Representative Kurt Olson
Representative Lance Pruitt
Representative Geran Tarr
COMMITTEE CALENDAR
PRESENTATION: ALASKA SEAFOOD MARKETING INSTITUTE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
TYSON FICK, Communications Director
Alaska Seafood Marketing Institute (ASMI)
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Provided an overview and answered
questions.
ALEXA TONKOVICH, International Program Director
Alaska Seafood Marketing Institute (ASMI)
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Participated in an overview and answered
questions.
ACTION NARRATIVE
11:19:59 AM
CHAIR SHELLEY HUGHES called the House Special Committee on
Economic Development, Trade, and Tourism meeting to order at
11:19 a.m. Representatives Higgins and Hughes were present at
the call to order. Representatives Herron and Drummond arrived
as the meeting was in progress.
^PRESENTATION: ALASKA SEAFOOD MARKETING INSTITUTE
PRESENTATION: ALASKA SEAFOOD MARKETING INSTITUTE
11:20:37 AM
CHAIR HUGHES announced that the only order of business would be
two presentations by Tyson Fick and Alexa Tonkovich of the
Alaska Seafood Marketing Institute.
11:20:59 AM
TYSON FICK, Communications Director, Alaska Seafood Marketing
Institute (ASMI), Department of Commerce, Community & Economic
Development (DCCED), directed attention to a PowerPoint
presentation entitled, "An overview of the Alaska Seafood
Marketing Institute."
REPRESENTATIVE HIGGINS referred to the presentation, noting that
of the 62,650 seafood workers in Alaska, over one-half are out-
of-state residents [slide 3].
11:22:37 AM
MR. FICK said yes, adding that there is a higher percentage of
Alaska residents fishing in the harvesting sector than of Alaska
residents working in the processing sector.
CHAIR HUGHES asked of the over 35,000 workers who are not Alaska
residents, how many are not U.S. citizens.
MR. FICK was unsure.
11:23:12 AM
ALEXA TONKOVICH, International Program Director, ASMI, DCCED,
estimated one-third.
REPRESENTATIVE HIGGINS requested general information on seasonal
employees such as where they are working, and for what periods
of time.
MR. FICK suggested much of the requested data can be found in
the report prepared by The McDowell Group entitled "Economic
Value of the Alaska Seafood Industry" and dated July, 2013. The
report includes in-depth employment and economic information for
Alaska as well as the U.S. He offered to research any
additional information needed.
CHAIR HUGHES said a summary of the economic report would be
helpful, specifically on the economic benefit out-of-state
workers provide to the state.
MR. FICK advised the committee that the seafood industry
benefits almost everyone in Alaska; one advantage not often
mentioned is the "backhaul freight fee." Shipping companies
estimate that the cost of shipping to Alaska is reduced by 10
percent because of the frozen seafood leaving Alaska. Alaska is
the largest seafood producer in the U.S., producing 57 percent
of its seafood, and produces less than 2 percent of the seafood
on the global market [slide 4]. Mr. Fick said the composition
by volume of Alaska's seafood harvest is very different compared
to its value [slides 5 and 6]. For example, salmon is 12
percent of the volume, but 29 percent of the value; crab is [2]
percent of composition and 16 percent of value. The funding to
support ASMI comes from a 0.5 percent tax at ex-vessel, and the
way to increase the value of the industry is to get the maximum
value from each fish harvested. He continued, noting that the
ex-vessel value of Alaska seafood has generally increased over
the last 10-15 years [slide 7]. Alaska has had a commercial
fishery since 1880 and two important dates in its history are
Statehood in 1960, when sustainability and sustained yield
principal were written into the state constitution, and when the
Magnuson-Stevens Fishery Conservation and Management Act of 1976
extended control of U.S. waters from three to two hundred miles
offshore, keeping out foreign fleets and pirate fishing. The
result was a steady increase from about 25-50 million fish
harvested per year, to a record in 2013 of 272 million fish
harvested in Alaska during salmon season. A preliminary
breakdown of the 2013 harvest indicated pink salmon was the
largest species by volume, and pink and sockeye salmon were the
largest two species by value [slide 9]. Again, over the last 10
years salmon ex-vessel value continues to grow in spite of
increasing supply world-wide.
11:29:34 AM
REPRESENTATIVE HIGGINS observed that over 1 billion pounds of
salmon was harvested last year, yet there are low numbers of
salmon taken in [Alaska] rivers. He suggested a sport fisherman
may believe commercial fisheries take too much.
11:30:19 AM
MR. FICK deferred the question to the Alaska Department of Fish
& Game (ADF&G) as it sets escapement goals and manages the
fishery. The job at ASMI is to tell the impressive story of the
results of commitments to time and area closures, the limited
entry permit system, and other management tools. He
acknowledged that challenges continue with Chinook salmon in
large areas of the state such as on the Yukon River, where there
are a large summer chum run and a distressed king salmon run at
the same time. Mr. Fick opined it does not do the king salmon
any favors to over-escape the chums and add to the competition
in freshwater, or to take out kings while targeting a summer
chum fishery. Therefore, ADF&G has developed a dip-net fishery
and a fish wheel fishery at Kaltag.
REPRESENTATIVE HERRON expressed his belief that Representative
Higgins is noting an irony in that the state promotes
sustainability, and ASMI is "bragging how much we harvest."
CHAIR HUGHES informed the committee the Board of Fisheries
adopted proposals regarding Cook Inlet fisheries that are
affecting the Susitna River drainage. She asked whether ASMI
has heard any concerns about those proposals and their impact on
the salmon harvest in 2014.
MR. FICK was unsure and again deferred to ADF&G because it works
to maintain a sustainable harvest status. He reiterated that
ASMI sees a remarkable situation in that 40 years after the
Magnuson-Stevens Act, there are more fish in Alaska waters than
previously.
11:34:11 AM
CHAIR HUGHES inquired as to where the pink and sockeye salmon
are fished.
MR. FICK responded that 65 percent of the sockeye harvested in
Alaska come from Bristol Bay, and others come from Chignik, Cook
Inlet, and Southeast; pink salmon come from Southeast and Prince
William Sound. He offered to provide more detailed information.
In further response to Chair Hughes, Mr. Fick opined that the
price of salmon has increased along with the demand because of
great marketing. He acknowledged that farmed salmon introduced
large numbers of consumers to salmon, and ASMI used that
opportunity to turn them to the best salmon in the world via a
great, recognized brand: The Alaska Brand. Again, Alaska
seafood is the second most commonly specified brand on U.S.
menus, behind Angus beef [slide 11]. Surveys show that
consumers are likely to recommend Alaska seafood first and
Alaska salmon second [slide 12]. In further response to Chair
Hughes, he clarified that the survey was of U.S. consumers. As
much as possible, ASMI coordinates its marketing efforts with
Alaska Grown, TravelAlaska, and individual companies [slide 13].
11:37:37 AM
A video was shown from 11:37 a.m. to 11:38 a.m. Mr. Fick said
ASMI has been requested to provide seafood for some television
and video productions, thereby having its message seen by
millions at no cost.
REPRESENTATIVE HERRON told a personal story from the European
Expo in Brussels, Belgium.
11:41:34 AM
MR. FICK turned to opportunities and challenges to the marketing
of Alaska seafood. Social media is both an opportunity and a
challenge because of misinformation. Other challenges include
Fukushima [Daiichi nuclear power plant] misinformation and
illegal, unreported, and unregulated (IUU) fishing that results
in overharvesting in other countries, which lowers the market
price for Alaska seafood [slide 15]. Marketing opportunities
include: working with Kikkan Randall, an Alaskan Olympic skier
[slide 16]; social media platforms, such as a photo contest; and
that ASMI has 80,000 internet fans. Returning to Fukushima
radiation, ASMI serves as a conduit for good information from
independent, state, national, and international groups that are
conducting tests [slide 18]. Wal-Mart announced it will accept
Alaska's Food and Agriculture Organization of the United Nations
(FAO) Responsible Fisheries Management (RFM) certification and
will continue to source Alaska salmon; ASMI and the seafood
industry appreciate the support from the administration,
legislature, and Alaska's Congressional Delegation on this
matter [slide 19]. Mr. Fick further explained that using
sustainability certification as a marketing tool was begun about
10 years ago by non-governmental organizations (NGOs); in fact,
WWF started the sustainability certification label called the
Marine Stewardship Council eco-label, and Alaska salmon was the
third fishery to be certified. Subsequently, the eco-label
certification was required for access to the marketplace, so
three to four years ago ASMI looked for an alternative
certification that would meet its customers' needs, but not pass
along the high cost of logo licensing fees, or relinquish state
sovereignty regarding fisheries management. The three primary
concerns with the Marine Stewardship Council eco-label were:
brand devaluation for Alaska; intrusion into fisheries
management; and market access. The alternative label is now
accepted in markets throughout the world, especially in Germany.
11:46:56 AM
CHAIR HUGHES questioned whether ASMI believes other major
grocers will not cause a problem in the U.S.
MR. FICK said ASMI is very hopeful "that is the situation."
REPRESENTATIVE HERRON supported ASMI's good relationship with
Alaska's Congressional Delegation; in fact, it was the
delegation that convinced the federal government not to stop
federal purchases of Alaska seafood because of the lack of
certification from the "London-based logo master." He said,
"Our congressional delegation has to be thanked for that."
MR. FICK then pointed out that there has been a very large
harvest of pink salmon, thus efforts in pink salmon marketing
have been expanded, especially for canned pink salmon. The
challenge is to maintain the value, but not crash the market.
One market was a $20 million purchase by U.S. Food Aid [slide
20].
CHAIR HUGHES heard the use of automation in fish processing is
increasing because increased productivity and technology help
the Alaska fish industry compete; she suggested there may be
equipment that could process fish into sushi for value-added
product, and asked about other possible value-added processes.
MR. FICK confirmed the interest in value-added products; in
fact, the utilization of the waste stream is of interest by the
processing sector. All fish parts - except for fillets - can be
used for fish oil, fish meal, and pet food, and 100 percent
utilization is sought by the seafood industry. There are
opportunities to derive value from waste for protein powders and
other products. There is interest also in more hand processing,
but the speed of the runs and the energy needed for the
processing plants are problematic.
11:53:07 AM
MS. TONKOVICH directed attention to a PowerPoint presentation
entitled, "China Business: A Seafood Perspective," dated
2/13/14. She informed the committee she oversees ASMI's
international program which covers 21 countries in Europe, Asia,
and South America, and will focus on its activities in China.
As previously discussed, in 2012 Alaska produced 5.4 billion
pounds of seafood, which is 57 percent of the U.S. commercial
harvest. Of that, 64 percent was exported, making Alaska the
sixth largest seafood exporter following Norway, Russia,
Vietnam, Chile, and Canada [slides 3 and 4]. She explained that
China is Alaska's foremost export market for seafood, although
the China, Korea, Thailand, Vietnam, and Central Europe markets
are largely reprocessing markets. Japan remains the largest
end-user market; however, over the past five years, the value of
Alaska's seafood to China has nearly doubled [slides 5 and 6].
China is a major reprocessing center, exporting one-third of its
seafood to Europe, one-third back to the U.S., and 17 percent to
Japan. However, the increasing cost of doing business in China,
and increasing wages, have shifted reprocessing to Thailand,
Vietnam, and Indonesia, but China's domestic demand is
increasing [slides 7 and 8]. China is a good customer because
its gross domestic product (GDP) is increasing over 7 percent
per year, which is expected to continue for the next five years.
The U.S. is China's second largest trading partner, its third
largest export market and its first source of imports; China is
currently a $250 billion market for U.S. companies.
Furthermore, there are high levels of consumer confidence in
China and retail sales are growing in the food service sector
and for imported products. She advised that domestic food
safety scandals have weakened trust in domestically-produced
products and increased demand for imported food products and
seafood [slides 9 and 10]. According to the FAO and the Chinese
Ministry of Agriculture, seafood prices are expected to rise up
to 70 percent by 2050 due to shortage of supply, growth in
demand, and growth in wages [slide 11]. Ms. Tonkovich related
that ASMI established an office in China in 1997 and has now has
offices in Shanghai, Beijing, Guangzhou, and Hong Kong; its
China program has always focused on building demand in the
domestic market [slide 12].
12:00:05 PM
MS. TONKOVICH continued to explain that ASMI builds awareness
through different strategies: create awareness of the
attributes of Alaska seafood; create awareness of the variety of
seafood; focus on new-to-market products such as pollock roe;
educate on the use of frozen products; educate on how to store,
handle, and prepare frozen products; and provide appropriate
recipes. In response to Chair Hughes, she said consumer
programs use recipe development and publications [slide 13].
Because China is a huge market, marketing is targeted at first-
tier cities such as Shanghai, Beijing, Guangzhou, then at second
tier cities along the coast. Marketing is also targeted at
younger consumers, housewives, and higher-income consumers. On
the trade side, ASMI works with importers and distributors that
supply hotels and restaurants and large chain retailers; on the
food service side, ASMI targets chefs, purchasing managers from
hotels and restaurants, and food chains [slide 14]. Some of the
activities sponsored by ASMI target consumer trade, hotels and
restaurants, public relations, events, advertising, press
campaigns, social media, trade schools, seminars and store
promotions, hotel and restaurant promotions, chef competitions,
and culinary school training [slides 15 and 16]. During a press
campaign, ASMI submits articles for publication, works with the
U.S. Department of Agriculture - which matches its funding -,
occasionally participates in television, and utilizes billboards
[slides 17 through 20]. Although Facebook is not allowed in
China, ASMI has a web site and a blog on Sina Weibo [slide 21].
Retail promotions feature Alaska signage, demonstrations,
tastings, and materials [slide 22]. She highlighted a promotion
with Tmall.com, Asia's largest online retailer, during which
over 33,000 items were sold over a period of nine days [slide
23]. Three trade shows and trade seminars are held that attract
importers, retailers, wholesalers, and distributors to provide
them with information about Alaska seafood and ASMI activities
[slide 25]. When possible, ASMI brings buyers to Alaska to meet
fishermen, go fishing, tour [processing] plants, and tour hotels
and restaurants [slide 26]. Promotions of Alaska seafood also
take place in restaurants, as do chef competitions [slides 27
and 28]. Finally, ASMI works with leading culinary schools to
educate the next generation of chefs [slide 29].
REPRESENTATIVE HIGGINS asked whether ASMI was involved in the
issue of the Chinese ban on geoduck.
12:07:43 PM
MS. TONKOVICH answered that ASMI does not lobby in China, but
has monitored the situation and is in contact with the
Department of Environmental Conservation, the U.S. Department of
Commerce, the National Oceanic and Atmospheric Association, and
National Marine Fisheries.
CHAIR HUGHES restated her question about Alaska's share of the
world market.
MR. FICK said he would provide that information in terms of the
value of the fish, which is more than its volume. Alaska
harvests less than 2 percent of the global supply.
CHAIR HUGHES surmised there is 2 percent in volume, a higher
percent in value, and room for growth.
12:10:04 PM
MR. FICK explained, "... with wild fisheries, is that it's all
biological in terms of ... volume, there are some underutilized
species, certainly some rockfish, herring ..., sculpin, cabazon,
things like that that wouldn't be traditional markets that we
would think of." However, these fish would not generate large
additional volumes. In further response to Chair Hughes, he
said ASMI was formed in 1981 and is a public-private partnership
with the state and the Alaska seafood industry. It is funded
from three sources: a voluntary 0.5 percent tax taken at ex-
vessel that ranges from $8-$12 million; $7.8 million of general
funds (GF); and $4.5 million of federal funds through the U.S.
Department of Agriculture. There is a seven-member board of
directors which consists of: five processors - Trident Seafood,
Ocean Beauty Seafood Inc., Icicle Seafoods, Inc., Peter Pan
Seafoods Inc., Kwik'Pak Fisheries, LLC; and two fishermen. In
addition, there is a group of dedicated industry leaders serving
on committees that provide information on challenges and
opportunities. The mission of ASMI is to increase the value of
Alaska seafood resource.
12:15:27 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, Trade, and Tourism
meeting was adjourned at 12:15 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Alaska China Business - EDTT.pdf |
HEDT 2/13/2014 11:15:00 AM |
|
| ASMI EDTT Committee 2014.pdf |
HEDT 2/13/2014 11:15:00 AM |