Legislature(2019 - 2020)GRUENBERG 120

02/26/2019 10:00 AM House FISHERIES

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10:00:36 AM Start
10:01:52 AM Presentation: Ak Seafood Marketing Institute
11:03:26 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: AK Seafood Marketing Institute by TELECONFERENCED
Jeremy Woodrow, Interim Exec. Dir.
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                       February 26, 2019                                                                                        
                           10:00 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Louise Stutes, Chair                                                                                             
Representative Bryce Edgmon                                                                                                     
Representative Chuck Kopp                                                                                                       
Representative Jonathan Kreiss-Tomkins                                                                                          
Representative Geran Tarr                                                                                                       
Representative Sarah Vance                                                                                                      
Representative Lance Pruitt                                                                                                     
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
PRESENTATION: AK SEAFOOD MARKETING INSTITUTE                                                                                    
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
JEREMY WOODROW, Interim Executive Director                                                                                      
Alaska Seafood Marketing Institute (ASMI)                                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a PowerPoint presentation about                                                                 
the Alaska Seafood Marketing Institute.                                                                                         
ACTION NARRATIVE                                                                                                              
10:00:36 AM                                                                                                                   
CHAIR  LOUISE  STUTES  called  the  House  Special  Committee  on                                                             
Fisheries meeting to  order at 10:00 a.m.   Representatives Kopp,                                                               
Kreiss-Tompkins, Tarr, Vance, Pruitt, and  Stutes were present at                                                               
the call to order.   Representative Edgmon arrived as the meeting                                                               
was in progress.                                                                                                                
^Presentation: AK Seafood Marketing Institute                                                                                   
           Presentation: AK Seafood Marketing Institute                                                                     
10:01:52 AM                                                                                                                   
CHAIR STUTES announced  that the only order of  business would be                                                               
a presentation on the Alaska Seafood Marketing Institute.                                                                       
10:02:31 AM                                                                                                                   
JEREMY  WOODROW,  Interim   Executive  Director,  Alaska  Seafood                                                               
Marketing  Institute (ASMI),  provided a  PowerPoint presentation                                                               
about ASMI.  He said his  focus would be on providing an overview                                                               
of  ASMI's value  to  the seafood  industry  plus challenges  and                                                               
opportunities going forward.                                                                                                    
REPRESENTATIVE  TARR  requested  Mr.   Woodrow  to  provide  some                                                               
information about his background.                                                                                               
MR. WOODROW  said he is  a lifelong  Alaskan from Juneau  and was                                                               
raised in  a commercial fishing  family.   He said he  has worked                                                               
with ASMI  for a couple years  and, in addition to  being Interim                                                               
Executive Director,  serves also as Communications  Director.  He                                                               
said he previously worked for  the Department of Transportation &                                                               
Public Facilities (DOTPF).                                                                                                      
10:04:49 AM                                                                                                                   
MR. WOODROW,  addressing slide 3  of his  PowerPoint presentation                                                               
[hard  copy included  in the  committee  packet], explained  that                                                               
ASMI   is  Alaska's   official  seafood   marketing  arm   and  a                                                               
public/private partnership  between the  State of Alaska  and the                                                               
seafood industry.  He spoke to how  ASMI is funded in part by the                                                               
seafood industry  through a voluntary  0.5 percent  assessment of                                                               
ex-vessel value.   He defined  ex-vessel value as the  first sale                                                               
between a  fisherman and a  seafood processor.  He  explained how                                                               
ASMI pools  together these assessments, about  $8-9.5 million per                                                               
year, to market the industry's products around the world.                                                                       
10:06:02 AM                                                                                                                   
CHAIR STUTES asked how much  funding ASMI receives from the State                                                               
of Alaska.                                                                                                                      
MR.  WOODROW   said  ASMI  currently   receives  zero   from  the                                                               
Unrestricted  General Fund  (UGF).   In  response  to a  question                                                               
about  funding for  the  travel industry,  Mr.  Woodrow said  the                                                               
Alaska  Travel Industry  Association  (ATIA) is  to receive  $7.5                                                               
million in the governor's amended budget.                                                                                       
MR.  WOODROW,  referencing  slide  4,  summarized  ASMI    recent                                                               
annual budgets as well as its  projected fiscal year 2020 (FY 20)                                                               
budget.    He  highlighted  the   importance  of  operating  from                                                               
carryforward funds    "leftover industry funds that  have been in                                                               
the  ASMI account"  - as  ASMI no  longer receives  state funding                                                               
from the general fund.  He  said ASMI draws from its carryforward                                                               
funds  because its  marketing budget  currently exceeds  revenues                                                               
from federal and  industry sources.  Mr. Woodrow  said he expects                                                               
the  ending carryforward  funds for  FY 20  to be  between $11-12                                                               
million.  He said carryforward  funds help carry the organization                                                               
at  the  outset of  the  fiscal  year  until industry  funds  are                                                               
received.   He said ASMI's  budget authorization  usually exceeds                                                               
its  marketing   spend plan   because  it  is important  for  the                                                               
organization to  remain flexible should  it be forced  to respond                                                               
to  a   crisis.     He  referenced   the  April   2011  Fukushima                                                               
earthquake/nuclear disaster as an example.                                                                                      
10:08:14 AM                                                                                                                   
MR.  WOODROW, addressing  slide 5,  said that  ASMI was  asked to                                                               
draw down  in its spending as  it became less reliant  on general                                                               
funds.   He said ASMI  was actively seeking new  funding sources.                                                               
He announced  that ASMI was  recently awarded  additional federal                                                               
funding  from the  Agricultural  Trade  Promotion Program  (ATP).                                                               
The  ATP  funding  is  $5.5  million to  be  spent  on  marketing                                                               
activities over three years.                                                                                                    
MR.  WOODROW said  the industry  has the  option to  increase its                                                               
voluntary  tax to  ASMI from  0.5 percent  to 0.6  percent, which                                                               
would  result in  an additional  $1  million annually.   The  0.6                                                               
percent figure  is the  highest allowed by  current statute.   He                                                               
said there have not yet been discussions to make this increase.                                                                 
MR. WOODROW said  that ASMI closed its Seattle office  in 2018 in                                                               
order  to fulfill  a goal  of  ensuring all  ASMI positions  were                                                               
Alaska-based.  He said ASMI reduced  its spend plan over the past                                                               
few  years to  provide  a  more sustainable  budget  to meet  its                                                               
10:10:13 AM                                                                                                                   
MR.  WOODROW moved  to  slide  6, titled  "FY19  vs FY20  Amended                                                               
Budget."   He  reiterated that  ASMI expects  not to  receive any                                                               
general funds from the state in FY  20.  Mr. Woodrow pointed to a                                                               
sizeable reduction  in ASMI's  travel budget,  which will  be cut                                                               
from $368,300 in  FY 19 to $158,700  in FY 20.   Mr. Woodrow said                                                               
that this  reduction will make  it difficult for ASMI  to fulfill                                                               
its core  mission.  "It's  really hard to market  seafood outside                                                               
of Alaska," he said, "if you don't travel outside of Alaska."                                                                   
MR. WOODROW detailed ASMI's efforts  to identify efficiencies and                                                               
reduce travel costs. He said ASMI  has reduced travel costs by 20                                                               
percent  since  FY  12 resulting  in  approximately  $100,000  in                                                               
MR. WOODROW addressed slide 7,  titled "What Does ASMI Accomplish                                                               
for  the  State of  Alaska?"    He  remarked on  several  notable                                                               
returns  on ASMI  marketing efforts.    He said  online sales  of                                                               
Alaska Seafood  in China reaped  a sizeable return  on investment                                                               
(ROI), over $1 million in product  sold for only $10,000 spent on                                                               
advertising.    He  said  partnerships  with  other  agricultural                                                               
brands allow  ASMI to  "stretch the  dollar" in  promoting Alaska                                                               
MR.  WOODROW pointed  to  another example  in  which a  week-long                                                               
promotion  in  Japan  produced  over $223  million  in  sales  on                                                               
$35,000  spent  by  ASMI.     He  emphasized  the  importance  of                                                               
strategic marketing plans that target  specific times of the year                                                               
that customers are more likely to purchase Alaska Seafood.                                                                      
MR. WOODROW asserted  that Alaska Seafood remains  the number one                                                               
ranked protein brand on menus nationwide.                                                                                       
10:12:49 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS,   regarding  the   protein  brand                                                               
ranking, requested the source of the statistic.                                                                                 
MR. WOODROW said he could not  recall the exact research firm but                                                               
explained  it is  third-party research  and not  ASMI's own.   He                                                               
said  he would  have  to  get back  to  the  committee with  that                                                               
10:13:41 AM                                                                                                                   
REPRESENTATIVE  EDGMON  asked what  the  future  held for  market                                                               
opportunities with China.  He  asked to what degree Governor Bill                                                               
Walker's May  2018 trade delegation  mission to China  had helped                                                               
ASMI "open doors."                                                                                                              
MR.  WOODROW explained  that  his final  slide  would cover  that                                                               
topic.   He  concluded slide  7 by  highlighting recent  research                                                               
indicating  that  71  percent  of  domestic  seafood  eaters  are                                                               
willing  to  pay  more  for  seafood  labeled  with  the  "Alaska                                                               
Seafood" logo.                                                                                                                  
10:14:45 AM                                                                                                                   
MR.  WOODROW addressed  slide  8.   He  referenced ongoing  trade                                                               
disputes  with  China  and  Russia   as  major  challenges.    He                                                               
explained how the Russia embargo has  led to a trade imbalance in                                                               
which Russian  seafood can  be imported by  the U.S.,  but Alaska                                                               
Seafood cannot  go there.  He  said this has forced  the industry                                                               
to  seek out  new markets  for products  that previously  went to                                                               
Russia.   Mr. Woodrow also  cited challenges relating  to reduced                                                               
harvest of  high value  species such as  king crab,  halibut, and                                                               
sablefish, as well as the high  price of key seafood species that                                                               
create an entry barrier to some customers.                                                                                      
MR. WOODROW  said ASMI  emphasizes the  story of  Alaska Seafood,                                                               
calling  it "a  great  story  to tell."    He  called the  Alaska                                                               
Seafood   industry   "the   gold  standard"   of   sustainability                                                               
management.  He said this resonates with customers worldwide.                                                                   
MR.  WOODROW addressed  slide 9.   He  said ASMI's  international                                                               
program  operates   in  8  different  markets   in  31  different                                                               
countries.    He highlighted  the  success  of ASMI's  e-commerce                                                               
platform in markets such as China  and Japan.  He detailed ASMI's                                                               
trade missions and efforts to  bring international buyers, chefs,                                                               
and media  members to  Alaska.  He  announced that  ASMI recently                                                               
held its first Women of Seafood trade mission.                                                                                  
10:17:41 AM                                                                                                                   
REPRESENTATIVE VANCE,  referencing slide  9, asked why  there was                                                               
an emphasis on a trade mission with Ukraine.                                                                                    
MR.  WOODROW explained  that  this mission  was  in Dutch  Harbor                                                               
where ASMI highlighted  the cod and pollock industries.   He said                                                               
that  a lot  of  cod and  pollock  goes to  Eastern  Europe.   He                                                               
identified  Ukraine as  a  specific market  in  that region  ASMI                                                               
wants to  grow.   He noted  this is partially  a reaction  to not                                                               
being able to sell in Russia.   Selling to Ukraine, he said, ends                                                               
up being a favorable opportunity for the seafood industry.                                                                      
10:18:27 AM                                                                                                                   
MR. WOODROW  addressed the final point  on slide 9.   He affirmed                                                               
the  benefit of  participating in  the Seafood  Expo Global,  the                                                               
largest seafood  conference in the world.   He said ASMI  hosts a                                                               
pavilion at the Brussels-based conference  that in 2018 generated                                                               
$52 million in onsite sales for  the Alaska Seafood industry.  He                                                               
said  the total  projected  sales  generated through  connections                                                               
made at the conference will exceed $640 million.                                                                                
10:19:12 AM                                                                                                                   
CHAIR STUTES asked  whether any other state or  nation brands its                                                               
seafood with  its name.   She  remarked how  she never  sees king                                                               
crab from Russia advertised as "Russian king crab," for example.                                                                
MR. WOODROW said  other locations have realized  how impactful it                                                               
is to  place an  origin on  their food labeling.   He  pointed to                                                               
Norway and Iceland as examples that have begun major campaigns.                                                                 
CHAIR STUTES  asked whether  those locations  would differentiate                                                               
between  wild-caught   and  farm-grown  in  their   branding  and                                                               
MR. WOODROW responded that this remains to be seen.                                                                             
10:20:19 AM                                                                                                                   
REPRESENTATIVE PRUITT  related that  he has  heard people  on the                                                               
East  Coast speak  with pride  about Atlantic  farmed salmon.  He                                                               
asked if  it is correct  to assume some buyers  prioritize farmed                                                               
seafood over wild-caught.                                                                                                       
MR.  WOODROW confirmed  Representative Pruitt's  assessment.   He                                                               
indicated  that farmed  fish,  especially  salmon, dominates  the                                                               
markets.   He said wild  salmon only  accounts for 15  percent of                                                               
the global  salmon marketplace, though  many seafood  buyers have                                                               
developed an  affinity for  Alaska [wild] salmon.   He  said ASMI                                                               
must  be  strategic with  where  it  markets its  products  given                                                               
Alaska's size relative to the rest of the global market.                                                                        
10:21:51 AM                                                                                                                   
REPRESENTATIVE  VANCE  asked  how  much of  that  15  percent  is                                                               
dominated by Alaska.                                                                                                            
MR.  WOODROW said  it varies  year to  year.   He mentioned  that                                                               
Alaska produces  about 98  percent of  the wild-caught  salmon in                                                               
the U.S.   He  said the majority  of Alaska's  global competition                                                               
comes  from Russia.   Russian  production numbers,  he explained,                                                               
vary  wildly year  to  year, but  in 2018  they  produced over  a                                                               
billion  pounds of  pink salmon.   He  shared the  statistic that                                                               
Russia produced more  pink salmon in summer 2018  than Alaska has                                                               
ever harvested  in a single year  of all its species  [of salmon]                                                               
combined.  He  said Russia's 2018 salmon  haul represented nearly                                                               
50 percent of the global wild market.                                                                                           
10:23:03 AM                                                                                                                   
MR. WOODROW addressed slide 10.   He highlighted efforts to reach                                                               
domestic  consumers through  digital  outreach, media  relations,                                                               
and  live events  held  in New  York  City.   He  pointed to  the                                                               
considerable earned media coverage  that results from hosting the                                                               
New  York events.   He  mentioned  the success  of ASMI's  annual                                                               
culinary  retreat  in  building long-lasting  relationships  with                                                               
chefs  and media  members who  have become  enamored with  Alaska                                                               
Seafood after  visiting Alaska.   He offered the  statistic that,                                                               
in 2018  alone, ASMI's public  relations efforts resulted  in 340                                                               
stories and just under a billion impressions.                                                                                   
MR.  WOODROW   addressed  slide  11   and  listed  some   of  the                                                               
restaurants, retailers,  and organizations  ASMI has  worked with                                                               
to promote Alaska Seafood to consumers.                                                                                         
MR. WOODROW  addressed slide 12  and explained  ASMI's developing                                                               
partnership with  Amazon Prime,  Amazon Fresh, Serious  Eats, and                                                               
Simply  Recipes.    He  explained that  one  common  concern  for                                                               
seafood eaters is  they don't know how to easily  cook fish.  Mr.                                                               
Woodrow explained  how consumers can now  access online shoppable                                                               
recipes  that  will automatically  place  an  order for  all  the                                                               
ingredients they need  into their Amazon Prime box.   He compared                                                               
this process to  similar meal delivery services  like Blue Apron.                                                               
Mr. Woodrow said ASMI is excited  to see where this new trend can                                                               
10:26:18 AM                                                                                                                   
MR. WOODROW  addressed slide  13.  He  highlighted ways  in which                                                               
ASMI works  with the  industry to  ensure quality  throughout the                                                               
supply  chain.   He said  ASMI develops  buyers guides  that help                                                               
processors and  sellers talk about Alaska  Seafood more in-depth.                                                               
He  also   highlighted  research-based  plans  to   increase  the                                                               
industry's value through creative utilization of resources.                                                                     
MR. WOODROW addressed slide 14.   He explained that ASMI operates                                                               
the Alaska Responsible Fisheries  Management (RFM) program, which                                                               
is  a  sustainable   certification  program  benchmarked  against                                                               
Global  Sustainable Seafood  Initiative's (GSSI)  standards.   He                                                               
said  it's  important  to have  a  third-party  certification  to                                                               
satisfy the needs and demands of buyers worldwide.                                                                              
10:28:40 AM                                                                                                                   
MR.  WOODROW addressed  slide 16.   He  called Alaska  Seafood "a                                                               
cornerstone to  Alaska's economy."   He said it  directly employs                                                               
more workers  than any  other private  industry in  Alaska, about                                                               
60,000  workers annually.   He  said  Alaska Seafood  contributes                                                               
approximately  $146 million  annually in  taxes to  state, local,                                                               
and federal government.  He  said Alaska Seafood also contributes                                                               
approximately  $5 billion  in  economic growth  to  the State  of                                                               
Alaska.  Mr.  Woodrow noted that if Alaska were  its own country,                                                               
it would rank eighth globally in wild harvest volume.                                                                           
MR.  WOODROW addressed  slide  17  and listed  the  top ports  in                                                               
Alaska ranked by  value:  Dutch Harbor,  Naknek, Kodiak, Cordova,                                                               
and Sitka.   He  emphasized that  the seafood  industry stretches                                                               
statewide, from Utqiagvik to Dutch Harbor to Ketchikan.                                                                         
MR. WOODROW  addressed slide  18, which  featured two  pie charts                                                               
displaying harvest  volume and ex-vessel value  of Alaska Seafood                                                               
by species.  He compared  the dispersion of high-volume and high-                                                               
value  species   to  a  diversified  financial   portfolio.    He                                                               
explained that this  is beneficial because wild species  can be a                                                               
volatile  resource that  vary year  to year,  but very  rarely is                                                               
there a  down year  for all  species in  one year.   He  said the                                                               
diversity of  seafood species has  led to a consistent  return of                                                               
about $1.9 billion annually.                                                                                                    
MR.  WOODROW  addressed  slide 19,  which  featured  line  graphs                                                               
plotting  year-to-year  trends in  total  harvest  value and  ex-                                                               
vessel value.   He  pointed out that  while total  harvest volume                                                               
has remained consistent  over the past 15  years, ex-vessel value                                                               
has  trended  upward.    Mr.  Woodrow  asserted  that  this  data                                                               
reflects a healthy industry.                                                                                                    
10:33:08 AM                                                                                                                   
MR.  WOODROW  addressed  slide  20,  titled  "Product  Type."  He                                                               
explained that 39  percent of Alaska Seafood  products are headed                                                               
& gutted  (H/G) and  wholefish. He said  these products  are sent                                                               
elsewhere to be processed as they  are not finished products.  He                                                               
highlighted  the  growing  popularity of  fillets  versus  canned                                                               
seafood.    He attributed  these  trends  to changes  in  seafood                                                               
consumer demographics.                                                                                                          
10:34:09 AM                                                                                                                   
CHAIR STUTES  asked whether ASMI  is pursuing any kind  of value-                                                               
added products generated in Alaska.                                                                                             
MR.  WOODROW highlighted  ASMI efforts  working  with the  Kodiak                                                               
Marine Science Center  to produce more value-added  products.  He                                                               
said  ASMI  works  with  the  industry  to  identify  hurdles  to                                                               
creating value.   He identified  the high  cost of energy  as one                                                               
key hurdle.   He  said it  can also be  difficult to  hire enough                                                               
CHAIR STUTES  asked whether there is  a push within the  state to                                                               
educate Alaskans about Alaska Seafood.                                                                                          
MR. WOODROW responded  that it is not a major  priority.  He said                                                               
that  Alaskans  are a  relatively  small  market share  and  many                                                               
Alaskans  catch their  own fish  and therefore  don't buy  Alaska                                                               
Seafood.   He mentioned the Alaska  Marine Conservation Council's                                                               
Catch  49   program  that  creates  direct   sales  from  Alaskan                                                               
commercial fishermen to Alaskan seafood buyers.                                                                                 
10:36:26 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS  asked how Alaska  Seafood compares                                                               
to other producers in adding value to its wild salmon product.                                                                  
MR. WOODROW said he didn't have  numbers for other countries.  He                                                               
said that, other than Russia,  the other main countries producing                                                               
wild salmon are  Canada and Japan.  He said  he would investigate                                                               
what  value-added   products  they  and  other   countries  might                                                               
produce.   He pointed  to smoked salmon  as a  significant value-                                                               
added product that is dominated by farmed salmon.                                                                               
10:37:56 AM                                                                                                                   
REPRESENTATIVE TARR,  referencing a  graph on slide  19, observed                                                               
in the  2019 timeframe  a decline  in both  total volume  and ex-                                                               
vessel  value.   She inquired  as to  the cause  of that  unusual                                                               
MR. WOODROW said he did not know  off hand and would have to look                                                               
it up.                                                                                                                          
10:38:48 AM                                                                                                                   
REPRESENTATIVE  KOPP asked  whether  Russia's  major pink  salmon                                                               
haul is related to hatcheries.                                                                                                  
MR. WOODROW confirmed  that Russia has a  large hatchery program.                                                               
He noted that pink salmon live  only two years, so even- and odd-                                                               
year returns can vary.                                                                                                          
REPRESENTATIVE KOPP  referenced the fishmeal plant  in Naknek and                                                               
asked  if  there are  any  other  plants  dealing with  fish  by-                                                               
MR. WOODROW responded that there  are plants across the state and                                                               
nearly every plant is looking into  expanding what it can do with                                                               
fish by-products.   He identified the Trident plant  in Kodiak as                                                               
an example, explaining  that it fillets its  pollock products and                                                               
turns the rest of the fish into surimi.                                                                                         
10:40:59 AM                                                                                                                   
CHAIR  STUTES mentioned  a fishmeal  plant in  her district  that                                                               
also produces fish oil.                                                                                                         
REPRESENTATIVE  KOPP  thanked  Mr.  Woodrow for  ASMI's  work  in                                                               
helping improve fish handling through  the industry.  He detailed                                                               
damaging   industry  practices   that,   through  awareness   and                                                               
education, have been curtailed.                                                                                                 
MR.  WOODROW credited  one of  ASMI's partners,  the Bristol  Bay                                                               
Regional  Development  Association,   for  successes  in  quality                                                               
10:42:52 AM                                                                                                                   
MR. WOODROW moved to slide 21, titled "Factors Impacting Value."                                                                
He identified large harvests,  surplus inventory, and competition                                                               
with other  species as  supply factors.   He  identified consumer                                                               
preferences, new markets, and new products as demand factors.                                                                   
MR.  WOODROW moved  to slide  22, titled  "Currency Rates  Impact                                                               
Value."  When U.S. currency  value decreases, the value of Alaska                                                               
Seafood products increase.                                                                                                      
MR. WOODROW moved  to slide 23, titled "Global  Competition."  He                                                               
identified  the  primary  competition   or  substitute  for  each                                                               
species of  seafood produced  in Alaska.   He said,  for example,                                                               
that Alaska  pollock most directly competes  with Russia pollock,                                                               
though  he  believes  Alaska  pollock to  be  of  higher  quality                                                               
because it  is not twice frozen.   Mr. Woodrow praised  black cod                                                               
as a great product but noted that  it competes with sea bass.  He                                                               
said  that  consumers  do not  necessarily  know  the  difference                                                               
between different  seafood products.   ASMI exists, he  said, for                                                               
the purpose of educating them.                                                                                                  
10:45:32 AM                                                                                                                   
MR. WOODROW moved to slide 24,  titled "Export Markets."  He said                                                               
60   percent   of   Alaska's    seafood   harvest   is   exported                                                               
internationally  accounting  for  60 percent  of  the  industry's                                                               
MR. WOODROW referenced  a world map on slide 24.   He highlighted                                                               
countries  where ASMI  has active  marketing programs.   He  also                                                               
noted  some  markets  in  which  ASMI does  not  have  an  active                                                               
presence.   "Our funds  are limited,"  he said,  "so we  can't be                                                               
everywhere ...; we must be strategic."                                                                                          
MR. WOODROW  acknowledged China's  position as "a  very important                                                               
market to Alaska  Seafood."  He said most products  sent to China                                                               
are reprocessed and exported to other markets.                                                                                  
MR. WOODROW drew  attention to ASMI efforts  to expand operations                                                               
in  Brazil, which  he called  a "growing  market."   He mentioned                                                               
that  Brazil  has  the world's  largest  population  of  Japanese                                                               
expatriates.    "They obviously  are  seafood  eaters," he  said,                                                               
explaining one reason ASMI sought to pursue business there.                                                                     
10:47:00 AM                                                                                                                   
MR. WOODROW moved  to slide 25, titled "US -  China Tariffs."  He                                                               
explained that  a 25 percent  tariff was implemented by  China in                                                               
July 2016 that  applies to Alaska Seafood exports  to the Chinese                                                               
domestic market.   He clarified  that this tariff does  not apply                                                               
to products  sent to China  to be  reprocessed.  He  detailed the                                                               
challenges  associated  with  the   tariff  including  the  added                                                               
difficulty of reaching the  world's fastest-growing middle class.                                                               
He shared  statistics on the impact  of the China tariffs  to the                                                               
Alaskan  seafood  industry including  a  21  percent decrease  in                                                               
exports to China compared to one year ago.                                                                                      
MR.  WOODROW  addressed  the retaliatory  tariff  implemented  in                                                               
September 2018 by the United States.   He said there is currently                                                               
a 10  percent tariff  on Alaska Seafood  products coming  back to                                                               
the  United  States after  having  been  sent  to China  for  re-                                                               
processing.   He  said  these tariffs  exclude  salmon, cod,  and                                                               
Alaska pollock  products, but  stressed how  much of  a challenge                                                               
these tariffs are  on the Alaska Seafood industry.   "We have put                                                               
a  lot of  effort  into  growing the  Chinese  market," said  Mr.                                                               
Woodrow.   He  said the  industry  cannot just  pivot toward  new                                                               
markets overnight.                                                                                                              
10:50:47 AM                                                                                                                   
REPRESENTATIVE   TARR  requested   clarification  on   the  exact                                                               
percentages of tariffs and the timeline of implementation.                                                                      
MR.  WOODROW clarified  that  there  is a  25  percent tariff  on                                                               
Alaska Seafood  products that enter the  Chinese domestic markets                                                               
and a  10 percent  tax on Alaska  Seafood products  imported from                                                               
China after  reprocessing.  He  explained that these  tariffs are                                                               
on top of existing tariffs.   He noted that the 10 percent tariff                                                               
on imports  was set to increase  to 25 percent on  March 1, 2019,                                                               
but that date has been pushed back.                                                                                             
10:52:06 AM                                                                                                                   
REPRESENTATIVE  VANCE  asked  whether  there is  a  concern  that                                                               
Russia will fill the gaps left by Alaska in Chinese markets.                                                                    
MR. WOODROW said China does not  have a free trade agreement with                                                               
Russia.  He  said it is unknown how much  seafood is shipped from                                                               
Russia to China though  he suspected it is a lot.   He added that                                                               
Russia  is  known  to  ship   sizeable  amounts  of  seafood  for                                                               
processing in North Korea where it is then moved to China.                                                                      
10:52:54 AM                                                                                                                   
CHAIR  STUTES requested  Mr. Woodrow  to speak  to the  [National                                                               
School Lunch Program] in relation to fish.                                                                                      
MR.  WOODROW said  that ASMI  worked with  Alaska's congressional                                                               
delegation in  Washington, D.C.,  to ensure the  [National School                                                               
Lunch  Program] buys  American  seafood  products and  especially                                                               
Alaska  Seafood products.   He  said the  program had  previously                                                               
been purchasing Russian pollock for  school lunches.  He said the                                                               
change  has been  a major  lift for  the Alaska  pollock industry                                                               
resulting in $30 million in sales.                                                                                              
10:54:20 AM                                                                                                                   
REPRESENTATIVE  TARR asked  whether there  were other  efforts to                                                               
allow or  expand the purchase  of Alaska Seafood by  federal food                                                               
programs such  as the  Supplemental Nutrition  Assistance Program                                                               
(SNAP) and the Special Supplemental  Nutrition Program for Women,                                                               
Infants, and Children (WIC).                                                                                                    
MR. WOODROW said  he would have to research  that information and                                                               
get back  to the committee.   He said he believed  Alaska Seafood                                                               
was available through  one or both of SNAP and  WIC.  Mr. Woodrow                                                               
also highlighted ASMI's work with  SeaShare, an organization that                                                               
donates seafood to food banks.                                                                                                  
10:55:55 AM                                                                                                                   
REPRESENTATIVE PRUITT noted that ASMI  has been running a deficit                                                               
for several years.  He asked  what ASMI's plans were to ensure it                                                               
does not run out of money in a few years.                                                                                       
MR. WOODROW  said ASMI is  trying to reduce  its spend plan.   He                                                               
said ASMI  should be operating at  $13 to 13.5 million  per year,                                                               
but they are spending more than that.   He said the ASMI board of                                                               
directors is working  with staff to identify  new funding sources                                                               
through grants or  additional federal monies.   He reiterated the                                                               
importance  of sustainable  budgeting but  expressed apprehension                                                               
to commit to cuts.   "In marketing you get what  you pay for," he                                                               
REPRESENTATIVE PRUITT  asked at what  point ASMI would  decide to                                                               
take preventative measures to ensure  it does not hit a financial                                                               
MR. WOODROW said that ASMI's  internal budgeting projections have                                                               
it drawing down its spending  in the fiscal years following 2020,                                                               
assuming no new funding sources are identified.                                                                                 
10:59:12 AM                                                                                                                   
REPRESENTATIVE  EDGMON asked  what  impacts could  result from  a                                                               
reduced ASMI spend plan.                                                                                                        
MR. WOODROW said  that ASMI's spend plan  was considerably higher                                                               
in previous  fiscal years when  it received general funds.   When                                                               
state funding  was reduced, the  ASMI board and staff  decided to                                                               
cut the  advertising program  for the domestic  market.   He said                                                               
that  Alaska  Seafood currently  enjoys  a  strong place  in  the                                                               
market, but that  will be impacted in the future  if more funding                                                               
cannot be identified.                                                                                                           
MR. WOODROW offered  Norway as a comparable  competitor to Alaska                                                               
Seafood.   He said Norway's  seafood marketing spend plan  is $50                                                               
million compared to ASMI's $16  million.  He reiterated that "you                                                               
get what you pay for.                                                                                                           
11:01:51 AM                                                                                                                   
REPRESENTATIVE TARR asked  who has the authority  to increase the                                                               
industry's  0.5 percent  tax to  ASMI.  She asked  if that  power                                                               
belongs to  ASMI's board or if  there is a process  for including                                                               
all stakeholders.                                                                                                               
MR. WOODROW cited  current statute and explained  that this power                                                               
lies with  the stakeholders who  control 51 percent of  the value                                                               
in the industry.   He clarified that this  is seafood processors,                                                               
not seafood  harvesters.   He said  the ASMI  tax can  be changed                                                               
through a vote by these stakeholders.                                                                                           
11:02:54 AM                                                                                                                   
CHAIR STUTES thanked Mr. Woodrow for his presentation.                                                                          
11:03:26 AM                                                                                                                   
There being no  further business before the  committee, the House                                                               
Special  Committee on  Fisheries meeting  was adjourned  at 11:03                                                               

Document Name Date/Time Subjects
ASMI House Fisheries- 2-26-19.pdf HFSH 2/26/2019 10:00:00 AM
ASMI Presentation 02/26