Public Responses to Salmon Task Force Vol. 8 December 3, 2002

Compiled by UFA

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Public Responses to Salmon Task Force Questions

As of December 3, 2002

Table of Contents

Responses by…

Geoffrey Orth (S04T) 12/1/02 ..........................................................................................2-4

Curt Herschleb (S03E) 12/1/02 ........................................................................................5-7

Bruce Jolma (S03T) 12/1/02.............................................................................................8

Shirley Kelly (S03T) 12/1/02............................................................................................9-11

Joseph Faith (S03T) 12/1/02...........................................................................................12

Alaska Independent Fishermen's Association (S03T/S04T) 12/1/02 .............................13-21

Adelheid Herrmann 11/30/02 .........................................................................................22-25

Richard Hendricks (SO3T/S03M) 12/1/02.....................................................................26-29

Alaska Manufacturers' Association 11/30/02 .................................................................30-33

Duff Mitchell (Kake Tribal & Foods) 11/30/02 .............................................................34-61

John Bocci (S03E) 11/30/02...........................................................................................62-64

Winston Gillies (S03H) 11/30/02 ...................................................................................65-67

Stephen Braund (S04H) 11/30/02...................................................................................68-73

Tim Keohane (S03H) 11/30/02 ......................................................................................74-77

Charles Crapo (Univ of AK) 11/30/02 ..........................................................................78-79

Peter Knutson (S03A) 11/29/02......................................................................................80-82

Gulf of Alaska Coastal Community Coalition (GOAC3) 11/27/02................................83-97

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

Compiled by UFA

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Name: Geoffrey Orth

Email: gcorth@mosquitonet.com

Address: P.O. Box 22 Ester, AK 99725

Phone: 907.479.0014

Fish Area: Bristol Bay (Egegik)

Gear Type: Salmon Setnet

Quality Subcommittee

1. What does the Alaska salmon industry need to achieve a higher quality product?

Exposure to markets demanding, and paying, for a higher quality product. The economic incentive is

there, we’re just not getting the exposure to it. The canned market does not require a higher quality

product!

2. Should the state be involved in creating a quality standard, state quality seal, and a state quality

commission?

No

3. Should the state have a quality education program for industry participants?

No

4. What incentives do you need to improve the quality of your harvested and/or processed salmon?

Higher grounds price.

Marketing Subcommittee

1. Do we use existing state salmon promotional entities or do we change the entities? If changed, what

changes should be made? (e.g. ASMI; Division of International Trade & Market Development, other)

Existing entities are adequate but are in need of a massive infusion of capita (i.e.: $$$$). The capture of

the “salmon” market by farmed salmon and strong US dollar has destroyed our market share. Increased

product marketing is the is critical component to the survival of our industry.

2. Who or what entity or entities should be paying for the promotion and/or marketing of Alaska’s wild

salmon? (e.g. salmon harvesters, processors, federal government/USDA; state general fund; other

federal funds; other sources)

Under normal conditions, harvesters and processors should bear the cost of funding the public agencies.

Unfortunately, until recently this industry has been in a position where the buyer came to the seller, and

both the harvesting and processing sectors were blind to the concept of advertising a product. We’re

behind the curve on this one, and because of the amount of funding required to save this industry, state

and federal assistance is required.

3. Should the state help individual fishermen promote and market their wild salmon? If so, how?

No. We need $$$$$ in a concentrated effort!

Production Subcommittee

1. How can we remove or reduce costs from the harvesting sector in a way that allows regional selfdetermination?

IFA’s, cooperatives and a look at fish traps all deserve serious attention.

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

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2. How can we remove or reduce costs and aid the processing sector?

No comment.

3. In addition to the removal or reduction of costs, are there statutory/regulatory changes that can help

the harvesters and/or the processors?

ADF&G is doing a great job…. Increase their budget, don’t cut it!

Finance Subcommittee

1. Are there better ways in which the state can use existing fishing industry taxes to assist the salmon

industry?

No comment.

2. Do current State of Alaska loan practices address the needs of the salmon industry? If not, what

changes would you suggest?

No comment.

3. Should the State of Alaska provide for the permanent retirement of limited entry permits in your

fishery? If salmon limited entry permits were retired in your fishery, what incentives would you suggest

for retirement? If funding is needed, who should pay?

I don’t believe that a buy-back of permits is required at this time. While its obvious that the Bristol Bay

salmon setnet fishery is not profitable for many individuals, if condition or regulations change it may not

be necessary. The concept of over-capitalization is often misunderstood. It is not a fixed point on an

economic scale, rather a fluid relationship between different factors: production costs, competition,

resource levels and resource price. Any one factor can influence an industry’s existence… a

combination of forces can kill it. We need focus on marketing and regulation changes (to reduce

operating costs).

Governance Subcommittee

Hatcheries

1. Would you support legislative development of a State of Alaska hatchery policy and/or performance

standards for hatcheries, and/or changes to the state’s relationship with all hatchery owners?

Hatcheries should survive on their own economic merits.

Education

1. What role should the State play in providing fisheries education (K-12, post-secondary, and voc/tech)

in order to promote Alaskans in the fishing and seafood industry?

No comment.

2. Does Alaska’s university system adequately meet the research and post secondary educational needs

of the Alaska salmon industry? If not, what changes would you suggest?

No comment.

3. If you are displaced by changes in the salmon industry, what could the state do to provide retraining

and/or alternative employment?

No comment.

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

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Agency Oversight

1. Apart from the Board of Fish decisions, are there other state agency regulations that could be

changed to benefit Alaska’s salmon industry?

State and federal legislation needs to be amended to allow fishermen to collectively negotiate price at

the regional level.

2. Do you support Alaska’s board of fish process? If changes are necessary, what would you suggest?

Yes.

3. Do you support a task force created by the legislature to review the Alaska Board of Fish?

No, not at this time.

Seafood Commission

1. Should the State of Alaska develop an Alaska Seafood Commission to annually advise the legislature

on the needs of the seafood industry?

No, not at this time.

Economic Development

1. As Alaska’s salmon industry changes, what are the economic development issues, community and

individual concerns that should be addressed by the State Legislature?

No comment.

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

Compiled by UFA

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Name: Curt Herschleb

Email: Salmo@ctcak.net

Address: PO Box 1622 Cordova, Ak. 99574

Phone: 907-424-3632

Fish Area: E

Gear Type: Drift Gillnet and Longline.

December 1, 2002

Quality Subcommittee

1. What does the Alaska salmon industry need to achieve a higher quality product?

The needs of the industry vary greatly by area and fishery. Solutions should be sought on a regional

level. The discussion of quality needs to include best practices for tenders, processors, and transporters

as well as harvesters. I believe that quality is generally improving. For quality to improve at a faster

rate would require either a strong, market-driven demand for quality or some form of subsidies for

infrastructure.

2. Should the state be involved in creating a quality standard, state quality seal, and a state quality

commission?

I believe the state should only impose very minimum quality standards to prevent extremely low quality

product from entering the marketplace. The need to reduce costs for all sectors of the industry is often

identified. It is not reconcilable with imposing more stringent quality standards

It would be helpful to change wanton waste laws so that a fish with high roe value and low flesh

value need not be wholly utilized. The low quality carcass sets a benchmark and reduces the overall

value of the pack. .

3. Should the state have a quality education program for industry participants?

I believe there is dearth of information available to catchers regarding improving quality. The state

could offer education to harvesters who want to process their catch for adding value and direct

marketing.

4. What incentives do you need to improve the quality of your harvested and/or processed salmon?

Personally I have invested a great deal of capital in my operation for improving quality and have not

been compensated. I believe low quality fish set the benchmark for what I am paid and I won’t be

compensated until 1. All harvesters raise quality to my level or 2.I direct market my catch into high end

markets and create a demand for higher quality. Those who are currently not producing high quality

will not do so unless they perceive a direct and clear incentive to improve quality. I have seen no

evidence that the processors have a problem with the overall quality of our catch. Therefore, don’t

believe that incentives for quality will be offered. Nor do I believe that the processors can be mandated

to provide incentives or disincentives. Once again, it must be market driven.

Marketing Subcommittee

1. Do we use existing state salmon promotional entities or do we change the entities? If changed, what

changes should be made? (e.g. ASMI; Division of International Trade & Market Development, other)

I oppose the application of ASMI tax to hatchery cost recovery sales

3. Should the state help individual fishermen promote and market their wild salmon? If so, how?

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

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The state should streamline the permitting process for direct marketing activities. The 3 agency

permitting results in confusing tax requirements and unclear definitions of activities. The net result is

that direct marketing is discouraged. There should be one comprehensive permit with clear definitions

and tax laws.

Finance Subcommittee

1. Are there better ways in which the state can use existing fishing industry taxes to assist the salmon

industry?

I strongly support the current structure of the Commercial Fishing Revolving Loan Fund.

Governance Subcommittee

Hatcheries

1. Would you support legislative development of a State of Alaska hatchery policy and/or performance

standards for hatcheries, and/or changes to the state’s relationship with all hatchery owners?

No. There already are some state policies regarding hatchery production. We continue to work hard to

formulate our aquaculture policies in area E according to our needs. Our production plans laid out by

stakeholders and approved by ADF&G on an annual basis. Despite dismal times in the world salmon

market our hatcheries are operating a balanced budget and are returning 65 percent of production to

common property harvest. The importance of hatchery production to the communities of area E is

impossible to overstate.

Agency Oversight

1. Apart from the Board of Fish decisions, are there other state agency regulations that could be changed

to benefit Alaska’s salmon industry?

Streamline the permitting for processing and direct marketing.

2. Do you support Alaska’s board of fish process? If changes are necessary, what would you suggest?

I support the board process in theory. I support House Bill 283. Designated seats would help to ensure

balance in the represented interests. It would also relax the conflict of interest laws restricting Board

members from voting on issues affecting the very people who supported said board members

appointment. I support strengthening the Advisory Committee process. A strong Ac with much local

participation should decrease the workload of the Board by avoiding redundancy and fringe proposals

with little or no support. AC positions with broad public input and support should carry more weight

with Board decisions.

BoF authority with regard to restructure needs to be clearly defined. A high degree of support

from affected stakeholders in given areas should preclude any restructuring imposed by the board.

3. Do you support a task force created by the legislature to review the Alaska Board of Fish?

I support a one time public panel to review board process.

Seafood Commission

1. Should the State of Alaska develop an Alaska Seafood Commission to annually advise the

legislature on the needs of the seafood industry?

I strongly support the continuation of the task force’s work in some form. The process will be a waste of

time and money if these issues are not revisited after this task force is adjourned.

Economic Development

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

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1. As Alaska’s salmon industry changes, what are the economic development issues, community and

individual concerns that should be addressed by the State Legislature?

The impacts of any restructure schemes on communities and fleets should be scoped by DCED prior to

the implementation.

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

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Bruce Jolma

460 NE Alder St

Clatskanie, OR 97016

A little note expressing my view of the Dangerousness of this little Task Force. What they are trying to do, in

theory, is really quite noble. In reality it could be compared to a witch hunt. If you fail any of the tests (i.e. not in

favor of permit stacking, A-B fractionalization, relaxing 32' limit) you are to be shunned or BURNED AT THE

STAKE!

Quality Subcommittee.

#1..Alaska Salmon industry., needs a higher quality product, but it cannot be achieved by only the harvesters.

Tendering and especially processing have to retool to produce a product to compete in the Domestic market

(U.S.) with farmed. If processors continue to due minimal processing in Alaska (head, gut, & freeze) , and

REPROCESS in Japan or some third world shit hole, Harvesters will never get a fair percentage of the real worth

of Bristol bay sockeyes. So with that said, harvesters could bleed, hand deliver individual fish in Styrofoam reefer

bags, and never see a fair % of the final market price. Abusive Transfer Pricing has to END!

#2 State Quality Standard, etc., HELL NO!

#3 Voluntary only

#4 Incentives, etc., The biggest one for me would be for the State to put a bug up the IRS's ass to once and for

all go after the transfer pricing issue. I feel the quality of 95% of the sockeye I deliver are #1's. I have flush

decks, small brailers and deliver my fish while they are still in rigors (4 to 5 hours) . They could compete with

farmed in the Domestic market, IF the foreign owned processors would make them AVAILABLE to the domestic

market. Foreign owned processors WILL NEVER put BB sockeye in the domestic (U.S.) market, at least not in

any meaningful quantity. That would establish a price comparison of what BB sockeye are really worth. This is

turn could be used against foreign owned processors in a transfer price investigation by THE STATE OF ALASKA

AND THE IRS!!!

Marketing Subcommittee.

#1. ASMI cannot market what is not available. Everyone bitches in Bristol Bay that ASMI doesn't market "our"

fish. How can they?

#2 All of the above.

#3 Yes, Streamlining of existing law's,USDA & bond requirement's, etc., to make it possible for fishermen to be

their own wholesale outlets.

Production Subcommittee.

#4. Here comes the push for relaxing the 32' foot limit!!!! Leave the goddamn statute's and reg's alone in Bristol

Bay. For Christ sake, concentrate on the REAL problem........The Price. The old theories of making up the

difference in production make work for factory trawlers but not salmon fisheries. Questions like this make me

very skeptical of the long term goals of organizations like UFA. The State and the IRS should be ENFORCING

the statutes and regulations against abusive transfer pricing. Perhaps your committees should be helping them.

Finance Subcommittee.

#1. Shut them down in areas where they DIRECTLY compete with native run harvest.

#3. Yes per manently retire permits.Offer a fair market price based on average permit price over the years they

have been freely transferred (i.e. average price from 1974 to 2002) A long-term, low interest ,Federal Loan,

repaid by a 1 to 2% raw fish tax on remaining fleet.

Governance Subcommittee.

Agency oversight.

#1. Here's the slippery slope. Just what are your long term goals???

#2. YES.

#3. NO.

Seafood Commission.

#1. Not a bad idea. Where would the funding come from?

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

Compiled by UFA

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Name: Shirley Kelly

Email: bristolbaygold@hotmail.com

Address: 2909 Arctic Blvd #203, Anchorage, AK 99503

Phone: (907) 561-4777 message

Fish Area: Area T

Gear Type: Drift Gillnet

Quality Subcommittee:

1. What does the Alaska salmon industry need to achieve a higher quality product?

Improved transportation infrastructure.

Value-added processing infrastructure.

Lower freight costs.

Implement accepted national and international quality norms:

Careful handling of salmon

Temperature Control

Vessel, Plant and Product Sanitation

Implementation of ASMI quality recommendations.

2. Should the state be involved in creating a quality standard, state quality seal, and a state quality

commission?

Yes, with a mechanism to ensure all harvesters and processors marketing salmon adhere to the

standard, yet without adverse or insurmountable financial impacts to resident rural fishers.

3. Should the state have a quality education program for industry participants?

Yes, a program that is continually and fully funded. Through this program industry

participants will know what is expected of them to market under the quality program.

4. What incentives do you need to improve the quality of your harvested and/or processed salmon?

Increased, stable salmon prices, recognition for a quality product.

Marketing Subcommittee:

1. Do we use existing state salmon promotional entities or do we change the entities? If changed, what

changes should be made? (e.g. ASMI; Division of International Trade & Market Development, other)

Use existing entities with increased funding. and allow entities regional marketing capabilities.

2. Who or what entity or entities should be paying for the promotion and/or marketing of Alaska’s wild

salmon? (e.g. salmon harvesters, processors, federal government/USDA; state general fund; other

federal funds; other sources)

Harvesters, processors, state and federal funds.

3. Should the state help individual fishermen promote and market their wild salmon? If so, how?

Yes, Re-access the taxation structure, small processors should not be penalized for marketing valueadded

products.

Production Subcommittee:

1. How can we remove or reduce costs from the harvesting sector in a way that allows regional selfdetermination?

Transportation infrastructure should be funded; lower freight costs and an assessment of the tax

structure.

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

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2. How can we remove or reduce costs and aid the processing sector?

Make it easier for small scale processors, they should be able to go to one entity to apply for the

licenses and permits that are needed.

3. In addition to the removal or reduction of costs, are there statutory/regulatory changes that can help

the harvesters and/or the processors?

Finance Subcommittee:

1. Are there better ways in which the state can use existing fishing industry taxes to assist the salmon

industry?

The current tax structure needs to be reviewed, value-added processors should not have to pay higher

taxes. Hatchery cost recovery and state conducted test fisheries should also pay taxes on their fish

that they harvest.

2. Do current State of Alaska loan practices address the needs of the salmon industry? If not, what

changes would you suggest?

Hatcheries are subsidized by the state and don’t pay taxes on the cost recovery fish that is harvested;

fisherman are not subsidized by the state, they pay taxes on the fish they harvest; if the state

institutes loan forgiveness for hatcheries, fishermen should be able to pay on the loan principle

without being penalized for not being able to pay for the interest.

3. Should the State of Alaska provide for the permanent retirement of limited entry permits in your

fishery? If salmon limited entry permits were retired in your fishery, what incentives would you suggest

for retirement? If funding is needed, who should pay?

Yes, a fair retirement program should be instituted.

Governance Subcommittee:

Hatcheries

1. Would you support legislative development of a State of Alaska hatchery policy and/or performance

standards for hatcheries, and/or changes to the state’s relationship with all hatchery owners?

Yes. Included the hatchery policy development process should be a study that minimizes the

economic and biological impacts that the hatchery fisheries have on natural wild fisheries.

Education

1. What role should the State play in providing fisheries education (K-12, post-secondary, and voc/tech)

in order to promote Alaskans in the fishing and seafood industry?

Fishery education should be taught at all levels of education.

2. Does Alaska’s university system adequately meet the research and post secondary educational needs

of the Alaska salmon industry? If not, what changes would you suggest?

The production and business management of the fishing industry should be taught

along with science and research.

3. If you are displaced by changes in the salmon industry, what could the state do to provide retraining

and/or alternative employment?

Adequately fund existing entities that provide training. Award locally owned organizations who

have the ability to construct economic development projects, which utilizes the local labor force.

Agency Oversight

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

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1. Apart from the Board of Fish decisions, are there other state agency regulations that could be changed

to benefit Alaska’s salmon industry?

Make it easier for fishers to become catcher/processors, one stop application process.

2. Do you support Alaska’s board of fish process? If changes are necessary, what would you suggest?

Yes.

3. Do you support a task force created by the legislature to review the Alaska Board of Fish?

No.

Seafood Commission

1. Should the State of Alaska develop an Alaska Seafood Commission to annually advise the legislature

on the needs of the seafood industry?

No, use existing entities.

Economic Development

1. As Alaska’s salmon industry changes, what are the economic development issues, community and

individual concerns that should be addressed by the State Legislature?

Funding transportation and value-added infrastructure, lower freight cost, review of the existing

tax structure

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

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Name: Joseph Faith

Address: PO Box 1316

Phone: 907-842-1200

Fish_area: (SO3T)

Gear_type: Drift

Finance

3. Should the State of Alaska provide for the permanent retirement of limited entry permits in your

fishery? If salmon limited entry permits were retired in your fishery, what incentives would you suggest

for retirement? If funding is needed, who should pay?

I. I ask that any permit buyback for Bristol Bay be established with the number of fishermen who fished

during the early l970s. Additionally, it seems that a permit buyback will accomplish little without an

increase in price. A buyback will presumably increase volume for fewer fishermen. However, I

understand that pinks in Southeast bring 5 cents/lb. You have to catch a million pounds to make that

pay. In Bristol Bay in 2002, chums paid 7 cents/lb. Whatever reasons are given for these low prices

could also be given to reduce the price of reds down to 10 cent/lb. It may take a few years to lower the

price but it could easily be reduced.

As I expressedin my November 8 letter, I believe that aggressive marketing by everybody can make a

difference in meeting the farm-fish competition head on and increase the price for quality wild salmon in

the long run. In the short run, fishermen should be given subsidies, just like the farmers, auto

manufactures, and bankers. The disaster money that has been given to the municipalities and local

organizations doesn’t really seem to help get fishermen back on their feet.

II. I ask that the benefit of the resource be made available to as many people as possible. Historically, in

England, the King and his royal men received the grant of right to fisheries. In the United States, the

people own the right to the resource. The government, however, holds the rights in trust for the benefit

of the people, and not as a prerogative for the advantage of government as distinct from the people. In

short, the King and his royal men do not have an exclusive right to the resource, nor as a pretext for the

public good. The framers of the Alaska constitution recognized the importance of providing the benefit

of the resource to the people in enacting its “common use” and “no exlcusive fishery” sections.

Limited entry by itself has been found consistent with these two principles. However, I ask that these

principles be kept in mind when any further limiting is done. The fisheries should not be just for the

“well to do.” They should not be structured to ensure the wealth of only a few permit holders and their

permit values. We should not regress to having princes and their families own the fisheries. A poor

man from a coastal village should not have to stand on the beach and watch while others who come from

miles away catch the fish off his doorstep. The benefit of the resource should reach the coastal

communities.

III. I also ask that any restructuring be done to leave enough flexibility to take into consideration future

generations. Young Alaska Natives have become known as “after-borns” because they were born too

late to become shareholders of any ANSCA corporation. Similarly limited entry created “after-borns”.

Young people who wanted to fish couldn’t do so because o the high price of the permits and boats.

Additionally, limited entry allows permit holders to pass permits down to people who do not even know

how to fish or run a boat simply because of wealth, lineage, or happenstance. Reissuance of all or some

permits could be accomplished through an apprenticeship system, or a lottery, or both.

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Name: Alaska Independent Fishermen’s Marketing Association (AIFMA)

Email: aifma1@seanet.com

Address: P.O. Box 178, Naknek, AK 99633, or P.O. Box 60203, Seattle, WA 98160

Phone: (206) 542-3930

Fish Area: Bristol Bay

Gear Type: Drift gillnet and some setnetters

AIFMA is the largest fishermen’s association in Bristol Bay and has been in existence for over thirtyfive

years. AIFMA owns property in Naknek for the purpose of one day operating and basing a

fishermen’s cooperative there. Our mission is to protect the renewable salmon resource and promote

economic sustainability for commercial salmon permitholders in Bristol Bay.

Quality Subcommittee

1. What does the Alaska salmon industry need to achieve a higher quality product?

Alaska needs to achieve a significant change in the underlying buying structure for salmon in key

fisheries, such as in Bristol Bay. The market should be the driving force with regard to quality standards

of Alaskan salmon products. This is the only logical way that a workable structure can evolve to

accomplish a goal of higher quality products.

In order to analyze quality problems, Alaska needs to examine the production-driven buying structure in

fisheries such as Bristol Bay, starting with the Japanese parent company, to its U.S. subsidiary and to the

fleet. The vast majority of sockeye leaves Bristol Bay, either as a frozen H&G product on a Japanese

freighter, or in a can on a container barge—in other words, with high volume primary processing at low

prices. This is the underlying structure of our production-driven model and is a significant problem.

Bristol Bay sockeye salmon are purchased as a bulk commodity and are treated accordingly at all stages

of harvest and production. Fishermen simply comply under these guidelines as prescribed by the

processor/buyer structure. Conversely, fishermen would fish for quality, if the structure was high

quality, high price driven.

Bristol Bay fishermen sell the bulk of the sockeye harvest to a few, very large, multi-national

corporations. To bring balance to this existing structure, Alaska needs to promote and support new

wholly–owned U.S. seafood companies. This could accomplish three things. First, competition for

sockeye would be increased. Second, the basic structure for secondary processing of salmon products

would more likely occur. And third, markets for these products would be diversified and become more

durable.

Note: According to the 1993 Forbes Report, Bristol Bay Salmon Investigation, (File No. 661-91-046)

conducted by the State of Alaska, Dept. of Law: “Our investigation found that the processor level of the

Bristol Bay market is very much an oligopoly because the same few firms consistently control fifty

percent or more of the annual production.”

“…fishers are told that only if the final market demand for salmon is increased (by, say, the actions of

the Alaska Seafood Marketing Institute) can they expect to receive a higher price per pound for their

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efforts. The policy recommendations forthcoming from the Supply/Demand school of thought are then:

(1) develop new products, (2) improve product quality, and (2) develop new markets. The

Supply/Demand school never recommends that Alaska take direct action to improve the bargaining

position of fishers vis a’ vis processors or processors vis a’ vis their Japanese customers.

In contrast, if the Japanese buyers of Alaska salmon wield collusive market power in their dealings with

processors, or if the processors do so in their dealings with fishers, then direct action to level the

playing field becomes a priority. The improvement of product quality and the development of new

products and new markets remain important goals but in addition two new goals are added: (1) to

extract the maximum dollar return from Alaska’s salmon resources by actively intervening to

counterbalance Japanese market power, and (2) to eliminate practices that artificially and illegally

reduce the price paid to fishers.”

B) Should chilling at point of harvest of commercially harvested salmon be mandatory statewide?

If the ice is available, should it be mandatory statewide?

AIFMA does not favor mandatory chilling standards at the point of harvest, but supports continued

efforts to improve product quality. The salmon market should be the driving force to the chilling of

salmon onboard harvester vessels. A “one-size-fits-all” law would not be appropriate for all regions of

Alaska. For example, a large percentage of the Bristol Bay sockeye harvest is canned and may not

require onboard chilling.

The current schedule of short openings (6-10 hours) in Bristol Bay allows for the fish to be chilled

immediately upon delivery to RSW salmon tender vessels.

Salmon standards and grades need to be further developed and should be important links to quality

controls. For example, bacteria counts and propagation are critical to the freshness of salmon. How do

you compare the quality of a Bristol Bay fish that is not iced onboard, but delivered to a RSW tender

within hours of being harvested, to a salmon that was caught and chilled, but held onboard for five days

or longer, before processing? These important quality factors need to be quantified and identified

along the entire market cycle from harvest to consumer plate. This includes steps from tendering,

processing, shipping, cold storage, secondary processing to retail sale.

2. Should the state be involved in creating a quality standard, state quality seal, and a state quality

commission?

ASMI may be the appropriate agency to address developing potential quality standards and/or a state

quality seal. Alaska should not create a state quality commission.

3. Should the state have a quality education program for industry participants?

ASMI has a quality education program for industry participants.

4. What incentives do you need to improve the quality of your harvested and/or processed salmon?

Fishermen will continue to improve the quality of their harvest, as higher values (prices) are paid to

them. Market diversification and new product forms are also incentives for quality improvements.

Marketing Subcommittee

Public Responses to Salmon Task Force Vol. 8 December 3, 2002

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1. Do we use existing state salmon promotional entities or do we change the entities? If changed,

what changes should be made? (e.g. ASMI; Division of International Trade & Market

Development, other)

In theory ASMI could be capable of accomplishing the task of promoting Alaska salmon in ways that

would help generate economic benefit to the fishing industry. We feel that some adjustments in the

structure of ASMI may need to be implemented before the appropriate promotional goals can be

achieved.

For example, AIFMA has recognized that corporations operating in the wild salmon industry have

conflicting ties and/or ownerships with the corporations operating in the farmed salmon industry.

Successful marketing strategies for farmed salmon may be detrimental to marketing efforts for wild

salmon. Processors with interests in farmed salmon operations or brokering/sales of farmed salmon

should be disallowed from a voting seat on the ASMI board.

ASMI has been unable to effectively market sockeye salmon to alternate markets, such as the United

States, because current salmon processors/buyers have chosen not to sell sockeye into these markets.

Until this situation changes ASMI will be unsuccessful in developing diverse and competitive markets.

State laws should be changed to allow ASMI to help develop and support regional marketing programs.

This effort will assist new companies in Bristol Bay, and in other regions of Alaska, to promote

competition and market diversity for our fish.

2. Who or what entity or entities should be paying for the promotion and/or marketing of Alaska’s

wild salmon? (e.g. salmon harvesters, processors, federal government/USDA; state general fund;

other federal funds; other sources)

Salmon harvesters, processors, federal government/USDA, state general fund, and other sources should

all pay for the promotion and/or marketing of Alaska’s wild salmon.

AIFMA will support the 1% assessment, if processors with conflicting interests in, or brokering of,

farmed salmon are disallowed from the ASMI Board.

3. Should the state help individual fishermen promote and market their wild salmon? If so, how?

We support regional marketing efforts that may include individual fishermen. These marketing efforts

will naturally help build new, small companies. New companies are the essential ingredient in helping

solve our market and pricing problems.

Production Subcommittee

AIFMA feels the production committee is particularly vital because it deals with potentially changing

the legal structure of fishing permits and rights. We would like to point out a conflict of interest that may

exist on this committee. Don Giles, represents Icicle Seafoods, a defendant in the Bristol Bay anti-trust

price fixing case.

1. How can we remove or reduce costs from the harvesting sector in a way that allows regional

self-determination?

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AIFMA and the majority of Bristol Bay drift permitholders support a permit buyback program.

Problem: The Bristol Bay salmon drift net fishery faces a chronic economic downturn.

• There is overharvesting capacity in Bristol Bay.

• ADF&G management practices have dictated that the fleet fish in smaller fishing areas to achieve

management goals. This has led to congestion that has created unsafe conditions for the fleet and a

poor work environment.

• There is a long-term decrease in the economic value of the fishery due to:

1. Chronic decrease in run size, and

2. Chronic decrease in ex-vessel prices.

Other problems that are causing a downward economic trend for driftnet harvesters include:

• Increase in number of permits from the initial level (1975) of about 1,416 permits, when limited

entry was put in effect, to the nearly 1,900 permits in the fleet today,

• Unmitigated Bristol Bay sockeye interceptions outside of U.S. jurisdiction,

• Increased subsistence and sports demands have decreased the common property harvest during any

given season, and

• Under regulated Bristol Bay sockeye interceptions in the North Aleutian Peninsula fishery.

Discussion:

AIFMA supports Alaska’s current Limited Entry Law. Under Limited Entry drift permitholders in

Bristol Bay can fish all openings permitted by gear type, with the allowed complement of gear and sell

their harvest to the market of choice.

After careful review of all proposed consolidation plans AIFMA supports a permit buyback plan as the

best alternative to decrease harvesting overcapacity of the Bristol Bay driftnet fleet. A buyback would

increase permitholder’s harvest, decrease congestion, increase safety and simplify management, without

changing the legal structure of Alaska’s limited entry law.

A buyback would allow for excess permits/harvesting capacity to be removed from the fishery

quickly and costs of the program would be spread out fleet-wide and paid back gradually over a

twenty-year period. A buyback would not change the legal structure of harvesting rights that are

currently held, one group or another would not be advantaged or disadvantaged and remaining

fishermen would retain equal access to the fishery.

A buyback is supported by fishermen in Bristol Bay. The Commercial Fisheries Entry Commission

(CFEC) surveyed Bristol Bay drift permitholders about their support of a buyback in Bristol Bay (CFEC

Report Number 02-4N, November 2002). Permitholders were asked how they felt about a buyback

program to reduce the number of entry permits in the Bristol Bay salmon drift gillnet fishery, if permit

holders were taxed a percentage of their earnings from the fishery to fund the buyback program. Sixty

percent of respondents favored such a program. In comparison, 81% of all respondents favored a

buyback program if funded by an alternative funding source, and not by fishermen.

The CFEC is currently conducting an optimum number survey for Bristol Bay and final results will be

released within a year. An optimum number study is very important under Alaska law and critical for a

buyback effort to be carried out. If the CEFC determines that the optimum number of permits is less

than the number of permits currently outstanding in the fishery, then the CFEC will be in position to

defend a buyback program

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Recommendations:

• AIFMA recommends that the Alaska Limited Entry Law be left intact.

• AIFMA recommends that the number of Bristol Bay drift permits be reduced to the optimum

number as determined by the Optimum Number Study now being carried out by the Commercial

Fisheries Entry Commission. The results of this study will be finalized in 2003.

• AIFMA recommends that the National Marine Fisheries Service Fishing Capacity Reduction

Program be selected as a leading choice of buyback and consolidation options. In our discussions

with NMFS it has been stated that the Bristol Bay salmon fishery can qualify for the plan,

either as a fishermen-financed program or as a subsidized program with an appropriation from

Congress without jeopardizing Alaska’s sustainable fishery designation.

(Excerpt from e-mail (9/27/00) from Michael Grable, Chief, Financial Services Division,

NMFS): “…the three elements of the “necessary” requirement are disjunctive rather than

conjunctive. Buyback proposals need, consequently, meet only one of the three elements.

Generally, the last element (achieving measurable and significant improvements in conservation

and management”) will be the easiest to meet in most fisheries, but the other two elements might

also be involved in some fisheries. Each buyback request must make its own case on the merits

of the specific circumstances involved in the buyback fishery, but significantly reducing

capacity in a fishery that demonstrably has too much fishing capacity for the sustainable

resource can hardly help but measurably and significantly improve the fishery’s conservation

and management. I believe that meeting the last element should be mostly a matter of

reasonable analysis, evaluation, and exposition.”)

• AIFMA recommends that equal opportunity be preserved in the Bristol Bay driftnet fleet.

AIFMA is opposed to any proposed plans that would restrict or take away time, area or gear

from an individual permitholder.

• AIFMA does not support consolidation/rationalization plans that would lock up production to

certain salmon buyers and/or restrain or lock out competitive/alternate buyers. A free and

competitive market is essential for a strong economy statewide and for the communities of

Bristol Bay.

2. How can we remove or reduce costs and aid the processing sector?

• Encourage dock-side deliveries whenever possible. This would reduce tender costs, handling of

fish and improve quality.

• The State of Alaska, with the assistance of the IRS, needs to study the effect of abusive transfer

practices in the salmon industry with respect to the loading in of costs and the marginalization of

processor profits.

The following article is reprinted from the AIFMA Leader, September 1995 and addresses the issue of

abusive transfer pricing.

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Transfer Pricing—Does it Affect Bay Sockeye Prices?

North Pacific fishermen wonder why fish prices seldom seem linked to final market prices. And in

recent years, the increased strength of the yen has not translated to higher grounds prices. You may have

asked, “How do these large gaps occur and who really ends up with the profits? Are other forces at

work?”

Japanese ownership of U.S. processors is increasingly suspect as an anti-competitive force. After all,

Japan is the leading consumer of much of Alaska’s seafood products. Suspicion runs high that U.S.

managers are under some type of foreign “directive and control” when it comes to setting fish prices

paid to fishermen. The recent Bristol Bay salmon price-fixing lawsuit reflects these concerns.

What it boils down to is whether or not these U.S. subsidiaries are dealing with their foreign parent firms

“fairly” when it comes to establishing sales prices for products shipped to Japan. Wisely, fishermen

know that, if those international product sales occur at low values, it will be reflected in lower fish prices

to fishermen.

But as AIFMA previously reported, Gunnar Knapp of the Salmon Market Information Service, stated

last year, “There is nothing written that says prices paid to fishermen need to be fair.”

Is Mr. Knapp correct? Well, the U.S. has had laws on the books for many years regarding such

intercompany transfers. These transfers are covered under IRS Tax Code Section 482—known as

Transfer Pricing.

Transfer pricing is a complex issue of great magnitude. It is the leading tax issue for international

business. Let’s see if we can define it and show how it influences fish prices.

A transfer price is the price charged by one company to a related company, whenever they allocate

income and expenses among themselves. This can be the price an affiliate charges for product obtained

and processed in the U.S. and then transferred to its foreign parent for management services or technical

know-how (and labor) provided.

Whenever these “intrafirm exchanges” take place among affiliates across our national borders in such

multi-national corporations (MNC’s), U.S. tax jurisdiction becomes a huge concern. The bottom line is

whether or not the U.S. company properly reflects income attributable to its operations within the U.S.,

or whether its foreign parent is using pricing strategies to avoid higher effective U.S. taxes.

The Transfer Pricing powers of the IRS are large. These powers are based on the concept of whether or

not such controlled transfers among related companies take place under the same market influences as

uncontrolled transactions between separate firms. That is, “Are prices determined ‘at arm’s length’ to

clearly reflect the income of any such organization?” The IRS can simply reallocate the “correct” level

of profits to the U.S. side, but it seldom recaptures the full amount of taxes unpaid. Meanwhile, the netof-

tax revenues also remain overseas.

In the Alaska seafood industry, we can ask if a foreign parent company is “milking profits” away from

its U.S. subsidiary by Abusive Transfer Pricing. At the least, this means the U.S. processor has less cash

when it comes to setting prices paid to U.S. fishermen.

As the IRS pursues U.S. processors who send out national resources overseas, an underlying concept is

the establishment of a “fair and economically justified price” for those resources. The cost of fish

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landings is a key part of the price for U.S. seafoods. So, the fairness of fish prices is directly tied to

whether or not transfer prices were indeed fairly determined or “abused” U.S. transfer pricing tax laws.

The IRS is currently investigating at least one of the industry’s leading foreign-owned processors on

matters of Transfer Pricing.

However, the IRS and a MNC can agree to establish “advanced pricing agreements” (APA’s) which

address IRS section 482 audit issues. This can severely influence future fish values, as a component of

these processors’ costs when they establish such formula-based APA’s with the IRS.

“Who is representing U.S. fishermen during APA-setting, and putting the legs back on the bargaining

table for fish prices?” Also, “Who is representing the U.S. when it comes to Americanization—as

defined by the highest overall taxable profits from our fisheries—to obtain the greatest overall benefit

for our nations?”

The tax strategies of MNC’s can prevent their U.S. subsidiaries from reflecting fair market prices. These

strategies can keep currency rate changes and other forces from influencing your fish price as they use

Transfer Pricing for their strategic tax goals.

So, as fishermen, you must become increasingly concerned and educate yourselves on the modern

complexities where tax and trade issues work together against you. Transfer Pricing is a key issue to

consider when you evaluate how the legs have been cut off the fish price bargaining table.

In addition, if policy-making boards are staffed by members of MNC-subsidiaries, can there ever be

“fairness” in the light of when you now know about their strategies of Transfer Pricing?

3. In addition to the removal or reduction of costs, are there statutory/regulatory changes that can

help the harvesters and/or the processors?

Finance Subcommittee

1. Are there better ways in which the state can use existing fishing industry taxes to assist the salmon

industry?

The State should consider giving tax incentives to new companies that meet secondary processing and

alternative market criteria.

2. Do current State of Alaska loan practices address the needs of the salmon industry? If not, what

changes would you suggest?

Alaska loan practices have led to the overcapitalization of some of Alaska’s salmon fisheries. In other

words, past loans for permits and boats were granted that would not have met private banking/loan

standards. A fine kettle of fish!

Alaska should consider a loan program for new companies that meet secondary processing and

alternative market criteria.

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3. Should the State of Alaska provide for the permanent retirement of limited entry permits in

your fishery? If salmon limited entry permits were retired in your fishery, what incentives would

you suggest for retirement? If funding is needed, who should pay?

AIFMA supports permanent retirement of limited entry permits as supported by an optimum number

study of the Bristol Bay driftnet fishery. See Production committee Question #1 for AIFMA’s full

discussion of this issue.

AIFMA supports permanent retirement of permits that have been repossessed by the state when loans

are defaulted.

Governance Subcommittee

Hatcheries

1. Would you support legislative development of a State of Alaska hatchery policy and/or

performance standards for hatcheries, and/or changes to the state’s relationship with all hatchery

owners?

The State should develop a comprehensive hatchery policy with performance standards. There are many

issues concerning hatcheries that directly affect the commercial fishery and the salmon resource. A

careful analysis regarding the detrimental affects of current hatchery policy should be prepared. This

analysis could be the basis for policy and ownership changes that would benefit the industry as a whole.

Education

1. What role should the State play in providing fisheries education (K-12, post-secondary, and voc/tech)

in order to promote Alaskans in the fishing and seafood industry?

The State should provide fisheries education to students on all related subject material on fisheries and

how economic forces shape them.

2. Does Alaska’s university system adequately meet the research and post secondary educational

needs of the Alaska salmon industry? If not, what changes would you suggest?

Apparently Alaska’s university system has not adequately met the required research to help the salmon

industry based on the current state of affairs. Research needs to be focused on two issues.

First, research should be focused on the detrimental effects of foreign ownership on the Alaskan salmon

industry as laid out in the 1979 Jeremiah Sullivan and Per Heggelund Pacific Rim Research study

“Foreign Investment in the U.S. Fishing Industry”.

Second, the problem of interceptions of Alaska salmon resources within the Russian Maritime EEZ

needs to be fully understood and acknowledged. Only then will we understand the economic impacts

these interceptions have had on Western Alaska’s fisheries.

3. If you are displaced by changes in the salmon industry, what could the state do to provide

retraining and/or alternative employment?

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A permit buyback program would allow for fishermen to leave the distressed salmon industry with

reparation for retraining.

Agency Oversight

1. Apart from the Board of Fish decisions, are there other state agency regulations that could be

changed to benefit Alaska’s salmon industry?

AIFMA supports rigorous enforcement of the existing State of Alaska’s antitrust provisions.

Enforcement of these provisions is essential to help new companies restore competition and evolve to a

mature market structure.

2. Do you support Alaska’s board of fish process? If changes are necessary, what would you

suggest?

AIFMA supports the Alaska Board of Fish process.

3. Do you support a task force created by the legislature to review the Alaska Board of Fish?

We do not support a task force to review the Alaska Board of Fish process.

Seafood Commission

1. Should the State of Alaska develop an Alaska Seafood Commission to annually advise the

legislature on the needs of the seafood industry?

Alaska should not develop an Alaska Seafood Commission. ASMI can provide this service.

Economic Development

1. As Alaska’s salmon industry changes, what are the economic development issues, community

and individual concerns that should be addressed by the State Legislature?

Any infrastructure that would aid in the development of new companies and market diversification is

important and would create the economic engine vital to the future success of communities and the

fishing industry.

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Name: Adelheid Herrmann

Email: herrmann@gci.net

Address: 1501 W. 11th Ave. #15, Anchorage, Ak. 99501

Phone: (907) 279-6138

Fish_area: Bristol Bay

Gear_type: Salmon Drift Gillnet

November 30, 2002

Quality

1. A) What does the Alaska salmon industry need to achieve a higher quality product?

The industry needs the ability to change to achieve a higher quality product.

B) Should chilling at point of harvest of commercially harvested salmon be mandatory statewide? If the

ice is available, should chilling at point of harvest of commercially harvested salmon be mandatory

statewide?

No, nothing should be mandatory until the processing and fishing industry can comply. The salmon

fishery in western Alaska does not have the infrastructure in place to meet any new standards set for

chilling. Some regional hubs may be able to have ice machines but many of the smaller areas do not

have minimum infrastructure such as a dock. There are many small boats, wooden and other, that will

not be able to hold much ice.

2. Should the state be involved in creating a quality standard, state quality seal, and a state quality

commission?

Yes, the State should be involved but there should be an extensive public process as well.

3. Should the state have a quality education program for industry participants?

Yes, the State should have a quality education program but could work in partnership with ASMI, FITC

and the Marine Advisory Program.

4. What incentives do you need to improve the quality of your harvested and/or processed salmon?

A decent price for the produc so that the harvestors can be sustained in the industry.

Marketing

1. Do we use existing state salmon promotional structures or do we change the structures? If changed,

what changes should be made?

The Alaska Seafood Marketing Institute does a good job of advertising and promoting our salmon but

the current structure has barriers. The barriers need to be identified, listed and a process or action plan

needs to be developed in order to have a more effective organization. If this does not happen, a new

structure needs to be developed that can

take our product to market and sell it.

2. Who or what entity or entities should be paying for the promotion and/or marketing of Alaska’s wild

salmon?

A partnership between the State, Processors and the fishermen. This partnership should exist now

through ASMI and ASMI goes after Federal grants to supplement State and fishermen monies.

3. Should the state help individual fishermen promote and market their wild salmon? If so, how?

Yes, the State should give fishermen the access to tools that the State develops. Fishermen's Direct

Marketing Handbooks and Guides, ASMI's research on foreign markets. The State should provide miniPublic

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grants for marketing and promotion and keep it as a consistent program.

Production

1. How can we remove or reduce costs from the harvesting sector in a way that allows regional selfdetermination?

Allow regions to do regional economic development and economic recovery plans. Have the State work

with them in these recovery plans. In addition, utilize resources such as the Denali Commission. These

processes are being formulated now in the State but could use some polishing with more coordinated

efforts among economic development and workforce development providers. Long-term plans need to

be developed and then a plan of action with follow through.

2. How can we remove or reduce costs and aid the processing sector?

Bring back the tax incentive plans for processors. Fred Zharoff's old legislation.

3. In addition to the removal or reduction of costs, are there statutory/regulatory changes that can help

the harvesters and/or the processors?

Examine the $10,000 bonding requirement for small processors and eliminate it if necessary.

Finance

1. Are there better ways in which the state can use existing fishing industry taxes to assist the salmon

industry?

100% of the State Fisheries Business Tax should be given back to the communities to invest in the local

community. The impact the fishing and seafood industry has on small communities is phenomenal,

paying the communities to adjust and cope with these impacts is a good way to spend State money.

2. Do current State of Alaska loan practices address the needs of the salmon industry? If not, what

changes would you suggest?

Fishermen need as much financial help as they can get, anything that sustains them in the way of loan

forgiveness etc. and helps sustain them and the industry should be examined.

3. Should the State of Alaska provide for the permanent retirement of limited entry permits in your

fishery? If salmon limited entry permits were retired in your fishery, what incentives would you suggest

for retirement? If funding is needed, who should pay?

An optimum numbers study is being done for Bristol Bay. We should see the outcome of that before

we talk about retiring permits. An Alaska resident fishery should be researched. Who should pay for

the retirement? The State should, since the permits are a privelage granted to the fishermen by the State.

Hatcheries

1. Would you support legislative development of a State of Alaska hatchery policy and/or performance

standards for hatcheries, and/or changes to the state’s relationship with all hatchery owners?

Yes, there should be a State hatchery policy developed with extensive public input. More public

educational information should be developed on the hatchery system in the State.

Education

1. What role should the State play in providing fisheries education (K-12, post-secondary, and voc/tech)

in order to promote Alaskans in the fishing and seafood industry?

The State of Alaska should provide existing resources for curriculum development for degrees or

certificates. Degrees could easily be developed in Fisheries Public Policy, Seafood Business and

Marketing, Roe Technician training, etc. The resources are there to develop these degree programs the

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information needs to be pulled together and there needs to be committment from the Higher Education

systems to provide the programs.

2. Does Alaska’s university system adequately meet the research and post secondary educational needs

of the Alaska salmon industry? If not, what changes would you suggest?

I would suggest that a process be examined that would begin conversations on cooperation,

collaboration and coordination between the State of Alaska, the University of Alaska system and

potential users of the education system. There are many opportunities in the SFOS programs in the

degree programs and research programs that young Alaskan Natives and Native Alaskan people could

take advantage of but there the networking is not being done. This could be done more effectively with

little effort. The Fishery Industry Technology Center (FITC) in Kodiak needs to provide internship

programs and the CDQ groups need to work with FITC to make this happen.

3. If you are displaced by changes in the salmon industry, what could the state do to provide retraining

and/or alternative employment?

Develop an Urban/Rural partnership tha offers training and employment at the end of the training. A

person could live in rural Alaska and commute to urban Alaska for work. Job sharing should also be

examined.

Agency Oversight

1. Apart from the Board of Fish decisions, are there other state agency regulations that could be changed

to benefit Alaska’s salmon industry?

The rapid response program that is supposed to respond to economic and natural disasters needs to be

overhauled so that it works for people that are in need.

2. Do you support Alaska’s board of fish process? If changes are necessary, what would you suggest?

I do support the Board of Fish process. There are many changes that could be examined and pursued.

One might be the continuation of a layman's board that would have paid commissioners much like the

CFEC Commissioners, in addition, the Board would also have a Resource Economist, that takes a closer

look at the economic impacts of BOF decisions. The Advisory Committee process is a good system but

should have the new "Stakeholder" committee process examined to see if it deletes the power of the

elected advisory committee process.

3. Do you support a task force created by the legislature to review the Alaska Board of Fish?

Yes, but I do not agree with any kind of legislative oversight of the BOF process other than the current

legislative confirmation process.

Seafood Commission

1. Should the State of Alaska develop an Alaska Seafood Commission to annually advise the legislature

on the needs of the seafood industry?

Yes, but it needs to be as non-political as possible. The trouble we have with appointments to such

commissions is there is too much self-interest and not enough Statesmanship that looks at all needs of

the State.

Economic Development

1. As Alaska’s salmon industry changes, what are the economic development issues, community and

individual concerns that should be addressed by the State Legislature?: The State Fisheries Business Tax

needs to be examined to help communties that are being devastated by fishing disasters. When disasters

are declared there has to be some financial help behind it - the current process of declaring disasters with

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no money behind it helps the individual very little. The Federal Government needs to step up to the

plate as well – The Magnuson-Stevens Act that addresses disasters needs to have an implementation

plan developed. Someone needs to take a leadership role to begin helping communities address the

many social problems and build good coping models that can be shared between regions. The leasing of

permits by elders to younger people should be examined.

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Richard A. Hendricks

bearh@gci.net

HC02 Box 7586F

Palmer, AK 99645

(907) 746-2265

Bristol Bay, 18 years

Aleutian Penn. 12 years

December 1, 2002

Quality

Gillnet fish: Vessels towing nets against current at line in Naknek River and other district lines. While

ADFG and State Troopers watch with video camera running on bank of river, fish are mutilated before

even getting aboard vessel . Crewmen jerk and slam fish out of nets, without regard to quality . Get this

fishery back to a drift net fishery and quality will improve markedly.

Ice or RSW? Ice is often overlooked as maybe a better solution than RSW, it lasts longer and

does not add prohibitively to the vessel weight, draft and maneuverability of the vessel. Also, tanked

boats lose a lot of speed when traversing the district to get to fish. Ice could be more readily available on

barges, tenders, dock, and floats. Flake ice makers or disc ice machines on vessels as an option to RSW.

2. NO. Too involved and not cost effective

3.Yes handling of fish and cleaning, hygiene and sanitation of vessel holds.

4. Markets could be more involved in finding out who produces which quality and grade product and

price accordingly.

Production

1. BB limit vessel to 2 participants only. This reduces the effort substantially without undue impact

on owners.

Fish farming is not viable economically with our wage and cost structure and its potential to

harm wild Alaska Salmon runs is very real. Fish escaping and waste and biological diversity are

being greatly impacted already. It also only compounds the problem of crowded markets and does

not in any way help the cause already at hand. As a visitor of the Chilean fish farms in ’95 (ON MY

OWN DOLLAR) I returned and warned of many of these problems today. Fish farming is an

industry of itself and does not in any way really accommodate the catcher fleet.

2. Work with agencies on a priority basis to facilitate permiting.

3. The use of salmon as a welfare fund is detrimental to those who should and could help the

industry forge ahead; examples of this are boat an permit holders restricted few options. Very

high capital costs and risks, flexibility in marketing approaches are lost due to the fear of run

fluctuations and lack of alternatives today. In the past , one could use a vessel in other fisheries,

such as halibut to help recover from a poor salmon run. Now he has to capitalize further in

another risky venture to participate, negating any benefit of that option, whereas he already has

the necessary equipment and experiences to participate in other salmon fisheries.. Its like any

business and should be allowed to operate like others under state and federal laws.

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Finance

1. Taxes.

2. Commercial Fishing loans. The state should examine the limited entry program and see what it

has created. For many years the state managed based on sound scientific and conservation

principles. Staying out of allocating the resource to user groups. Fishermen invested in what the

opportunity was; like any other business venture. When allocation changes the status quo, the

opportunity for some is either reduced or enhanced. The individuals with reduced opportunity

then finds themselves unable to produce and operate a viable business. Is this what was intended

when he purchased his permit? Was not the permit system in itself a solution to allocation? With

equal opportunity for all willing to invest and work in the fisheries? What do you have left if half

your production is eliminated and allocated to another user group in your area or another area

altogether? Does the state not have the responsibility to safeguard or protect the individual in this

situation? Conservation and natural run fluctuations are inevitable obstacles, but damages from

allocations and political scheming are beyond the control of fishing business operators. They

should be compensated for losses just as anyone who might lose half a farm or other business

entity to a Highway or some other public acquisition of property or use. Even though the state

says the permit is not a right, but a privilege it should remain a viable entity as it was when

bought or why would any one take such an enormous risk if he knew his life savings and

investment would be allocated away. Few people today received their permits free, many have

had to invest enormous sums to participate. Values were arrived at in a free market based on

historical catches and opportunity. If the state allocates away the opportunity then it should also

absorb the loss or transfer the liabilities to the recipient of the gain in opportunity. It can not

morally work any other way.

3. Do not retire permits. They are another constant. They provide opportunity on an equal basis. No

more should be issued either. By the same token. Let the market work it out.

Marketing

1. As an longtime Alaska fisherman, I have heard far to much from the marketing people and

economists we pay fish taxes to about how poor our quality is. For the last ten years we have

heard over and over again that we need to improve quality and that our fish are poor. Well guess

what? The market has also.. As one who has invested large sums in RSW and NOMAR brailers

and timely deliveries and all other care and handling techniques I see it only has further reduced

my proceeds. I would be better off today had I done nothing like so many others. I feel they have

done more to ruin our reputation of quality worldwide by publicizing this repeatedly in all forms

of press and advertising. I thing the food and drug should ensure quality and marketing people

should create demand. I strongly doubt Ford or Firestone emphasize safety hazards when

marketing their leading brands. Marketing is all about creating an image people want and

convincing them they can’t do with out your product. Quality alone is not going to sell anything.

We also need to have some protection for our products in this country. Laws in employment and

many other areas are either more relaxed or nonexistent in other countries..

2. The farmed and imported salmon should pay a marketing tax to promote all products especially

those they displace

3. The state has many informational agencies that could help provide for the needs of individual

marketers such as the trade center in Anchorage.

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Governance

1.Hatcheries have been beneficial to many fishermen. However they have not been fairly treated.

Whereas; they all use the same ocean resources, sometimes at the expense of others. Political

opposition by some groups jeopardized hatcheries in some parts of the state while others continue to

use the same resources.

Education

1. It is hard to create a program in the secondary schools that could prepare one for the fishing

industry.. Other than the basic skills, which are needed in any occupation, the changing nature of

the business tends to lend itself to higher education programs. I would certainly like to let them

know at an early age that the industry should not be used as reason to not pursue an education or

skills to be used in other fields.

2. I have participated in educational programs by the university and vo tech and found them

helpful.

3. They could fund education opportunities and training for those who are willing to pursue other

careers and the state would most likely benefit greatly by their life experiences and the greater

gain of society would be enhanced.

Agency oversight

1. Salmon fisheries in some areas are known as battlezones, I for one often have wondered why no

one has been killed. Many fisheries operate lawlessly as far as rules of the road , coast guard regs

obusive fishing practices, reckless operation of vessels including raming and running over and

into fishing gear which are already prohibited in statute. The State troopers have sat idly by and

let these practices multiply, especially in BB. Vessels should observe safety rules of the road and

safe speeds in congested fishing areas. There should be no physical contact of vessels or gear

tolerated.

2. The Alaska board of fish process is out of control. The quality of board members is atrocious.

The selection of board members should be like the depolitized judicial appointments that work so

well in the state.

3. A task force should review all work of the board for the last 6 to 10 years. Allocation based

decisions should be recinded. The politics removed and conservation and scientific data brought

back in as the prevailing guidance on board decisions. Too many people have been destroyed by

the recent board actions. I have participated in many board meetings over the last 20 years and I

have seen decisions made that altogether reject the will of the people participating in the process

and the scientific evidence presented. Decisions have been handed downs that were not even in

the proposal booklet, or given a chance to be discussed. Board members and third parties have

had an agenda and created policy outside the board process. Please do change and oversee this

board.

Seafood commission

1. A good idea if the board is not politically motivated. How do you insulate the members from

undue influence.

Economic development

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The changes proposed in harvesting coops and other means will tremendously affect local

communities and individuals involved in off peak fishing ventures. The demise of viable

experienced crewmen jobs in communities is already evident in chignik. The skills needed are not

going to be passed on as in the past. Fewer opportunities in other fisheries, such as halibut as well. I

see many people looking for alternative fisheries, but not much is available for salmon equipment, or

is it viable for use in other areas or open ocean ventures. Vessels are too specialized to the areas and

gear types they salmon fish. Whether it be length , draft or capacity for areas away from established

centers for fuel, repairs or markets. Also safety concerns in areas most of the rest of the year.

Thank You For this chance to participate.

Richard A. Hendricks

bearh@gci.net

HC02 Box 7586F

Palmer, AK 99645

(907) 746-2265

Bristol Bay, 18 years

Aleutian Penn. 12 years

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Name: David R. Arnsdorf, President,

Alaska Manufacturers' Association, Inc.

Email drarnsdorf@alaskamfg.com

Address: Suite 406, 3201 "C" Street, Anchorage 99503

Phone: (907) 565-5655

Fish Area: statewide seafood quality certification

Gear Type: all species, all gear types, all regions

November 30, 2002

Quality

1/a. What does the Alaska salmon industry need to achieve a higher quality product?

It is mainly a matter of attitude. While there are certainly some logistic and financial problems to solve,

they can be solved with coordinated, persistent, pro-active effort. Above all, this effort must be driven

by a clear, objective understanding of the demands of the marketplace.

1/b. Should immediate chilling at point-of-harvest of commercially harvested salmon be mandatory

statewide?

Prompt, proper chilling is a good idea, and does indeed improve quality. However, at least in the short

run, this is an unattainable goal. First, it will be so hard to accomplish that either (a) many harvesters

will disobey the rule, thus making it useless, or (b) if the rule is strongly enforced, then many harvesters

will be forced out of the market. Second, seafood quality is a complex issue, and depends on several

other factors in addition to chilling. As we explain in our answer to #2, AKMA thinks that the myriad

quality-related issues should be addressed together.

2. Should the state be involved in creating a quality standard, state quality seal, and a state quality

commission?

No, absolutely not. Quality, and the attendant value, is determined by the marketplace. A quality

standard and seal are necessary, but they must be designed by the private sector, and managed by the

private sector. It is very hard to set up a standard that will satisfy all customers and suppliers and that

can be adjusted as customer requirements change. With that in mind, the State should --

* Require all fishers and processors to have a quality plan covering temperature control, holding time,

processing methods, handling, and other factors affecting quality.

* Use ISO 9000-1996 code as a format

* Require this plan to be a public document

* Plan must cover how fisher or processor will handle fish, how they will chill fish, how they will verify

fish temperature, and how long it will take to get the fish to their customers

* The goal should be consistent grading and long shelf life so require a specified shelf life and

appearance performance after the customer receives it but do not specify how to meet the shelf life and

appearance performance.

In all cases, require standard grading, 3rd party certification, and metrics to ensure performance.

3. Should the state have a quality education program for industry participants?

Yes. In fact, it already has one. For over 20 years, ASMI has educated all participants in the "boat-tothroat"

seafood chain on quality handling practices. This valuable service must continue, and, in fact,

expand greatly. Quality training should be mandatory, for all permit holders and crew, tender captains

and crew, and processing workers and managers

4. What incentives do you need to improve the quality of your harvested and/or processed salmon?

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AKMA improves the quality of Alaska salmon throughout the state through a voluntary, market-driven

program of third-party inspection and certification. The harvesting and processing sectors of the

industry already recognize their strong existing incentive to (a) improve quality, and (b) deliver that

quality to the marketplace. That is why AKMA program attracts a rapidly growing number of

participants every year. This approach is far more realistic and effective than any government-imposed

program could be.

Marketing

1. Do we use existing state salmon promotional entities or do we change the entities? If changed, what

changes should be made? (e.g. ASMI; Division of International Trade & Market Development, other)

ASMI is doing a fine job, given its funding and regulatory restrictions. ITMD, which often works at

cross-purposes to ASMI, should be prohibited from marketing seafood, or, at minimum, ITMD's seafood

marketing work should be directed by ASMI.

2. Who or what entity or entities should be paying for the promotion and/or marketing of Alaska’s wild

salmon? (e.g. salmon harvesters, processors, federal government/USDA; state general fund; other

federal funds; other sources)

ITMD's seafood-related budget should be given to ASMI, plus ASMI should get a guaranteed stream of

substantive state funding. This funding should come from: (a) the state general fund, and (b) increased

mandatory contributions from industry.

3. Should the state help individual fishermen promote and market their wild salmon? If so, how?

Yes, in two ways: (a) increased support for ASMI, and (b) education in markets, market research, sales

techniques, etc. The state should not ever buy, sell, or own seafood; nor should it arrange sales; nor

should it provide financing for sales.

Production

1. How can we remove or reduce costs from the harvesting sector in a way that allows regional selfdetermination?

This Task Force is a good first step. The next step will be to set up regional task forces, to address this

very question. The third step will be to make sure that the Board of Fisheries allows each region to

experiment. At present, the salmon fishery by its very design reduces quality and limits the potential

efficiency of fishers. All of the following suggestions will be difficult to implement, but will all result in

a significant increase the overall quality of the salmon catch --

* Encourage fish for commercial sale to be caught in the ocean far from fresh water.

* Change gear laws to allow and encourage gear that is best at producing high quality fish such as

trolling or purse seining in all Alaskan waters.

* Change openings so that boats and processors are not overwhelmed by too much fish in too small a

time.

2. How can we remove or reduce costs and aid the processing sector?

If they are allowed to cooperate without being accused of anti-trust violations, processors could share

tenders. Some tenders could take fish from high-quality fishermen, while other tenders would take fish

from the rest of the fleet. Handling practices would be the same on both types of tenders. The

advantage is that high-quality fish are kept separate from lesser-quality fish.

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3. In addition to the removal or reduction of costs, are there statutory/regulatory changes that can help

the harvesters and/or the processors?

No comment.

Finance

1. Are there better ways in which the state can use existing fishing industry taxes to assist the salmon

industry?

Yes, buy out permits.

2. Do current State of Alaska loan practices address the needs of the salmon industry? If not, what

changes would you suggest?

No comment.

3. Should the State of Alaska provide for the permanent retirement of limited entry permits in your

fishery? If salmon limited entry permits were retired in your fishery, what incentives would you suggest

for retirement? If funding is needed, who should pay?

The State should simply buy permits at the current market rate, under a "willing seller, willing buyer"

model. If this does not attract sufficient sellers, then pay a 2.5% premium in the second year, a 5%

premium in the third year, and so on. Another incentive could be that sellers, and only sellers, are

allowed to pool investments in salmon farming. Funding could be from (a) fish taxes, or (b) a one-time

bond sale.

Governance

Hatcheries

1. Would you support legislative development of a State of Alaska hatchery policy and/or performance

standards for hatcheries, and/or changes to the state’s relationship with all hatchery owners?

The regional aquaculture associations are doing fine, and should not be held to any higher standards than

those already imposed by ADFG, ADR, and their stakeholders.

Education

1. What role should the State play in providing fisheries education (K-12, post-secondary, and voc/tech)

in order to promote Alaskans in the fishing and seafood industry?

No comment.

2. Does Alaska’s university system adequately meet the research and post secondary educational needs

of the Alaska salmon industry? If not, what changes would you suggest?

No comment.

3. If you are displaced by changes in the salmon industry, what could the state do to provide retraining

and/or alternative employment?

First develop other natural-resource-based industries, then train former fishermen to work in those

industries.

Agency Oversight

1. Apart from the Board of Fish decisions, are there other state agency regulations that could be changed

to benefit Alaska’s salmon industry?

Mandatory quality plans and quality education, as outlined in our Quality comments.

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2. Do you support Alaska’s board of fish process? If changes are necessary, what would you suggest?

The BoF process is, in general, a good one. The problem has arisen in recent appointments of people

who have no intention of solving the problems of our industry, and instead, simply seek to impose more

demands upon finite natural and fiscal resources.

3. Do you support a task force created by the legislature to review the Alaska Board of Fish?

Yes, but only it is composed mostly of commercial fishing and seafood processing people, rather than

sport-fishing or personal-use people. Notice that the sport fishing and personal use industries (an

accurate term!) are not in trouble; the commercial fishing industry is indeed in trouble.

Seafood Commission

1. Should the State of Alaska develop an Alaska Seafood Commission to annually advise the legislature

on the needs of the seafood industry?

No, this task should become a permanent responsibility of a joint working group from ASMI and CFEC.

Economic Development

1. As Alaska’s salmon industry changes, what are the economic development issues, community and

individual concerns that should be addressed by the State Legislature?

The high cost of electric power in rural Alaska.

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Name: Duff W. Mitchell

Email: duff@alaskafoods.com

Address: Box 23000 Juneau, AK 99802

Phone: (907) 586-3333

Fish Area: SE Processor & SE Permit Holder Kake & Pelican AK

I would like to thank the Task Force members for their time and contributions to the pressing needs of

our fishing industry. I think that it is long overdue for the legislature to become active at solving some

very pressing issues in the fish patch. I respect you for your willingness to dive into some contentious

issues. I also commend you on our mutual desire to re awake our sleeping industry and to look toward

our fisheries future. Our industry employs so many of our citizens and is so vital to the coastal

community economies that it is with great hope that these task force proceedings will result in “real”

change for the better. Alaska makes up over 1/3 or more of the total coastline of the United States and

we are truly blessed with the abundant resources that our seas provide. Our fisheries are the envy of the

world. Many countries and regions were forced into farmed salmon due to over fishing, pollution, and

wasteful practices. Alaska is truly the last bastion of a seafood breadbasket left in the world. We,

collectively as citizens of Alaska are the custodians of a great resource. With this god given abundance

comes responsibility to do what is not only right today, but what is right for the generations of Alaskans

who will follow our footsteps and participate in our Alaskan fishing industry.

I use the word “Alaskanize” often. Make no mistake, I love many who hail from the lower 48 and call it

home. However, it is Alaskans that should be in control of our destiny, and our fishery industry, not

outside interests. “Alaskanization” can be defined as the long-term strategy to take over and control of

our fishing industry by Alaskans to be run by Alaskans for the benefit of Alaskans. Alaskans respect one

another and work together to find Alaskan solutions. Outside interests and control over fish traps is the

very reason that we became a State. Maybe some have forgotten the history of 1958 and 1959. Some,

like myself, only see today and our current dilemmas as one step toward the eventuality that our industry

will one day be controlled and operated by Alaskans for Alaskans.

We have many regions and each region has many parochial issues. We also have many issues that

overlap our various regions. It is important to respect the desires and direction that each region wants to

collectively pursue. It is also important that people and fishermen in Region A do not hold hostage or

harm fishermen in Region B. It is too easy to speculate and come up with superficial solutions to

someone else’s problem. It is too easy to get engaged in the Alaskan game of “fratricide” where we

blame one region for the fishery failure of another region. I ask that you rise above this fratricidal and

divisive tendency because when we are divided, we are easily picked off by outside interests who take

advantage of our disorganization. Each fishermen and Alaskan processor of a particular region should

set out to “correct” market deficiencies, quality issues, infrastructure, and market issues in their own

region first before embarking on a know all, fix all mentality. As such, my focus is on Southeast Alaska.

I have lots of opinions on other regions, but I know less and have little first hand knowledge in these

regions. I strongly feel that nobody except those living and fishing in a particular area can truly “feel”

the issue like those personally involved. It is for that reason that I do not feel it is appropriate that policy

from Bristol Bay or the Yukon should impact Southeast Alaska and vice versa. Solutions for one region

could very well be disastrous in another. Our elected leaders need to have the Wisdom of Solomon to

see the difference. Baby splitting is never fun.

These written responses and recommendations that I am providing are additional to the previous

submitted recommendations and public testimony given at the Petersburg, Alaska hearings. It is in this

train of thought that I am not just raising problems, because anyone can point out problems, I am taking

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the risk to offer rational solutions to some disturbing but easily definable problems in the format of the

questions that you posed. My words my raise some ire, but my heart is in what is best for my regions

fishermen and Alaska. Please excuse me where my words are blunt as I am an Alaskan. I have not held

back any punches, but I have not thrown any blows where they are unwarranted. I walk through life

reserving the right to change my opinion based upon the light of new facts and information. Whenever I

am proven wrong, I admit it. I ask that you try and do the same.

Quality

1. What does the Alaska salmon industry need to achieve a higher quality product?

Fish start to deteriorate (like all living creatures) the very second they die. The enzymes in their stomach

begin the process of leaching into the meat and roe. In addition to enzymes, their cell structure begins to

break down with time and this is compounded by the presence of bacteria, that is present in the slime

that covers their skin. The cell breakdown is even further accelerated and exacerbated with warmer

temperatures.

Any activity which either slows this natural decaying process down (lowering temperature) or speeds

their delivery to a plant for processing (time) assists the fishermen, the processor and the reputation of

Alaskan salmon in achieving a higher quality product. Processors also must be able to quickly process

their volumes. Plants that sit on fish for three days do just as much a disservice to the overall reputation

of Alaska quality as the worst fisherman.

The standard for salmon quality is set by the farmed fish industry. There is no doubt in anyone’s mind

today that it is difficult and in some cases impossible to match this “world class” benchmark standard in

a “wild fishery environment”. However there are many actions that we can collectively take that can

bring us close to this standard. Furthermore, we should do everything reasonable to achieve the basics

for quality and then develop more advanced ways and actions to methodically bridge our quality gap.

Admittedly it will be impossible to match farmed fish freshness, but nonetheless strides should be made

to condense the bridge between our “third world” handling of fish and the standard set by advanced fish

farms. Although the actions below are not in any way exclusive or exhaustive, they will, if implemented,

drive quality up.

Some of these actions are:

• Adjust openings so there is no incentive to “hold” fish for multiple days. Institute openings

policies that assist and encourage quality fishing.

• Require all processors (as a condition of operating permits) participating in the fishery that they

have adequate tenders to handle the amount of boats they have fishing for them. That way

unprepared processors cannot use “quality” issues as an excuse to create trip limits or fleet

cutbacks against fishermen.

• Consider every other day fishing that forces deliveries at the end of each day. 24 hour on, 24

hours off will allow tenders to deliver product timely to the processors, keep processors on an

even keel and this will allow fishermen to dock deliver without fear of losing fishing time.

Quality improvements and value must exceed the additional expenses incurred for fuel.

• Provide real and determinable economic incentives that encourage twice a day tender deliveries

by rebating all state fuel taxes to boats and tenders and processors that follow a rigid set of

guidelines. Provide tax rebates for fishermen and processors that institute and document twicePublic

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daily deliveries from fishermen.

• Allow fishermen to get a small fish tax rebate for RSW and ice purchases on their fish tickets.

• Provide Zero percent interest loans for processors and fishermen boat improvements to enhance

salmon product quality by purchasing or upgrading refrigeration systems, ozonated ice,

modifying decks to meet ADEC regulations, installing soft vacuum salmon pumps on tenders,

and other quality improvements.

• Build infrastructure (roads and freight ferry systems) and invest public capital to move fish faster

to plants for processing and to transport fish to markets for distribution and sales.

2. Should the state be involved in creating a quality standard, state quality seal, and a state quality

commission?

I do not think this is a wise idea because all the discussion has been focused on voluntary participation.

Voluntary seals are meaningless to the consumer and are ripe for abuse. Are the Norwegian quality seals

of farmed fish “voluntary” or do they have enforceable grades? I suggest that we research and learn

from others. I will argue that it is better to copy others in this area rather than reinvent the wheel.

The “Good Housekeeping” seal is a “voluntary” seal and is completely and unquestionably worthless.

There is not one product on the US market that can state that it sells its product more to the American

consumer with the “Good Housekeeping Seal of Approval” than without it. Why? Because voluntary

seals have no enforcement and therefore they mean nothing to the consumer. It may have meant

something years ago (at a time when consumers were less informed) to separate shoddy or unwholesome

products from good products, but it is meaningless today.

However, if you or I go to a grocery store to buy US beef and we buy US “Prime”, it means something

different from US “Choice” which again means something different from US “Select”. These are legally

defined and objective quality designations from the US Department of Agriculture. The standards are

enforceable and there are serious fines and enforcement proceedings for slaughterhouses that sneak

lower graded beef into higher grades. Not only are there criminal charges for cheating and lying on

grades, but also a cheating slaughterhouse runs the risk of ruining their reputation and could lose

governmental contracts. Should we not have the same responsible standards in our industry? How else

are we going to combat farmed fish? It should surprise no one that there are similar legal grade

differentiations with pork and chicken. Our industry sells pale meated chums and put terminal area pinks

in a can, yet we would not feed the same meat to our children. How many processors would

“voluntarily” mark their product as “dog food?” Enforceable grades mean something; voluntary seals or

commissions will waste our taxpayer’s (fishermen’s) time and money.

Now lets explore for a moment a scenario that we had enforceable grades and that there were penalties

enforceable by law for those that cheated or abused these enforceable grades. Under this scenario if a

processor had mushy, warm fish (or twice frozen value added products) that would only make the

“select” grade (as opposed to “Prime” or “Choice”) they would and should get a lower price in the

market. After all, they should get a lower price for shoddy goods that were not “prime”. But if a

processor worked with his fishermen, invested in a first class tendering system and or paid incentives for

timely deliveries, then he would have fresher, colder, and more firm fish that would meet the higher

“Choice” and “Prime” grades. Since this or any enforceable quality criteria would be enforced

throughout the Alaska industry on all “Alaskan” harvested salmon (including deliveries of Alaskan fish

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taken to Canadian plants owned by Seattle processors-which is another whole can of worms); it is very

likely that the “quality producing” processor could and would charge more and profit more from an

“enforceable” quality salmon. The processor can therefore recoup his quality improvement investment

and he can afford to pay fishermen more that deliver a “quality” product.

Therefore, enforceable quality gives the fishermen an economic incentive (not lip service) and more

negotiating power to get more money from processors. This is no different of a concept that occurs when

a farmer delivers higher quality beef to the slaughterhouse: he gets paid more! This is a pretty simple

capitalist concept that does not take a fisheries biologist to figure out.

Currently, superior quality fishermen (through processor cost averaging the values of quality) who take

great pride in their fish “subsidize” the poorer quality fishermen or processors who put out inferior

product. Enforceable quality standards and objective benchmarks are a means to extract more value

from the same pound of fish and is a means to professionalize our industry and bring more money to

Alaskan fishermen.

In quality, you are only as strong as your weakest link. Any “quality” policies must solidify and

strengthen the weak links that are reinforced through economic incentives paid to fishermen.

My point is that only through enforceable quality standards can quality be enumerated and objectively

determined through quality specifications that are market related. Otherwise, quality to one voluntary

standard is junk to another. A completely subjective and voluntary quality standard is bunk and

meaningless because it is like hitting a moving target that never stops moving…. Today saumon

sauvage, tomorrow salmon garbage. Quality grades must be objective, simple and enforceable. Anything

less can’t and won’t work and is a waste of time and money and provides NO economic incentive to our

fishermen. Voluntary quality seals do not work in other food industries so I am perplexed why Seattle

processors and their supporters think that it can work in our industry? The bottom line is that if

fishermen were able to deliver “prime” and it was graded as “prime” they would have more negotiating

power to demand a “prime” price from these same Seattle processors. This is something these processors

do not want to pay our fishermen for because they are already getting it for free from the superior

fishermen!

Let me drive home and explain an example. At present, dock prices are paid on the average “quality” of

fish. Sure temperatures are taken at the dock, sure fish are inspected, but there is no economic incentive

to be above average or to deliver “prime”.

Enforceable market related quality seals mean something to the consumer and they pay for themselves

through higher sales prices by differentiating the grades (Grade A “prime” sells for a higher price than

“dog food” grades). This consumer differentiation eventually means that the higher grades provide more

money to pay the fishermen more at the dock (Capitalist economic incentives to promote enforceable

quality designations) rather than voluntary (lets feel good) quality lip service. At present, there is no

economic incentive for one boat to take care of his fish when it is all mixed in a tender or plant with fish

from poor quality boat or tenders. Therefore our quality in each region is determined by the lowest

common denominator (worst boat-worst tender-worst processor) and that is not good for the reputation

of our entire wild salmon industry. By providing enforceable grades, we can offer “economic” reasons

to reach quality benchmarks and standards.

A prime example of an unenforceable quality seal was our defacto quality label produced by ASMI for

Europe, “Saumon Sauvage” or Wild salmon in French. Hey, it was cute and ASMI spent a small amount

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of money promoting it. Unfortunately every watermarked hump backed pink salmon soon had “Saumon

Sauvage” all over its boxes and totes. The “market” took our label and in one season our cute “Saumon

Sauvage” label was transformed and became synonymous with “Salmon Garbage” because it was

perceived as poor quality fish. Again unenforceable standards are taken to the level of the lowest

common denominator, which ultimately “hurts” all of us more than it helps.

Seattle based processors generally do not support “enforceable” quality standards (at least they haven’t

yet on ASMI or in any public forum) nor do they want the intrusion into their plants like all of our

Nation’s food industries have. However, homeland defense and accountability for our Nation’s food

safety could very well change this. These same processors have been processing fish in the same

“production” manner for over 75 plus years and they do not want to put more capital or grading expense

into their plants. Enforceable Quality standards will allow smaller Alaskan and more skillful processors

to pay their fishermen more and that would upset the current status quo. Therefore, I believe there is

serious opposition to enforceable and verifiable grading standards from the large outside interests that

fear changes to our current system (no enforceable grading standards) because they would lose

economic y control over fishermen (and would have to pay them more) who produce quality. Besides

some of these processors may find themselves with large amounts of “dog food” grade product if we

had enforceable quality grades.

I understand this economic fear of the unknown (look at the fines and product recalls these processors

already get) and would also be wary of any potential overzealous enforcement. However, objective

grade selection based on time and temperature is not subjective and has no room for manipulation or

abuse by unscrupulous processors. Therefore NO quality seal is better than an unenforceable or

voluntary one. It is similar to when fishermen go on strike. It does no fishermen any good to have a scab

cross the picket line.

I also want to throw something out for consideration. Do you personally eat twice frozen prime rib?

How about twice frozen pork chops? How about a twice frozen fillet of King salmon? Have you tried a

twice frozen pink salmon processed in Seattle? If you have, you will notice that it is watery; in fact some

processors inject more salt water into the fillet to increase the weight (nice trick, huh?). However, if an

American consumer eats a value added Alaskan salmon product made in Seattle, it is always TWICE

FROZEN. Why does our industry have such low standards? I think our State should encourage value

adding and value added jobs in coastal communities that take fresh fish, value add it, and only freeze it

once. I think a law should be passed that only once frozen fish can be called “Alaskan” salmon. Twice

frozen salmon can be called “Seattle Salmon”. A perfectly caught, perfectly tendered, perfectly

processed salmon is ultimately ruined and becomes a vastly inferior product when it is thawed, slacked

out, cut, value added and then refrozen. If we encourage once frozen, made in Alaska products because

the quality is better, then we can start giving processors an economic and market based incentive to quit

selling the public twice frozen poorer quality value added salmon products that ruin our collective

reputation.

I think it makes more sense to put these jobs in the coastal communities of Alaska where they belong.

Twice frozen salmon is one of the largest causes of poor quality of Alaska Salmon in the value added

consumer market. If anyone has noticed, our Chilean competition is selling once frozen salmon. Is this

wake up call?

3. Should the state have a quality education program for industry participants?

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I already thought there were programs. Are you asking if they can be improved? The answer is yes. I

think anyone applying for a processor permit must already demonstrate that they have a HACCP plan; a

sanitation plan and a DEC approved facility. In order to accomplish these items, a processor must

demonstrate a basic knowledge of food safety, which is in many ways tied to quality.

I think our loan programs for fishermen should require as a condition of a new loan or a refinance that

fishermen attend an 8-hour class (or some other type of formal training) on handling and icing fish as a

professional development requirement. The curriculum should include how time and temperature

degrades salmon quality. Something in this manner would provide a way that the State could assist and

ensure that new fishery participants (including deckhands) understand what “quality fish handling

techniques” are. I also think that processors should be required to provide professional development and

quality training for their fleets as a requirement to operate. I also think that every “new” deckhand

licensee should receive a videotape instruction designed to assist “crewmen” on what they can do to

properly handle fish and keep them cold. The cost of the videotape can be added to their license and it

would require that they pass a simple test from questions obtained from the video to get their license.

The goal of all this training would be to improve the message of quality through professional

development and professional training.

Every industry whether it is accounting, electrical, diesel repair or medical; all have professional

development courses. I think it is time that our industry does the same. Our State institutions do not offer

very much professional development for fishermen or processing employees. However, I will point out

that the Marine Advisory program and the Fisheries Industrial Technology center do a very good job on

the courses they offer.

Other states that have pork, beef and poultry industries require that their institutions of higher learning

provide educational resources to their industry. Our state neglects the fishing industry in this area and

also in fisheries Research and Development areas. Do not get me wrong. I am fully aware of the UAF

School of Fisheries and the Kodiak Fisheries Technology Center, but it quite simply is not enough when

compared to what “fishing” provides to this State. As the “major” fishing state, our universities should

rank far ahead of Maine, Rhode Island, North Carolina, Washington, and British Columbia in fishery

science and fish processing technology, but we don’t. Again this is indicative of legislative neglect in

fueling and “Alaskanizing” our important industry with future educated “Alaskan” leaders and

managers.

I think the creation of a scholarship investment fund from fish taxes should assist Alaskans that want to

learn and become processing plant managers and leaders in this important industry. In return for these

scholarships, I believe we could require that the up and coming Alaskans work in our industry for a set

period of time. I know that I would gladly hire college educated fish process technicians and managers

to work in our Native Company. I believe in this manner of promoting fish technology and education

that we can collectively groom our collective future like other states promote education in their primary

industries. This is another step toward the eventual “Alaskanization” of our industry.

4. What incentives do you need to improve the quality of your harvested and/or processed salmon?

Tax credits and low interest loans for investing in quality improvement technologies and equipment.

Marketing

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1. Do we use existing state salmon promotional entities or do we change the entities? If changed,

what changes should be made? (e.g. ASMI; Division of International Trade & Market

Development, other).

ASMI does a great job when you realize what constraints they have. Some of these constraints are

regulatory, others are self-imposed by their own board of directors. Their employees are enthusiastic and

dedicated to their mission of marketing our wild salmon. There is room for improvement in any

organization, but the employees and managers are committed to what they are doing, are professional,

and are creative in their pursuit to market and regain market share for Alaskan salmon. I do not think

there needs to be another entity or to create a “new” competitive entity. I do think that all entities should

work together in unison and in a synergistic fashion.

However, we need to remember that the “A” in ASMI is “Alaska” not Seattle or Tokyo. The fact that

farmed fish companies can sit on our ASMI board causes ASMI’s direction to become contaminated

with farmed fish interests and therefore their marketing is less effective. Any change in ASMI, needs to

be directed at the Board of Directors, not the organization itself. I will explain more on this as I address

this issue under the Governance questions.

2. Who or what entity or entities should be paying for the promotion and/or marketing of Alaska’s

wild salmon? (E.g. salmon harvesters, processors, federal government/USDA; state general fund;

other federal funds; other sources).

Fishermen and processors already are the only personal income tax payers in this state! A fact that is too

conveniently ignored by an Anchorage/urban controlled House and Senate. For too long our Alaskan

Legislature have conveniently avoided the fact that Alaskan Fishermen contribute substantially more to

the General Fund than what they take back. Salmon harvesters and processors cannot afford more taxes.

In fact, in the depressed economy of the salmon market, we should reduce all salmon taxes until the wild

fish market is stabilized. However, the question above is how to provide funding for promotion and

marketing.

The answer is all of the above-suggested sources. WE should match funding with federal entities to the

maximum extent possible. We should take direct funding from the general fund (the fishermen paid into

it, why not give some back?)

3. Should the state help individual fishermen promote and market their wild salmon? If so, how?

Yes, but it should be through ASMI and the Division of Trade. I think both entities could set up a “how

to” market and cover basic marketing so that fishermen that know nothing about marketing and

distributing can follow some general guideline. I believe the Marine Advisory program has already

taken steps to producing a guideline on how to market your catch. The State should support the “small”

guy because he usually has fabulous quality because it is his “personal” catch and reputation. Promoters

of high quality salmon help all of us in the industry because it lifts our reputation. As JFK stated, “a

rising tide lifts all boats”.

Production

1. How can we remove or reduce costs from the harvesting sector in a way that allows regional

self-determination?

We need fishery managers to consider economic considerations and add, “fishermen economics” as a

secondary consideration when making decision on establishing season openings, policies etc. Nobody is

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advocating anything that would harm or impair a resource, but too many times, economics are ignored

and then the ultimate decision adds costs to the harvesters and robs their income due to decisions that do

not account for harvester impacts. We need to look at the big picture when making decisions and those

decisions need to include the economic impact on fishermen and local processors.

The above question is confusing because “regional self-determination” means different things to

different people. Any action that reduces costs to the harvester is a no-brainer. How that plays into

regional self-determination is another issue that may or may not be mutually exclusive to reducing costs.

The Chignik experiment is a stab at regional self-determination? I personally think that I have no right to

comment on Chignik or any other region that does not affect me. I do believe that regions should have

control on how business is conducted in their region and only in their region.

2. How can we remove or reduce costs and aid the processing sector?

This is an important area. Our overseas competition in Chile has very cheap labor. Value added plants in

China pay workers as low as between $1 and $2 a day. Many Seattle processors ship fish to China or

Thailand to be value added and then sell the fish to Europe or re-import the product back to the United

States. This twice frozen fish is sold as an Alaskan salmon product. As Alaskans we have a much higher

standard of living, we must fly workers in from urban areas to rural areas, house them, feed them and

run large housekeeping and food service operations. Our competition does not have these expenses and

any unnecessary expenses imposed on processors take away from the processor’s bottom line and ability

to pay a higher dock price to Alaskan fishermen. Therefore, anything we can do to lower overhead costs

allows more profit or money available to pay for raw material (fishermen’s dock prices).

Our current labor laws for seafood workers are skewed against the employer. These laws that originally

set out to protect the employee have become abusive and expensive for the employer who is creating

jobs in Alaska. For example, if a processor hires a worker from Seattle or some other urban center and

that person receives airfare and then quits on the first week, the current law does not even allow the

airfare to be deducted from his pay. (Hey buddy, want a free trip to Alaska?) If the same employee

vandalizes the bunkhouse because he hates his job (or for other reasons), the employer cannot deduct

those costs from his wages unless he agrees to them (yeah, right).

I am not advocating that we eliminate laws. I am advocating that we review these seasonal worker laws

and make them fairer for the employer. If an employee quits, he must receive all pay in 72 hours. We

have had employees quit because other processors have hired them away. We should be able to pay

quitting employees on the next scheduled payroll instead of within 72 hours as provided by law.

Processing employers should not be administratively burdened with laws that unnecessarily add

bureaucratic expense to these employers. I have had to have office staff work overtime and expend large

amounts of administrative labor to comply with laws that force us and other processor to have larger

administrative staffs than we otherwise would need. These burdensome, and I will argue unnecessary

regulations cost this industry money that could be spent more productively.

Unfortunately, we are the only state that has such arcane and unreasonable laws. Many of our seasonal

labor laws are outdated and were created in a bygone era when everything was just fine in the fishing

industry… and processors could afford to suck up airfare. As a start to remedy this situation, I suggest

that the legislature do a thorough review of how other states treat and compensate seasonal seafood and

agricultural workers. Then these laws need to be discussed and then we need to pass legislation that

reforms our seasonal labor laws so that they are reasonable and in synch with the rest of the country.

Therefore, I will suggest that reasonable room and board needs to be recouped by the employer.

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Reaso