Crayfish Keep Getting More Expensive. Who Is Actually Driving Up the Price?

And what does the business look like for the people who went into it?

At 7:40 on the first morning of August 2017, a long-distance coach with almost no passengers pulled out of the bus station in Xuyi County, Jiangsu Province. Ten hours later it reached Shanghai.

The day laborers had been waiting a while. They hauled more than a dozen Styrofoam boxes out of the luggage hold, each packed with ice and 50 jin (about 25 kilograms) of crayfish. Within minutes the crayfish — crammed together, unable to move — were on their way to restaurants across the city and into the cold rooms behind their kitchens. Crayfish kill each other when penned together, so squeezing them into less space both saves room and holds down the death rate.

On July 30, Hu Xiaopang Crayfish, a chain with eleven outlets, was hit by bad press: "Diner Hospitalized With Rhabdomyolysis After Eating Crayfish." The story immediately touched nearly everyone's business — at the peak this summer, close to 2,000 restaurants in Shanghai were selling crayfish.

Wang Ting, who runs the Zhuangshi Longxing Crayfish Noodle House near Nanjing East Road, had a fair idea of why Hu Xiaopang ran into trouble. August is when crayfish are scarcest. "A lot of chains buy from several suppliers at once, and some of them scrape together whatever they can find. That's when things go wrong."

Interviewed by QDaily in late August, Wang said: "After the Hu Xiaopang story broke, we sold maybe 50 jin of crayfish on August 1. We should have sold 300 jin, and it took us three days to move that 50. The next day we didn't restock at all."

"Something like this happens every year at this time. Have you noticed?"

But even without Hu Xiaopang, Wang knew this had been a hard year for crayfish restaurants.

Ever since crayfish came into season in March, Wang Weijian, who owns the Minfa Shrimp and Crab Trading House, had been posting the day's prices to his WeChat Moments. On July 7, the wholesale price of red "cannonhead" crayfish — the grade over one liang, or 50 grams — passed 40 yuan for the first time. Wang scrawled "prices gone mad" across his price sheet. That was only the beginning of the summer of 2017.

In July, heavy rain and floods hit much of southern China, and red alerts for temperatures near 40°C went out in 21 provinces, including Hubei and Jiangsu, the country's main crayfish-producing provinces.

By the last day of July, cannonhead crayfish were closing in on 60 yuan. Yuan Ye, who owns more than a dozen outlets of the Sichuan crayfish chain Bawang Xia, said: "For the first time in five years I felt costs were about to crush me in peak season." That day he went and ate a whole chopped-chili fish head made from an 11-jin bighead carp, "just to clear my head."

Ten days later, Yuan announced that Bawang Xia was losing money and began planning a vacation for himself.

"The crayfish market is finished for this year," Wang Ting said. Someone from the Shanghai Catering Association had told him a few days earlier that 60 percent of the city's crayfish-only restaurants had closed this year. Search Dianping now and only 750 restaurants in Shanghai still sell crayfish — fewer still if you leave out the ones that sell other things too.

The crayfish trade is widely seen as short-sighted. Farmers and wholesalers alike are small and scattered, while both temperature and transport can send the death rate through the roof. The old trade saying — "no traps in the heat, no traps in the cold, no traps in wind or rain" — has held whether business is booming or not.

Fourteen years ago, the name Zhuangshi Longxing Crayfish Noodle House did not yet contain the word "crayfish," and the country was nowhere near as hungry for the things as it is now. The owner at the time saw an opening and went himself to Hongze Lake in Xuyi County, Jiangsu, to find a farmer to supply him.

Hongze Lake is one of China's largest unpolluted freshwater lakes, and it is where crayfish first settled after the Japanese brought them to China from North America in the 1930s. From there they spread into Tianquan Lake, Mao'er Lake, Tian'e Lake and other lakes and ponds, and eventually across the country. In 2010, the crayfish — Procambarus clarkii — was added to mainland China's second list of invasive alien species, a decision that came rather late: the clawing, thrashing creature had long since become something children fished out of lakes and ponds for fun, and their parents cooked into plain dishes.

Xuyi County has held a Crayfish Festival every June since 2000. With the local government pushing it, tens of thousands of people gather in a single day at the "Crayfish Festival Square" built halfway up a hillside and get through 200,000 to 300,000 jin of crayfish.

This county of 800,000 people smells everywhere of shisanxiang (thirteen-spice) seasoning, fish-market brine and crayfish protein. According to the Xuyi Crayfish Association, one in eight residents works in a job connected to crayfish. The county even built a Crayfish Museum, whose displays consist largely of written material documenting the success of the Xuyi Crayfish Festival, including Ode to the Crayfish Festival by Zhao Kai, a contemporary poet and member of the Jiangsu Writers Association.

"The main reason prices swung so hard this year isn't the weather." Dong Peineng, director of the Xuyi Crayfish Association, pointed out that hydrologically speaking southern China floods at this time every year, and that this year's crayfish harvest was still growing steadily, so the flood explanation does not hold. "This year the north started eating crayfish on a large scale. Demand from the northeast, from Ningxia, from Shandong — all of it is strong."

Almost every crayfish farmer, distributor and restaurant in Xuyi belongs to the association, and several of the big distributors reported that this year they had a great many customers in the north, as far out as Hailar and Heihe.

The association's office sits across from the government's new Shanshui Business Tower, one of many buildings Xuyi has put up over the past eight years. Between 2011 and 2016, the county's GDP grew by an average of 15.1 percent a year, against a national average of 10.4 percent.

Yet in Xuyi you will not find a busy, teeming trading market. The deals are point to point, done out of sight behind the trading houses' doors. The food columnist Christopher St. Cavish was commissioned in August to write a piece about crayfish and went to Xuyi, where he visited Dongfang Market, one of the two biggest wholesale markets in the area, and found only "a few forlorn warehouses standing along a grubby little road."

Dongfang Market also sells to Xuyi residents and local restaurants, and now and then a speculator will sit on his stock, hoping to sell it that night at a higher price to the crayfish stalls that have run out. But in Dong Peineng's words, the great majority of Xuyi's crayfish are "already spoken for."

Fan Baolin, 56, has been in crayfish for more than twenty years. He owns an unremarkable storefront in Dongfang Market called Fan Baolin Crayfish, and is, as Dong Peineng puts it, "the biggest crayfish dealer in Xuyi." He says he has "at least fifteen or twenty" men working directly under him buying up crayfish, and in May and June, the peak shipping months, he can move several tons a day.

Fan Baolin's phone holds text exchanges with hundreds of customers. "I don't care what your restaurant is called. You want a hundred jin of crayfish, you pay for a hundred jin. Money first, shipment after." His finger raced down the screen: "Boss Sun in Ningbo, Boss Gu in Jiaxing, one in Shenyang, one in Heilongjiang, Changzhou, Ningbo, Cixi, Mudanjiang in Heilongjiang, Jiaozhou…"

Fan finished high school in 1979 and first taught at a village-run school. When private business opened up in the 1980s he went into trade and became one of the first people in Xuyi to get rich off crayfish. By then Hongze Lake was crawling with them — "any fisherman could throw out a net and pull up a few hundred jin." Fan bought a small boat and worked the lake buying crayfish from fishermen at 0.25 yuan a jin, selling at 0.3 yuan to the middlemen waiting onshore, who could get 0.5 or 0.7 yuan for it once it reached Nanjing.

After 2000 the business found its footing. Fan brought the middlemen under his own roof and hired men to weigh, keep the books and unload, and rented minibuses to ship crayfish to Shanghai and Nanjing. "A run to Nanjing cost a hundred-odd yuan, Shanghai four or five hundred. A load is several thousand jin, and at 0.3 yuan a jin, a thousand jin brings in 300 yuan — take off a hundred and change for the ride. And if I haul two thousand jin? To Shanghai I'd sometimes haul three thousand. There were plenty of crayfish. Haul as much as you like!"

In Xuyi today, whether you are moving people or crayfish, the long-distance coach is the cheapest way. Every morning Fan times his shipments to the bus station's timetable. "The seven o'clock bus to Shanghai, the eight o'clock to Suzhou — load it, quick." Where there's no direct route the cargo is relayed through connecting buses, and in every new city he ships to he can always find someone locally to handle the last leg.

Things do go wrong. During last year's Dragon Boat Festival, the luggage hold of a bus bound for Jinan filled up with passengers' bags; a lot of crayfish dealers missed their deliveries and lost serious money.

This is how crayfish crisscross the country to reach the seafood markets and restaurant owners who want them. According to the Ministry of Agriculture's China Crayfish Industry Development Report (2017), farmed crayfish output in China reached 852,300 tons last year, not counting wild catch — more than 70 percent of world production. Xuyi, at 20,300 tons a year, ranks only ninth in the country, and what Fan Baolin handles in a year is less than 3 percent of Xuyi's total.

Output has tripled in a decade, and the credit for that goes largely to Liu Zhuquan, a village official in Hubei Province in the late 1990s. He pioneered a farming method called rice-shrimp co-culture: dig a ditch about 1.2 meters deep around the edge of a rice paddy and raise crayfish in it. The crayfish eat plankton and the weeds that would otherwise choke the rice; the rice takes up the nutrients in the crayfish's waste; and the ditch itself keeps the young crayfish from eating one another.

The method lifted the income of large numbers of Hubei farmers who had been stuck with weak grain prices, and the provincial government used subsidies to push more of them into it. But before crayfish caught on nationwide, most of Hubei's went into processing for export. In 2008 there were reports that the financial crisis and a falling US dollar had blocked the province's crayfish exports, and prices fell to half of the previous year's. It was after that that Hubei began encouraging residents to open crayfish restaurants.

Meanwhile, different places came up with different ways of cooking crayfish: Xuyi's shisanxiang crayfish, Changsha's mala crayfish, Hubei's oil-braised crayfish. These heavily seasoned styles traveled with migrant workers to more commercially developed cities, and years later, thanks to the ritual of peeling the shells and the sociability of "freeing up your hands," crayfish became a late-night-snack sensation. The two most famous streets for it are Ghost Street in Beijing and Shouning Road in Shanghai.

Unfortunately, rice-shrimp co-culture never spread widely across the country — at any rate it never reached Xuyi. Xuyi took to crayfish half-willingly, and without proper farming technique behind them, plenty of the farmers who gambled on raising crayfish by hand a decade ago lost everything.

"Farmers in Jiangsu have more options. Go work in Wuxi and the yuan you put in today, you earn back tomorrow. Go into farming, raise crayfish, and tomorrow you might make fifty cents."

Xuyi now has 210,000 mu of ponds and lake surface producing crayfish, but very little of it counts as professional farming.

Duan Defeng sees an opening in that. Three years ago Duan, a graduate of Peking University's law school, was a complete outsider himself. Before he came back to Xuyi to found Xiaohe Agriculture, he had run the Beijing news desk at China Business News and founded a corporate social responsibility consultancy. "I don't actually eat crayfish. I don't eat eel, I don't eat crab either. But this market is wild."

Now Duan drives his Audi between the Xuyi county seat and Huanghuatang Township in the east of the county, working the space between officials and farmers and arranging dinners for aquaculture professors and bureau chiefs. Xiaohe Agriculture has leased about 2,000 mu in Huanghuatang for rice-shrimp co-culture and signed exclusive purchase agreements covering another 10,000 mu of farmers' land, for which Xiaohe supplies the farming know-how free.

"The enemy of the crayfish is time," Duan said. Between the water and the table, a lot of them die. "Under 5 percent, you have no right to complain. You have to live with it." In hot weather losses easily top 10 percent — "and then there's no profit."

And that is only the loss from farm to truck to restaurant. By Wang Ting's account, a hundred jin of crayfish sitting in a restaurant's cold room will lose ten or twenty jin a day to death. With restaurants needing a gross margin of at least 30 percent, and supply short, the price on the menu has climbed and climbed.

"Crayfish trading around the country is fairly loose and scattered. The peak season is summer, and unlike crabs, crayfish die quickly once they're out of the water, which puts heavy demands on logistics. For small orders, running tanker trucks or refrigerated trucks or misting systems costs too much; for big volumes, without a working system of holding stations, the crayfish die if they arrive and can't be sold," Dong Peineng, director of the Xuyi Crayfish Association, told QDaily.

His plan is to set up direct-supply stations for crayfish around the country and sign up franchised agents. One station costs roughly 150,000 to 350,000 yuan to open.

Everyone in the business agrees that crayfish spoil. Li Jian, founder of the Xinladao fish hot pot chain, decided "live crayfish are too inefficient" and in 2015 started the supply-chain brand Xinliangji. Today 60 percent of the company's revenue comes from heavily processed cooked and frozen crayfish. Xinliangji has consolidated tens of thousands of mu of farming bases in Hubei and buys their entire output exclusively. Besides e-commerce customers like Freshippo, its main buyers are restaurants that want to get dishes out faster, depend less on chefs and widen their menus — the Beijing roast duck chain Jinbaiwan, for one. Li says he wants to move into fish heads, river snails, bullfrogs and stinky mandarin fish as well.

Zhou Hei Ya and Yazhentan ("Duck Detective"), among others, have also tried processed frozen crayfish; some opened physical stores, some sold through Lawson convenience stores. But Yazhentan told us that its crayfish lost money this year and had turned into a line in the brand marketing budget. Zhou Hei Ya pulled its crayfish product less than a month after launch, with reviewers online saying it "just doesn't taste good."

"Cooked crayfish is a very good shock absorber. You have to go hard when prices are low." Duan Defeng is trying processed crayfish too — when the price fell to 15 yuan he put up 20,000 jin, with an 18-month shelf life. "We'd planned on 200,000 or 300,000 jin, but this year there were only a handful of days at that price."

On top of the roughly 8 million yuan raised on the crowdfunding site Kaishi Zhongchou, Xiaohe Agriculture has put in 15 million yuan so far, including angel money from Jin Yuanying, one of Alibaba's founders. These days Duan Defeng is negotiating a stake in a crayfish processing plant while sending staff out to teach several dozen households in Tianquan Lake Township how to farm crayfish.

Xuyi is now copying Hubei. Its latest published figure for rice-shrimp paddy area is 139,000 mu, 23 times what it was two years ago.

Duan agonizes daily over "whether to expand by a thousand mu, three thousand mu, or not at all by the end of the year," but a 1,000-mu hatchery near Hongze Lake is something he is "definitely going to build." Next year its fry can be sold to the company's growing roster of partner farmers.

However much groundwork gets laid, almost nobody can forecast where demand in this business will go — not even the old hands at Shanghai's biggest seafood market.

Qian Yongkuan of the Jiangyang Road Seafood Market is about 50. Asked what has changed in the crayfish trade, he answered: "Seafood is the hardest work there is. Day and night, more than ten hours a day." When a farmer calls to say a shipment is coming, he has to be at the shop waiting, even at three in the morning. Qian's wife held out her hand, cracked and covered with cuts from tying up crabs.

By the end of August, the dozens of stalls here that used to sell crayfish had switched to seasonal hairy crabs. Qian was learning to book an SF Express pickup on his phone: he wanted to send his daughter, who works in Zhenjiang, two boxes of "June Yellow" crabs.

According to Dianping data, the number of crayfish restaurants in China began to spike in 2012, for the first time growing faster than restaurants as a whole; by July 2016 there were more than 17,600 of them, three times the number of KFC outlets in China. Jiangsu is the province with the most crayfish restaurants, Shanghai the city.

Every early spring, would-be restaurateurs travel to producing areas — Xuyi in Jiangsu, Jianli and Qianjiang in Hubei — looking for supply, and they usually realize only afterwards how rough and improvised the upstream end of the business is.

Shen Wei founded Mr. Shrimp Is Big, a three-outlet Shanghai chain that has invented more than twenty crayfish flavors (iced crayfish, plum-liquor drunken crayfish) and uses only large, clear-water, white-gilled crayfish. The first thing he said in our interview was: "I'm about to sell it." His next venture, he said, would be burgers.

Shen came out of finance and likes to talk about marginal returns, gross margins and team stability. What drew him in at the start was the crayfish's built-in reward mechanism: crack the shell, get the meat. Three years on, his line is that "crayfish is a false proposition." The gulf between slow and peak seasons meant he could never hold a stable team together and scale up, and scarce supply left him entirely at the mercy of farmers raising their price on the spot.

Mr. Shrimp Is Big's main supplier, Wang Xianji, works 12,000 mu of water on Gaoyou Lake. In 2014 this base, which produces "clear-water crayfish," made the Yangzhou Evening News; the manager of the crab ponds said at the time: "We didn't set out to raise them. The crayfish walked in on their own."

"This stuff sells for so much money, and it still gets delivered to us in a Styrofoam box. If I'm spending 200 yuan a head, why not go eat French food? Or Boston lobster? Once the wholesale price hits 50 or 60 yuan a jin, how much do you have to charge not to lose money?" Shen's conclusion: the industry is too short-sighted, crayfish is no longer worth the money, and he wants out as soon as he can.

In August, Wang Ting raised the price of crayfish in his restaurant by 20 percent, to 138 yuan a serving, and it visibly cut how much diners ordered. "Regulars who used to come every day now come once a month. Shanghainese are shrewd. They used to order three or four servings each; now two people share one serving and add a bowl of noodles."

As for the crayfish restaurateurs who came through this summer intact, the veteran "Shrimp God," Yu Xinkai, is one.

In Xuyi, billboards for Yu's Shrimp God are everywhere. Yu Xinkai's grandfather went into the restaurant business in 1968; in 2000 Yu took over Yu's Crayfish, and the "pickled-vegetable crayfish" he invented in 2014 made his name in a single stroke at the Xuyi Crayfish Festival. "Shrimp God" became a registered trademark, and on a good day the flagship store in Xuyi cooks 2 tons of crayfish.

Yu works out, is thickly built and keeps his hair immaculate. A dozen or so jars of seasoning sit on the coffee table in his office, ready to be shown off whenever someone comes in to talk about a franchise.

Living on franchise fees from more than 700 stores nationwide, Yu has invested in crayfish farming and crayfish seasoning, and processing is next — "stockpile the crayfish we raise ourselves in the summer and vacuum-pack it." He hasn't stopped developing flavors either; the latest are "mushroom crayfish" and "Dry-Fried King."

A few years ago, also because of rain, crayfish were scarce in many places and Yu lost more than a million yuan. On August 15 this year he raised his prices without hesitating: the extra-large platter that used to be 388 yuan for 40 crayfish became 388 yuan for 28. For a big table, the servers will push the "Shrimp God Big Shot" set for 10 to 12 people — 2,488 yuan for 182 crayfish, with five cold dishes thrown in. Two servers dressed as crayfish carry the enormous platter to the table while someone else beats a gong and a drum and recites the doggerel adapted from Ode to the Crayfish Festival. It runs 220 characters. It begins like this:

"The sea has its shrimp, the lake has its shrimp.

In China's town of Xuyi, crayfish leap through every street.

Dragons belong in heaven — how did one become a shrimp?

Only because the Huai River is so lovely has the dragon stopped pining for home.

The Shrimp God Big Shot is a beauty — the Yu family writes the legend!"

(Graphics by Wu Lingwei)