Legislature(2003 - 2004)
02/10/2004 01:31 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 273-ASMI BOARD/ SEAFOOD TAXES & ASSESSMENTS CHAIR CON BUNDE announced SB 273 to be up for consideration. He asked Senator Stevens if he wanted to make additional comments on his bill. SENATOR GARY STEVENS responded that the goal was to find an adequate way to fund ASMI in the future, realizing there had been substantial reductions to its funding because of reduced salmon price and catch. SB 273 is an attempt to see the funding continue for the good work that ASMI does in marketing Alaska seafood products. A question was raised about whether the seafood marketing tax is unconstitutional and Senator Stevens referenced a letter dated February 4, 2004, from George Utermohle, Legislative Legal and Research Services, which basically answers no. The second question raised is what ASMI would do with the additional $2,610,000 in revenue from the proposed .3 percent tax on non-salmon species. He wanted Laura Fleming, ASMI representative to address that. MS. LAURA FLEMING, Director, Public Relations, Alaska Seafood Marketing Institute (ASMI), said she was asked to answer several questions and would begin with the shortest answer. The .3 percent tax on other species, if it were enacted, would restore ASMI's funding to where it was three years ago and that would allow them to restore their programs to what they were three years ago and put an additional emphasis on whitefish and shellfish varieties. The current board has many representatives of whitefish interests, both harvesters and processors. Very few processors confine themselves to one species and processing whitefish varieties has been very lucrative, keeping a lot of companies, which have formerly processed salmon, on their feet. She said: Whitefish varieties include pollock, sole, black cod and halibut and are an integrated part of all ASMI's marketing activities. They are part of the Alaska seafood basket of products that are associated with the brand. We leverage that brand equity in the U.S. and overseas. The overseas market is probably of the greatest interest to the pollock industry. We are paying for most of the activities in those markets with federal dollars, because our federal export activities are paid for through an agricultural service. We provide year-round assistance to the surimi industry and to the pollock industry in those key overseas markets. We have market representatives in those overseas markets. We do promotions that retail and do food service with restaurants. A lot of the surimi processing and so on involves our educating the trade about availability and superiority of our products - that means the people who take the raw product and turn it into wide varieties of products that you see in their magazines. I just brought along an example [indicates pamphlet].... The French and Germans use huge amounts of surimi. The market in France has grown three times in ten years. It's tripled in 10 years. So, it's a huge part of it. CHAIR BUNDE asked what role ASMI has had. MS. FLEMING replied that ASMI has had trade seminars for the big importers and exhibits at the European Seafood Exposition, the biggest seafood tradeshow in the world, where $70 million worth of business was done last year. A lot of that business was whitefish. Also, she noted the shrinking of Atlantic cod stocks has opened up big opportunities for Alaska and ASMI. Pacific cod and pollock are being used in place of Atlantic cod, until farming operations ramp up. ASMI organizes promotions for food service suppliers that use Alaska seafood to make their products and then brand it Alaskan in their catalogues. They also do promotions in Spain and Portugal where fish fillet sandwiches are a huge growth market. MS. FLEMING said she is not surprised that some pollock fishermen don't know about ASMI's efforts, because even though they sell fish at the dock, they don't sell the processed product. Sometimes the product is used just as a value-added ingredient and ASMI also promotes those. ASMI helps the Genuine Alaska Pollock Producers, a trade organization, in setting up exhibits in the U.S and Europe. Membership in that organization has a lot of crossover with the whitefish committee of ASMI. She noted a newspaper with a circulation of 8 million readers that had an article in it about the benefits of adding fishing to the diet. About 60 percent of seafood in the U.S. is consumed in restaurants and ASMI does a lot of promotions with restaurants and Sysco, a food service distribution company. For instance, there are 56 Alaska seafood items in Sysco's food catalogue; of those items, a big portion are made with Alaska whitefish varieties. "So, about 60 percent of our promotions with those Syscos of the world are with pollock and cod." CHAIR BUNDE asked her for rough numbers on the time, effort and money ASMI puts into salmon compared to whitefish and other seafood. MS. FLEMING replied: We always do all-species marketing for almost all of our promotions. Some might be specifically benefiting halibut or cod or salmon, but we always bring a whole basket of products to the table. So, it's a little tricky to split out exactly the dollars, but I would say...in the past, it has been about half and half, but now the balance is shifting and the amount of money from salmon is less. So, the whitefish industry has been asking us to demonstrate that we are giving them their fair share. We have on several occasions tried to break out for them what we are doing for whitefish. So far, they have always been satisfied - all the people on our board and on our committees have been satisfied with the results we are obtaining, especially since we leverage every industry dollar and leverage a lot of value out of it.... CHAIR BUNDE asked if she is saying that if the whitefish industry is paying for a larger portion of their funds, ASMI would provide them an equal effort. MS. FLEMING replied that so far industry has been satisfied with ASMI's promotion of the species. She pointed out that the ASMI chairman of the board fishes for whitefish and the board is the entity that tells staff what to do. CHAIR BUNDE said this would be a good time to bring Mr. Stinson in to the conversation. MR. JAY STINSON, Chair, ASMI, added that the apparent needs of various industries create a different dynamic from year to year and there is no hard and fixed number for what ASMI's promotions do every year. Its allocation efforts revolve around equitability within the industry and where the money is coming from. Currently, the board has 25 members, but counting ex- officios, there is a total industry representation of 80 members. CHAIR BUNDE asked Mr. Stinson if he favors SB 273. MR. STINSON replied that the board has long-term concerns about stable funding for ASMI and supports that portion of the bill. However, it supports a board of 15 members, not the nine in the proposed language. He rationalized that part of ASMI's charter is to represent the interests of the fishing organizations as well as to maintain a certain fiscal responsibility and a certain tension needs to be maintained. SENATOR STEVENS countered that whatever the size of the board, representation of the whole industry is always a concern. He asked Mr. Stinson to comment on how non-salmon fishermen and processors are currently represented on the standing committees. MR. STINSON replied that there are seven standing committees. 3:07 p.m. TAPE 04-8, SIDE A MR. STINSON continued saying that there is a Canned Salmon Committee, a Salmon Marketing Committee, an Export Promotions Committee, a Seafood Technical Committee, a Shellfish Committee and a Whitefish Committee. The committees have approximately 90 individuals representing the various aspects of the seafood industry. Current by-laws say the board has to have 12 members that are involved in commercial fishing and nothing prevents the governor from including whitefish harvesters in his appointments. Any segment that wants to be involved is more than welcome to come to the table. "Basically, we try to maintain an equitable representation, both by region and by species, in the entire Alaska fishing industry." CHAIR BUNDE asked Senator Stevens to respond to a communiqué from a gillnetting association about its concerns with the hatchery cost recovery tax. SENATOR STEVENS said a letter from the United Southeast Alaska Gillnetters is supportive of the 1 percent salmon tax, but opposes applying it to the hatchery cost recovery program, because of double taxation - an issue that should be discussed further. CHAIR BUNDE encouraged him to address that issue as the bill moves through the process. He closed public testimony. SENATOR STEVENS recapped that they had heard from Ms. Fleming what ASMI would do with additional revenue and noted at the last board meeting Executive Director Riuta indicated that whitefish was also facing problems in the future with fish farming. So, it was important to know what ASMI intended to do about that issue. Figures from the Commercial Fisheries Entry Commission (CFEC) show that of the 6,848 non-salmon permit holders, 22 percent are non-resident. The National Marine Fisheries Service (NMFS) report on federally licensed fisheries indicates 20 percent out- of-state addresses. SENATOR STEVENS said the issue of the future of whitefish farming had not been discussed by Ms. Fleming, but ASMI is prepared to deal with it. CHAIR BUNDE quipped that he assumed ASMI would not advocate for it. SENATOR STEVENS agreed and added that he felt he could defend a nine-member board since most boards work best with a smaller number and this measure maintains and enhances funding to ASMI at previous levels. With that, he moved to pass SB 273 from committee with individual recommendations and the attached fiscal note. Senator Stevens, French and Bunde voted yea; and SB 273 moved from committee.