1. Economic Development Initiative Activity Overview HB 204 DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT DIVISION OF ECONOMIC DEVELOPMENT 02/06/2014 1

2. Economic Development Initiative Activity Overview 2 Key Benefits of Product Development Tax Credit Promotes development of value-added salmon and herring products, leading to greater product diversity Stimulates product development of underutilized specie (herring) and waste byproduct Softens financial impact of potential changes to EPA effluent guidelines in non-remote locations Incentivizes investment to produce canned salmon in sizes appropriate for today’s market conditions Supports Alaska’s fishing communities

3. Economic Development Initiative Activity Overview 3 Alaska produces over 95% of all salmon in U.S. yet represents under 1/3 rd of global wild salmon supply

4. Economic Development Initiative Activity Overview 4 Alaska Salmon Value, 2008-2012

5. Economic Development Initiative Activity Overview 5 Ex-Vessel price has grown faster than 1 st -wholesale

6. Economic Development Initiative Activity Overview 6 Canned salmon: Current can sizes out of touch with market Massive 2013 pink harvest EPA: “Non-remote” seafood processing centers will be required to fine screen and collect waste, then barge or process Yet there are some clouds on the horizon…

7. Economic Development Initiative Activity Overview 7 Too much supply… (cases of canned salmon)

8. Economic Development Initiative Activity Overview 8 Too Many Ounces, Too Much $$$ (price per case)

9. Economic Development Initiative Activity Overview 9 Potential EPA Guidelines (and cost) Rule will apply regardless of year-round or seasonal basis In absence of full utilization, would require vessels haul waste to deep ocean discharge sites Does not take into consideration weather, mooring needs Preliminary cost per pound estimates at select sites range from $.21--$.56/pound.

10. Economic Development Initiative Activity Overview 10 Primary Products - Fish Meal - Fish Oil Value- Added Products - Nutritional Supplements- fish oil pills, Omega-3 acids - Collagen- medicinal, nutrient, gelatin - Enzymes- food additive, chemical applications - Cosmetics- lotions - Medical products- bandages - Human foods- dried products - Leather - Pet food ingredients - Livestock Feed - Aquaculture Feed - Fertilizers/Compost - Biofuel - Industrial Products- lubricants, chemicals, etc - Bait Waste-Byproduct Opportunities

11. Economic Development Initiative Activity Overview 11 Active Herring Permit Holders

12. Economic Development Initiative Activity Overview 12

13. Economic Development Initiative Activity Overview 13

14. Economic Development Initiative Activity Overview 14 Gross Revenue from Fisheries Business Tax and Utilization Credits Claimed