Legislature(1993 - 1994)
03/25/1994 03:37 PM Senate RES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE
March 25, 1994
3:37 P.M.
MEMBERS PRESENT
Senator Mike Miller, Chairman
Senator Loren Leman, Vice Chairman
Senator Drue Pearce
Senator Al Adams
Senator Dave Donley
MEMBERS ABSENT
Senator Fred Zharoff
Senator Steve Frank
COMMITTEE CALENDAR
SENATE BILL NO. 306
"An Act relating to an antitrust exemption for persons engaged in
the fishing industry."
HOUSE JOINT RESOLUTION NO. 50
Relating to the North Pacific Fishery Management Council
comprehensive rationalization plan.
HOUSE JOINT RESOLUTION NO. 34
Requesting the Department of Commerce to give a high priority to
fisheries development project grants for the Alaska salmon
industry.
PREVIOUS ACTION
SB 306 - No previous action to record.
HJR 50 - No previous action to record.
HJR 34 - No previous action to record.
WITNESS REGISTER
Bruce Schactler
Area K Seiners
Box 2254
Kodiak, Ak. 99615
POSITION STATEMENT: Supported SB 306.
Jim Forbes, Assistant Attorney General
Department of Law
1031 W. 4th., Suite 200
Anchorage, Ak. 99501-1994
POSITION STATEMENT: Commented on SB 306.
David Reaume
10746 Horizon Dr.
Juneau, Ak. 99801
POSITION STATEMENT: Supported SB 306.
Dorn Hawxhurst
P.O. Box 939
Cordova, ak. 99574
POSITION STATEMENT: Supported SB 306.
Willis Kirkpatrick, Director
Division of Banking and Securities
Department of Commerce and Economic Development
P.O. Box 110807
Juneau, Ak. 99811-0807
POSITION STATEMENT: Supported SB 306.
Kate Troll, Executive Director
South East Seiners Association
9226 Long Run Drive
Juneau, Ak. 99801
POSITION STATEMENT: Supported SB 306.
Rick Lauber
Pacific Seafood Processors Association
321 Highland Dr.
Juneau, Ak. 99801
POSITION STATEMENT: Supported SB 306.
Jerry McCune, President
United Fishermen of Alaska
Juneau, Ak.
POSITION STATEMENT: Supported SB 306 and HJR 34.
George Utermohle
Legislative Affairs
130 Seward St.
Juneau, Ak. 99801-2197
POSITION STATEMENT: Commented on SB 306.
Karen Brand, Legislative Aide
c/o Representataive Moses
State Capitol
Juneau, Ak. 99801-1182
POSITION STATEMENT: Commented on HJR 34 and HJR 50.
ACTION NARRATIVE
TAPE 94-30, SIDE A
Number 001
CHAIRMAN MILLER called the Resources Committee meeting to order at
3:37 p.m. and announced SB 306 (ANTITRUST EXEMPTION FOR FISHERMEN) )
to be up for consideration.
SENATOR DUNCAN, sponsor, gave a brief overview of SB 306 which
would allow fishermen to negotiate raw fish prices with processor
in order to improve the market price of Alaska seafood. He said we
can't control the price that fishermen get on the grounds, but the
state can offer more support to our fishing industry which is
Alaska's largest private employer.
British Columbia fishermen have consistently been getting higher
salmon prices than Alaskan fishermen, he said, in part because of
multi year collective bargaining agreements with processors. This
will help stabilize commercial fishing prices bolstering local
state economies.
SENATOR DUNCAN said that the Alaska Fish and Agriculture Bank and
United Fishermen support this bill.
BRUCE SHACTLER, Area K Seiners Association, supported SB 306. He
said it was needed badly. However, on page 2, lines 10 and 11, he
would like to delete, "including fish processors acting through
associations of processors,..."
JIM FORBES, Assistant Attorney General, said the way he sees the
issue is that the fishermen can't get a better price than the
processors get and the processors are not in a position to
negotiate from strength.
DAVID REAUME, Juneau fisheries economist, said there is enough
evidence to suggest that it would appear two large Japanese
companies, Mitsui and Marobani, have organized the market for
Bristol Bay red salmon. One of the categories of cartels the
Japanese are free to organize with government approval is the
import cartel. This is in line with the Japanese interest in
obtaining raw materials at the lowest possible price which is the
fundamental problem underlying the low prices we have been getting
in the last three years. Alaska processors are simply in no place
to say no to a Japanese offer. They have no other place to go in
the short run. The difference in bargaining strength between the
processors and the fishermen is really the lesser of the two
problems facing them today. The amount that is left over to
negotiate is sufficiently small that it's a tertiary order of
magnitude to the problem.
Information from the Attorney General's investigation says that six
of the largest buyers control approximately 60% of the market.
There are about 1500 permit holders in Bristol Bay. This is one of
the features of markets which makes it possible for one side to
have increased bargaining strength.
There are several things that signal potential market power
disproportionately on one side rather than the other. One is rapid
verification of price quotations. Advance notice of price changes
would serve the same purpose. Existence of relative value scales
in product standardization makes it very difficult for a fisherman
to sell one grade of fish at a price that might be out of line if
that grading scale has been established ahead of time.
An outstanding feature of the Bristol Bay fishery, MR. REAUME said,
is the "loyalty bonus" for delivering 100% of their fish to one
processor. This bonus does not have to be fair to elicit loyalty.
Absence of "shopping around" tends to put downward pressure on
salmon prices within the market.
Another feature of Bristol Bay agreements is custom processing
agreements where one processor will process the fish of another.
This is quite common. The side effect here is a possible payment
of side payments. In relation to this, it is known that the CEOs
to the six large processors take common vacations to various
foreign countries and while they have asserted under oath that they
never discussed price during those vacations, the opportunity is
there.
Finally, MR. REAUME said, although Alaska's share of the Japanese
salmon market has been declining in recent years, the last data he
saw have Alaska continuing to hold in excess of 50% of the red
salmon market and comparable species market in Japan.
In conclusion, he strongly supported legislation such as SB 306 for
policy reasons.
DORN HAWXHURST, Cordova CDFA, supported SB 306, because it
clarified ambiguities in existing laws. It also removes
inconsistencies between state and federal laws. It makes a more
level playing field for fishermen when negotiating with processors.
WILLIS KIRKPATRICK, Department of Commerce, supported SB 306. The
Department feels that some stability of price might be established
over time with the fishermen and processors working together. The
finished product could be taken onto the market with some assurance
that the distribution of that product would have some stability in
price to assure future contracts.
KATE TROLL, South East Alaska Seiners Association, said Mr. Reaume
concentrated on Bristol Bay salmon, but the other half of the
component is pink salmon. She said they do not deal with the
Japanese, but they do move a considerable volume on the domestic
market. Some of the same problems are encountered although they
don't have the problem with the Japanese. She supported SB 306.
MS. TROLL explained that the fishing industry had changed from a
company town type of set up to a situation where the fishermen
didn't really have a business partner relationship with the
processors where there was price and profit sharing agreements that
could be openly discussed. Major processors have felt they
couldn't participate in discussions because of the antitrust
regulations.
She noted Senator Duncan's remark about the price in Canada and
said that it has nothing to do with quality and has everything to
do with having a union and having collective bargaining.
RICK LAUBER, Pacific Seafood Processors Association (PSPA),
supported SB 306. He said the objective is admirable. Based on
advise from their anti trust lawyer, there will be no change in
activities of the members of the PSPA. While this bill exempts
fishermen from state law, it has no affect on federal law. This
bill is an excellent one, but he did not want to cause any false
hopes.
Number 522
MR. FORBES commented that he did concur with Mr. Utermohle's March
15 memorandum.
SENATOR DUNCAN responded to Mr. Schactler's comment about changing
section 2. He said there seems to be some confusion over what that
phrase means. MR. FORBES said deleting the language would take the
processors out of the picture. It would allow fishermen to
negotiate with one processor at a time rather than collectively.
JERRY MCCUNE, President, United Fishermen of Alaska, supported SB
306. It is a good start, because we need the exemption. He said
it was his opinion that the language in section 2 should be left
in.
GEORGE UTERMOHLE, Legislative Affairs, said the section 2 language
is intended to provide some efficiency in the procedures whereby
the fishermen negotiate with processors eliminating the need for
them to negotiate individually with the processors.
SENATOR MILLER said he would hold the bill until there was a quorum
and announced HJR 34 (FED FISH RESEARCH & DEVELOPMENT GRANTS) to be be
up for consideration.
TAPE 94-30, SIDE B
Number 580
KAREN BRAND, Legislative Aide for Representative Moses, said HJR 34
requests the U.S. Department of Commerce give a high priority to
fisheries development project grants for the Alaska salmon
industry. While the ground fish industry has ongoing development,
the salmon industry is undergoing stresses which have affected its
ability to compete in the changing world market, she said.
JERRY MCCUNE, UFA, supported HJR 34.
SENATOR MILLER said it was his intent to bring this bill up again
on Monday and he announced HJR 50 (NPFMC COMPREHENSIVE
RATIONALIZATION PLAN) to be up for consideration.
KAREN BRAND, Legislative Aide for Representative Moses, said HJR 50
simply reaffirms the importance of the shore based processing
industry to Alaska and asks that the North Pacific Fisheries
Management Council incorporate fairness, equal rights of access,
and equity to this sector of the commercial fishing industry when
it considers its current comprehensive rationalization plan.
SENATOR MILLER said it was his intention to bring all three of
these bills up on Monday and adjourned the meeting at 4:29 p.m.
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