SB 255 PROMOTION BY SEAFOOD MARKETING INSTITUTE  CHAIRMAN LEMAN brought SB 255 before the committee as the next order of business. SENATOR AL ADAMS , prime sponsor of SB 255, explained the legislation amends the current status governing the Alaska Seafood Marketing Institute (ASMI) by allowing the institute to promote Alaska seafood on a regional basis. Currently, seafood promotion must be generic and statewide such as Alaska salmon, Alaska sockeye. The bill will amend AS 16.51.110 to allow ASMI to promote seafood by regional basis such as Yukon kings, the Arctic Circle chums, or the Copper River reds. Senator Adams said the existing framework for marketing salmon produced in Alaska waters assumes that generic product promotions will increase overall sales thereby providing benefits to fishermen from all regions of the state. While this works to some extent and may be necessarily part of the overall marketing program, regional disparities in the cost of production and transportation requires that in certain areas niche marketing efforts should be undertaken. Promotion by brand names will be still be prohibited. Senator Adams pointed out that the bill carries a zero fiscal note and there will be no funds taken from ASMI, however, in order to fund niche promotions, he said he would like to try to find some other funds from other agencies that are willing to help in niche marketing through the reappropriation method. Senator Adams also pointed out that the change in law is permissive; it does not require ASMI to do anything new. TAPE 96-33, SIDE B Number 001 Number 040 DAN ALBRECHT , Executive Director, Yukon River Drainage Fisheries Association, said the association represents both the Lower Yukon gillnet fleet and fish wheel and set net fishermen in the Upper Yukon. He said SB 255 represents an initial attempt to address a problem that perhaps was unforeseen several years when ASMI was created, which is a glut on the market and many fish species being priced out of the market. This has hit the AYK region especially hard because their fish come out of remote areas and salmon is their only fishery. They are in a situation now where their chums are priced out of the market and many other species are as well. Generic marketing by ASMI doesn't really help them; their fish are always going to cost more than a fish from other parts of the state because it's got to come the farthest distance, so they need to be able to develop markets that will pay that price. He suggested each region could have its particular fish described for the uses that it's most appropriate for. Number 100 HENRY MITCHELL , testifying from Anchorage, said he has been involved for many years with trying to develop some small scale fisheries and doing some preliminary niche marketing on behalf of some of the fishermen in Western Alaska. It was determined a number of years ago that the best possible approach would be to allow ASMI to do that type of intensive niche marketing so that the people, like those in Western Alaska who were experiencing difficulties, could have that little bit of extra effort paid to their product to assist in developing a standing in the marketplace. He noted the Bering Sea Fishermens' Association did two marketing projects in 1993 and 1994, and they found that on the east coast the chum salmon products and the coho salmon products from Western Alaska were rated as superior products, but in order for the program to be successful, there needs to be an ongoing program. In addition, there needs to be a mechanism that evolves that provides the availability of these products on a year-round basis. Number 130 JUDE HENZLER , representing the Bering Sea Fishermens' Association and testifying from Anchorage, pointed out that at the present time the chum market is primarily July 4 and before, but the chums in their area arrive July 4 and after. He also said the association believes that if the public could be educated to the quality of their chum salmon, it would help that market and ultimately help everybody's chum market. Number 145 JEFF STEPHANS , representing United Fishermens' Marketing Association and testifying from Kodiak, stated their strong support for the work ASMI does, it has done in the past, and intends to do in the future with regard to marketing Alaska salmon. He observed that without ASMI the situation would be much more complex than it is now. Speaking to SB 247, he said their association is a little reticent to support this type of approach, and they believe it is a topic that needs to have a little more discussion or investigation. He said ASMI already has a very complex task before it given the current situation of the salmon supply in the world, and requiring ASMI to get involved in niche marketing really opens up a tremendous sweep of complex decisions and possibly some controversies that would be very difficult to deal with. Number 195 SENATOR HOFFMAN commented that Senator Adams is not asking or requiring ASMI to start niche marketing. It's basically allowing that to happen, and if they can identify sources of funds, they can start assisting an area that is not allowed to sell salmon presently. He said he is sure that if Kodiak did not have a market to sell their fish, they would be asking the same. He stressed the importance of looking farther into the future and pursuing such ideas as this, otherwise, if too much time passes, it may be too late. MR. STEPHANS said he understood what Senator Hoffman was saying and he supports the idea, but he thinks given the structure of ASMI and the obvious discussions that would take place within the organization, the whole concept could be pursued and forwarded quicker if some type of niche marketing program were established in DCRA or DCED, etc. Number 250 VIRGIL UMPHENOUR , a member of the Board of Fish testifying from Fairbanks, said the fishermen in the Bristol Bay and AYK regions are very unhappy about ASMI and its one percent assessment, and they feel that ASMI does absolutely nothing for them. He said that in his opinion, niche marketing should be done because the only thing ASMI basically has promoted is king salmon, king crab, halibut, and a little bit of pollock, and they need to be advertising and promoting chum salmon and sockeye salmon. He noted currently AYK has a zero market for chum salmon for the upcoming season. He also said fishermen from all over the state, even the fishermen in southeast, are really concerned about the prices of fish, and no one knows what's going to happen this coming fishing season. He emphasized there needs to be innovative niche marketing. Number 310 ART SCHEUNEMANN , Executive Director, Alaska Seafood Marketing Institute, said ASMI has gone through a number of positive changes and transition in the last two years, and they are attempting through a fairly active instate PR communications program to carry that message to a wide range of fishermen and processors who are the benefactors of their programs. He admitted there are people who are unhappy because their products aren't being promoted in the marketplace. He said a category marketing organization has to stay on a focus, and with a strategy that has been developed in the last two years, they have seen significant growth and consumer awareness in purchases and intent to purchase of Alaska salmon in all categories of the seafood. Mr. Scheunemann said ASMI, with its programs, would like to see the salmon in Alaska beyond the king in the domestic marketplace, which is a major focus of their efforts at this point in time, but ASMI doesn't control the supply and distribution and the decision making in terms of that part of the business structure. However, ASMI has been working actively with the fishermen, the processors, etc., to find ways to get dedicated commitments to the domestic marketplace for those species. They have been providing active, aggressive promotional programs that retailers and food service operators and distributors can utilize to build value in their marketplace, as well as going through a major educational program with their chef and training at the retail level on how to utilize, handle and to merchandise Alaska salmon. Mr. Scheunemann said the ASMI Board of Directors discussed this legislation at their recent board meeting in February and took no official position on it. However, they do have a concern about changing the statute because they believe that could lend to the competition of competing regions and interests and species against each other, which would push ASMI off of its strategy in a number of different directions and essentially make ASMI the marketing department for each one of these areas. He added that does not mean ASMI does not recognize the need for creative niche marketing. He has had some experience with working with direct marketing and niche marketing and he knows it works, but whether ASMI is the right vehicle to make it work is another question. Mr. Scheunemann said he believes this is a larger economic issue under which marketing is one part of the solution, but it may not be the only solution, and it may not be the successful solution unless the other issues are addressed as well. ASMI believes it is necessary that there be a organized logical approach, and they stand ready to provide as much and whatever appropriate assistance they can, but they have concern in terms of changing the statute. Number 420 SENATOR HOFFMAN commented that it appears that ASMI is doing nothing on chums and reds, and by excluding those two species of salmon, ASMI is doing anti-niche marketing to those two products. If, in fact, all of the millions of dollars that are being spent to no avail of Bristol Bay and AYK, those people are being extremely hurt by what ASMI is presently doing. MR. SCHEUNEMANN pointed out that the decisions in terms of product are made between the processor, distributor, broker, and the retail chain. ASMI is prohibited in getting involved in deciding which products are bought and sold. However, he also pointed out that there has been a significant consumer response to properly handled, properly demonstrated, properly merchandised chum salmon. This hasn't been done with Bristol Bay sockeye because there aren't any Bristol Bay sockeye in the marketplace, but ASMI does not control that decision making. He said it is fair to say that ASMI supports niche marketing and that they will provide whatever technical system that they can on the marketing area. SENATOR HOFFMAN said the state of Alaska, through the Permanent Fund Corporation, has invested many millions of dollars in malls in the United States, and he has sent a letter to the governor asking that they look into having some promotional displays on Alaska fish in some of the major stores in these malls. He believes this will target the average consumer on the streets and will have some impact on the retailing of the fish available out there. Number 610 There being no further testimony on SB 255, CHAIRMAN LEMAN stated the bill would be set aside for further action.