Legislature(2023 - 2024)SENATE FINANCE 532
02/23/2024 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SJR14 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SJR 14 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 23, 2024
9:02 a.m.
9:02:37 AM
CALL TO ORDER
Co-Chair Olson called the Senate Finance Committee meeting
to order at 9:02 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair [via teleconference]
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Erin Shine, Staff to Senator Bishop; Brian O'Leary, COO,
OBI Seafoods; Stefanie Moreland, Executive Vice President,
Trident Seafoods; Julie Decker, President, Pacific Seafood
Processors Association; Abby Fredrick, Director of
Communications and Investor Relations, Silver Bay Seafoods;
Greg Smith, Communications Director, Alaska Seafood
Marketing Institute.
PRESENT VIA TELECONFERENCE
Jim Jansen, Chairman, Lynden Transport.
SUMMARY
SJR 14 SUPPORT STATE SEAFOOD INDUSTRY
SJR 14 was HEARD and HELD in committee for
further consideration.
SENATE JOINT RESOLUTION NO. 14
Calling on the United States Congress and all federal
agencies to adopt policies and engage in certain
efforts to improve the competitiveness and resiliency
of the state's seafood industry.
9:03:00 AM
Co-Chair Olson relayed that it was the first hearing for
SJR 14. He invited the sponsor to present the bill.
9:03:32 AM
Senator Click Bishop, Sponsor, conveyed that the resolution
addressed a very important issue facing the state. He read
from a Sponsor Statement (copy on file):
Alaska's seafood industry is a vital part of Alaska's
economy, benefiting fishermen, coastal communities,
plant workers and the many businesses that rely on
seafood production statewide. As the largest
contributor to the United States' seafood harvest,
Alaska plays an important role in global seafood
production, exporting to over 100 countries worldwide.
Despite its significance, Alaska seafood faces
numerous challenges in the global market. High
interest rates, inflation, and increased competition
from farmed fish and foreign countries threatens the
economic viability of our fishermen and seafood
businesses. These challenges impact fishing families
and local economies and jeopardize our state's food
security and supply chain integrity.
In recognition of these challenges, SJR 14 encourages
similar treatment of Alaska seafood by the federal
government as other sources of domestic food
production and supports efforts by the federal
government to establish an Office of Seafood Policy
and Program Integration within the United States
Department of Agriculture (USDA). This could play a
crucial role in ensuring that domestic seafood is
treated equitably while competing in the global
market.
USDA provides critical support for agricultural
products but lacks in its support for seafood
products. Some of the issues within the USDA are the
inability of fishermen and processors to participate
in certain loan, grant, or tax credit programs;
suboptimal timing of federal nutrition program
purchases; and a lack of programs to help the industry
develop new products and update aging infrastructure.
An Office of Seafood Policy and Program Integration
would provide needed leadership on addressing issues
with USDA programs.
SJR 14 also encourages greater federal interagency
cooperation and greater emphasis on various support
mechanisms for the seafood industry from USDA and the
National Oceanic and Atmospheric Administration
(NOAA). This is increasingly necessary if the Alaska
seafood industry is to survive these significant
economic challenges.
Additionally, SJR 14 supports an increased seafood
presence in the Office of the U.S. Trade
Representative which could help address the unbalanced
tariffs that result in higher export fees for Alaskan
seafood than for competing seafood imports.
SJR 14 aims to support the Alaska Congressional
Delegation in their strategic efforts to improve
federal programs to give the seafood industry equal
support that many other U.S. food products receive.
Senator Bishop referenced a recent address by United States
(U.S.) Senator Dan Sullivan, and his mention of his
efforts. He thought joint resolutions helped the efforts of
the states Congressional delegation.
9:08:18 AM
ERIN SHINE, STAFF TO SENATOR BISHOP, did not have
additional comments but was available to address questions.
9:08:48 AM
BRIAN O'LEARY, COO, OBI SEAFOODS, introduced himself and
spoke in favor of the bill. He relayed that he was born to
a fishing family in Kodiak. He referenced the disturbing
events in the fishing industry. He noted that OBI Seafoods
had eight facilities, six of which were seasonal. The
company was not going to operate one of its facilities this
year due to tough economic conditions. The company employed
1,500 employees at peak season. He cited three major issues
for the fishing industry: de-globalization, geopolitical
issues, and interest rates. He highlighted that the
Ukraine-Russia conflict had hurt the fishing industry the
most. He explained that Russia was dumping its commodities
at low prices to fund a war. He referenced huge hatchery
production in the Sea of Okhotsk.
Mr. O'Leary continued his remarks. He discussed frozen pink
salmon at the price of $1.30 to $1.60 delivered to foreign
markets. The previous summer, when Russian production was
going unexpectedly and astronomically high, the price had
dropped to below $1. He mentioned a helpful executive order
from the presidential administration and thought getting
the USDA and the Office of the United States Trade
Representative (USTR) to recognize seafood would be
important. He contended that seafood needed to be treated
in a similar way to agricultural products in the market. He
contended that having a seafood office would be
instrumental in getting the same options for risk and
mitigation tools that farmers received, including profit
insurance and product development.
Mr. O'Leary spoke to how interest rates affected the
fishing industry. He detailed that the rise in interest
rates had sucked liquidity out of the marketplace. He
described that buyers were behaving differently and
purchasing month to month and seafood processors were
putting products in cold storage. He thought having
representation in the USTR would be a huge advantage to
help wean allies off Russian products and place Alaskan
seafood into the correct marketplaces at correct market
prices. He thanked the committee for its support of the
USDA Section 32 bid, which had been approved and would be a
big relief to the industry.
Co-Chair Olson asked about how the industry was surviving
when product was being dumped on the international market
below market value.
Mr. O'Leary thought there was a general agreement that the
prices paid to fisherman were based on an expected margin.
He knew what was paid in the current year was not
sustainable for the fleet or the processors. He described
the situation as being at a fork in the road.
9:13:49 AM
STEFANIE MORELAND, EXECUTIVE VICE PRESIDENT, TRIDENT
SEAFOODS, introduced herself and spoke in support of the
bill. She detailed that Trident was a family-owned seafood
company that had been in the state for 50 years. The
company owned and operated short-side processing facilities
across the state and partnered with over 1,000 independent
harvesters in producing wild Alaska seafood products around
the world. She expressed support for the resolution, and
relayed that Trident supported the resolution to draw
attention to the crisis the sector was facing and to lend
urgency to improving the competitive environment faced by
Alaskan seafood producers in the global markets. She
mentioned unprecedented economic conditions in 2023, which
shocked the seafood industry and fishery-dependent
communities and businesses.
Ms. Moreland thought many of the impacts were the result of
the federal government focusing solely on the role of
regulators of the marine resources and failing to regard
the sector as being heavily invested in domestic food
production. She contended that U.S. trade policies had been
worsening for Alaska seafood producers for a decade, and
the producers had been left out of major programs that
supported the land-based agricultural sector. She cited
that Alaskas competitive position in the global seafood
markets was eroding. She cited factors including global
imbalances in supply and demand, lost market share to
Russian products, and high labor and production compliance
costs. She referenced market pricing driven by low-cost
imports that did not reflect the cost of the U.S.
regulatory environment and sustainably managed ethical
supply chains.
Ms. Moreland relayed that the industry had been seeking
remedies, many of which were called for in the resolution.
She cited that the biggest challenges were with federal
policy allowing seafood to fall between the cracks of
agriculture and industrial goods sectors. She contended
that the interagency coordination called for in the
resolution, as well as the inclusion of seafood in programs
designed for U.S. food production were critical to sustain
healthy futures for Alaskan communities.
Co-Chair Olson asked about Trident's locations in the
state. He asked if any of the facilities would be shut
down.
Ms. Moreland listed facilities in Petersburg, Wrangell,
Ketchikan, Cordova, Kodiak, False Pass, Naknek, and St.
Paul. She noted that Trident had made an announcement in
December of the intent to divest in four of the facilities.
She clarified that the intent was not to shut the
facilities, but rather work to sell the facilities while
ensuring continuity for the communities, harvesters, and
employees. She relayed that Trident was working as quickly
as possible but did not have any information that could be
publicly shared. She continued that Trident was trying to
focus and continue to reinvest, modernize, and to be able
to improve the ability to compete globally. She mentioned
differentiating the state and growing demand. She mentioned
cost efficiency and reaching consumers with information
about Alaska.
Co-Chair Olson asked about the number of Tridents
employees.
Ms. Moreland estimated that there were about 4,500 seasonal
employees at the facilities. She mentioned senior staff and
maintenance. She mentioned a skills program with the Alaska
Vocational Technical Center (AVTEC) to support
modernization.
Co-Chair Olson commented on the great number of people
affected.
Ms. Moreland agreed.
9:18:23 AM
JULIE DECKER, PRESIDENT, PACIFIC SEAFOOD PROCESSORS
ASSOCIATION, expressed her support for the resolution. She
relayed that she lived in Wrangell and had worked in the
fishing industry for 30 years. She explained that Pacific
Seafood Processors Association (PSPA) was a trade
association which represented 11 major shoreside and
mothership seafood processing companies operating in over
30 facilities in the state. She cited that PSPAs member
companies bought hundreds of millions of pounds of fish
from fisherman, which it processed and moved it to market.
The member companies had made significant investments in
Alaska Seafood, spending hundreds of millions of dollars in
facilities, processing technology, product development, and
marketing. Additionally, members had made capital
investments in communities.
Ms. Decker noted that PSPA members created jobs and created
markets for thousands of independent commercial fishermen
and contributed millions in tax revenue to state and local
economies. She contended that many coastal communities
depended upon Alaska seafood for an economic foundation.
She emphasized that the seafood industry was facing
economic conditions unlike any time since the collapse of
salmon in the late 1990s and early 2000s, except the
current problem included multiple species. She described a
freefall of seafood prices in 2023, due to multiple
economic and global factors occurring simultaneously. There
were millions of dollars in losses and in some cases,
processors stopped buying fish in order to reduce further
losses. Experts estimate that the loss to Alaskas economy
in 2023 was $2 billion; with $1 billion in wholesale value,
and $1 billion in decreased spending on vessels and
facilities.
Ms. Decker continued that economic conditions in 2024 were
not expected to improve. Fishermen and processers had borne
the brunt of the economic effect, but she thought
communities were starting to feel the trickle-down effect.
She thought some challenging market conditions would
improve over time but asserted that the need for government
and state action was critical to support the industry and
meet current challenges.
9:21:42 AM
ABBY FREDRICK, DIRECTOR OF COMMUNICATIONS AND INVESTOR
RELATIONS, SILVER BAY SEAFOODS, spoke in support of SJR 14.
She thanked the sponsor and co-sponsors. She relayed that
Silver Bay Seafoods (SBS) was a fishermen-owned processing
company. The company currently had six relatively new
facilities in Craig, Sitka, Valdez, Kodiak, False Pass, and
Naknek; and processed salmon, pollack, Pacific Cod,
rockfish, and herring. She hoped that the companys
diversity would help with resilience across the different
markets. She cited that the company had experienced a
dramatic shift in markets in 2023, and the outlook for 2024
left significant uncertainty.
Ms. Fredrick thought the current market condition was not
usual nor cyclical. She thought the level of market decline
was not normal. She mentioned global influences and
proposed that the resolution would help tackle some of the
elements that the federal government could help with. She
highlighted the rapid increase in operating expenses. She
noted that Senator Bishop had termed the situation a five-
alarm fire that needed immediate attention. She thought
the crisis was a reminder of the importance of the fishing
industry. She thought the resolution would send a message
that the legislature was supportive of the industrys
efforts.
9:25:44 AM
Senator Kiehl appreciated that Ms. Fredrick directly
addressed commercial fishing businesses that SBS purchased
from. He asked if she could quantify how many individuals
the company purchased from.
Ms. Fredrick estimated that SBS had over 600 fishermen
partners, each with an average of five crewmembers. The
fishers partnered with over 100 tender vessels, which also
had crew members. She mentioned a peak of 2,500 employees
at SBS facilities. She noted that the people impacted lived
in every community in the state.
Senator Kiehl thought the number of sellers and fishing
households was an important perspective to consider. He
asked Ms. Fredrick to elaborate on the breadth of the
crisis, and whether it affected certain fish or gear types.
Ms. Fredrick thought the issue was broad across all the
species that SBS was participating in. She noted that SBS
started in 2007.
Senator Kiehl appreciated getting an understanding of how
dire and how broad the problem was.
Co-Chair Olson asked if SBS owned any tender vessels.
Ms. Fredrick affirmed that SBS owned some tender vessels
that supported fishermen owners.
Co-Chair Olson asked if there was a cooperative.
Ms. Fredrick relayed that there were independent fishermen
that operated and benefitted from personal businesses that
invested in the processing facility and shared in the
profits of the company.
Co-Chair Olson asked what kind of seafood was processed by
SBS facilities.
Ms. Fredrick relayed that SBS processed primarily salmon,
Pacific Cod, pollack, herring, and rockfish. It did not
currently process any shellfish, but hoped there would be
an opportunity in the future.
9:29:31 AM
JIM JANSEN, CHAIRMAN, LYNDEN TRANSPORT (via
teleconference), testified in support of the resolution. He
thought everyone understood the importance of the seafood
industry to fishermen, processors, and coastal communities.
He reminded of the importance of the seafood industry in
supporting businesses and communities around the state. He
used the example of his company having moved more than
14,000 containers of seafood from the state in 2023 while
employing more than 500 Alaskans. He noted that the company
was one of seven major marine companies moving seafood.
Mr. Jansen explained that in 2023, Lynden moved more
seafood cargo than oil industry cargo. He suggested that
Alaska's trucking companies, port companies and airlines
all benefitted from the seafood industry. He cited that
Southbound seafood was about 20 percent of Lyndens cargo
volume and that without seafood, Northbound shipping rates
would have to be substantially higher. He thought the
seafood industry had suffered greatly in the previous two
years and needed the help of the legislature.
Co-Chair Olson asked for Mr. Jansen to address how many
employees might be affected in the marine line and the air
cargo business.
Mr. Jansen noted that there were about 500 Alaska employees
that were directly associated with the movement of seafood.
He pointed out that Lynden was one of many companies that
serviced the industry.
Co-Chair Olson asked what the Alaska Seafood Marketing
Institute (ASMI) was doing specifically, considering there
was a dismal year for fishing and also those in the
transport business.
9:32:59 AM
GREG SMITH, COMMUNICATIONS DIRECTOR, ALASKA SEAFOOD
MARKETING INSTITUTE, listed that the 20 employees of ASMI,
15 contractors around the world, and retail and food
service partners were doing everything they could to
address the issue. He mentioned the preliminary price for
Sockeye Salmon was at the lowest level in 20 years. He
mentioned working with industry partners to promote Alaska
seafood in Costco, Walmart, e-commerce. He mentioned
working with influencers to collect with younger audiences.
He mentioned being as strategic as possible with the
available resources. He thought the seafood industry around
the world was struggling.
Co-Chair Olson asked about targeting other international
markets.
Mr. Smith relayed that ASMI was active in 9 regions and 40
countries. He mentioned existing markets in Japan and
Europe, and new markets such as Southeast Asia. He
recounted a recent trade visit to Morocco.
Co-Chair Olson asked for Mr. Smith to discuss ASMI's
budget, and whether it was adequate. He mentioned the price
of fuel and relayed that he had been a commercial
fisherman.
Mr. Smith relayed that he had started with the institute in
June of the previous year, and it had been extraordinarily
challenging since that time. He mentioned the price of
Bristol Bay sockeye and the impacts on fishermen, fishing
families, and supporting businesses. He relayed that ASMI
worked within its budget and was funded by an industry
assessment, which would decline the following year due to
reduced costs. He discussed federal funds which required
matching state funds. He mentioned FY 24 state funds. He
noted that ASMI's budget was about half of that of the
Norwegian Seafood Council. He noted that Norway was
investing at least $5 million in the U.S. domestic market
in the current year. He argued that there would be an
opening in the market that would be wise to take advantage
of after the recent executive order by President Biden
banning Russian seafood.
9:36:58 AM
Senator Bishop referenced Mr. Smith's comment about a visit
to Morocco. He asked about the number of people that would
be targeted.
Mr. Smith cited that in the Middle East and North Africa
there were 600 million people.
Senator Bishop relayed that he was able to go on his first
tour related to seafood in Spain. He emphasized that if the
state was going to be competitive on a global and domestic
stage, it would need to increase its budget. He commented
on the greater size of the representation from Iceland and
Norway.
9:39:02 AM
Co-Chair Stedman thought there was zero funding in the
current year's budget for ASMI. He thought there was an
opportunity for the state to help turn the situation
around. He thought imports of Russian fish would cease in
30 days. He asked what ASMI needed from the legislature to
penetrate the market so that another country such as Norway
did not rush in and fill the void.
Mr. Smith reiterated that ASMI was very appreciative of
anything the legislature or governor was able to provide.
He mentioned funds used in FY 24 to help relieve some of
the large inventory of Bristol Bay sockeye harvest in 2022.
He noted that ASMI had deployed at least $3 million for the
effort and asserted that marketing efforts translated into
sales. He referenced promotions, coupons, and other
marketing strategies. He noted that ASMI could move
additional resources quickly to help Alaska seafoods of all
kinds.
Co-Chair Stedman questioned Mr. Smith's answer. He
considered that the ASMI budget had a forthcoming reduction
from processing members due to the decline in fish prices.
He pondered that the reduction was possibly as much as $5
million. He asserted that trying to penetrate the American
market would take funding, and ASMI had the opportunity to
help committee members understand the magnitude of what the
industry was facing. He thought ASMI should return with a
three-year marketing plan to penetrate the American market.
He emphasized the urgency of the timeframe and competition
from Norway.
Mr. Smith affirmed that ASMI had requested $10 million in
additional funding in the current year's budget to address
current issues facing the industry. He expressed that ASMI
would be happy to work on a plan. He offered to provide the
information at a later time.
Co-Chair Stedman thought it would be good to give ASMI time
to contemplate the plan. He emphasized that the problem was
significant, and that the committee needed to know what was
necessary. He thought that if there was a good flow of
information, the committee could make a good case to assist
ASMI in a significant way.
Co-Chair Olson agreed with Co-Chair Stedman.
9:44:20 AM
Senator Wilson wanted to summarize what he had heard. He
understood that the industry had an opportunity to help
some processors. He thought Co-Chair Stedman was referring
to Alaska Seafood dominance in the U.S. markets, and
thought it was a shared goal.
Senator Kiehl informed Mr. Smith that he was inclined to
agree with Co-Chair Stedman's request for a three-year plan
from ASMI. He hoped ASMI could quickly provide information
related to how the state could invest in markets to help
fishing families, processors, and other impacted parties.
He wanted to see information related to impacts on each
market segment.
Senator Bishop wanted to address employees in the industry.
He emphasized that the state could not afford to lose the
workforce. He considered data provided by the Pacific
Seafood Processors Association (PSPA) and pondered the
number of direct employees and fishermen. He emphasized the
importance of keeping a market to keep people employed.
Senator Kiehl had a specific question directed to the text
of the resolution, which referenced domestic and
international efforts and various federal steps that needed
to be taken. He mentioned a reference to a national export
strategy from 2023. He cited that one paragraph in the
section that referenced the federal government having
information in a lot of places and thought higher trade
data and analytics should be developed. He asked if ASMI
needed access to such information.
Mr. Smith asserted that ASMI had good sources of
information, but more data and better sources would be
helpful.
SJR 14 was HEARD and HELD in committee for further
consideration.
Co-Chair Olson discussed the agenda for the following day.
ADJOURNMENT
9:49:32 AM
The meeting was adjourned at 9:49 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SJR 14 letter of support ASMI 02.22.24.pdf |
SFIN 2/23/2024 9:00:00 AM |
SJR 14 |
| SJR 14 Sponsor Statement 02.14.2024.pdf |
SFIN 2/23/2024 9:00:00 AM |
SJR 14 |
| SJR 14 Supporting Document - Seafood Impacts.pdf |
SFIN 2/23/2024 9:00:00 AM |
SJR 14 |
| SJR 14 LEG SESS 021824.pdf |
SFIN 2/23/2024 9:00:00 AM |
SJR 14 |