KIBBUTZ DAN, Israel (Reuters) - When Yigal Ben Tzvi began working on the fish farms of his kibbutz two decades ago, he never imagined that one day each fish would be worth thousands of dollars.
During a trip to Russia in 1992, Ben Tzvi and his business partner Avshalom Hurvitz, spotted the potential of growing sturgeon on fish farms.
It was the peak of Russian Jewish immigration to Israel in the 1990s and they were looking to breed the famous Caspian Sea fish for local consumption by the thousands of newcomers.
But when the United Nations Convention on International Trade in Endangered Species (CITES) put sturgeon on its list in 1998 and prices of their black eggs began rocketing, the two fish farmers realized they could turn eggs into gold.
"We took the big risk in 2003 when we decided to go to caviar, because before it was for (sturgeon) meat," Ben Tzvi says. In 2003 "we had four-year-old fish and we decided to keep them another six years" with almost no income until they were ready to produce eggs, he said. "It was a big risk but we were lucky enough and the prices of the caviar are very good."
In 2006, CITES halted the global export of all wild caviar from sturgeon in the Caspian and Black Seas, creating an unexpected market opportunity for the two fish-farmers, who both grew up on a kibbutz collective community in northern Israel.
Their fish farm, Caviar Galilee, across the road from Kibbutz Dan near Israel's border with Lebanon, produced three metric tons (3.3069 tons) of caviar in 2011 and is aiming to reach eight metric tons by 2015. That makes an awful lot of 50 gram glass jars.
The farm comprises 40 ponds of 250 square-meters, with approximately 70,000 sturgeon of the Osetra species and it produces some of the finest farmed caviar worldwide.
"We use Israeli caviar because of its flavor. It's very nutty and buttery and also because of its texture, it's very crisp, firm eggs," says Jean-Francois Bruel, executive chef at Daniel restaurant on 65th St. in New York.
"We've been using it for about two years and a half, three years. It's a sustainable product coming from Israel, farm raised with very clear water, you know. So the flavor is very clean, no after-flavor, no muddiness like you can find sometimes in a farm raised caviar," Bruel said.
The Osetra sturgeon are grown in optimal conditions, from the cleanliness of the water pumped from the Dan river, a tributary of the Upper Jordan, to the feeding technique.
Caviar Galilee's delicacy is a result of several parameters, says Hurvitz, who hand picks the females for reproduction.
"It starts here by selecting the proper female which has the body shape, the color, the quality of the eggs which makes the future generation of our fish, which makes the future caviar," says Hurvitz, who is the operation's biologist.
Only 15 other sturgeon farms exist worldwide, Ben Tzvi said, three of which produce Osetra.
Hurvitz conducts periodical biopsies on female sturgeon to determine the quality of their eggs, inserting a metal tool into the fish to extract a tiny sample of eggs.
"According to the sample of eggs that I've taken from the fish, I can say that this fish is ready for caviar harvest," he says. "I see that the eggs are a nice pale-grey color. The size, the diameter of the eggs is about 3 mm and it means that the fish is ready for caviar harvest."
Israel's sworn enemy, the Islamic Republic of Iran, once produced some of the world's best caviar. But overfishing and pollution have led to a ban on fishing, making caviar production elsewhere even more profitable, said Ben Tzvi.
"The situation nowadays -- that fishing in the Caspian Sea is forbidden -- is ideal for us because it's not allowed to fish either in Iran or in Russia or in Azerbaijan. So all the caviar must come from our farms and it's a very good situation," he says.
With wild sturgeon of the Russian Osetra species facing extinction and farmed caviar becoming more accepted, Ben Tzvi is ramping up production of the gourmet food and targeting a wider international market.
There is competition, but Bruel of Restaurant Daniel says the kibbutz product has an edge.
"We did some different research, you know. We tried some caviar from Italy, from Bulgaria, from Germany, from California here also. But we find the Israeli the best so we work with Israeli caviar."
Cavier Galilee's shareholders are divided between Kibbutz Dan and five other kibbutz communities in southern Israel. In 2011, the company took in just over $3 million.
Producing a non-kosher product in the Jewish state is not always easy. The Israeli rabbinate had threatened to revoke Kibbutz Dan's kosher certificate -- it produces kosher trout for local consumption -- if Caviar Galilee retailed its caviar in Israel.
"Caviar is not kosher so we only sell caviar to the new immigrants, (who) don't care so much," said Ben Tzvi. "We don't want to make too many waves because we don't want the (rabbis) to attack us for selling in Israel. So we keep very, very small."
Editing by Douglas Hamilton and Paul Casciato