ALASKA STATE LEGISLATURE  HOUSE SPECIAL COMMITTEE ON FISHERIES  February 9, 2023 11:07 a.m. DRAFT MEMBERS PRESENT Representative Sarah Vance, Chair Representative Kevin McCabe Representative CJ McCormick Representative Ben Carpenter Representative Craig Johnson Representative Louise Stutes Representative Rebecca Himschoot MEMBERS ABSENT  All members present OTHER LEGISLATORS PRESENT  Representative Dan Ortiz COMMITTEE CALENDAR  PRESENTATION(S): UPDATE ON ALASKA'S SEAFOOD MARKET - HEARD PREVIOUS COMMITTEE ACTION  No previous action to record WITNESS REGISTER JEREMY WOODROW, Executive Director Alaska Seafood Marketing Institute Juneau, Alaska POSITION STATEMENT: Provided a PowerPoint presentation on Alaska's seafood market. ACTION NARRATIVE 11:07:28 AM CHAIR SARAH VANCE called the House Special Committee on Fisheries meeting to order at 11:07 a.m. Representatives McCabe, McCormick, Carpenter, C. Johnson, Stutes, Himschoot, and Vance were present at the call to order. ^PRESENTATION(S): Update on Alaska's Seafood Market PRESENTATION(S): Update on Alaska's Seafood Market    11:08:51 AM CHAIR VANCE announced that the only order of business would be the Update on Alaska's Seafood Market presentation. 11:09:27 AM JEREMY WOODROW, Executive Director, Alaska Seafood Marketing Institute (ASMI), gave a PowerPoint presentation, titled "Alaska Seafood Marketing Institute," [hard copy included in the committee packet]. Mr. Woodrow provided an outline of the presentation content, as shown on Slide 2, [original punctuation provided]: head2right ASMI Overview head2right Economic Update head2right Global Market & Strategy head2right ASMI Resources MR. WOODROW read from Slide 3, "What is the Alaska Seafood Marketing Institute?," which read as follows, [original punctuation provided]: As Alaska's official seafood marketing arm, ASMI  maximizes the economic value of the Alaska seafood  resource by: ? building and protecting the Alaska Seafood brand ? developing and creating markets for Alaska seafood products ? working directly with the seafood industry to maximize efforts ASMI is directed by a Governor-appointed Board of Directors: five processors, two commercial harvesters; and 10 board-appointed Species and Operational Committees. MR. WOODROW identified the funding sources of ASMI for fiscal year 2023 (FY 23) and FY 24 spending plans in Slide 4, "ASMI Funding," which read as follows, [original punctuation provided]: FY23 Budget Authority Seafood Marketing Assessment $15,932,800 (0.5% of ex-vessel value) Federal Funds $5,603,500 • Market Access Program (MAP) • Agricultural Trade Promotion Program (ATP) • Saltonstall-Kennedy Grant (SK) • Cochran Fellowship • Emerging Markets Program (EMP) • Quality Samples Program (QSP) $0 General Funds* FY23 Spend Plan: $21,250,000    FY24 Governor's Budget Seafood Marketing Assessment$16,067,300 (0.5% of ex- vessel value) Federal Funds $5,640,500 • Market Access Program (MAP) • Agricultural Trade Promotion Program (ATP) • Saltonstall-Kennedy Grant (SK) • Cochran Fellowship • Emerging Markets Program (EMP) • Quality Samples Program (QSP) $0 General Funds FY24 Spend Plan: Set by ASMI Board in May  *FY23 Capital Funds: $300,000 UGF for Alaska canned salmon food aid to Ukraine. MR. WOODROW defined the term, "ex-vessel value" in Slide 4, as the first sale from a fisherman to the processor or the next person down the line. 11:11:50 AM MR. WOODROW recounted the ASMI budget history and forecast in the presentation. He showed a graph on Slide 5, which displayed the funding sources for ASMI. He walked through the trends in the graph, notably FY 20, where there was a dramatic loss in funding. Subsequently, the federal government stepped in, providing funding through the Alaska CARES Act in 2021 and other funding sources later in 2022. He said, this year's spending plan was around $21 million, but without additional revenues, ASMI will have to reduce spending until revenues match expenditures. He admitted ASMI will need to reduce the budget down to $14 million to be sustainable. 11:13:18 AM MR. WOODROW highlighted the five main programs of ASMI, shown in Slide 6: Domestic Marketing; Seafood Technical; International Marketing; Communications; and Global Food Aid. He then showed a map of the 42 international markets ASMI cooperates with, on Slide 7, which includes emerging markets in South America, Southeast Asia, and Africa. Referring to slide 8, "Domestic Marketing," he disclosed the domestic market [U.S. and Canada] consists of primarily business to business in the foodservice and retail space. He highlighted the figures on slide 8, which read as follows, [original punctuation provided]: FY22/23 Promotions:  •35,000 retail and e-commerce stores •18,000+ foodservice establishments 11:15:00 AM REPRESENTATIVE MCCABE asked if this marketing presentation could be sent to the U.S. Trade Representative to [promote] Alaska seafood as an export commodity. MR. WOODROW responded that is a great idea, and he said he would follow-up with the U.S. Trade Representative [Katherine Tai]. 11:15:29 AM MR. WOODROW, returning to the PowerPoint, expressed the need for communication and public relations for sustainable seafood marketing. On Slide 9, "Communication & PR," he highlighted a segment on the Today Show that kicked off Earth Week featuring a fisherman from Kodiak who displayed an assortment of salmon products during a live interview. He directed attention to Slide 10, "Seafood Technical," which describes how the marketing program interacts directly with the seafood industry to develop new materials and research. He said the program ensures quality control of seafood products from boats, to processors, and throughout the supply chain. MR. WOODROW described the Global Food Aid Program on Slide 11, which read as follows, [original punctuation provided]: Seeks Alaska seafood inclusion in domestic and  international food aid programs: USDA Women's Infants and Children's (WIC) Supplemental Nutrition Program (SNP) School Lunch Program USAID, and more MR. WOODROW added that the Global Food Aid Program provided 300,000 cans of salmon to Ukraine. He said the cans were delivered on January 30, [2023], partnered with the World Central Kitchen (WCK). He thanked the Governor Mike Dunleavy Administration for maintaining ties with the Ukrainian workforce. 11:18:44 AM REPRESENTATIVE HIMSCHOOT inquired about the artwork on the salmon can label. MR. WOODROW responded that it was created in-house by ASMI as a throw-back to the can salmon labels of old, in honor of those labels. 11:19:28 AM MR. WOODROW continued the presentation with Slide 13, "A Cornerstone of Alaska's Economy." He read the statistics from the slide, which read as follows, [original punctuation provided]: • Directly employs 62,000 workers annually, more than any other industry in Alaska - largest manufacturing sector in Alaska $1.75B in direct earnings • Industry operates over 8,900 Vessels & over 160   shore based processors in 40+ communities  • Alaska holds six of the nation's top ten ports by value MR. WOODROW continued directly to Slide 14, which read as follows, [original punctuation provided]: Value for Alaska  Seafood provides economic activity and tax revenue the state. $163 million  in annual state, municipal, and federal taxes, fees, and assessments paid by Alaska seafood industry $5.7 billion directly benefits and contributes to Alaska's economy; $2.2 billion in labor income MR. WOODROW summarized Slide 15, "SEAFOOD SUSTAINS ALASKA." He provided polling results that affirmed 87 percent of Alaskans feel proud when they see Alaska seafood in grocery stores and restaurants; and 88 percent of Alaskans view commercially-caught Alaska seafood as enhancing Alaska's reputation around the world. 11:21:20 AM The committee took two consecutive at-eases from 11:21 a.m. to 11:22 a.m. to address a technical issue. 11:22:23 AM MR. WOODROW played a 30-second video about the Alaska seafood industry. He added that the advertisement he played can be seen on YouTube and other media outlets. 11:23:21 AM REPRESENTATIVE HIMSCHOOT asked what the criteria were for choosing an Alaska audience or if the intended audience was broader than just Alaskans. MR. WOODROW clarified that the video he showed was targeted specifically for Alaskans. He said the main reason was to show support for the industry. 11:24:15 AM CHAIR VANCE asked specifically which Alaska communities are being targeted by ASMI. MR. WOODROW said the aim was to hit most of the population base and coastal Alaska, as well. MR. WOODROW resumed the presentation on Slide 17, "Alaska's Fisheries' Ex-Vessel Values," which shows a pie chart depicting the diversity of commercial fisheries in Alaska. He showed salmon are the predominant species caught at 39 percent; followed by halibut, sablefish, and crab with 26 percent; next in proportion is pollock with 22 percent; with cod, flatfish, rockfish, and "other" rounding out the rest of the $2 billion yearly total. He said the pie chart illustrates why it is important to have a diverse seafood portfolio to maintain consistent earnings from year to year. MR. WOODROW read from Slide 18, "2022 - Groundfish Harvest," which read as follows, [original punctuation provided]: • Pollock quota decreased by >15% • Record prices and continuing strong • Flatfish economics appear to be recovering after disruptions (China/COVID) • Pacific cod quotas growing after years of decreased abundance 11:26:26 AM MR. WOODROW pointed to Slide 19, "2022 - Salmon Harvest," which illustrates salmon harvest fluctuations over a 5-year average, as follows, [original punctuation provided]: 2022 Salmon Harvest  • Record breaking Bristol Bay harvests • Pink well below average, but up from 2020 • Keta historically low, but harvest volume up from 2021 • Strong prices • Some regional harvests down • Sockeye would be down if not for Bristol Bay MR. WOODROW spoke about the graph on Slide 20, "Bristol Bay Sockeye Salmon Harvest," which shows the harvests, measured in the millions of pounds, from 1980-2022. He emphasized that Bristol Bay sockeye salmon are driving the industry right now. He cautioned that salmon processors have an overload of product right now and have asked for the help of ASMI to move the overstock to other markets. He said the response by ASMI was to add $1.1 million to the domestic program in 2023. 11:28:11 AM MR. WOODROW showed Slide 21, "Alaska Seafood in U.S. & Global Contexts," which provides the statistical breakdown the Alaska fishes harvested, [original punctuation provided]: Alaska contributes to the global supply:  • 41% of Alaska pollock • 30-40% of wild salmon • 66% of sablefish • 61% of Pacific halibut • 21% of flatfish • 10% of cod 11:29:19 AM MR. WOODROW segued from global markets to the Russian market on Slide 22, "What is the U.S. blocking from Russia?" He provided the history of 2014 and 2022 embargos between Russia and the U.S. 11:30:20 AM MR. WOODROW highlighted the bullet point from Slide 23, "GLOBAL COMPETITION," which read as follows, [original punctuation provided]: • Opportunities & Challenges not unique to Alaska Seafood • Norwegian Seafood Council global budget 3x larger than ASMI • Russia investing $7 Billion into its fisheries • Processing, New Vessels, Cold Storage & Promotion • "New Alaska" 11:31:02 AM MR. WOODROW outlined the four major obstacles facing the Alaska seafood market on Slide 24, "HEADWINDS," which are: inflation; a strong U.S. dollar; product inventory; and trade barriers. Conversely, he stated that Alaska has opportunities from: brand recognition of Alaska salmon; market diversification; full utilization of Alaska fleets; and innovation of new products. He elucidated the global strategy of ASMI is based around connecting with home cooks and promoting wild, sustainable salmon harvests, as well as practicing diversification and premiumization. 11:32:40 AM MR. WOODROW continued the presentation on Slide 27, "Global Marketplace," which read as follows, [original punctuation provided]: About 65-70% by value of Alaska seafood production exported annually to 100 countries U.S. has largest market share with more than 30% by value China/South Korea largest trading partners primarily for transshipping and reprocessing Japan/Europe largest direct foreign markets 75% of pollock, keta salmon, and flatfish species exported 11:33:58 AM MR. WOODROW emphasized the need for diversification on Slide 28. He explained that Alaska's export to China has dropped to $450 million from 2017 to 2020. He said subsequently, selling seafood to China is incredibly expensive with a 38 percent tariff. He emphasized that it is essential to grow markets in Southeast Asia, South America, and possibly Eastern Europe and Africa. He showed Slide 29, "Alaska Seafood Export Value by Region," which depicts the decline of seafood sales to China from 2013 to 2022. MR. WOODROW revealed the new markets ASMI recently developed on Slides 30-32, in South America, Southeast Asia, England, and Japan. 11:37:28 AM MR. WOODROW moved to Slide 33, which illustrates the numerous grocery companies involved with e-commerce, such as Instacart. 11:37:55 AM MR. WOODROW highlighted how the pandemic increased sales of seafood prepared at home. He showed Slide 34, "Still Cooking at Home," which indicates 91 percent of consumers expect they will prepare a meal at home from scratch as much or more often as last year. He continued to Slide 35, "Relevant recipes are key to keeping new consumers." which read as follows, [original punctuation provided]: "Most consumers could be enticed to eat more seafood especially if they were provided recipe ideas" - Datassential 2022 "Most seafood consumers want to know more about how to cook, prepare or flavor seafood (80%) and new and different ways to cook seafood (83%)" - FMI 2022 11:38:40 AM MR. WOODROW referred to Slide 36 to relate there are "7.3 billion impressions" on a hashtag for Alaska seafood hacks. He then moved to Slide 37, which depicts how ASMI has continued to work with retailers such as Costco Wholesale. Slide 38 shows chef Brooke Williamson promoting Alaska rockfish. He emphasized the need to work with fine-dining restaurants. He pointed out that restaurants have changed since the pandemic and menus are smaller therefore making it very competitive to keep seafood on the menu. 11:40:55 AM MR. WOODROW turned to slide 40 and said Alaska seafood has logo power. He highlighted [consumer ratings] on the slide. As shown on Slide 41, he pointed out that "wild-caught" messaging resonates more with consumers than "sourced from the USA" or "Alaska" alone. He highlighted the "Make the Wild Choice" ad campaign that hosted a cooking contest and sweepstakes. He emphasized the need for new recipes such as the popular fish taco featured on Slide 43. He displayed the content of Slide 44, which read as follows, [original punctuation provided]: Consumers across all generations--from Baby Boomers to Gen Z--are now willing to spend more for sustainable products. 11:43:16 AM MR. WOODROW displayed the partnerships ASMI has with companies such as Holland America, featured on Slide 45, and Princess Cruises, shown on Slide 46. He directed attention to Slide 47, "Japan," and played a short video about the international importance of sustainability. 11:45:43 AM MR. WOODROW concluded the presentation on Slides 48-51 by providing online resources at www.AlaskaSeafood.org. He reported the "Alaska Seafood U" program has been improved for retailers, sales, and wait staff. He informed the committee the supplier's network on the ASMI website has also been upgraded to buyers with sellers. 11:47:33 AM REPRESENTATIVE MCCORMICK highlighted the donated canned salmon to Ukraine and asked whether something similar could be done for struggling families in Alaska, specifically regarding the late Supplemental Nutrition Assistance Program (SNAP) benefits. MR. WOODROW emphasized ASMI would be a willing partner through the Global Food Aid Program. 11:48:55 AM REPRESENTATIVE C. JOHNSON inquired about new emerging products like seaweed. He questioned whether ASMI had an outreach program to remove barriers of entry into the seafood market. MR. WOODROW answered that ASMI is prohibited from marketing mariculture by statute but is looking to legislation in the future to change that law. 11:50:32 AM REPRESENTATIVE MCCABE asked whether the Alaska Railroad was a big buyer. MR. WOODROW offered to follow up at a later date. 11:51:46 AM ADJOURNMENT  There being no further business before the committee, the House Special Committee on Fisheries meeting was adjourned at 11:52 a.m.