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Fri July 12, 2013
Why Caviar Producers Are At Odds With An Oklahoma Conservation Program
The American paddlefish is a pretty bizarre-looking creature, named after the long, flat appendage jutting out from its head, but the prehistoric species has made a reputation for itself around the world for another reason: caviar. In between the rivers and the five-star restaurants, the eggs pass through fish houses run by a unique group of American fishermen who, decades ago, threw out their nets to catch a piece of this lucrative market.
But in recent years, those in the industry are facing an unexpected competitor, and are now finding it more and more difficult to make a living off this domestic delicacy.
A family affair
Steve Kahrs runs Osage Catfisheries with his brothers in Osage Beach, Mo., and they grew up in this business.
“This is my dad’s dream. And we’re trying to fulfill it,” Kahrs says.
Steve’s late father Jim got into the caviar business in the 80s after reading headlines that the sturgeon in the Caspian Sea, where caviar traditionally came from, was nearing extinction, and catching the fish was banned. The demand for caviar supplements, like paddlefish eggs, skyrocketed, and the Kahrs then started what they call the paddlefish ranching program to snag a piece of the action.
“We have our reputation invested in it with the people in our ranching program, because of course these people entered into our program thinking there’s be some return,” Steve says.
The “ranchers” are Missouri landowners who had lakes or ponds on their land. They allow Osage Catfisheries to raise its paddlefish on their land for free, and in exchange, they get a cut of the revenues from the resulting caviar sales.
But, there’s a problem.
“Well we’re now having to come back to these individuals and say ‘we’re sorry, your fish are ready to go, but we can’t afford to harvest them,’” Kahrs says.
Female paddlefish produce the most eggs when they’re between 10 and 12-years-old, so Kahrs made his investment in raising paddlefish over a decade ago. That’s called the biological lag factor: how long you have to wait to harvest after the initial investment.
Kahrs assumed, or hoped, that the market would stay the same after they invested. But something changed since then, and Kahrs is pointing his finger at a neighboring state.
In the name of conservation
In the small Route 66 town of Miami, Okla., Brent Gordon is loading small white boxes into a freezer truck behind the Paddlefish Research Center. Inside is frozen caviar, about a thousand pounds worth, bound for a storage facility in Tulsa.
But Gordon says the caviar isn’t the main focus of his work.
“The true beauty and purpose of this is to conserve the paddlefish,” he says. “And to preserve this species of fish is very important, and is really the true beauty of the whole idea of the Paddlefish Research Center.”
The Paddlefish Research Center is a project run by the Oklahoma Department of Wildlife Conservation, and Gordon is the man in charge. He’s a biologist that has been with the department for 25 years. Northeastern Oklahoma is pretty much paddlefish heaven – there are more here than any other place in the world. And Brent Gordon is Oklahoma’s “paddlefish guy.” He even has a paddlefish air freshener hanging off the mirror of his Game Warden truck.
Paddlefish populations vary from region to region. In Canada, they’ve pretty much gone extinct. In places like Oklahoma, there seem to be tons. Regardless, they’ve been protected by both the Endangered Species Act and the International Convention on Trade of Endangered Species since 1992.
Learn more about paddlefish in Missouri
Years later in 2008, Gordon helped open the Research Center.
“The idea was that not only have you created an operation in which it pays for itself to research the paddlefish population, but you’ve also created a way of getting revenue to pay for the toys that law enforcement needs, such as night vision, boats, trailers, and also being able to have money to pay for thermal imaging flying over the lake at night – things like that,” Gordon says.
It is essentially illegal for individuals to possess paddlefish roe in Oklahoma – and you absolutely cannot sell it, even locally. The paddlefish is an internationally-protected species, and even though commercial production of caviar existed in Oklahoma in the 80’s, now the state is the only entity that can sell it. Anything else is considered poaching.
Here’s how Oklahoma’s research program works: During the couple months the center is open, recreational anglers that have paid the state for a fishing permit and catch a paddlefish can bring their fish to the research center. There, the program will filet the fish, package the meat, and dispose of the carcass for free. In exchange, Gordon and his team collect enormous amounts of data on the fish for research purposes, as well as the roe – or raw eggs. The center then turns the eggs into caviar, sells it on the international market, and the revenues go back to the Department of Wildlife Conservation.
“Managing the population of paddlefish in Oklahoma is what we are paid to do, and we do it very well,” Gordon says.
This year, the program sold over 15,000 pounds of the stuff. That’s a pretty average haul for the program that can bring in up to $2 million annually. They sell it anywhere between $65 per pound and $135 per pound, mostly to buyers in Japan.
Back in Osage Beach, Steve Kahrs says that is where his problems begin.
“There’s no way a private company of our size can compete with that kind of volume and that kind of price,” he says.
To be profitable, Kahrs would have to sell his caviar at $300 per pound. He says he can’t afford to harvest because the going rate in recent years has been as low as $60, and Kahrs blames Oklahoma. Osage Catfisheries would actually lose money if it harvested its paddlefish today.
“We don’t have the luxury of cutting prices, and quite frankly I’m not going to play that game,” Kahrs says. “It’s hard to compete with a cheap product.”
Since Oklahoma anglers fish on their own dime and for fun, the state’s program doesn’t front the costs of raising or catching the fish, which is why their price is so low. They essentially get their supply of eggs for free when the fish are brought to the center, while producers like Kahrs have been putting money and resources into raising paddlefish for over a decade, and made that investment years before Oklahoma’s program even existed.
But it could be worse, and Kahrs knows it.
“Thank god we’ve got other companies, like the farming operation, that are making money because the caviar business,” Kahrs says. “Some of these commercial fisherman -- the caviar season is what gets them through the year. With the prices that are out there, they won’t make it. Absolutely no way they would make it.”
Those commercial fisherman make up most of the paddlefish caviar producers. They fish season-to-season for wild fish in the region’s rivers, and face costs different than Kahrs: fuel for their boats, fishing supplies, fishing permit applications, maintenance, salaries for employees; the list goes on and on.
“An individual cannot compete with a state. An individual, simply, cannot contest, with a state,” says Jessie George, a caviar producer in Marvell, Ark.
George says he has seen his prices drop $35 per pound this year alone, or about 30 percent. He says he’s one of the largest producers in the state of Arkansas, but even he can only produce a fraction of Oklahoma’s annual output.
Fishermen from Missouri, Arkansas, Tennessee, Kentucky, and other states share the same frustrations. Some even dispute the claim that paddlefish are endangered at all, and that Oklahoma’s program is irrelevant. But they all have the same story: prices are falling, expenses are rising.
Click on the markers to learn more about those involved in the paddlefish caviar industry, and what they're saying about the state of their industry.
An Indiana producer says his fisherman used to make up to $30,000 in one paddlefish season. Now they’re lucky to make it to 15. Another says he’s had to let go of 13 fishermen in two years, and now only employs three. Yet another says he had to lower his prices an additional 25 percent below Oklahoma’s just to find a buyer.
Though, they know Oklahoma isn’t the only factor causing this. The global recession has had a significant effect on their market, but when they talk to buyers, Oklahoma’s prices keep coming up, and they say the state is taking their business away.
Joe Parcell is a professor of Agricultural Economics at the University of Missouri. He agrees that the recession affected the price of caviar. But he also says it’s easy to saturate the market of a luxury product like caviar, let alone the niche of paddlefish caviar. When supply is low to begin with, and a producer like Oklahoma is putting a comparatively massive amount of product on the market at a low price, there will be a ripple effect.
“Obviously whenever you have one entity that comes in and has a significantly reduced price, they’re going to drive the price down for everyone that’s in that market,” he says.
A question of personal philosophy
But at the end of the day, private producers like Steve Kahrs are upset about who they’re competing against, and the unfair advantages they say Oklahoma has.
“It all boils down to the fact that I hate seeing, and I think a lot of people hate, seeing a government agency go up against private industry,” Kahrs says. “I mean, our family has been in this business a long time. We’re not looking for any special favors, we built everything we’ve got. We never got any handouts.”
Back in Oklahoma, Brent Gordon of the Paddlefish Research Center says it was never about competition, and disagrees with claims that his program is significantly affecting the market. For him, the caviar is just a means to an end. His job, first and foremost, is about taking care of Oklahoma’s paddlefish, and he says this program has given him an unprecedented advantage in his research and conservation efforts.
“Our biggest concern, not our only concern, but our biggest concern has to do with keeping this population healthy, and not only this population, but other population of paddlefish in the state of the Oklahoma,” Gordon says.
Private caviar producers may be catching a break soon. Gordon says the data is indicating that Oklahoma’s paddlefish population may need some time to “rest,” so to speak, and that discussions to cap the number of fishing permits issued in 2015 are ongoing.
Coming Next: Frustrated Fishermen Tangled Up In Export Process, Suspect Favoritism