Legislature(1997 - 1998)
03/10/1997 03:21 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 10, 1997
3:21 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative John Cowdery, Vice Chairman
Representative Bill Hudson
Representative Jerry Sanders
Representative Joe Ryan
Representative Tom Brice
Representative Gene Kubina
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
* HOUSE BILL NO. 167
"An Act repealing certain requirements relating to posting and
reporting of prices paid for salmon."
- MOVED HB 167 OUT OF COMMITTEE
HOUSE BILL NO. 73
"An Act extending the termination dates of the salmon marketing
programs of the Alaska Seafood Marketing Institute and the salmon
marketing assessment; and providing for an effective date."
- MOVED HB 73 OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 167
SHORT TITLE: DISCLOSURE OF SALMON PRICES
SPONSOR(S): REPRESENTATIVE(S) IVAN
JRN-DATE JRN-PG ACTION
03/05/97 542 (H) READ THE FIRST TIME - REFERRAL(S)
03/05/97 543 (H) LABOR & COMMERCE
03/10/97 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 73
SHORT TITLE: SALMON MARKETING ASSESSMENT & ASMI
SPONSOR(S): REPRESENTATIVE(S) HUDSON, Grussendorf, Elton
JRN-DATE JRN-PG ACTION
01/15/97 72 (H) READ THE FIRST TIME - REFERRAL(S)
01/15/97 72 (H) FSH, FINANCE
01/16/97 92 (H) L&C REFERRAL ADDED
01/21/97 113 (H) COSPONSOR(S): ELTON
02/10/97 (H) FSH AT 5:00 PM CAPITOL 124
02/10/97 (H) MINUTE(FSH)
02/17/97 (H) FSH AT 5:00 PM CAPITOL 124
02/17/97 (H) MINUTE(FSH)
02/19/97 (H) FSH AT 5:00 PM CAPITOL 124
02/19/97 (H) MINUTE(FSH)
02/19/97 (H) MINUTE(FSH)
02/21/97 422 (H) FSH RPT 3DP 1NR
02/21/97 423 (H) DP: AUSTERMAN, KUBINA, HODGINS
02/21/97 423 (H) NR: IVAN
02/21/97 423 (H) 2 FISCAL NOTES (REV, DCED)
03/10/97 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE IVAN IVAN
Alaska State Legislature
Capitol Building, Room 418
Juneau, Alaska 99801
Telephone: (907) 465-3882
POSITION STATEMENT: Sponsor of HB 167.
BRUCE SCHACTLER
Kodiak Seiners Association
Box 2254
Kodiak, Alaska 99615
Telephone: (907) 486-4686
POSITION STATEMENT: Testified in support of HB 167 and HB 73.
JERRY MCCUNE
United Fishermen of Alaska
211 Fourth Street, Suite 112
Juneau, Alaska 99801
Telephone: (907) 586-2820
POSITION STATEMENT: Testified in support of HB 167.
DEAN PADDOCK, Executive Director
Bristol Bay Driftnetters Association
P.O. Box 21951
Juneau, Alaska 99802
Telephone: (907) 463-4970
POSITION STATEMENT: Testified in support of HB 167 and HB 73.
RICK LAUBER, Lobbyist
Pacific Seafood Processors Association
321 Highland Drive
Juneau, Alaska 99801
Telephone: (907) 586-6366
POSITION STATEMENT: Testified in support of HB 167.
KAY ANDREWS, Gillnetter Deck Hand
P.O. Box 7211
Ketchikan, Alaska 99901
Telephone: (907) 225-2463
POSITION STATEMENT: Testified in support of HB 167 and HB 73.
TOM WRIGHT, Legislative Assistant
to Representative Ivan Ivan
Capitol Building Room 418
Juneau, Alaska 99801
Telephone: (907) 465-3882
POSITION STATEMENT: Answered questions on HB 167.
RODGER PAINTER, Member
Board of Directors
Alaska Seafood Marketing Institute
P.O. Box 20704
Juneau, Alaska 99802
Telephone: (907) 463-3600
POSITION STATEMENT: Testified in support of HB 73.
ART SCHEUNEMANN, Executive Director
Alaska Seafood Marketing Institute
1111 West Eighth, Room 100
Juneau, Alaska 99801
Telephone: (907) 465-5560
POSITION STATEMENT: Testified in support of HB 73.
NARRATIVE
TAPE 97-19, SIDE A
Number 001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee to order at 3:21 p.m. Members present at the
call to order were Representatives Rokeberg, Brice, Sanders, Hudson
and Cowdery. Representative Kubina arrived at 3:30 p.m. and
Representative Ryan arrived at 3:50 p.m.
HB 167 - DISCLOSURE OF SALMON PRICES
Number 048
CHAIRMAN ROKEBERG announced the first order of business would be
HB 167, "An Act repealing certain requirements relating to posting
and reporting of prices paid for salmon."
Number 094
REPRESENTATIVE IVAN IVAN, sponsor of HB 167, read his sponsor
statement into the record:
"House Bill 167 repeals two provisions of Alaska statute that
mandate fish tickets for salmon reflect the current salmon price
and that a processor will post the current salmon price at each
location where salmon is purchased.
"With salmon prices changing throughout a fishing season, the
posted price on a salmon ticket does not necessarily reflect the
final price. This leaves the possibility that a dishonest buyer
could claim a preliminary price as a `final' price because once the
fish ticket is signed by the fisherman, it conceivably becomes a
binding contract.
"Processors usually do not know the final price before or during
the season. The current law is unenforceable and impractical. For
example, some processors, before the start of the fishing season,
are posting a 5 cent per pound price since they do not know what
the wholesale price will be. Posting prices before the start of
the season puts both the harvesters and the processors in a non-
competitive situation."
REPRESENTATIVE IVAN explained that in reviewing the legislation
that was previously passed, the intent was to give both the
processors and the fishermen an opportunity to come forth with a
price that the fishermen count on throughout the season, with the
intent of trying to get the best possible price for the fish.
Number 259
BRUCE SCHACTLER, Kodiak Seiners Association, testified via
teleconference from Kodiak. He said he is happy to see HB 167
introduced. Mr. Schactler said he thought the law was a mistake
when it was passed, even though the intentions were good. Since
then, it has actually exaggerated the problem that it was intended
to be a cure. He said the fish prices have stayed artificially low
because of the law. One of the big problems is with the
wholesalers. For example, the Japanese will look at the price on
paper, which is artificially low, to make sure they don't get
burned. The processors don't want to have too high of a price to
begin with because they don't know what the price will actually be.
The wholesalers look at the artificially low price and compute
their wholesale offer using that as a base price. The law has
helped the wholesalers to the fishermen's disadvantage. The price
should be proprietary. Mr. Schactler said he supports HB 167.
CHAIRMAN ROKEBERG asked Mr. Schactler to forward the association's
written position to the committee. He then asked Mr. Schactler to
give his testimony on HB 73.
HB 73 - SALMON MARKETING ASSESSMENT & ASMI
CHAIRMAN ROKEBERG noted due to time constraints, Mr. Schactler
would also give testimony on HB 73, "An Act extending the
termination dates of the salmon marketing programs of the Alaska
Seafood Marketing Institute and the salmon marketing assessment;
and providing for an effective date."
BRUCE SCHACTLER, Kodiak Seiners Association, testified via
teleconference from Kodiak. He said the Alaska Seafood Marketing
Institute (ASMI) is very important. If you don't have marketing,
you don't have anything. The world market, as it currently is,
makes ASMI all that much more important. Mr. Schactler said his
association supports the extension of the 1 percent marketing tax
and urged the committee members to move HB 73 forward.
CHAIRMAN ROKEBERG asked Mr. Schactler to forward the association's
written position to the committee. He indicated the committee
would go back to HB 167.
HB 167 - DISCLOSURE OF SALMON PRICES
Number 678
CHAIRMAN ROKEBERG announced the committee would continue to take
testimony on HB 167, "An Act repealing certain requirements
relating to posting and reporting of prices paid for salmon."
JERRY MCCUNE, United Fishermen of Alaska, came before the committee
to testify on HB 167. He said when the law was passed, people
behind the bill thought they were going to force the processors
into a corner to give a real price. A lot of the time the
processors in different areas don't know the price as the
wholesalers aren't giving them a price. They were pushed into a
corner to give a low price. Mr. McCune said the whole thing kind
of backfired, but at the time people thought it would be helpful.
He noted it is unenforceable unless someone went to every plant and
forced them to put the price out. It isn't realistic. Mr. McCune
said 99 percent of the fishermen he has talked to in Alaska would
like to see the law repealed.
CHAIRMAN ROKEBERG asked Mr. McCune to give a background as to why
the law was passed in the first place.
MR. MCCUNE explained it was centered around the Bristol Bay area as
the fishermen were having problems with prices. They thought that
by cornering the processors, they would put out a real price. The
backfire was the processors don't always know the final price until
the product is sold, but they know what the base price roughly
should be.
Number 861
DEAN PADDOCK, Executive Director, Bristol Bay Driftnetters
Association, came before the committee to give his testimony. He
said the record shows that he testified in favor of the bill when
Senator Jacko proposed it a few years ago, but as Mr. McCune
testified, it's the attitude of the bulk of the catchers that the
law depresses the final price rather than forcing it upwards. Mr.
Paddock said they would like the law to be repealed.
Number 968
CHAIRMAN ROKEBERG asked Mr. Paddock if the association originally
supported the legislation and didn't have anything more to do with
it.
MR. PADDOCK responded they only supported the legislation. It was
not introduced at their request and they had no part in the design
of the bill.
Number 996
CHAIRMAN ROKEBERG referred to Mr. McCune's comment regarding 99
percent of the fishermen he knows supports HB 167 and asked who
might want to keep it on the books.
MR. PADDOCK said he suspects that on any issue there is always a
minority opinion. He said he is fully in support of their ability
to disagree with the majority. Mr. Paddock referred to the way the
prices are ultimately determined in the Bristol Bay fishery and
said Bristol Bay is the largest red salmon fishery in the state and
anywhere else. He informed the committee that virtually all their
red salmon that isn't canned goes to Japan. It is in the interest
of the Japanese to try to keep that price down. They have not in
recent years, ever since there has been the competition from pen-
reared fish from other countries, been willing to state an up front
price. There hasn't been competition between Japanese companies to
get their hands on Bristol Bay fish. On the other hand, they've
shown a great interest in purchasing fish elsewhere to try to
suppress their need to fill their requirements for red fleshed
salmon to keep that Bristol Bay price down. Mr. Paddock said they
don't know how big the supply is going to be until those fish have
all been caught and by that time the season is over. He said last
year some of the Bristol Bay companies posted a price. Some posted
50 cents, some posted 60 cents. At the end of the season, they
were given a 15 cent retroactive payment that brought the price up
to 75 cents, which is virtually the standard for practically all of
the companies in the bay. He said that is the way it works.
Number 1199
RICK LAUBER, Lobbyist, Pacific Seafood Processors Association, came
forward to give his testimony. He informed the committee that when
the law was enacted, he could see no way that it would help and he
could possibly see that it would harm. Mr. McCune indicated that
he thought that the fact of posting of a low price might have an
impact on the buyer, the wholesalers in this case. By starting out
with a low price, it may give a false signal to the wholesalers
that the price is going to be low and their expectations are for a
lower price. Mr. Lauber stated he can't say that it has had a
major impact. He said when the legislation was passed, it called
for an independent group to be contracted by the state of Alaska to
apprise fishermen, processors, etc., of what the current market
situation is worldwide, particularly in Japan. The University of
Alaska has contracted to do that and their price information has
helped fishermen and processors in their price negotiations. Mr.
Lauber noted that HB 167 doesn't repeal that portion of the law.
He commended the sponsor for introducing the bill and urged
passage.
MR. LAUBER said we need good strong prices. Fishermen can no
longer continue to fish for lower prices, particularly in the area
of pink and chum salmon. He has heard some processors say that the
market is so bad for some of the product that if the fishermen gave
them the fish, they couldn't sell it at a profit.
CHAIRMAN ROKEBERG questioned Mr. Lauber as to how many processors
he represents in his association.
Number 1423
MR. LAUBER said there are approximately 30 processors and they
process about 50 percent of the product caught in Alaska. He said
his association is a trade association that has been operating in
Alaska for 83 years.
Number 1520
CHAIRMAN ROKEBERG asked Mr. McCune how many fishermen he
represents.
MR. MCCUNE responded he represents 21 individual groups and about
8,000 fishermen.
Number 1607
KAY ANDREWS, Gillnetter Deck Hand, testified via teleconference
from Ketchikan. She said she has concern regarding the fish
tickets. She explained they add up the amounts on the fish tickets
for tax purposes. Ms. Andrews said she doesn't receive W-2 forms
or a end-of-the year statement from the particular processors they
sell to. She said if there isn't a price on those tickets, how is
she supposed to keep track of what she is receiving for what fish.
CHAIRMAN ROKEBERG asked Mr. Lauber to respond.
Number 1670
MR. LAUBER said he isn't sure that's common practice. Most large
companies he is familiar with give a final fish ticket price or a
final statement. He said as stated in other testimony, the
original fish ticket might have a price of 60 cents, but the
eventual price kept going up. There are also cases where there are
bonuses or post-season adjustments.
CHAIRMAN ROKEBERG said he would assume that most of the processors
issue a 1099 miscellaneous form of some type at the end of the
year.
MR. LAUBER said he would think so. He explained that Mr. McCune
had indicated to him that in his personal business dealings he does
receive a 1099 statement from his buyers. It deals with the
posting of a price. The law had no affect on the fish tickets.
Number 1786
TOM WRIGHT, Legislative Assistant to Representative Ivan Ivan, came
before the committee. He noted he has a drift permit for Cook
Inlet. Under 16.05.690(c), which is being repealed, it states that
the fish ticket recording the purchase of salmon must include the
current price paid, per pound, for reach species of salmon
purchased. He said the price listed on the fish ticket doesn't
necessarily mean that's going to be the final price that a person
will receive for that species. He said what started out in Cook
Inlet, for example, at 75 cents a pound ended up at $1.15 with most
processors. Mr. Wright explained if the 75 cents a pound was the
price they were going to stick with at the beginning of the season
and not see any retroactivity, they would have lost 40 cents on the
final price. He noted the final prices aren't posted until the end
of the year. Mr. Wright pointed out the processor he delivers to
issues a 1099 form at the end of the year. He noted he also can
get a list, at any time, of what he has delivered to the cannery at
a specific time.
Number 1843
CHAIRMAN ROKEBERG asked Mr. Wright if the practice of issuing fish
tickets won't be affected by the legislation.
MR. WRIGHT said he doesn't see where it would be.
Number 1867
CHAIRMAN ROKEBERG asked if there was any further witnesses. There
being none, he closed the public hearing.
Number 1871
REPRESENTATIVE JOHN COWDERY made a motion to move HB 167 out of
committee with the fiscal note.
CHAIRMAN ROKEBERG noted there is a zero fiscal note. He asked if
there was an objection. Hearing none, HB 167 moved out of the
House Labor and Commerce Committee.
HB 73 - SALMON MARKETING ASSESSMENT & ASMI
Number 1900
CHAIRMAN ROKEBERG announced the committee would take further
testimony on HB 73, "An Act extending the termination dates of the
salmon marketing programs of the Alaska Seafood Marketing Institute
(ASMI) and the salmon marketing assessment; and providing for an
effective date."
REPRESENTATIVE BILL HUDSON, sponsor of HB 73, said he was the
original sponsor of the current law. Representative Hudson said,
"It was no easy task to get the fishermen and women of this state
willing to pay a 1 percent assessment for marketing in those days,
but in the years that have ensued, I think that this domestic
marketing and these monies for this domestic effort has proven
invaluable." Representative Hudson explained HB 73 would extend
the current 1 percent domestic salmon marketing assessment when the
law sunsets on June 30, 1998. It is a measure that has to be dealt
with either now or before the end of next session. He explained
ASMI works to create a brand identity for Alaska seafood. He noted
he was the executive director of ASMI for three years and has seen
how it can effectively help the industry recover from a botulism
incident that literally tied up thousands of cases of canned
salmon. He noted there are people from ASMI in attendance. He
referred to the ASMI Board being large and said when the salmon
marketing tax was created, they wanted to incorporate the
harvesters into the decision making process. Historically, the
processors were on one side and the harvesters were on the other
side and they were trying to make one industry out of the whole
industry. As a consequence of having 12 people from the harvesting
side and 12 from the processing side, we have brought the fishermen
and women into the marketing element. One element of the marketing
program is to take fishermen into the marketplace. He indicated
there is strong competition with the farmed markets. This
marketing tax, in his opinion, has far exceeded expectations. We
now have a broader industry perspective because when the
harvesters/fishermen go back to their various gear groups, they can
speak about full industry marketing. The 1 percent tax wouldn't
have happened without their approval. He said the feedback he has
received indicates that they believe this is a valuable tool and
should be maintained. Representative Hudson said it is necessary
that HB 73 is passed before the program sunsets. The 1 percent tax
generates approximately $3.5 million and it would go into the 1997
projected revenue. It might be a little bit more for 1998.
Number 2124
REPRESENTATIVE HUDSON said in addition, included in ASMI is the
seafood marketing assessment. The assessment is voluntarily paid
by processors. It is one of the few industries where both the
processors and the harvesters have agreed to ante up their own
taxes for something that they mutually feel is important. The only
other source of funds that is available is from the federal
government which is the overseas USDA marketing plan. That is
about $3.1 million. There is about $550,000 to match the $3.1
million from the federal assessment. Representative Hudson noted
the director of ASMI is in attendance.
Number 2206
RODGER PAINTER, Member, Board of Directors, Alaska Seafood
Marketing Institute, came before the committee to give testimony in
support of HB 73. He explained the 1 percent tax is vital to their
overall program. They are projecting revenues from the 1 percent
tax, in fiscal year 98, of about $3.8 million. That would
represent about 36 to 38 percent of their overall funding. The
loss of that would be devastating to their programs. Mr. Painter
stated a little over 60 percent of their domestic marketing program
is supported with the 1 percent tax. The feedback from the fishing
community has been supportive. He said he would hope that when the
industry is having problems, the legislature would see fit to
continue with what is a voluntary effort, on behalf of the
industry, to provide for generic marketing programs.
Number 2280
REPRESENTATIVE COWDERY questioned what portion the state is
funding.
MR. PAINTER explained the 1 percent assessment on fishermen funds
about 38 percent of the program. The remainder of that funding
comes from a voluntary .3 percent assessment on seafood processors.
Another $3 million comes from the federal government through a
market assistance program for international programs. The state is
supporting about $550,000, which is dedicated solely to match that
federal grant. The federal government is supplying about $3.1
million. He noted the federal government does require a certain
match.
Number 2341
REPRESENTATIVE JOE RYAN said a couple of years ago Senator Stevens
gave a speech where he said people were looking at how to market
Alaska salmon in the Far East where there is potentially a huge
market. He thought that it had come about to where the fish would
be quick-frozen in plastic sleeves and shipped on large ships to
the Far East, but what the state needed to do was to investigate
those markets and see what is going on. Representative Ryan said
he has spoken with a number of people who hold commercial fishing
licenses and they have not been very enthusiastic about what is
happening to their industry, seeing it go away due to farmed
salmon. He said farmed salmon can be harvested at any time. He
asked what ASMI has done to investigate promoting Alaska salmon in
Asia and Southeast Asia such as the Peoples Republic of China and
the technology Senator Stevens spoke about.
Number 2384
MR. PAINTER said ASMI has been aggressively working in the Far
East. Last year, they participated in a trade show in China. They
will participate in a trade show in Hong Kong in May. Mr. Painter
said there is also another trade show scheduled in China in 1998.
Number 2412
ART SCHEUNEMANN, Executive Director, Alaska Seafood Marketing
Institute, came before the committee to give testimony in support
of HB 73. He said the Asian markets are markets of the future. He
said ASMI currently has active programs with the Foreign
Agricultural Service in about nine countries. Mr. Scheunemann
informed the committee that Hong Kong, Taiwan and China are on
their list of countries. He noted they haven't been to China in
the past because the dollars that ASMI receives, to a point, are
somewhat dictated by the federal government in terms of the
markets. He said ASMI makes application for the funds and the
federal government says, "Yes, that's a good idea," or "no, that's
not such a good idea." Mr. Scheunemann said they have just
received funding, within the allocation of money, from the federal
government. He said that he believes this is second year that they
have asked for an allocation within the total to do things in
China. They have done a trade show in Qingdao, and some people
just came back from a trade mission to Shanghai and Taipei. Mr.
Scheunemann said there is a lot of interest in the Asian Markets.
TAPE 97-19, SIDE B
Number 001
MR. SCHEUNEMANN informed the committee ASMI is aggressively
pursuing all of the things that Senator Stevens has been talking
about. He noted Senator Stevens has supported the Market
Assistance Program of the Department of Agriculture.
Number 077
CHAIRMAN ROKEBERG questioned why ASMI is spending money on
television adds within the boundaries of the state of Alaska.
MR. PAINTER said one of the things ASMI is concerned about is that
the people of the state of Alaska understand the importance of the
industry to the state, so ASMI dedicates a certain amount of money
to that effort.
Number 064
MR. SCHEUNEMANN, in response to Chairman Rokeberg's question, said
the board of Directors feels very strongly about the issue of
advertising, promoting and marketing outside of the state of
Alaska. The balance on that is there is a need to let people know
what ASMI is doing. He said over the last year, ASMI has spent
maybe $10,000 on some advertising, mostly on local public
broadcasting channels in Juneau and Anchorage. He noted they have
also done some radio spots. Mr. Scheunemann said ASMI spends time
and effort talking to fishermen/processors in Alaska. From a
marketing perspective, the ASMI board agrees that their major
effort needs to continually be directed outside Alaska to the
marketplace.
MR. SCHEUNEMANN explained that in the United States the salmon
product has to compete against beef, pork and chicken. Salmon has
1.3 pounds, per capita, consumption. He noted that is all salmon
including farmed salmon and wild natural Alaska salmon. Over the
last year and a half, in the whole salmon category, there has been
a 27 percent increase. Mr. Scheunemann informed the committee that
Alaska has been recognized by the Natural Fisheries Institute and
a number of other bodies around the country as having contributed
to that. He said ASMI does a lot of television and radio
advertising during good years and when there is more money. He
said when they have leaner years, they go to the stores and do
demonstrations. Fishermen have been in the stores to educate the
industry and to promote to the consumer on a direct basis which is
the most effective way to get new consumers.
MR. SCHEUNEMANN said ASMI has gotten a lot more aggressive in the
restaurant food service feeding category and institutional feeding.
Those programs have shown growth in sale volumes. He said the only
thing they can't guarantee is increased prices to the fishermen and
processors. He said he can guarantee that ASMI is continually
getting the message out about Alaska seafood and salmon.
Number 297
REPRESENTATIVE RYAN discussed his trip to Disney Land in Orlando
ten years ago. There was an area where there were venues from a
number of different countries and they all seemed to have
restaurants associated with them. He said it was his understanding
that on the average, 50,000 people a day came through that park.
He said this would be an ideal place for the state of Alaska to set
up a restaurant with salmon and seafood. He noted there were also
movie theaters where they showed portions of films of the different
countries. He mentioned this to Tourism and Marketing and they
told him that they were investigating something similar to this
approach.
Number 337
MR. SCHEUNEMANN said it has crossed their minds. It is not part of
ASMI's charter and it would be difficult for them to fund or set
up. However, they are contacted, on a fairly regular basis, by
restaurant entrepreneurs who are doing certain types of themes. He
noted there is an Alaskan Klondike Restaurant theme at Disney
World. He said it is left up to the private sector to develop that
kinds of opportunity. Mr. Scheunemann said ASMI does have a
relationship with Disney in terms of putting together a program
with their food service decision makers. They also have an
executive chef decision-making training program where ASMI has a
partnership with the Culinary Institute of America. He said, "We
had at one of our events, our training events, four day Alaska
seafood training, how to make money and menu Alaska salmon and
seafood profitably to the people who are making those decisions to
buy the product and showing them why they can make money on their
menus."
Number 433
REPRESENTATIVE RYAN referred to fishermen getting $1.20 or $1.30 a
pound in Cook Inlet and asked why it costs him $18.00 a pound in a
restaurant.
MR. SCHEUNEMANN said that is one of things that is not in ASMI's
control. He noted there is an economic model that people can look
at for just about every food product in existence. As you go up
the food chain, the value continues to get added past the
production and processing side. Alaska salmon is considered a high
value product in many places and people will pay for it.
Number 489
REPRESENTATIVE HUDSON said when he was the executive director of
ASMI, they were looking at 6 cents a pound to transport salmon.
Salmon sitting in a warehouse or freezer depreciated at 1 percent
per month as there is wastage and spoilage. Representative Hudson
said, in his opinion, the program works very well because it does
compete against beef, pork, chicken and other seafood products. He
continued to discuss how menu development occurs. He also informed
the committee of a situation where Julia Childs had been making
great strides at trying to prove to everybody that frozen salmon
wasn't any good. Representative Hudson said they challenged her
and took a frozen white king salmon to New York City and had a cook
off. Julia Childs had to personally recognize that fresh frozen,
if done correctly, was not only every bit as good as farmed fish,
but better. He said absent a good marketing program, Alaska would
be losing out to beef, pork and chicken in a big way.
Representative Hudson referred to the farmed salmon and said they
are all heavily subsidized whether they are from Norway, Chili or
Scotland. The state only puts $550,000 into the program.
CHAIRMAN ROKEBERG asked how much the matching funds are.
REPRESENTATIVE HUDSON responded that the match is $3.1 million of
federal money. He noted the program is bringing in over $6 million
of industry money from harvesters and processors. The law states
that the harvesters could vote themselves totally out of this tax.
Number 723
REPRESENTATIVE SANDERS asked Mr. Scheunemann how much he thinks
Alaskan salmon demand went up last year.
MR. SCHEUNEMANN said that is tough question because they can't
measure what the Chileans volume movement is in a particular chain.
He said, "I would guess that just given the volume of product that
we moved through the domestic marketplace in the last year, and
that's all salmon consumption - that's canned, fresh frozen and
fresh as well, I would bet some good money that we probably have 15
percent of that or maybe more of that percentage change. I think
the important thing to keep in mind is that that line had stayed
pretty flat for about five year period of time prior to 1993, at
about a pound. I think when the 1 percent was instigated and put
in place, there was some idea that we were going to increase market
share by two or three pounds. There was these huge percentages and
that type of thing which in any analysis of gaining market share,
you don't make those kinds of strides in any food product or any
food category. So three-tenths is pretty significant. Now low
prices, a lot of volume, but a lot push behind that low price, high
volume."
MR. SCHEUNEMANN informed the committee one thing that isn't in
ASMI's control is the price to the fishermen or how it is set and
determined. He said referred to Denny's Restaurants and said they
have 1,800 restaurant chains around the United States. They have
been serving six ounce portions of chum salmon fillets for $4.99 to
$6.99. That one deal consisted of about 800,000 six ounce
portions.
Number 897
REPRESENTATIVE SANDERS said a couple of years ago the federal
government came up with a program where they were going to use
salmon in school meals. He asked if that was included in the
increase of salmon being eaten.
MR. SCHEUNEMANN said that would be separate category. The federal
government has purchased canned salmon from the seafood industry in
Alaska for a number of years. They buy it under school lunch
emergency buying entitlement type programs. It is bought as a
commodity and it is put out on the shelves. He said ASMI had
something to do with pushing that through. The federal government
is also interested in getting schools to purchase value-added
products such as salmon nuggets. Mr. Scheunemann said they
contributed to the Fisheries Development Foundation in Anchorage
where they gave assistance in pushing that through. The current
issue is that there are a lot of processors that make salmon
nuggets and the USDA has purchased a fair amount of nuggets for
their school lunch program. The question is, "How much more money
does the federal government, through its entitlement programs, give
to school districts to buy certain classes and categories of food
products?" He noted a lot of that has to do with politics. Mr.
Scheunemann said every one of our processors, in his view, are
creating new products. He noted pouches of salmon could
revolutionize the industry and could be custom tailored for the
large contract feeders of the world that service cafeterias. He
said there are microwaveable products and center of the plate
portions. There are a lot of things that are happening, but one of
the questions is, "Will that solve the problem of our production?"
He said he believes it is only a small portion of our production
that goes to those products. The other question is, "Can those
kinds of changes happen fast enough to make a difference in the
short term as it is more of a long term proposition?"
Number 1030
CHAIRMAN ROKEBERG asked how long ASMI has been in existence.
MR. SCHEUNEMANN said last July, ASMI celebrated their sixteenth
anniversary.
CHAIRMAN ROKEBERG asked if there is any way to determine the amount
of imported fish into the United States. He said of the 27 percent
increase in salmon consumption in the United States, how much of
that was Alaskan salmon.
MR. SCHEUNEMANN explained there is no doubt that they could find
out how much salmon is imported. He said they would have to pull
apart all the gross custom's district data and do an analysis. Mr.
Scheunemann said ASMI hasn't done that. The 27 percent figure is
an educated guess based on the number of units in stores they
promote in.
MR. SCHEUNEMANN said when ASMI goes into a retail chain, the chain
signs a contract with ASMI to report their sales volume data based
on that promotional time period. For example, they are currently
in the Lenten period which is a typical promotion time period
because during the religious period, people buy more seafood. If
they contract with a retail chain like Kroger, for example, they
have to report to ASMI the volume of sales movement. He noted they
don't get into price or where the product comes from. Mr.
Scheunemann said they then compare from period to period as to
whether the volume has increased. He said when they're not
promoting, they also look at whether there are continued
maintenance sales of those products. During the summer months,
there seems to be more interest in fresh seafood. Mr. Scheunemann
explained the question that they don't have an answer to is how
much carry over is there. That is a function of how much inventory
is in the marketplace and how much is being sold after the
promotional periods and between the seasons.
Number 1156
CHAIRMAN ROKEBERG pointed out there are two different dates in the
bill. "One is for the tax itself as the year 2003, and the other
one is for the -- I believe is the 10 percent or less than 10
percent of the other activities of the board that expires in the
year 2004. Could you explain why there is the difference of the
two years?"
MR. SCHEUNEMANN said he isn't clear on that rationale.
CHAIRMAN ROKEBERG told Mr. Scheunemann that he is pleased that ASMI
is working with the Culinary Institute of America. He asked if
they have looked at other cooking schools or the Hotel Management
Department of the Cornell University, which has the most well
respected hotel management and culinary program curriculum in the
United States.
MR. SCHEUNEMANN said they haven't had contact with Cornell
University. He said one of the factors of working with the
Culinary Institute is that ASMI has a limited amount of money in
the food service arena and what they are trying to do is rather
than contacting the chefs, they are trying to contact the decision
makers who are in a position who decide whether to buy product to
develop the menus. It would be a good strategic direction to go if
there was more money being put into food service area. He noted
the Seattle Art Institute has a cooking culinary program and last
month ASMI trained 40 chefs in a one day seminar.
Number 1284
CHAIRMAN ROKEBERG said, "Historically, there has been a controversy
about the retention of your advertising agencies. As I understand
it, there is more of an Alaskan contract now. Do you want to make
a very brief comment on that?"
MR. SCHEUNEMANN said in January, ASMI signed up the Nerland Agency,
which is a well respected Anchorage firm. He said they went
through a total review process a little over a year ago and the
board chose a Minneapolis based advertising agency. It didn't work
out as there were internal management problems that the board
couldn't have known about.
Number 1356
CHAIRMAN ROKEBERG referred to the unmarketable hatchery fish,
particularly the incident that occurred in Southeast Alaska last
summer with the chum dump and roe stripping and asked if ASMI was
involved.
MR. SCHEUNEMANN explained ASMI doesn't get involved in any of those
policies. He said it is a management issue and ASMI's charter
doesn't include their involvement in that by statute.
CHAIRMAN ROKEBERG asked if it has a negative impact on marketing.
MR. SCHEUNEMANN said he thinks it has an impact, to some degree, on
ASMI's relationship with the industry and not so much with the
trade.
CHAIRMAN ROKEBERG said he has concerns about the issue in that if
poorly looked after fish are given away in a program, and they end
up in the Pacific Northwest, it will reflect negatively on the rest
of the industry in Alaska.
Number 1394
MR. HUDSON referred to the two different dates in the bill and said
he believes what they did was say, "We collected right up until
1993, and then we permit them to spend it because they collect it
into the following year."
CHAIRMAN ROKEBERG said he thought that was the case.
Number 1496
KAY ANDREWS, Gillnetter Deck Hand, testified from Ketchikan. She
said she is in support of continuing the ASMI program as it is
necessary not only for processors, but also fishermen.
Number 1524
DEAN PADDOCK, Executive Director, Bristol Bay Driftnetters
Association, came before the committee to give testimony in support
of HB 73. He said his organization feels it is necessary to
advertise or die. He commended ASMI for the job that has
collectively been done. Mr. Paddock referred to 1989 and said the
average per capita consumption of salmon was .470 of a pound. In
1995, the consumption is 1.41 pounds per capita. The National
Fisheries Institute gives credit for that to the ASMI and to the
efforts of the pen rearing industry.
Number 1735
JERRY MCCUNE, United Fishermen of Alaska, came forward to testify.
He said 80 percent of the groups within his organization supports
the 1 percent tax. The others are waiting to have board meetings
to make their decisions.
Number 1766
CHAIRMAN ROKEBERG closed the public hearing.
Number 1770
REPRESENTATIVE COWDERY made a motion to move HB 73, with attached
fiscal notes, out of committee with individual recommendations.
CHAIRMAN ROKEBERG objected for the purpose of discussion. He said
the fiscal note is rather high, but it is programs receipts.
Chairman Rokeberg said he believes it is a very good program. He
then removed his objection. Hearing no other objections, HB 73 was
moved out of the House Labor and Commerce Committee.
ADJOURNMENT
Number 1827
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Committee
meeting at 4:47 p.m.
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