Legislature(2017 - 2018)BUTROVICH 205
03/24/2017 03:30 PM Senate RESOURCES
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| Audio | Topic |
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| Start | |
| Overview: Alaska's Seafood Industry | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 24, 2017
3:30 p.m.
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Natasha von Imhof
Senator Shelley Hughes
Senator Kevin Meyer
MEMBERS ABSENT
Senator John Coghill, Vice Chair
Senator Bert Stedman
Senator Bill Wielechowski
COMMITTEE CALENDAR
OVERVIEW: ALASKA'S SEAFOOD INDUSTRY
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
CHRIS HLADICK, Commissioner
Department of Commerce, Community and Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Commented on his and the department's place
in the state's fishing industry.
TRENT HARTILL, Federal Fisheries Coordinator
Alaska Department of Fish and Game
Kodiak, Alaska
POSITION STATEMENT: Presented a high-level overview of
fisheries management and jurisdiction in the State of Alaska.
GLENN MERRILL, Assistant Alaska Regional Administrator
National Oceanic & Atmospheric Administration (NOAA)
Juneau, Alaska
POSITION STATEMENT: Provided a high-level overview of the role
of the State of Alaska in federal fisheries management.
ALEXA TONKOVICH, Executive Director
Alaska Seafood Marketing Institute (ASMI)
Juneau, Alaska
POSITION STATEMENT: Provided an overview on how ASMI brands the
Alaska seafood commodity.
ANDY WINK, Seafood Economist
McDowell Group
Anchorage, Alaska
POSITION STATEMENT: Provided an overview of research contracted
by ASMI since 1998.
NICOLE KIMBALL
Pacific Seafood Processors Association (PSPA)
Anchorage, Alaska
POSITION STATEMENT: Provided an overview of PSPA participation
in marketing Alaska salmon.
MARK VINSEL, Executive Administrator
United Fishermen of Alaska (UFA)
Juneau, Alaska
POSITION STATEMENT: Provided overview of industry marketing
initiatives, technology and modernization, and sustainable
management.
ACTION NARRATIVE
3:30:14 PM
CHAIR CATHY GIESSEL called the Senate Resources Standing
Committee meeting to order at 3:30 p.m. Present at the call to
order were Senators Hughes, von Imhof, and Chair Giessel.
^OVERVIEW: Alaska's Seafood Industry
OVERVIEW: Alaska's Seafood Industry
3:30:44 PM
CHAIR GIESSEL said the committee's agenda today was an overview
of Alaska's seafood industry. She said this committee is very
concerned about the vibrancy and success of Alaska's coastal
communities, and control of our fisheries was one of the things
that pushed Alaska to statehood. Senator Ted Stevens was
instrumental in establishing Alaska's control over its fisheries
with the Magnuson Stevens Act that will be 41 years old next
month. It serves a two-fold purpose: a spear against foreign
fleets and a shield mandating sustainably managed fisheries.
Senator Stevens' vision of value-added resources was extremely
important and has guided the state and this industry since its
inception.
3:31:39 PM
CHAIR GIESSEL said a panel of great presenters will show the
interaction of local, state, and federal officials with private
industry in sustainably managing the state's fisheries. She
invited Department of Commerce, Community and Economic
Development (DCCED) Commissioner Chris Hladick forward adding
that he has a unique perspective having managed the seafood
community of Unalaska in a previous position.
3:32:32 PM
CHRIS HLADICK, Commissioner, Department of Commerce, Community
and Economic Development (DCCED), Juneau, Alaska, said his
"journey of education and discovery about commercial fishing in
Alaska" began on the Yukon River in the 1990s with meeting
Sidney Huntington and learning about the chum fishery. In 1994
he went to Dillingham as its city manager and his fisheries
education really took off. He said Bristol Bay is home to the
largest red salmon fishery in the world and the history of the
commercial salmon fishing in "the Bay" goes back to the late
1800s.
3:33:05 PM
SENATOR MEYER joined the committee meeting.
COMMISSIONER HLADICK said life in Dillingham revolves around
fishing seasons and the quality of their fish is a source of
pride for everyone in the community - and he includes fishermen
and processors that come from Outside as part of the community,
because they all contribute.
In 2001, the commissioner said he moved his family to Unalaska,
home to the International Port of Dutch Harbor. He was aware of
inshore/offshore fishing, but had no idea what he was getting
himself into. He learned what ground fish are and the importance
of the Bering Sea to the Alaskan and the U.S. economy not to
mention the fact that its products are delivered worldwide. The
shipping infrastructure in Unalaska can ensure that fish arrives
on a scheduled service virtually anywhere on the globe.
He also learned about the North Pacific Fisheries Management
Council and that Alaska has the best managed fisheries in the
world, bar none. Fish stocks are managed with input from all
sectors of the industry and government and rely upon sound
science. It's a process that works.
COMMISSIONER HLADICK said one of the reasons he wanted to move
to Unalaska was because it ranks in the top schools in Alaska on
a regular basis and it also has the Coast Guard, an integral
component of any fishing community in Alaska. If a ship gets in
trouble in the Bering Sea or any Alaskan waters, there is only
one group to call: the U.S. Coast Guard.
COMMISSIONER HLADICK said seafood is a bright spot in Alaska's
economy, and others will testify about the numbers of jobs and
total value created, but the competition is fierce. There are
more options for fish protein alternatives coming on the market
every day. But he has also learned that the fishing industry
can turn on a dime to get things done to adapt to markets. One
year, surimi is the optimal product sought by the market, the
next is filets: the equipment in the plant gets taken out and
new efficient equipment gets installed in a matter of months.
Government could never respond this fast. The fishing industry
is dynamic and ever vigilant in responding to market demands,
which can make it a bit of a roller coaster for them and the
community in which they reside.
He said they would also hear today from the Alaska Seafood
Marketing Institute (ASMI) and the job it does for Alaska. As
commissioner of DCCED, he is on over 20 boards, but he is
honored to be on the ASMI board working with industry members to
promote the best Alaska has to offer.
Anyone who has been to Unalaska realizes that commercial fishing
is not just about the boats, not just the processors; it's also
about support industries: welding, trucking, cold storage, fuel
and equipment, ship supply, bulk food supply, having capable
labor 24/7, and it's having everything available 24/7. It's the
contractors that build the docks, the power plants, living
quarters, and processing facilities that all provide jobs and
hard dollars into the community. It's a symbiotic relationship
between industry and the community, with both benefits.
Communities have a host of responsibilities in their link to the
economy. Capital projects include public facilities: docks,
landfills, power plants, waste water and drinking water
facilities, clinics, schools, public services such as police as
well as fire and emergency medical services (EMS). Often the
community provides the public library, the only place for
workers to go and check their email.
So, you may ask how that is different than anywhere else in
Alaska. Commissioner Hladick said it's different, because there
is an ebb and flow to fishing seasons creating peaks and valleys
in utility and service demand. Unalaska is a community of 4,500
people, but 32,000 airplane seats are sold each year destined
for Unalaska. All services are staffed appropriately to meet
this demand. For instance, the water plant in Unalaska provides
up to 7 million gallons a day to meet the demands of the
processing plants. This utility is the fifth largest water
supply in Alaska based on volume. Municipal government can never
let up on planning and maintenance.
In summary, he said living in rural Alaska in fishing
communities has been an incredible experience for himself and
his family. The exposure he has gotten while working with
multiple state and federal agencies has been a learning
opportunity of a life time. While the commercial fishing
industry is dynamic and has many complexities regarding the
plethora of federal and state agency regulations, there is
tremendous opportunity for innovation to increase the value of
Alaska's seafood products. The seafood we produce comes from an
incredible renewable resource and it is managed wisely, he said,
and he is honored to come to know many of the players in the
industry and know that every day they work to sell the brand and
maintain the highest quality seafood possible wild sustainable
seafood to the world. "It's a great story and I'm proud to be
part of that story."
3:39:27 PM
CHAIR GIESSEL thanked Commissioner Hladick for his remarks and
finding no questions, she said the committee would go on to the
interaction between state and federal agencies, and welcomed the
Alaska Department of Fish and Game (ADF&G).
3:40:05 PM
TRENT HARTILL, Federal Fisheries Coordinator, Alaska Department
of Fish and Game, Kodiak, Alaska, said he would present a high-
level overview of fisheries management and jurisdiction in the
State of Alaska. In general, there are two primary regulatory
bodies in Alaska that are responsible for fisheries management:
one is the Alaska Department of Fish and Game (ADF&G), and the
regulations that govern these fisheries are developed through
the Alaska Board of Fisheries. These fisheries generally occur
from zero to three nautical miles. The other primary agency is
the National Marine Fisheries Service (NMFS) and the regulations
for these fisheries are developed through the North Pacific
Fishery Management Council (NPFMC). These fisheries occur from 3
to 200 miles offshore. He noted that the ADF&G commissioner has
a dedicated seat on the NPFMC, so the state has a role in
assisting in the development of regulations and fisheries
management in the federal fisheries.
3:41:46 PM
Within these two management bodies there are three general types
of fisheries: a federal fishery that occurs in federal waters
from 3 to 200 nautical miles offshore and those regulations are
guided by the Council process. The harvest in these fisheries is
deducted from a federal total allowable catch (TAC), the target
amount of catch for vessels to take.
The second type of fishery is a parallel fishery and that occurs
inside state waters. It is managed by the ADF&G through the
Alaska Board of Fisheries. The unique nature of this fishery is
that the Board of Fisheries generally adopts the federal rules
and regulations that occur in the adjacent federal waters. This
provides a seamless transition for the fishery participants 0 to
200 nautical miles offshore. Despite the federal rules being
adopted into state waters, it's still a state managed fishery
and still falls under the Alaska Board of Fisheries
jurisdiction. Harvest in these fisheries is deducted from the
total federal TAC.
3:43:12 PM
SENATOR HUGHES asked if the TAC is per vessel or per region.
MR. HARTILL answered in open access fisheries, vessels compete
for the amount of available TAC and there is no individual
allocation. But some fisheries have individual allocations. His
example is open access.
3:43:43 PM
The third type of fishery is a state-waters fishery that uses a
guideline harvest level (GHL), which is analogous to the federal
TAC. These fisheries are wholly within the Alaska Board of
Fisheries process and only prosecuted from 0 to 3 nautical miles
offshore.
3:44:08 PM
MR. HARTILL provided a map of state and federal fishery
boundaries noting that some areas of state and federal areas
align better than others, but in general there is pretty good
agreement between the state and federal government on where
fishery boundaries occur.
MR. HARTILL said he would use the Pacific cod fisheries in the
central Gulf of Alaska as an example of where some of the
overlaps occur. The state has many fisheries and there is no
single template that is used. The fisheries are generally geared
towards the user groups, the areas, the fleets, and the target
species. He explained that the acceptable biological catch (ABC)
limit is a bright red line that the federal fisheries don't want
to exceed. The total allowable catch (TAC) is an amount less
than the ABC and is what they target to catch.
MR. HARTILL explained that the central Gulf of Alaska has an
acceptable biological catch (ABC) and 75 percent of that is
allocated to the TAC. That is further distributed between the
two seasons, A and B, with a little bit more dedicated to the A
season compared to the B season. Within each of those the
Pacific cod is allocated to specific gear groups, and that is
what actually hits the water. Twenty-five percent of that is
allocated to the state waters fisheries in the form of GHL. That
25 percent is further distributed between the different
management areas in the Central Gulf (Cook Inlet, Kodiak, and
Chignik are the three state management areas). The different
proportions of GHL are allocated to the gear types in these
fisheries.
3:47:59 PM
SENATOR VON IMHOF asked if the A season and the B seasons are
completely separate for the federal and state fisheries.
MR. HARTILL replied that they are completely separate.
SENATOR VON IMHOF said it seemed that some areas are getting
fished twice.
3:50:14 PM
MR. HARTILL explained that the A season and the B season in the
federal fishery can occur from 0 to 200 miles in the form of a
federal fishery and the parallel fishery and the state season
(GHL) starts when that fishery closes.
3:50:35 PM
SENATOR HUGHES said about 75 percent of the allocation goes to
the 3 to 200-mile marker, leaving 25 percent for the smaller
area and asked why. Are there more fish closer to land?
MR. HARTILL answered that when the state waters GHL fisheries
were developed there had to be a starting point for allocation
and one of the metrics that informed the Board of Fisheries in
development of these fisheries is the historic proportion of the
catch that occurs inside of three miles, and at the time it was
about 25 percent. That is where the board started the
allocation.
SENATOR HUGHES said she assumed that they have stuck with that
proportion because it has worked well.
MR. HARTILL answered yes, and added there are GHL fisheries in
many other areas of the state that might have a different
percentage, which reflects historical participation in that
area. Stakeholders drive the board process and can advocate and
request modifications. For example, the board increased the
allocation to the fisheries in the South Alaska Peninsula area
from 25 percent to 30 percent. The beginning allocation amounts,
and the ongoing management of each fishery is a Board of
Fisheries job.
3:53:09 PM
MR. HARTILL said the next slides were a high-level overview of a
federal fishery, a parallel fishery, and a state waters fishery,
the take-away being the difference in management of the
fisheries.
The federal Pacific cod fishery is 3 to 200 nautical miles
offshore. The harvest limit is based on a fixed percentage of
the Pacific cod ABC and there are specific gear sectors for
trawl, long line, pot, and jig gear. There are also separate
allocations for whether the operations are catcher vessels
versus catcher processors.
3:54:40 PM
MR. HARTILL explained that the Parallel Pacific Cod Fishery
occurs just in 0 to 3 nautical miles and is essentially a
federal fishery that occurs inside state waters where the state
adopts similar regulations. It is also called a concurrent
fishery. It has a shared TAC, a single overall total allowable
catch for all participants, whether they are inside or outside
three miles, and the same gear and sectors that participate.
However, the Board of Fisheries has provided some bottom trawl
restrictions: the Gulf of Alaska has quite a bit of state waters
that are closed to bottom trawl gear. The A and B seasons also
apply during the parallel fishery. There is no gear limit, but
the board has developed some vessel length restrictions for
certain gear types and in certain areas.
He explained that the differences between the parallel and the
federal fishery are:
-the parallel fishery is open access. This essentially means
that any vessel can participate as long as it follows the other
rules, such as seasons and gear types. (The State of Alaska
doesn't administer an FFP or an LLP program nor does it
recognize the LLP or FFP requirements in the federal fishery.)
-the state also adopts most Steller sea lion protection
measures, and
-the observer program requirements only apply to the federally
permitted vessels.
3:56:35 PM
MR. HARTILL further explained that the state waters Pacific cod
fisheries are only 0 to 3 NMI and were developed through the
Board of Fisheries process; the harvest limits are based on a
percent of the federal Pacific cod ABCs. The seasons are opened
after the federal parallel fisheries close, which prevents
overlapping fisheries from going on at the same time.
One of the key differences between the parallel and federal
fisheries and the state waters fisheries is the gear. Most of
the state waters Pacific cod fisheries are open to just pot and
jig gear with a couple of exceptions: one in Prince William
Sound and one in the Aleutian Islands. Both Prince William Sound
and the Aleutian Islands are open to long line gear; the
Aleutian Islands is also open to trawl gear.
MR. HARTILL said there are gear limitations: 60 pots and 5 jig
machines, and most areas have vessel length limitations. The GHL
fisheries have an access provision that is different than a
permit system. The state implements an exclusivity requirement,
essentially a way to control a vessel's participation in
different registration areas in the same calendar year. So, some
areas have more stringent requirements than others.
The state has Steller sea lion protection measures, but only the
rookery protection measures. So, the federal haul out protection
measures are not adopted in the state water's fisheries. There
are no observer program requirements for the GHL fisheries.
3:58:25 PM
SENATOR VON IMHOF asked how long the parallel and federal
fishery seasons are.
MR. HARTILL answered that a number of factors influence the
season length: one is the size of the TAC and another is the
participation in the fishery. In general, the fisheries close in
February or March.
SENATOR VON IMHOF said that closure would amount to 30 to 60
days and asked if smaller boats will fish the state waters
versus bigger boats fishing the federal waters. How do fishermen
select which fishery to participate in?
MR. HARTILL replied that there is a lot of overlap. Many of the
vessels will participate in both the federal parallel fishery
and the state waters fishery, but many only participate in the
state waters fishery. So, it's largely dependent upon the
business plan and other opportunities that the vessel will have.
3:59:49 PM
MR. HARTILL summarized that there are two management
jurisdictions in Alaska: federal and state. There are three
types of groundfish fisheries: the federal, the parallel, and
the state, and they have varying levels of overlap. There isn't
a single form of fishery in Alaska; each is unique and highly
dynamic across all of the areas.
4:00:50 PM
SENATOR HUGHES thanked Mr. Hartill for his presentation and
asked how federal employees work together with state employees.
MR. HARTILL explained that the state has a good working
relationship with the in-season federal management staff.
Typically, as the federal fisheries begin to wind down (as they
approach their TAC), the state will be in contact with them to
determine the timing. The state has a time period unique for
each area in regulation on when the state waters fishery will
open. So, they have some flexibility in the timing of these
closures on the federal portion and the opening on the state
portion.
SENATOR GIESSEL thanked Mr. Hartill for his very good
presentation and welcomed Glenn Merrill to the committee.
4:02:50 PM
GLENN MERRILL, Assistant Alaska Regional Administrator, National
Oceanic & Atmospheric Administration (NOAA), Juneau, Alaska,
said he would provide a high level and relatively brief overview
of the role of Alaska in federal fisheries management. Within
the federal system, many of the concerns and issues that
residents of Alaska have are recognized through specific
provisions in the Magnuson Stevens Act, which he would touch on
briefly, as well as the North Pacific Fisheries Management
Council (NPFMC) process. He would then provide examples of how
NOAA coordinates with residents of Alaska as they manage the
federally managed fisheries.
4:03:44 PM
MR. MERRILL said the residents of Alaska interface with the
federal government for the day-to-day management of the federal
fisheries through the North Pacific Fisheries Management Council
(NPFMC), through cooperative management for a number of species,
and ongoing research. The federal process is a very public
process, because they the importance of engaging with the public
seriously so that they understand the implications and the
management process used at the federal level.
4:04:33 PM
MR. MERRILL acknowledged that the nuances of fisheries are
complex, but Senator Stevens and other senators recognized the
importance of having direct involvement by the stakeholders in
the policy development process and that is unique about the way
the fisheries are managed in Alaska through the Magnuson Stevens
Act.
The NPFMC is a policy development body. It recommends policies
to the federal government and the federal authorities are
responsible for reviewing those policies to make sure they are
consistent with existing laws, and then they implement the
regulations that result from those policies. The State of Alaska
is a key voting member on the NPFMC having 6 of the 11 voting
seats. The ADF&G commissioner has one of those seats and the
other five represent a variety of different interests from
various communities and different fishery groups that are active
in the fisheries.
The Magnuson Stevens Act requires balancing a lot of different
interests in developing policies. Fisheries is complex;
typically, restricting or limiting one fishery for one set of
participants provides opportunities for others. The Magnuson
Stevens Act recognizes that by requiring all of these policies
to balance a range of "national standards." Four of the ten
standards are: trying to achieve the optimum yield from the
fishery, providing for fair and equitable allocations among
residents of various states, providing for sustained
participation in communities, and minimizing by-catch.
4:06:30 PM
MR. MERRILL used groundfish catch as an example of the balancing
act. Groundfish refers to basically anything except for salmon,
shellfish, herring, and halibut. He showed a chart of groundfish
catch in the federal fisheries off of Alaska in metric tons for
a number of years and explained that they have attempted to
ensure that active fishermen are minimizing by-catch and they
are doing a very good job of that from a groundfish perspective.
Ninety eight percent of all of the groundfish that are harvested
are retained. This is done through a variety of different
regulations.
Key to that is Alaska's very robust scientific and research
program and that includes science and research done in Alaska
and what the federal government does in terms of grants that are
active in a lot of these fisheries research areas. One of the
hall marks of federal fisheries off of Alaska is that they are
very linked to their science. That isn't the case in all areas
in the nation.
MR. MERRILL stated that Alaska has the most effective
monitoring, counting, and enforcement systems. It has the
largest at-sea observer program in the nation; tens of thousands
of days are observed on various vessels throughout Alaska. That
provides very essential information that is used in their day-
to-day management of the fisheries. There are limits on fishing
capacity and on the total amount of catch that is allowed, and
those are adhered to. Uncertainty in state management policies
is recognized by having precautionary and conservative
management. They want to understand the impacts of habitat and
protections and how that can help all species moving forward.
4:09:33 PM
SENATOR VON IMHOF asked if the U.S. has a way to monitor foreign
vessels that come into the Aleutians or Bristol Bay right at the
200-mile mark. How do you handle that?
MR. MERRILL answered that NOAA undertakes a robust enforcement
process particularly with the U.S. Coast Guard and they have a
monitoring system to ensure that vessels don't encroach into
domestic waters. No foreign vessels are authorized to fish in
U.S. waters. So, if a vessel were to cross over into our
exclusive economic zone (EEZ) that would be a violation of laws
that could be prosecuted. It is relatively rare, but they
certainly keep an eye on it.
4:10:36 PM
SENATOR HUGHES asked how many foreign vessels hover within 100
miles of that 200-mile mark in any given year.
MR. MERRILL answered that it is difficult to know because it is
such a vast amount of ocean, but they have joint enforcement
agreements with Russia, Korea, and Japan, and other nations that
border U.S. waters in the North Pacific. For the most part some
vessels, including ours, will fish close to the line, because
that happens to be where the stock is, and they are fishing off
their allocations that are provided through their domestic
management bodies. It is difficult to provide a precise number,
but the idea is to better understand whether their vessels are
increasing the amount of activities they have near Alaska's
waters. They haven't seen a high degree of interest, but it is
monitored.
4:12:00 PM
SENATOR HUGHES asked for a ballpark estimate.
MR. MERRILL estimated that probably a handful of vessels fish
really close to the line, primarily between the U.S. and the
Russian maritime boundary for pollock. That varies from year to
year. Because they are fishing there doesn't necessarily mean
that they are encroaching into U.S. waters; it could simply be
that happens to be where the stocks are. Sometimes U.S. vessels
get close to the line, as well.
4:12:42 PM
SENATOR MEYER asked how NOAA monitors these activities; by
satellite, by drones? What jurisdiction do they have if someone
is where they shouldn't be in our area?
MR. MERRILL answered that a variety tools are used: satellite,
overflights with the U.S. Coast Guard, cutter presence, and
reports from the fleet if they see vessels that are near the
maritime boundary. Some vessels use an automatic identification
(AIS) system.
4:13:31 PM
SENATOR MEYER asked what jurisdiction NOAA has.
MR. MERRILL replied that NOAA has a variety of enforcement
tools: the domestic laws for one - the Lacey Act and Magnuson
Stevens Act, for instance. A number of these countries are also
members of various "regional fishery management organizations,"
that have agreed to certain provisions and restrictions on the
use of their vessels in high seas. If they have an issue with a
vessel in those cases, then they can bring a case to the
domestic body and address it. They have had some success with
scrapping or removing several vessels from service for various
infractions that have occurred over the years. This is an
agreement on an international basis, as well.
Some of the domestic agencies have joint enforcement agreements
with NOAA, he said. In other words, they would inform NOAA if
they witness any vessel behaving in a way that would be
inconsistent with their domestic laws or our domestic laws if
that vessel were to transit back into their waters. Those
incidents can be pursued through these joint agreements.
4:14:59 PM
MR. MERRILL highlighted that the NPFMC and NOAA are always
looking at ways to innovate management. They have a very robust
observer program, and one of the things the Council and the
federal government has been responsive to and is trying to find
better ways to gather at-sea information that is perhaps less
onerous or less difficult than having observers on board
vessels, which is a concern for some of the small-boat hook and
line fleets. So, they have developed a series of arrangements
with the fleet to have volunteers take cameras on board their
vessels to see whether some video system could be used to detect
the specific species that are being discarded at sea and measure
those to use the information in their day-to-day management.
They just published yesterday a proposed rule that will look at
ways to enshrine this in regulations that they hope to have in
place for next year to provide an opportunity for some of these
small boats to take a camera instead of a human on board. This
kind of innovation has allowed Alaska to be at the forefront
with its management by continuing to look at ways to work with
the stakeholders, engage them in finding solutions to problems
that they have, and yet at the same time recognize the
importance of getting good data for management.
4:16:38 PM
MR. MERRILL highlighted a few places to look for information and
context on the variety of groups that are involved:
-National Oceanic and Atmospheric Administration (NOAA)
fisheries
-North Pacific Fisheries Management Council
-International Pacific Halibut Commission
4:17:08 PM
SENATOR GIESSEL thanked Mr. Merrill for his comments and said
once the seafood is caught how it gets to market is another
issue. She invited Ms. Tonkovich to talk about ASMI.
4:17:53 PM
ALEXA TONKOVICH, Executive Director, Alaska Seafood Marketing
Institute (ASMI), Juneau, Alaska, said she would give a brief
overview of how ASMI brands the Alaska seafood commodity. She
would talk about the Alaska brand in the seafood market place,
the global factors impacting the seafood, sustainability, eco-
labels and marketing, and Alaska's responsible fisheries
management from a marketing perspective.
4:18:10 PM
MS. TONKOVICH said ASMI is a public/private partnership between
the Alaska seafood industry and the State of Alaska; they
promote all commercially harvested seafood from the state and
they are the official promotional arm for the State of Alaska.
ASMI's current budget breakdown demonstrates that they are truly
a public private partnership and that ASMI is a good example of
how industry, state, and federal governments collaborate to
promote a U.S. product. ASMI is currently receiving money from
the State of Alaska general fund and the Alaska seafood industry
through a voluntary assessment, which is paid by processors
through the State Department of Revenue. ASMI also receives
federal funding through the U.S. Department of Agriculture's
(USDA) Market Access Program, a federal grant which ASMI
competes for annually. The funding goes towards promotion of
U.S. agricultural commodities in international markets.
4:19:23 PM
MS. TONKOVICH said ASMI is part of a network of commodity boards
and industry associations who also compete for the USDA grant
funding and who also promote U.S. goods overseas. Some are
public private partnerships with their state, like ASMI. Others
are primarily industry driven. They all share the goal of
raising the economic value of their goods and promoting state,
country, and commodity brand and ASMI collaborates with these
commodity groups and combines resources whenever it can.
MS. TONKOVICH said ASMI is the brand manager for Alaska seafood
and they aim to promote that brand in the United States, as well
as 27 other countries. While they strive to have some
consistency in their brand, the same messaging attributes and
aesthetic does not work in every market. Through market
research, in-country expertise and close alignment with
partners, they strive to find a message and a promotional
vehicle to suit each market and market segment. They use several
different platforms; ecommerce, in-store retail promotions, and
consumer advertising social media.
4:20:46 PM
She said ASMI uses many traditional means to promote the Alaska
seafood brand like print advertising and in-store promotions,
but thanks to the digital age there are new, exciting, and often
less expensive ways to reach millions of consumers with their
messaging. E-commerce is quickly becoming the new way that
consumers shop for groceries, particularly in Asia, but also in
parts of Europe and in the U.S.
Social media has changed the marketing landscape, as well. On
the first "Alaska Wild Salmon Day" in August, ASMI engaged in
almost exclusively on-line promotional activities. They didn't
hold an in-person event and didn't pay for any advertising. They
used public relations and primarily digital promotions such as
snap-chat in highlighting the event on their social media. This
was a lower cost effort than traditional promotion and they were
still able to generate 94 million consumer impressions.
4:21:47 PM
MS. TONKOVICH said ASMI works with a number of different
partners to promote the Alaska brand and customize their
promotional efforts to build on the strong brand equity of these
partners leveraging their budgets in addition to ASMI's as well
as their customer base and media channels.
That ASMI and the Alaska industry has spent years building the
strength of the Alaska brand, particularly in the U.S., is
apparent. In 2015, for the first time ever, Alaska seafood
became the number one brand among proteins on U.S. menus. "This
is the first time we have ever managed to beat Angus beef," she
exclaimed.
Each year ASMI conducts consumer research in most of its major
markets and the latest U.S. research found that 94 percent of
consumers are more likely to order seafood in restaurants when
the word "Alaska" is used. These numbers aren't quite as high in
international markets where Alaska has a less familiar origin to
consumers.
4:22:48 PM
MS. TONKOVICH said ASMI's primary focus is to add value to the
Alaska brand. However, many things that impact the value of the
seafood are outside of their control. A strong U.S. dollar makes
Alaska's products more expensive compared to competitors in
overseas markets. It also makes the U.S. market a desirable one
for imported seafood. And Alaska faces fierce competition from
farmed and imported seafood as well as other protein sources
because the wild harvest is unpredictable. Things like the
Russian embargo enacted in 2014 closed off our largest roe
market and diverted farmed salmon into our major markets in
Europe and the U.S.
MS. TONKOVICH said sustainability has long been a part of the
Alaska brand. However, the ways in which they have messaged
around this topic have changed in the last decade and a half.
Around the year 2000, the failure of the EU common fisheries
policy led to a collapse in EU fishery stocks, 80 percent of
which were over fished. This prompted a fisheries sustainability
movement and the heightened role of non-governmental
organizations (NGOs) in sustainability. Wild capture fisheries,
like Alaska seafood, have been on the forefront of these
sustainability measures and are decades ahead of other fisheries
and commodity groups.
4:24:40 PM
The fishery sustainability movement led to the formation of the
Marine Stewardship Council (MSC) which is backed by the World
Wildlife Foundation. It was formed to bring market pressure on
companies to support sustainability. MSC needed a fishery to
showcase this movement and Alaska salmon was the natural choice.
Alaska saw a competitive advantage in marketing its
sustainability and so the ADF&G signed on with the MSC to
certify Alaska salmon.
Prior to MSC certification ASMI was already marketing
sustainability, Ms. Tonkovich said, particularly in places like
the U.K., the U.S., and Germany. After receiving MSC
certification, ASMI began to use certification language in its
marketing efforts and was able to capture some additional
promotional efforts through MSC-themed activities; other Alaska
species followed suit in gaining this certification.
As MSC grew globally, ASMI began to see it replace Alaska on
packaging, in-stores, and in advertising. ASMI felt some erosion
of the Alaska brand, because now Alaska salmon would be MSC
salmon. And as MSC has expanded to include fisheries that are
making progress toward but being not fully sustainable, Alaska
fisheries were then grouped in with that broader group.
The Marine Stewardship Council (MSC) has taken hold particularly
in Europe and is aggressively expanding to other markets.
Despite Alaska's track record on sustainability, certification
is a requirement in most of those markets and most customers are
now demanding third party verification of sustainability. Given
that certification is increasingly necessary for market access,
she said, the industry and customers expressed the need to have
a choice in certification programs, and so ASMI developed the
Alaska Responsible Fisheries Management Certification (RFM).
4:26:15 PM
MS. TONKOVICH explained that RFM is an independent third-party
certification of Alaska's seafood sustainability. Alaska salmon,
halibut, black cod, pollock, cod, and crab are all certified by
this standard, which is owned by the ASMI board. RFM is based on
the United Nations Food and Agriculture Organization (FAO) code
and guidelines.
4:26:36 PM
MS. TONKOVICH said fisheries management and certification, which
is the focus of the RFM program, are only two aspects of
sustainability, which is an evolving topic. Alaska does very
well with its fisheries management thanks to the state and
federal regulatory agencies and certification is available to
major Alaska fisheries both through the RFM and the MSC. Another
part of sustainability is full utilization. ASMI supports
industry efforts through their technical program and through
supportive programs initiated by groups like the Alaska
Fisheries Development Foundation. Social responsibility is the
coming trend in sustainability, and again the U.S. has strong
regulatory agencies to manage this. It's not a part of the
Alaska RFM program and it is not known how these trends will
affect Alaska.
More broadly, to many, sustainability is about fishing families
and communities. Alaska's fisheries are well managed so that the
resource will be available for next generations and so that the
Alaska industry will continue to support our communities. This
is an important part of the Alaska story and a key part of its
brand.
4:27:47 PM
MS. TONKOVICH said choice in certification isn't just important
to Alaska, other FAO-based programs have gained momentum
worldwide. Iceland and Louisiana have similar programs to
Alaska's that are fully operational. Australia and New Zealand
are conducting feasibility studies, and Canada and Japan have
expressed interest in forming similar FAO-based programs.
4:28:09 PM
MS. TONKOVICH said they are very proud of Alaska's responsible
fisheries management program, as it is the first certification
to successfully benchmark against a globally developed
benchmarking standard through the Global Sustainable Seafood
Initiative (GSSI), a platform to streamline sustainable seafood
sourcing worldwide. Major companies have signed on that they
will accept certifications that are benchmarked by GSSI. In
fact, Walmart announced that it is changing to include GSSI
certifications.
4:28:44 PM
MS. TONKOVICH said issues of social responsibility and ethical
harvesting practices are the coming waves in the sustainable
movement. This is in part to recent headlines about poor labor
practices in other fisheries. Many major customers are beginning
to feel at risk and are requesting more formal assessments,
which will place an additional demand on Alaska industry to
demonstrate its responsible practices. This is outside Alaska's
RFM program and ASMI will look to industry as it crafts messages
on these topics.
4:29:24 PM
SENATOR HUGHES asked at what point the RFM certification takes
place.
MS. TONKOVICH answered that the RFM certifies major Alaska
fisheries, so the fishery itself is certified, and anyone
selling seafood can say it is certified sustainable seafood.
There is also a mechanism through which people can get chain of
custody, so they can have an audit of the fish from the moment
it's caught to when it is processed and sold in a grocery store.
4:30:09 PM
SENATOR VON IMHOF asked what the additional cost to ASMI is to
do this.
MS. TONKOVICH clarified that the RFM program is managed by ASMI
and has a budget of $1 million per year.
4:30:51 PM
SENATOR GIESSEL thanked Ms. Tonkovich and welcomed Mr. Wink to
the table.
4:31:08 PM
ANDY WINK, Seafood Economist, McDowell Group, Anchorage, Alaska,
said McDowell Group has been a research contractor for ASMI
since 1998. It tracks market conditions, informs industry and
buyers about key trends, submits ASMI's federal grant
application for MAP funds, and supports all ASMI's various
programs with data and strategic consulting services. Beyond its
work with ASMI, the McDowell Group has a long history of
studying economic impacts in the seafood industry, outlining
market conditions, and working on economic development projects
for dozens of clients throughout the state.
In addition to seafood, they provide research services to the
oil and gas, and the mining industry, health care, Alaska Native
organizations, the maritime support sector, as well as
government agencies.
MR. WINK said slide 2 graphed "Alaska Seafood Marketing
Institute Volume and Value by Species (2011-2015)" with an
emphasis on coastal impacts. He said it's important to
understand where the value and the volume comes from. The graph
included all commercial seafood harvest and its ex-vessel value
(the value of the fish as it goes from the fisherman to the
processors). He explained that some catcher-processors process
seafood on the same boat it was caught. In those situations,
they use an imputed ex-vessel price. Most of the harvest volume
is dominated by pollock, cod, and Amendment 80 (A80) species,
which includes mackerel, sole and flounder, and rock fish. Those
three pieces of pie are about 81 percent of the volume and are
primarily federally managed fisheries.
On the value side, the pieces are much smaller, about 42 percent
between the three. The way to look at this is: yes, we catch a
lot of high-volume low-value ground fish, but the value is
represented by a very diverse portfolio of species. Frankly, a
lot of states would count themselves lucky to have just one of
these pie slices. Alaska accounts for 62 percent of the U.S.
harvest volume; no one else comes close to producing that
volume. Halibut, black cod, and crab is less than 3 percent of
the overall volume, but almost over a quarter of ex-vessel
value.
4:34:58 PM
MR. WINK showed a graph of production by product type averaged
over 2013 and 2014, because some years can shift depending on
the species that are caught. It basically indicates that Alaska
produces mostly primary and intermediate products. So, most of
our production will be sold to secondary processors or
distributors, and those buyers also buy species from other
fishery producers and other aquaculture companies. So, Alaska is
definitely competing in a global market place.
He also noted that a lot of Alaska production (about two-thirds
of Alaska's seafood value) comes from foreign markets. Most of
the value from filets comes from pollock, not salmon. Most of
the headed and gutted (H&G) value comes from salmon, halibut,
black cod, as well as Pacific cod.
4:36:27 PM
MR. WINK said slide 4 breaks down the ex-vessel value by Alaska
residents versus non-residents. Non-residents out-earn Alaska
residents overall, but it depends on which species you are
talking about. In the federally managed fisheries, the high-
volume ground fish tends to be more non-resident whereas salmon,
halibut, and black cod tend to have higher percentages of
resident earnings.
So, when one thinks about the Alaska fleet and the seafood that
matters to it and what drives the value for that group, that is
represented by another pie chart where salmon is almost half of
the Alaska resident fleet's value.
4:37:31 PM
MR. WINK said slide 5 graphs the ex-vessel value over time
(inflation adjusted in billions of dollars) using the U.S.
dollar index. Back in the early 2000 Alaska had a real value
crisis when companies and fishermen went out of business,
especially in salmon harvesting. A lot of that was driven by the
strong U.S. dollar at the time. There was also the misfortune of
having relatively poor salmon runs in 2002 and 2003. But that
salmon crisis led to a lot of investment and innovation, and the
entire industry really got better. The products improved, and
the efficiency improved, and as a result value went up. An
important "tailwind" happened at that time in a weakening dollar
(2000 - 2011) making the value of the fish go up. It probably
would have continued the same trajectory, but 2010 and 2009 had
very low pollock harvests. But since 2011, things have shifted
and the values in the fisheries have declined, at the same time
being driven by the stronger dollar.
So, in general, a weak dollar and low index, is good for
Alaska's fishing economy: a strong dollar is bad. It just means
that it takes more foreign currency for buyers to buy our
products.
He pointed out that even this chart says a lot, but it
understates the difference in market conditions between
2001/2002 and 2015. In early 2000, the Russian ruble was quite a
bit stronger; the ruble in 2015 is actually 49 percent weaker
than it was in 2002. That was particularly bad for Alaska
because Russia catches a lot of the same species that we do.
They have also seen larger harvests of pollock, up 96 percent
since 2002. Their harvest of chum/sockeye/pink salmon are all up
dramatically.
Alaska has also faced more competition from things like Atlantic
cod. Between 2002 and 2015 Atlantic cod went up 44 percent and
farmed Atlantic salmon went up 119 percent. At the same time,
halibut and black cod - the two high-value species - have had
their harvest volume drop 56 percent. So, even though the dollar
index was technically higher back in the early 2000, a strong
case can be made that market conditions now are even more
difficult for Alaska seafood producers.
4:41:41 PM
MR. WINK, page 6, said the strong dollar isn't just affecting
Alaska seafood, it's also affecting its two-other major natural
resource industries: oil/gas, and minerals. Seafood volume is
down 8 percent since 2011 through 2015 and we have had a first
wholesale (when a product gets sold from the processor to a
buyer) value change of an 8 percent decline (from $4.6 billion
in 2011 to $4.25 in 2015).
Other industries have been impacted by the strong dollar, too,
as well as other factors. Oil is down from $16.3 billion to $5.6
billion, a 59 percent decrease. Minerals, mainly gold and zinc,
are down from $3.5 billion to $2.6 billion. In this context,
seafood is not the only one being hit by "this currency truck."
4:43:06 PM
MR. WINK referred to slide 7 and said each year the total value
is going to be driven by the catch volume and what it's worth
and there are important changes over time in harvest volumes of
different species. The main species to pick out are salmon,
halibut and black cod, about a $300 million loss. Basically, the
catch is down from 2011 even with slightly higher prices. Salmon
had a larger harvest in 2015, but prices collapsed, partly due
to the large harvest, but also due to the strong dollar and the
fact that it was hard to find competitive buyers for some
species for several reasons. In the end, the ex-vessel value
went to 27 percent since the peak in 2011. That isn't good, but
considering that the dollar index gained 27 percent, that puts
it in the appropriate context.
4:44:46 PM
MR. WINK referred to slide 8 and said the question is always
what is going to happen this year. And there is good reason to
believe the value might increase for the first time in a while.
This year the salmon forecast is better: pinks are way up after
an historically poor run last year; the sockeye forecast is down
next year but prices are building, and demand is building for
that. So, salmon values are expected to rebound in 2017.
The pollock harvest is expected to be down in the Gulf of Alaska
and overall. There is more downside with pollock in terms of the
value and they think it will probably be flat depending on how
the roe harvest and roe markets go. Last year was a poor roe
yield for pollock. A lot of pollock were caught, but the roe
yield wasn't there.
Halibut and black cod quotas are up a little bit, not near they
were historically, but trending in the right direction. There
are strong prices, so they expect value to be up for that. Cod
and flat fish both have seen better pricing, both slightly lower
tax. One thing about expecting less harvest from pollock, cod,
and flat fish, is that the biomass and the biological health of
these species in the Bering Sea is doing very well and the
acceptable biological catch in the Bering Sea for all ground
fish is over 4 million metric tons. However, there is a hard cap
in the Bering Sea of 2 million metric tons. So, no matter what
the biomass is there, and how much they think they can
successfully catch, the rule is not to cross that 2 million
metric ton threshold.
4:47:29 PM
MR. WINK said slide 9 presented a table of the fishing and
processor workers that were down a little bit over all looking
at the difference between the peak in 2011 and 2015 data.
Similarly, slide 10 presented a table for skipper counts and
gross earnings by resident versus non-resident and indicates a
bigger impact on residents.
4:48:13 PM
Slide 11 summarized fishing employment and earnings. Declining
ex-vessel value has had a larger impact on the resident fleet,
both in terms of employment and gross earnings. This resident
fleet has more exposure to salmon and generally includes
smaller, less efficient boats, which are impacted more by
pricing. Then it depends on which fishery gets hit with a poor
harvest from year to year.
4:48:42 PM
MR. WINK said slide 12 graphed ex-vessel value by Alaska regions
in 2013/2014 to see where fishing dollars go: Southcentral is
the largest followed by Southeast and then Kodiak. Even though
those three are the largest in terms of the piece of pie, the
impacts and the money that goes to Western Alaska and Kodiak, as
well, is proportionately larger than Southcentral and Southeast
with the lower populations there. It is a huge part of the
Western Alaska economy given that the pies for Southcentral and
Southeast are so much larger.
4:49:39 PM
MR. WINK said slide 13 charts how this industry impacts coastal
and rural areas in terms of permit holders, active skippers, and
two categories for non-ground fish ex-vessel value comparing
2011 vs. 2016 and 2011 vs. 2015. Basically, they have seen less
participation and less employment, but the gross earnings really
took a hit from 2011 to 2015/16.
4:50:25 PM
MR. WINK said lower employment and lower revenues results in
less residual economic impacts due to spending and taxes. While
the values grew permit values also grew, as well as boat values
and quota values. So, a lot of things got more expensive in the
fisheries and then things started to cool down. In some cases,
prices have come down, but in most cases, they haven't.
Fishermen have less revenue, but they still have big bills.
The lower values also resulted in a balance sheet hit. Salmon
permit values are something that can be tracked, and the total
value of Alaska salmon fishing permits fell 21 percent in 2016,
a loss of $175 million basically off of the balance sheets of
commercial fishermen. Alaska residents bore over $100 million of
that. Basically, they are seeing contraction and less value in
both 2015 and 2016, and a significantly lower harvest volume in
2016.
4:51:51 PM
MR. WINK referenced slide 15, and said current market trends are
low prices for Alaska pollock filets and that is usually the
largest pollock product. Industry is competing fiercely with
Russian product, which is typically sent to China and processed
and then resold as a twice-frozen product. Encouraging things
have been seen in terms of marketing of once frozen versus twice
frozen due to superior quality and hope that continues, because
that has been a very beleaguered product.
Low salmon prices have been seen for a couple of years, but that
in addition to the ASMI's work has really been important in
building demand for salmon and cod, specifically sockeye and
cod. Tremendous in-store demonstrations and promotions have been
done throughout the U.S. and they are really making a
difference.
Crab prices are at record levels and there is low tax, but there
are some mixed results of good fishing where they thought stocks
were lower, but fishermen are still finding the crab. We have
strong prices and better halibut and black cod quotas, so that's
a plus. Retailers overall are finding that consumer demand is
fitting more and more each year with what Alaska's seafood
attributes are. This is really encouraging going forward.
On the flip side, Russia still has a very favorable currency
situation; it makes their cost of production much lower than
Alaska's. Companies over there can really turn out high quality
salmon, pollock, and crab, and Alaska must figure out a way to
beat them in the marketplace. In some cases that will be
difficult.
MR. WINK said pollock roe is another beleaguered pollock product
where supply has grown faster than demand for years, and that
has resulted in very low prices. Historically, the pollock
fishery really depended on roe, because it was a high margin
product and paid a lot of the bills. That is not the case
anymore. These are some of the big things the industry is
facing. He closed by asked for questions.
4:54:48 PM
SENATOR GIESSEL, finding no questions, thanked him for his
presentation and began taking industry presentations.
4:55:22 PM
NICOLE KIMBALL, Pacific Seafood Processors Association (PSPA),
Anchorage, Alaska, showed a map of the nine communities in which
shore-side processing plants are located and explained that like
other trade associations for other resource industries a group
of people came together over 100 years ago for this association
and decided there were enough statewide and federal issues that
they could collaborate on and have an interest in that they
could work together on some of them. That is what PSPA does in
addition to just trying foster a better understanding of the
seafood industry and its importance to Alaska.
4:56:48 PM
MS. KIMBALL said these member companies have about 31 different
shore-side plants and two companies have floating processor
vessels that only buy seafood and process it on shore. These
companies purchase, process, and market hundreds of millions of
pounds of pollock, cod, halibut, sable fish, and all the
fisheries they have heard about today. They are dependent on
state water fisheries and federal fisheries, large boats and
small.
4:57:43 PM
MS. KIMBALL said she wouldn't cover the previously discussed
issues, but focus on seafood value: $4.2 billion in wholesale
value for all the seafood off Alaska annually. We typically
harvest between 5 and 6 billion pounds annually under very
conservative management. It's important because it generates
almost $6 billion in economic activity in Alaska every year.
Domestic markets are very important and key when there is a
strong dollar, but some of the export markets are very critical
for specific species. Alaska makes up 55 percent of all U.S.
seafood exports.
She showed a chart of important species illustrating that Alaska
is in a global fish market. The very tallest bar in 2015 shows
that the global salmon market is dominated by farmed Atlantic
salmon. Wild salmon is what Alaska provides and that is only
about 28 percent of the supply. This makes Alaska price-takers,
which means we don't have enough market share to really drive
prices. This means we are linked to global price trends. So, as
aquaculture or farmed supply increases, Alaska is linked to any
price trends that they create. It's very important to understand
that Alaska is a salmon state, and salmon creates the most
economic activity in Alaska. So, all fisheries, in terms of
jobs, income and total value among all species (from Mr. Wink's
presentation) make up one-third of the total wholesale value of
all fish species off Alaska. It's important to know where we
fall in the global market.
4:59:00 PM
Pollock is another situation that has competing products (white
fish products). Tilapia is one of those. One can see the global
tilapia supply is about 5 million metric tons, and that greatly
outweighs Alaska's total pollock supply of 3.5 million metric
tons. Even the growth in some of these farmed white fish species
markets outweighs the total pollock supply from wild sources.
That creates a big strain on harvesters and processors that are
dependent on pollock. The market is depressed and it's in
terrible shape for all the reasons they have heard today:
competition, market increase in Russian production, a strong
dollar, and a Russian embargo to the point that the U.S. can't
export fish to Russia, but Russia can export fish into the U.S.
This is significant to Alaska because pollock is the state's
highest volume fishery. It has long seasons and supports
activity in a lot of different communities with processors from
the Pribiloff Islands, the Alaska Peninsula, and Gulf of Alaska
communities like Kodiak, King Cove, and Sand Point, not to
mention Dutch Harbor. Pollock has the volume to keep processing
plants in some communities operating nearly year-round, and
that's important for job growth. Like salmon, pollock makes up
about one-third of the first wholesale value of all seafood off
Alaska; between pollock and salmon that's two-thirds, which is
why she uses them as examples.
MS. KIMBALL noted that the Department of Labor and Workforce
Development (DOLWD) came out with their unemployment rate of 6.4
percent for February. Unemployment fell in 10 different areas
across the state and the regions with winter fisheries, the
ground fish fisheries, had the lowest unemployment rates.
5:01:04 PM
MS. KIMBALL said she was really asked to talk about the key to
seafood being control of supply. Buyers want to commit to those
processing companies that they trust to follow through with
supply and they only want to invest in species that are reliably
available. So, generally that combination - volume and
reliability - puts Alaska in a unique position despite all the
other market challenges. In these highly competitive markets
from species that have a controllable supply and low cost of
production, the value is added to Alaska's seafood with
investment in marketing, production, and management.
At each step of the supply chain everyone is adding money to
increase the value. Harvesters and processors clearly have "sunk
costs." Even though last year saw a terrible pink salmon run,
everybody still had to make their boat payment, have crew ready,
and processing plants. When the fish don't materialize those
costs are lost. Retailers and food services are a little bit
different. They have sunk costs, as well, but they aren't tied
to a specific species or specific product. They can walk away to
some other species or product.
5:02:28 PM
MS. KIMBALL said Alaska competes by pushing out new product
development to find new seafood products that major buyers are
going to want to push out to their consumers. So, creating new
fish consumers is a major objective all the time. She listed
some of the domestic buyers indicating that a strong dollar is
putting more emphasis on domestic markets. The main message from
this slide is because Alaska doesn't have the marketing budget
to move the whole needle on U.S. seafood demand, it needs to
leverage the marketing budgets of these major buyers to tell
that story for us. In other words, we need them to use their
marketing budgets to say why Alaska seafood and Alaska wild
seafood is the best product. A foot-long wild caught Alaska
pollock is a new product from Subway; it's in 1,000 stores. That
took two years of research and development by one of PSPA's
processing company members. Alaska pollock is coated in sea salt
and pepper breading; it's precooked (to meet the customer's food
safety requirements), but the marketing around it is
interesting: it's no longer a "fish" sandwich; it's wild caught
Alaska pollock, recognizing that pushing the Alaska brand is
good for them in selling more fish. She showed a short YouTube
video of a McDonald's Filet-O-Fish, a product that has been
around for 50 years, but they changed the marketing. That
happened because one of their companies got McDonald's buyers to
physically come out and go on these boats and experience the
fishery. So, now they are using the fishery, fishery
participants, crew members, and social media to market that
Alaska fish.
5:03:20 PM
MS. KIMBALL said she was also asked to talk about some
investments in operations and facilities. There are a lot of
demands on the industry to keep up with current infrastructure
and a lot of the infrastructure is aging at the same time. As an
example, in the past they have heard there is a lot of
investment in new technology such as filet and vacuum packing
machines, moving more from the canned salmon world into filets.
That continues to happen. There has been a lot of investment in
salmon oil extraction machinery to move into the nutritional
supplement market. There has also been a lot of "boring
investments" like moving from traditional lighting to LED
lighting to save money, finding ways to self-power the facility
in case the community can't handle that level of power
generation. At present, salmon has been emphasized, especially
in Bristol Bay, to using refrigerated seawater systems (RSW
tanks) on fishing boats. The impetus comes from seafood
processing companies that are paying financial incentives to
fishermen to meet certain quality standards.
In the future, there is still the possibility of new canning
line technology and automation will likely replace some
functions in processing plants due to minimum wage increases of
26 percent over the past two years. There are also going to be
continued major capital expenditures to expand the existing
fresh and frozen markets. Kodiak has a new facility; it didn't
replace a processing plant or upgrade it, which is unusual. That
plant rounded out all the product forms that that company could
provide. It has state-of-the-art technology; it's highly
computerized, but it offers some great long-term highly skilled
positions for Kodiak residents.
5:07:21 PM
MS. KIMBALL said slide 11 was a "good visual" of how the seafood
industry has survived in the Bering Sea/Aleutian Islands because
of its stability due to the state management system based on
sustainable yield and the federal systems that are based on the
concepts in the Magnuson Stevens Act. It showed the biomass at
over 21 million metric tons; fishing levels and catch limits are
buffered before the catch is tabulated.
5:08:15 PM
MS. KIMBALL said seafood processors invest in this data, because
getting a sustainability certification is key to competing
globally. Meeting these global sustainability standards is a big
win for fishermen in Alaska.
5:10:00 PM
MS. KIMBALL said keeping Alaska seafood as a premium brand,
which is what they are trying to do, and getting a higher value
for that brand means not undermining any of the harvesting
processing management systems that got us to where we are now.
Part of that is this need for sustainable management. Without
funding for weirs, surveys, and in-season management projects
management becomes more conservative to account for uncertainty,
which means less fish across the docks, less income for
Alaskans, less tax revenue for the state, and less revenue
sharing for coastal communities. So, they are always a strong
advocate for keeping those biological systems running.
She said they had already talked about what puts those
investments at risk and summarized the state-specific issues
that can reduce risk, add stability, and help us compete in this
difficult climate are environmental permitting, loan programs,
state marketing efforts, a commercial fisheries management
budget, fishery management policy and regulations, and fish tax
policy.
5:11:14 PM
MARK VINSEL, Executive Administrator, United Fishermen of Alaska
(UFA), Juneau, Alaska, said he would touch on industry marketing
initiatives, technology and modernization, and sustainable
management. He said UFA is an umbrella association for 34-member
groups spanning the fisheries throughout the state and offshore
federal waters.
MR. VINSEL said from the fishermen sector everything relates
back to ASMI and to processors, but he wanted to touch on three
trends. One is direct marketing - fishermen selling their own
fish, another one is regional marketing, and then community
supported fisheries.
5:11:30 PM
MR. VINSEL said direct marketing can be done in four ways: one
is just selling right off the dock and retail and to local
restaurants, and the broader market of shipping outside of
Alaska to U.S. consumers, and U.S. restaurant and caterers. All
those businesses are different from just being a fisherman that
delivers to processors.
He said in 2004 the salmon industry was bad, because there were
a lot of fish, but the price wasn't paying for people to go out
and fish. The legislature formed the Joint Legislative Salmon
Industry Task Force. Over the next five years a total of 50
bills came out with ideas and concepts. SB 286 in 2004
streamlined the paper work and tax burden for direct marketers,
which increased that effort. He explained that the opportunity
for direct marketing varies by local community. Some communities
don't have a local market to sell to - don't have the
infrastructure, electricity costs, transportation, and a
critical mass of other support services.
5:13:02 PM
MR. VINSEL said regional marketing was also spawned by the
legislature in HB 419 that allowed a voluntary assessment of
fishermen in each fishery in a region; they can vote to tax
themselves 1 percent on their catch, which goes to a regional
marketing association that can then invest as the local fishery
needs to develop its fisheries. Right now, RSDAs include the
Bristol Bay Regional Seafood Development Association (BBSDA),
the Copper River/Prince William Sound Marketing Association, and
a few others where the impetus started but were not approved by
the fishermen.
BBSDA identified the quality of fish coming to the processors as
the problem and provided ice barges, equipment, moving of ice,
and moving of fish. Copper River did a lot of branding,
promotions, R&D on nutrition, and product development. These
tools have allowed regional fishermen to go above and beyond in
coordination with ASMI. ASMI only markets for the big picture of
Alaska seafood.
5:14:43 PM
MR. VINSEL said an example of community supported fisheries is
"Alaskans Own," which sells fish in Sitka and Juneau. It pays
ahead on a subscription basis cutting some of the risk out of a
fluctuating price at the dock. Some organic farmers do this in
the Lower 48. The first one in fisheries was in Maine in 2007.
Mr. Vinsel met the person who started it and introduced her to a
few people in Alaska where the concept has gone forward. He
found three or four more community entities in preparing for
today. The Alaska Marine Conservation Council has spawned one
that now services Anchorage, Mat-Su, Homer, Seward, and
Fairbanks. This gives customers confidence in the chain of
custody; they are supporting their local community and their
fishermen stay local. It directly connects fishermen to their
markets. All these rely on ASMI for materials: their promotions,
their brochures, the on-line seafood directory, and chef
collaboratives.
5:16:44 PM
MR. VINSEL said fishermen also directly interact with ASMI
having three seats on the ASMI board, and there is a committee
system where individual fishermen from different fisheries
engage in ASMI planning.
Technological and modernization has helped improve the tough
times in salmon. Chilling and freezing on board has been a big
trend to the point that many processors won't take fish unless
they are chilled either with ice or refrigerated salt water.
This is a lot different than it was in 2000. Having quality fish
provides an opportunity to compete against farmed fish.
A lot of fuel efficiency measures have progressed, although they
all cost money. A fall McDowell study on vessel replacement in
the North Pacific fleet (large offshore fleet) estimated $1.6
billion would be spent in the next 5-10 years on rebuilding and
upgrades. The Port of Seattle commissioned the report and he
thought there were definite Alaska opportunities in that $1.6
billion. UFA members build large vessels in Ketchikan, Seward,
Kodiak, and Wrangell. There are also opportunities for
improvements on small boat fleets around the state.
Navigation technology has improved with using electronic vessel
monitoring instead of an observer, and data networks for how and
where people fish to help them avoid if suddenly there is a high
level of by-catch in a certain area. These require investments,
so both the Commercial Fishing Agriculture Bank and the
Department of Commerce, Community and Economic Development
(DCCED) loan programs have statutory requirements on their
loans. New programs often come through the legislature for
approval. There are fuel efficiency upgrades and some product
quality improvements that have been spawn by the fishermen's
needs. Especially as they are one of the very few tools in the
toolbox for Alaska to favor its own residents with the DCCED
loan programs.
5:19:13 PM
MR. VINSEL said sustainable management is required by the Alaska
Constitution. UFA has a policy for healthy and sustainable
management of fisheries and supports state management of salmon
fisheries, escapement goal management based on biological data,
local management that is adaptive and abundance-based and the
use of the commissioner's emergency order authority on an active
basis for the local management. That includes an opening when
there is a whole surplus of fish coming through or a closing
with no notice because there are no fish. UFA supports mixed
stock management unless there are sustainability problems with
the by-catch fish.
In practice, the cost and the importance of the biological
information - weirs, counts, management plans - have thresholds.
The board of Fisheries process creates these management plans
for what can be foreseen and emergency authority for the things
that can't be foreseen. Sustainability certifications bring an
additional cost, which he calls the social license to operate.
When MSC was started, Alaska was already there, so they came to
us. The Marine Advisory Program does a good job of helping the
next generation fishermen work through the difficulties of
running a fishing business.
5:23:12 PM
MR. VINSEL summarized that Alaska feeds the world and there was
both legislative and ASMI involvement in getting Alaska fish
into the global food aid programs. Very little could be more
beneficial to people who suffer from no protein in their local
area than a shelf stable can of pink salmon. "It's a super
food."
CHAIR GIESSEL thanked the presenters.
5:25:02 PM
There being no further business to come before the committee,
Chair Giessel adjourned the Senate Resources Committee meeting
at 5:25 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 1. ADF&G Presentation to Senate Resources Committee_3-24-17.pdf |
SRES 3/24/2017 3:30:00 PM |
Seafood |
| 2. NOAA Presentation to Senate Resources - 3 - 24 - 17.pdf |
SRES 3/24/2017 3:30:00 PM |
Seafood |
| 3. ASMI Senate Resources Presentation 3-24-17.pdf |
SRES 3/24/2017 3:30:00 PM |
Seafood |
| 4. McDowell ASMI Senate Resources Presentation 3-24-17.pdf |
SRES 3/24/2017 3:30:00 PM |
Seafood |
| 5. Presentation by PSPA - 3 - 24 - 17.pdf |
SRES 3/24/2017 3:30:00 PM |
Seafood |
| 6. UFA Senate Resources - 3 - 24 - 17.pdf |
SRES 3/24/2017 3:30:00 PM |
Seafood |
| Agenda - 3 - 24 - 17.pdf |
SRES 3/24/2017 3:30:00 PM |
|
| 7. USCG 2016 Year in Review.pdf |
SRES 3/24/2017 3:30:00 PM |
United States Coast Guard |