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Facing South Florida: The Business Of Lobster

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MIAMI (CBSMiami) -- In an upscale portion of Hong Kong, the Boat Dweller Restaurant is renowned for its live seafood. Tanks showcase the freshest offerings from around the world - but few items on the menu are likely to capture a diner's attention or have the appeal of the Florida Spiny Lobster.

With one of the fastest growing economies, and an exploding middle class that extends onto the mainland, the Chinese have developed a taste for the better things in life – and Florida lobster is surely one of them.

For the lobster, this was the culmination of a 9,000 mile journey – a journey that in recent years has transformed the commercial fishing industry in Florida. Before the Chinese started buying their lobsters, the fishermen of the Florida Keys were getting just $3 a pound for their catch with almost all of it being sold in local restaurants.

Boat captains from Key West to Miami were struggling to survive. At $3 a pound commercial fishermen were losing money – they claimed to need $4 just to break even.



But by 2010 and 2011, the Chinese had planted their flag in the Keys, driving up the price to as high as $24 a pound.

Today the price has settled to $10 to $14 a pound.

"Thank God for the Chinese," said Gary Nichols, a lobster fisherman based on Conch Key. "We sure import a lot of things from China and people complain, `Oh, it's Chinese made.' Well if it wasn't for the Chinese right now I'd be getting three or four dollars a pound for lobster instead of $12 or $13 a pound for lobster."

Not everyone is celebrating. The Chinese demand for lobster has left restaurants from Key West to Miami struggling to keep Florida lobster on their own menus.

"Who it was not good for was some of the companies that had been around for a while buying lobster for many, many years like my family business and others that have been around for a long time," said Manuel Prieguez, who has been in the business of buying lobsters since 1993. "That someone who lives in Miami can't go to a restaurant, can't go to a market and buy a Florida lobster – I don't think that's a good thing."

By 2013, three out of every four lobster caught in Florida were not only shipped out of the state, but out of the country as well, with the vast majority going to China.

In response, local restaurants have had to import spiny lobster from countries like Nicaragua, Honduras and the Bahamas. The lobster shipped here in frozen and less expensive. Even when Florida lobster is available, the price has risen to the point where many restaurants still chose to import lobsters form outside of the country.



"In a lot of those restaurants you get a lot of tourist action and they can sell those tourists on the fact that it's a Florida lobster when it's not," Prieguez said. "It's the same species of lobster, so it looks exactly the same to our lobster. Only I know, and you know, that that's not Florida lobster because there is no Florida lobster being sold in restaurants and seafood markets here in Florida. All of it goes to China. That is the bottom line."

CBS4 News spent four months examining the Florida-China lobster connection, from the early days when giant salt-water tanks were awkwardly used to try and transport  crayfish, to its current incarnation, where lobsters are pulled from the water, placed in a state of hibernation and flown to China within 48 hours. In the midst of our reporting, a budding trade war between China and the United States threatened to upend the entire industry.

The story of how the Chinese came to Florida starts in 2009, when Nichols recognized the future for commercial fishing in the Keys was growing increasingly bleak. He was looking at an issue of National Fisherman magazine and noticed an advertisement for a Chinese buyer looking to purchase soft-shell crabs in Maryland that he could ship live to China. Nichols wondered if the buyer might be interested in lobster. After several calls, he eventually met Larry Yee, president of Elite Sky International, a seafood export business based in New York.

Yee laughs when asked if he thought Nichols was crazy to propose shipping Florida lobster live to China.

"He was the guy who said give it a try and we said okay and now we've turned this into a fishery," Yee said. "And guess what the American fishery is so successful shipping these lobster, now the whole Caribbean is trying to copycat us."

Yee now buys lobster from more than 100 boat captains from Key Largo to Key West. Yee's competitors in China soon followed him to the Keys.

"Word spread like wildfire," recalled Prieguez. "And then a bunch of other Chinese came down and then before you knew it they were all over the place, offering astronomical prices to the fishermen and basically going gangbusters."

There are at least three other companies now buying as much Florida lobster as they can get their hands on and shipping them live to China.

The numbers are staggering. CBS4 News analyzed nearly twenty years' worth of US Commerce Department records on Florida lobster exports to China. Starting in 2000, just 32,000 pounds of Florida lobster was shipped to China, with exports remaining flat until 2010 when the Chinese market for Florida lobster exploded. By 2013, nearly 4 million pounds of lobster was being sent from Florida to China.

In recent years, Florida exports have ranged from $50 to $75 million a year.

To look at it another way, between 2000 and 2008, a total of 638,707 pounds of Florida lobster was sold to China. But from 2009 through 2017, the total was just under 17 million pounds

After years of struggling to survive, the Florida's lobster fishermen felt secure.

"It gave us a whole new quality of life," Nichols said. "We have a nice vacation in the summer like normal people. We can buy a new engine for a boat. It makes a big difference."

In Key West, Rick Joyce is the manager and fishmonger for the Half Shell Raw Bar. And Fish Market.

"It's gotten difficult in the last several years," he said.

On this particular day, back in February, Joyce admitted that they have had to import lobster from other countries.

"Nicaragua is the ones that we have right now," he said. "Like I said we have lobster tails from Florida and from Nicaragua. We have to. The customer base wants lobster. You come into Key West you want lobster and you want the spiny lobster. So if we can't get as many as we need, of course we have to get what we want for the customer base."

Joyce admits it's embarrassing to have to import lobster at this time of year.

"It stinks," he said. "It's only happened in the last two to three years. We never had a problem with lobsters ever. I mean it's lobster season. There are plenty of lobsters."

Joyce said he doesn't blame the fishermen.

"I'm not going to blame those guys," he said. "You have to get what you can. This is your livelihood. But it hurts on this end. It hurts on this end. It does.



In the pre-dawn darkness, the crew of the lobster boat G-Force is busy loading traps and supplies. Hurricane Irma decimated the commercial fishermen in the Keys. Gary Nichols lost nearly 80 percent of his traps in the storm – and it was two months before he could start fishing again.

On this day in early February, his daughter Kelly, who normally captains his other boat, will serve as a mate. She's been hauling traps since she was a teenager.

As the boat pulls out, the first streaks of light are seen in the distance. Slipping through the narrow arch of the Long Key Bridge, Nichols comes out on the Atlantic side of the Keys.

By the time the sun is up, they're pulling traps about five miles off of Marathon. One crew member hooks a buoy and wraps the line around a winch which pulls the wooden trap onto the boat. The next crewmember power washes the trap, pulls out any lobster found inside, tosses in fresh bait and drops the trap back in the water.

The lobsters are measured - too small and they have to be returned to the water. Female lobsters also have to be checked to see if they are carrying eggs. If they are – they too go back in the water.

In a ten hour run they can pull in as many as 800 traps and that could result in up to 2,000 pounds but today is not going to be a very good day, they are expected to pull in about 500 pounds but given the Chinese New Year and the high prices nobody is complaining.

There is a rhythm to it all, a repetition slowed only by the need to repair traps – but you are always reminded that delays cost money.

"To leave the dock in one of these lobster boats costs me $1,000 – just to start that boat up, get on it and go out for the day," Nichols said. "Because once those guys are on it they are getting paid for the day."

Crewmembers make between $150 and $200 a day, plus an additional cut depending on the size of the haul.

"The average pay for a mate on a lobster boat is between $35 and $50 thousand," he added. "A captain makes probably 30 percent more."

After finishing a string of traps, the boat speeds off to the next set of buoys, offering the crew a few moments to catch their breaths, rub tired legs or just have a cigarette.

"It is hard work, it is tiring, sometimes it gets back breaking," noted Kelly, who is married with a son who gets sea sick. "You want to quit or you want to go home but you just keep going and have fun and enjoy being on the water."

By 5:30 they are back at the dock where Larry Yee's crew is waiting. They will sort through the lobster, weeding out those they think won't last the journey to China alive.

Before Yee takes away his newly acquired lobsters, a few locals show up, hoping to buy some of the spiny crustaceans before they are sent off to China. Nichols agrees to sell them a few.

"They line up every day to buy lobster," he said, before calling out for locals to come over.

The dockside rate – 13 dollars a pound. Once Nichols is done, the day's catch is loaded onto a truck by Yee's crew and driven twenty miles down the road to a facility Yee built to handle his lobster operation.

"We are the biggest lobster facility in the US for spiny lobsters," Yee said.

In this massive tank, Yee can hold as many as 120,000 lobsters at a time. The water temperature is about 65 degrees and the lobsters are kept there for 24 hours. The idea is for them to purge themselves of all their bodily wastes – a colonic spa of sorts for the lobsters.

After 24 hours the lobster is moved to a series of green tanks – where the temperature is down around 55 degrees. The idea is to put them into a drowsy state.

"Once they soak into cold water, cold salt water they are not that active," Yee said. "Now they are like calm and that way they are easier to ship."

After the lobsters go into hibernation, they are packed overnight in Styrofoam boxes with straw, stacked on pallets and loaded into a truck, where they are driven back up the Keys and to Miami International Airport.

By the next morning the pallets clear security and are loaded onto a Cathay Pacific cargo flight to Hong Kong.

"Lobster is always a high end seafood, a gourmet seafood and not an everyday product," Yee explained.

While most of it goes directly into restaurants from Hong Kong to Shanghai, Yee has a plan to introduce live lobster tanks in high-end markets.

"That will come next season," he said. "We will directly our supply Florida Spiny Lobster into the Chinese version of Whole Foods in China."

Prieguez and others warn that there are no guarantees the Chinese market will remain.

After hitting a high of nearly four million pounds in 2013, the numbers have dropped in recent years and only started to pick up again in 2017.

The reason for the drop – a slowdown in the Chinese economy. In the past the only channel a lobster fisherman would check in the morning was the weather channel – now they are tuning into CNBC and the other business networks.

"I never dreamed we'd be out there in the boat monitoring what the Chinese stock market did last night," said George Niles, a lobster fisherman on Stick Island. "It's just unbelievable to me that that's what this fishery has come to. But that sure is what it has come to."

And every time the President criticizes China for its trade policies, it raises concerns.

Asked if he was worried about a possible trade war between the US and China?

"Yes, yes we are," Yee said. "China is still a communist country, we don't know. They could say – one day they could say no imports, no US products, anything could happen."

If that was the case then the lobster fishermen of the Keys could find themselves back in the desperate financial situation they were in before the Chinese arrived.


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