HB 73 - SALMON MARKETING ASSESSMENT & ASMI CHAIRMAN LEMAN called the Senate Labor and Commerce Committee meeting to order at 1:42 p.m. and announced HB 73 to be up for consideration. REPRESENTATIVE HUDSON, sponsor, testified that this bill would extend the current one percent domestic salmon marketing assessment when the law is scheduled to sunset on June 30, 1998. This assessment is essential to continue funding the needs of the Alaska Seafood Marketing Institute (ASMI) and its various programs. It is fishermen and women taxing themselves and trusting the legislature to appropriate it back to them, which it has always done. This fund accompanied with a self-assessment by the processors and a fund available through the federal overseas marketing program are the three funding essentials of the entire seafood industry for the State of Alaska. This has broad support from the harvesters in Alaska and ASMI. SENATOR HOFFMAN stated that one of the biggest contributors to the fund presently are the Bristol Bay fishermen and they feel that ASMI does little to assist them in their markets which are primarily Japanese. They feel that they are unduly taxed by this program. REPRESENTATIVE HUDSON responded that a majority of fishermen and women have indicated strong support for this legislation, but he understands the situation Senator Hoffman is talking about. Representative Hudson said, however, that it is absolutely imperative to have some funds to replace the farmed salmon products that are competing with Alaska salmon markets, particularly in the domestic marketplace. The Japanese market is largely handled by the federal assessment which manages for the sale and export of all Alaska salmon, including those from Bristol Bay. He said those people benefit indirectly by the fact that they are creating a "bigger pie" and a higher perception of value among competing protein sources. Number 127 MS. BARBARA BELKNAP, Executive Director, ASMI, responded to Senator Hoffman that she was sympathetic to his concerns. She was pleased with the Southwest Alaska Municipal Conference resolution to support funding of ASMI. She said they had struggled with this issue since the tax was enacted in 1993, but their problem is that they don't control the supply of product to market. Last year they were able to do a nationwide Safeway promotion for reds and most of the stores also put Bristol Bay salmon on the adds. If they are able to get the product, they do sockeye salmon promotions along with their canned salmon promotions. She noted that the sale of canned red salmon overseas has been boosted tremendously by ASMI's programs. CHAIRMAN LEMAN said he has seen results that he is pleased with while the organization hasn't been perfect from his perspective. He asked if the one percent was more than replaced by the good accomplished in the marketplace. MS. BELKNAP answered "unquestionably." She also noted that the Norwegians have recently doubled their marketing budget to $40 million and they have a very good product and control a great deal of the market. ASMI still felt that marketing was necessary and that it is important to expand. The feedback she is getting from fishermen and their organizations is that they see the necessity for an overall marketing program simply to keep Alaska salmon a viable product in the marketplace. CHAIRMAN LEMAN asked how the Fishermen-in-Stores program worked this past year. MS. BELKNAP said ASMI cut most of its programs except for the basic in-store demonstrations. Five fishermen went out in the spring and it went real well as it always does. It's a question of having the money, because it costs $1,100 - $1,600 a piece to send them out. CHAIRMAN LEMAN said some legislators have suggested that the marketing directors of ASMI shouldn't be located in Bellevue, but should reside in Alaska, although ASMI has done studies to show that the Bellevue location is more appropriate. MS. BELKNAP answered that it is a good business decision to have them in Bellevue. When the lease expires in August 1999, they are going to move to another area in Ballard. They have found that it would increase their costs 20 - 30 percent to move them to Alaska. Efficiency would be impaired. A very expensive study was done three years ago for Senator Donley in which the industry across the board said the best business decision was to keep it in Seattle. The Board is working with only industry money now and feel they have a fiduciary responsibility to spend that money as wisely as possible. SENATOR HOFFMAN asked what ASMI was planning on doing to assist the new facility in Anchorage in marketing. MS. BELKNAP said they would be producing value-added products and the facility would be another client for their marketing programs. MS. LIZ CABRERA, Petersburg Vessel Owners Association, supported HB 73. She said they recognize ASMI's work as essential in maintaining our share of the domestic salmon market. MR. JERRY MCCUNE, United Fishermen of Alaska, supported HB 73 to help keep our share of the domestic salmon market. He said that they don't agree with everything that's done in ASMI, but they were going to get together and work through some of the problems they see as fishermen, including Bristol Bay fishermen. MR. JEFF STEPHAN, United Fishermen's Marketing Association, supported HB 73. He said a large component of their membership are salmon seiners. ASMI has been very important to UFMA and to all the members (crab, halibut, salmon, whitefish, etc.). "As bad as our position in the salmon market is, we would be far worse off without the good efforts of ASMI over the years." He said that Alaska salmon needs to have a continual marketing program that hits retail, food service, consumer, food service magazines, T.V., promotions, etc. ASMI knows exactly where to put money, he said, and the only thing they need is money to put in. CHAIRMAN LEMAN asked if the salmon fishermen are assessing themselves one percent and the processors are assessing themselves 3/10 percent, would it be appropriate for the fishermen of other seafood products in Alaska to do a comparable assessment. MR. STEPHAN said at this time he wouldn't support adding on any direct taxes like the salmon marketing tax for any other species until there is a chance to discuss it as an industry. MR. THEO MATTHEWS, Executive Director, Cook Inlet Driftnetters Association, said his group is in the same situation as Bristol Bay. Eighty percent of their harvest is sockeye and 95 percent of their value of harvest is sockeye salmon which is sold directly to Japan. When his Board voted unanimously to support this tax, their primary concern was that the legislative funding has been cut so drastically and so rapidly to ASMI that without this tax, ASMI, itself, might be in jeopardy. That is not acceptable at all. There is a place for ASMI in both foreign and domestic marketing. CHAIRMAN LEMAN noted that he is a seller of salmon and has a potential conflict of interest. Number 373 SENATOR HOFFMAN said he didn't want to delay this bill, but he would like to hold it over and bring it up as soon as possible. He wanted to call his constituents first, although he knows they support the tax. SENATOR KELLY said he supported the bill. CHAIRMAN LEMAN said he would schedule the bill for next Tuesday.