The Cook Inlet Salmon Branding Project will get $192,000 of the $635,000 the borough received in federal dollars aimed at revitalizing Alaska's fisheries, thanks to an ordinance passed Tuesday night by the Kenai Peninsula Borough Assembly.
But that was only a little more than half what the fledging salmon marketing program requested in Ordinance 2003-19-08, a measure that proved somewhat more controversial than was expected.
The ordinance requested $359,000 to cover core operating costs over three years while the salmon-branding project's label, known as Kenai Wild, builds domestic markets for its high-quality inlet salmon products. Borough Mayor Dale Bagley's administration backed the $359,000 grant.
Assembly member Gary Super-man of Nikiski, however, moved to reduce the grant to cover just the first year, saying the assembly could only fund one year at a time.
As discussion began on the merits of the ordinance, assembly President Pete Sprague ruled assembly member Chris Moss of Homer had a conflict of interest because he is a member of the branding project board of directors. Moss disagreed with the ruling, but stepped down from the dais.
Moss said later that issues surrounding the struggling fish marketing project are so important he will step down from the CISB board so as to be able to participate in future assembly debate over funding and other matters having to do with the program.
The branding project is in the second year of a five-year plan to funnel inlet salmon into high-end domestic markets by encouraging and training fishers and processors to handle salmon in ways that produce less damage to the meat. It is developing a quality certification program, creating a higher-value product and promoting that product to niche markets in an effort to create higher profit margins for fishers and processors.
So far, according to project president Mark Powell of Kenai, the nonprofit organization has not led to any profit for fishers or processors. He told the assembly he hoped the program would become self-sustaining in the next few years. Meanwhile, the program will need help.
Assembly members Betty Glick of Kenai and Pete Sprague of Soldotna expressed doubts about the funding move, however.
Glick said she liked the program and recently recommended it for a National Association of Counties award. However, she said she had "some heartburn" over the money being used for the grant.
The state received $50 million in federal money aimed at relief for the struggling salmon industry and the resulting impacts of the downturn in the state's economy. According to Bonnie Golden, who manages borough grants, the state split that into three different programs. One offered grants to applying municipalities, individuals and nonprofits. The branding program applied but did not win a grant through that program. A second pot of money reimbursed fishers directly, Golden said.
The third, about $7 million in all, was distributed to coastal communities that lost fish tax revenue. The borough's share, now in the general fund, was $623,000 and came with no strings attached.
The administration favored spending some of it on the salmon branding program, which if successful, would result in more profits to fishers and processors, increased employment and higher fish tax revenues in the long run.
But Glick expressed some confusion over the intent of the federal dollars and said she would not support the grant at this time.
Sprague also said he had concerns about the dollar amounts.
"I want to see a more detailed program come before us," he said, adding that the money now in the general fund could be spent on other needs, including education.
Other members said they believed the $192,000 grant was worthwhile.
"I feel this is a program that has a lot of support," said assembly member Milli Martin of Homer. "Yes, we did fund it to get it off the ground. All of that was paid back. I think we need to give this program a chance." That could take several years, she said.
Assembly member John Davis said he couldn't think of a better way to revitalize the local fishery.
"Lord knows we need to do something," he said. "This is a good move."
The assembly voted 5-2 for the grant. Glick and Sprague were in the minority. Moss did not vote. Assembly member Paul Fischer of Kasilof was absent.
During the public hearing, Powell told the assembly that even though the program is struggling, there is plenty of reason to remain optimistic.
He said the program to boost the quality of marketable salmon is a matter of altering old habits.
"The bottleneck is changing an old-school regime that has done something this way for a long, long time and doing it a different way," he said.
Problems are many, he said, including fishers who don't have the staff or on-board equipment to do large volumes of high quality handling on peak days, to a lack of de-icing machinery and other equipment at processing plants.
"Processors are in a difficult place," he said. "We've had restricted years. We've had restricted seasons. Banks are scared to invest long term in plants," he said, adding that plant operators themselves have their own concerns about long-term investment.
Nevertheless, Alaska salmon now represents just 3 percent of the domestic market, meaning there is virtually unlimited potential for market-share growth. Farmed salmon recently has met with some difficulties regarding purity. Environmental groups are pressing fish markets to look at wild salmon. There is litigation regarding artificial coloring. Powell said CISB's recent test marketing revealed that demand for wild salmon far exceeded the fledgling program's ability to deliver. That is, in a way, good news.
"The stars have lined up for us to some extent based on market conditions that are out of our control," he said.
Asked when fishers and processors might begin to see bottom-line profits from their investment in high-quality fish-handling procedures, Powell said that would depend on several factors, including how and when plants choose to recoup investments. But he said "it would be a real shame" to lose the momentum the program now has.
The grant, he said would help fishers and processors, and eventually result in a greater return to the borough in increased fish tax.
He also said that in his conservative estimation, the CISB program might one day involve a healthy percentage of the fish caught in Cook Inlet.
"Fifty to 70 percent branded fish out of the Cook Inlet harvest is not reaching too far," he said. "I believe that by year five of our plan, there is no reason we can't be doing close to a million pounds."
That would represent about 5 percent of an average annual harvest of 20 million pounds, he said.
This year, some 3.4 million salmon were caught, averaging about six pounds each. The branding program submitted 216,000 pounds as eligible product resulting in some 90,000 net weight pounds ready for the high-end market. Powell said the effort involved some 120 individual fishers and four plants.
The program expects further growth in numbers of participating fishers and processors next year and will move to ramp up production volume at least to a target of 300,000 pounds as it continues to build market share.
