Legislature(1993 - 1994)
04/14/1993 08:30 AM House FSH
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON FISHERIES
April 14, 1993
8:30 a.m.
MEMBERS PRESENT
Representative Carl E. Moses, Chairman
Representative Harley Olberg, Vice-Chairman
Representative Gail Phillips
Representative Cliff Davidson
MEMBERS ABSENT
Representative Irene Nicholia
COMMITTEE CALENDAR
Fisheries Development Foundation Discussion
WITNESS REGISTER
Paul Fuhs, Commissioner
Alaska Department of Commerce and Economic Development
P.O. Box 110800
Juneau, Alaska 99811-0800
Phone: 465-2500
Position Statement: Supports endowment
Carl L.Rosier, Commissioner
Alaska Department of Fish and Game
P.O. Box 25526
Juneau, Alaska 99802-5526
Phone: 465-4100
Position Statement: Supports endowment
Chris Mitchell, Executive Director
Alaska Fisheries Development Foundation
508 W. 2nd, Suite 212
Anchorage, Alaska 99501
Phone: 276-7315
Position Statement: Supports endowment
John French, Director
Fisheries Industrial Technology Center
Kodiak, Alaska 99615
Phone: 486-1500
Position Statement: Supports endowment
Kim Elton, Executive Director
Alaska Seafood Marketing Institute
Alaska Department of Commerce and Economic Development
1111 W. 8th Street, Suite 100
Juneau, Alaska 99801-1895
Phone: 586-2902
Position Statement Supports endowment
Jerry McCune, President
United Fishermen of Alaska
211 Fourth Street, Suite 112
Juneau, Alaska 99801
Phone: 586-2820
Position Statement: Supports endowment
Bart Watson, Executive Director
Armstrong/Keta Corporation
P.O. Box 21990
Juneau, Alaska 99802
Phone: 586-3443
Position Statement: Supports endowment
Dean Paddock, Executive Director
Bristol Bay Driftnetters Association
P.O. Box 21951
Juneau, Alaska 99802
Phone: 463-4975
Position Statement: Supports endowment
ACTION NARRATIVE
Tape 93-22,Side A
Number 000
CHAIRMAN CARL MOSES called the meeting to order at 8:36
a.m., and said the committee would be hearing from a group
of people who had been working together on a project to fund
salmon development in Alaska.
PAUL FUHS, COMMISSIONER, ALASKA DEPARTMENT OF COMMERCE AND
ECONOMIC DEVELOPMENT (DCED), talked of how everyone has seen
the reduction in salmon prices and the problems and impacts
it has had on fishermen and the local communities that
depend on salmon revenue. He said the state also has a
significant amount invested ($130 million) in fishing boats,
permits and hatcheries. The DCED and the Alaska Department
of Fish and Game were concerned about the situation and came
up with a plan that they took to Governor Hickel which he
"put his blessing on."
MR. FUHS explained that marketing assessment is a critical
piece of this plan. It would assure more money would go
into domestic marketing. He stated the way Alaska is
trying to sell its fish is very outdated and the seafood
industry has not kept up with other industries. He felt the
Alaska Seafood Product Development Fund is probably the most
important part. The idea behind this is to set aside a
suggested amount of $50 million dollars for ten years, from
which the interest would be used to develop new products and
the technology necessary to produce those products. He said
the source of funds has not yet been identified
MR. FUHS further explained that this would generate about $4
million dollars a year and it would be the responsibility of
the departments working with industry to come to the
legislature with a budget each year explaining how this
money would be spent. It would be totally within the
control of the legislature to appropriate, not setting up a
constitutional endowment. If at any time the legislature
feels it is not worth doing, the $50 million can be put back
into the general fund, or at the end of ten years it would
automatically go back into the general fund. He noted that
this process really worked with surimi using federal funds
that are not available now.
MR. FUHS talked about the last aspect of the plan which is
tax credits to promote value added salmon production in
Alaska. For a few years, Alaska had a 50% tax credit to
anyone who invested onshore in Alaska. It was very
successful and led to hundreds of millions of dollars being
invested in the shore site industries. There was a proposal
to extend that, but the DCED testified against that because
more primary production is not what is needed. What is
needed is incentive for value added processing for new
product forms and improvements to the quality of the
products, he declared.
Number 118
CARL ROSIER, COMMISSIONER, ALASKA DEPARTMENT OF FISH AND
GAME, testified that Alaska has not yet peaked as far as
salmon production goes. He felt there is a lot of concern
amongst the industry, and fishermen are extremely concerned
about fish prices this year. There is also concern about
people getting out of the salmon business, because of the
low economic return. He stated the industry needs our help
at the present time, and this foundation is the next logical
step in support of the industry.
Number 188
CHRIS MITCHELL, EXECUTIVE DIRECTOR, ALASKA FISHERIES
DEVELOPMENT FOUNDATION (AFDF), explained they are an
industry membership organization whose project, programs and
activities are to try to collectively move the industry
forward and solve problems that are generic to the industry,
or too big or expensive for a sector or component of the
industry to take on by itself. He represents a consortium
of people in the fishing industry who feel that now is the
time to collectively come together to make the industry
better and bring it out of the crisis that it is in.
MR. MITCHELL said the legislature's joint economic task
force's mini summit was the stimulus behind the endowment
asking what the legislature can do to help industry
problems. He stated that the fishing industry is a very
large, important industry that has invested heavily in
itself and is a big contributor to the state's economy.
Number 296
MR. MITCHELL spoke of how low fish prices are and how a near
record harvest is coming up this year, with declining
markets in Japan and a decline in North America for canned
consumption. He felt all of these signs indicate the
industry is in distress. Mr. Mitchell said the endowment
can be the unifying factor to bring all of the pieces
together. Alaska must look at the problem in its entirety
and interact and attack in a comprehensive way, from ocean
to market. He said only in that way can the business
effectively move forward and ahead. The concept behind this
is where the legislature, through the creation of the
endowment would help the industry help itself. Mr. Mitchell
felt only the industry can make those changes.
Number 377
CHAIRMAN MOSES said he had run into sentiment that there is
considerable duplication between the Alaska Seafood
Marketing Institute (ASMI), the Fisheries Industrial
Technology Center (FTIC), and the DCED. He asked how to get
everyone under one roof, or going in the same direction.
Number 386
MR. MITCHELL said there is a bill being drafted which
outlines how the concept might work. A board could be
developed to decide what projects are to be undertaken and
provide the framework for each of the projects. The board
would be industry based and have each of the components of
industry, from fishermen to processors, to offshore
processors and the DCED, all working together.
Number 432
CHAIRMAN MOSES said legislators and fishermen who are going
to contribute to the project are going to want to know that
they have an entity that is going in the right direction and
under one roof.
Number 435
MR. FUHS responded that one month ago a meeting was called
in Anchorage, of all of the groups who, for the first time,
sat down together and came up with this proposal. He said
the groups are all speaking with one voice now, and there is
no division among them.
Number 445
REPRESENTATIVE CLIFF DAVIDSON asked who the other members of
the board would be.
Number 450
MR. MITCHELL answered that honestly his wish list would be
an industry member appointed by ASMI's board of directors,
one appointed by the FITC's board of directors, one
appointed by the AFDF, one appointed by Pacific Seafood
Processors Association's board of directors, one appointed
by United Fishermen of Alaska's board of directors, and one
appointed by the DCED; the executive director of ASMI, the
executive director of AFDF (Mitchell) and a marketing
industry member elected by the preceding nine members. That
is the way Mr. Mitchell visualizes it: To make it industry
designed, industry directed and industry managed.
MR. MITCHELL felt with that kind of makeup the board would
undertake programs that the industry feels are real and
needed. He stated he had recently spent some time in
Seattle speaking with some of the major Pacific Seafood
Processors Association members to get their support for this
kind of concept. They ultimately said they could support
it.
Number 490
REPRESENTATIVE DAVIDSON told Mr. Mitchell he felt the
committee members had heard the negatives and would like to
hear some ideas or positive project specifics coming as a
result of this coordinated effort. He wanted to know who
would be the entity or individual to place the pieces of the
puzzle to get the big picture.
Number 502
MR. MITCHELL said the idea behind this was an endowment for
ten years that would sunset after that point in time. The
income from it would generate $3-4 million annually. He
said the stimulus behind making it happen right now is the
salmon situation. He felt there are two distinct salmon
industries in the state: Pink salmon, a very large fishery
with very low values which has some very interesting food
market opportunities in food categories rather than fish
categories; and sockeye, where there is a relatively
directed market into Japan where stress is coming and doors
are closing and prices are falling.
MR. MITCHELL envisioned the first two projects would target
those two immediate needs. What they will do as a
consortium, he said, is put together an outline on both
projects the way they see a development project taking
place.
Number 530
CHAIRMAN MOSES said it cannot be an industry driven program.
He envisioned an all encompassing entity to try and solve a
problem.
Number 535
JOHN FRENCH, DIRECTOR, FISHERY INDUSTRIAL TECHNOLOGY CENTER
(FITC), passed out an informational packet entitled "Turning
Research into Reality". (A copy of this packet may be found
in the House Special Committee on Fisheries' Room, Capitol
Room 204, and after the adjournment of the second session of
the 18th Alaska State Legislature, in the Legislative
Reference Library.) He said they are talking about being
able to effectively introduce new research and development
ideas into the industry.
MR. FRENCH agreed with the previous speakers that it is very
critical that the industry be a significant part of that
process so they can utilize the results. If the end results
are not of value to the industry operations, he felt it is
not worth spending state money to do it. He spoke in favor
of the tax credits on low interest loans as they could be
used to increase the industry's cash contribution towards
projects that require matching funds for federal monies.
Number 588
KIM ELTON, EXECUTIVE DIRECTOR, ALASKA SEAFOOD MARKETING
INSTITUTE (ASMI), said he managed a marketing arm of state
government and emphasized that an important component of
marketing is being ignored. He felt this endowment would
make his job much easier. Generic promotions such as ASMI
does are much easier when you have diversified products. He
said there had been a lot of cooperative work done by groups
that in the past had been divided in coming up with a piece
of legislation that establishes a harvester assessment for
marketing programs that ASMI does.
Number 615
MR. ELTON felt they had come up with a piece of legislation
that marketers, processors and many major fishing groups
could buy off on. He was encouraged by the fact that these
different groups have been able to work together to do this.
Number 628
JERRY MCCUNE, UNITED FISHERMEN OF ALASKA, stated that Alaska
used to have a world share market and could force prices on
the world market, but that is not so anymore.
TAPE 93-22, SIDE B
Number 000
MR. MCCUNE suggested getting into a domestic market. He
felt if all the groups can work together then it is a good
proposal.
Number 074
BART WATSON, EXECUTIVE DIRECTOR OF ARMSTRONG/KETA, a salmon
hatchery in the Baranof Islands, stated that they only
employ 35 people, but bring hundreds of thousands of dollars
of value into the fishing industry by mainly seining and
trolling. He said facing the challenges of the current low
prices is not the problem of too many fish in the world, but
that marketing has not caught up with the increased supply.
He was really encouraged to see this consortium come
together, and noted that the hatchery had donated several
thousand pounds of pink salmon this year to the AFDF for
processing research.
MR. WATSON felt this consortium really had the ability to
create new markets for salmon in Alaska if it were funded
properly.
Number 163
DEAN PADDOCK, SEVEN YEAR MEMBER, ALASKA COMMERCIAL FISHING
AND AGRICULTURE BANK (CFAB), stated that the CFAB has been
very concerned with the changes in the industry. Concerned
enough that in 1992 they devoted approximately $100,000 to a
program to educate fishermen that their world was indeed
changing. Fishermen feel they are at a crisis point as
their collateral is at stake. The CFAB is a longtime
supporter of the AFDF and has granted money to the AFDF for
some very worthwhile programs with some very worthwhile
accomplishments. He thought this plan was brilliant and
would urge the committee to support this plan.
MR. PADDOCK said this approach offers hope because it
proposes to attack the problem of the changes that are
facing those involved with this industry.
Number 219
CHAIRMAN MOSES expressed his feeling that one big problem
was in the past they were told by the canned salmon industry
that salmon could not be frozen, which turned out not to be
the case. They just did not want to change with the times
and he felt there was another stalemate in the industry in
not wanting to change with the times.
Number 243
MR. ELTON agreed and went on to discuss some changes that
have been made. He stated that there is some resistance to
product form change, but that is because of investments the
industry has made. He was, however, very optimistic.
CHAIRMAN MOSES said one of the big problems is concentrating
too much on catching or buying the fish and not determining
where or how the market is going to be.
Number 324
MR. FRENCH talked about how originally only a small group
believed in the surimi project. The AFDF board went and
found some federal money and it proved to be very
successful, and as the project went forward it gained more
industry support. The industry dollars were far greater
than the federal dollars, but the federal dollars helped to
ease the risk. He said the monies in this endowment could
be used in the same way. They could provide the incentive
for industry to take some of those risks.
MR. FRENCH said the industry realizes it has problems. He
didn't think industry appreciates what the real solutions
probably are, but solutions are being sought. All of the
ideas for the projects will not necessarily come from
industry, but certainly industry needs to be an active
partner. It is not putting a lot of state money forward,
except for delaying the monetary return from the money in
the endowment.
Number 365
MR. PADDOCK shared with everyone his pleasure in hearing
that Governor Hickel approved of the idea of approaching the
problem this way.
Number 394
CHAIRMAN MOSES felt the governor was in favor in principle
and everyone was in agreement. Everyone just needs to
figure out how to do it, he added.
Number 402
MR. MCCUNE mentioned legislation that is being drafted and
suggested that the committee request it from drafting and
take a look at it.
Number 426
ADJOURNMENT
CHAIRMAN MOSES adjourned the meeting at 9:55 a.m.
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