02/08/1999 05:06 PM House FSH

        HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                                    
                  February 8, 1999                                                                                              
                     5:06 p.m.                                                                                                  
                                                                                                                                
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
PRESENTATION:  OVERVIEW OF ALASKA SEAFOOD MARKETING INSTITUTE AND                                                               
               SEAFOOD MARKETS                                                                                                  
                                                                                                                                
                                                                                                                                
CHAIRMAN BILL HUDSON called the House Special Committee on                                                                      
Fisheries meeting to order at 5:06 p.m.  Members present at the                                                                 
call to order were Representatives Hudson, Dyson, Harris, Morgan,                                                               
Kapsner and Smalley.  Also present was Representative Austerman.                                                                
                                                                                                                                
SUMMARY OF INFORMATION                                                                                                          
                                                                                                                                
BARBARA BELKNAP, Executive Director, Alaska Seafood Marketing                                                                   
Institute (ASMI), presented a brief overview of ASMI and its                                                                    
programs.  She explained that ASMI is fully funded by the industry                                                              
and receives no general fund dollars.  ASMI works with food service                                                             
and retail outlets to promote consumption of all varieties of                                                                   
Alaskan seafood.  They attempt to build relationships with the                                                                  
decision-makers; for example, ASMI sponsors a three-day seminar for                                                             
executive chefs at the Culinary Institute of America, which has                                                                 
garnered thousands of promotions throughout the country.                                                                        
                                                                                                                                
MS. BELKNAP, in response to questions from committee members                                                                    
regarding farmed salmon, indicated that farmed salmon outsells wild                                                             
product in the United States.  Alaska finds itself in the position                                                              
of developing a market in the U.S., since most of our product has                                                               
gone overseas.  She noted that some places like Europe and Japan                                                                
are becoming more concerned about the "artificial" aspects of                                                                   
farmed salmon.  There is an increasing trend toward natural                                                                     
products.  ASMI is about to start a major campaign to show Alaskan                                                              
salmon is not endangered.  She noted that there are two                                                                         
misconceptions about salmon:  one is that all salmon is farmed, and                                                             
the other is that there are no wild salmon left.                                                                                
                                                                                                                                
MS. BELKNAP addressed questions from the committee regarding ASMI's                                                             
financial resources.  She noted that the biggest challenge is                                                                   
getting consumers to choose seafood, and then, by extension,                                                                    
Alaskan seafood.  The United States is primarily a nation of beef                                                               
and chicken eaters.  ASMI recently received a $5 million federal                                                                
grant which has helped bolster their budget.  It is still much                                                                  
smaller than our competitors; for example, Norway spends $20                                                                    
million per year on their marketing effort.  The State of Alaska                                                                
withdrew general funds when the 1% assessment went into effect, but                                                             
continued providing $500,000 in matching funds for a federal                                                                    
program until three years ago.                                                                                                  
                                                                                                                                
SANDRO LANE, Owner, Taku Fisheries and Taku Smokeries, and ERIC                                                                 
NORMAN, General Manager, Taku Fisheries, operate a small                                                                        
value-added company called Taku Smokeries and a medium-sized                                                                    
processing facility, Taku Fisheries.  Mr. Lane stated that he did                                                               
not see value-added as being a volume business.  He noted that                                                                  
there is a price differential between wild and farmed fish.  He                                                                 
felt it is even more difficult to compete against that price                                                                    
differential when you "add value" because of additional labor                                                                   
costs.                                                                                                                          
                                                                                                                                
MR. LANE stated, in response to questions regarding the oversupply                                                              
of farmed fish and the decline in the Asian markets, that the                                                                   
greater problem has been an oversupply of farmed fish.  The Asian                                                               
economy has declined, but it seems to have bottomed out.  The                                                                   
oversupply of farmed fish has required him to reorganize his                                                                    
business.  Fifteen years ago, Taku Smokeries did the majority of                                                                
its business on the wholesale market and only a small portion                                                                   
through retail.  As it became obvious that they could not compete                                                               
with the increased production and lower costs of farmed fish, they                                                              
now do almost all of their business through their local retail                                                                  
store and mail order.  Mr. Lane also stated that he had filled out                                                              
several questionnaires for the Federal Trade Commission regarding                                                               
unfair trade practices by Chilean farmed salmon producers, but he                                                               
has not heard anything from them.                                                                                               
                                                                                                                                
MR. LANE was asked about new product development, and he noted that                                                             
he was able to take advantage of a federal program for small                                                                    
businesses; however, he did not believe the State of Alaska offered                                                             
a comparable program.  He also stated that there is a great deal of                                                             
capital and risk involved in developing a new product, which makes                                                              
it even more difficult for small companies to get the necessary                                                                 
financial backing.                                                                                                              
                                                                                                                                
MR. LANE discussed quality issues and the need to improve                                                                       
management of the resource to maximize quality and value.  He                                                                   
stated that he had discussions with the Alaska Department of Fish                                                               
and Game (ADF&G) regarding managing for quality.  He felt that                                                                  
ADF&G would continue doing things the same way because it is the                                                                
way it has always been done.                                                                                                    
                                                                                                                                
REPRESENTATIVE MORGAN asked a question regarding the effects of a                                                               
federal takeover of subsistence fisheries on commercial fisheries.                                                              
Neither witness felt qualified to answer, but Mr. Norman did not                                                                
think there would be much of an impact.                                                                                         
                                                                                                                                
COMMITTEE ACTION                                                                                                                
                                                                                                                                
The committee took no action.                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting was adjourned at 6:06 p.m.                                                                                          
                                                                                                                                
NOTE:                                                                                                                           
                                                                                                                                
Due to a mechanical malfunction, no tape is available for this                                                                  
meeting.