The Exotic Game Market Goes Bang

Discussion in 'Articles' started by Hoas, Jan 15, 2019.

  1. Hoas

    Hoas AH Fanatic

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    Source: https://mg.co.za/article/2019-01-11-00-the-exotic-game-market-goes-bang


    The exotic game market goes bang

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    In the 17th century, the Dutch financial craze for tulip bulbs shaped the tale of a famous market crash. Tulips were traded fanatically by investors hoping to cash in. Nobody was specifically interested in the tulips, only in the prices that they could fetch.

    Eventually buyers could not afford them and the bubble burst spectacularly, and many bankrupt investors, saddled with worthless tulips, drowned themselves in canals.

    Some 400 years later, the South African game industry entered a tulip craze with the trading of rare game — buffalo, sable, roan and also colour variants such as black and white impala, as well as golden wildebeest — that promised crazy returns.

    A game farmer in Limpopo, who did not want to be named, said the huge financial returns drew him in.
    He previously farmed cattle, but was hooked by the record amounts rare game were fetching at auctions. He started buying exotic game in about 2010 and became a breeder.

    “It cost a pretty penny to get started, but those auctions were going crazy. And, yes, I made insane profits.”

    Eight years later, he is stranded with animals that he can’t afford to sell.

    “The loss is too big if I sell them now. Five years ago, my sable could fetch R300 000. At the last auction, I was lucky to get R60 000. I still feed them, breed them and live in hope of a recovery.”

    Farmers were also lured into the market by tales of hunters willing to pay premium prices to shoot trophy animals. It was the fad of the decade and the return on investment promised to outperform star companies on the Johannesburg Stock Exchange.

    Even Cyril Ramaphosa, before he stepped up as South Africa’s president, was involved. He invested millions in his game farms in Limpopo.He was fond of sables and buffaloes, earning him the nickname Buffalo Man. In 2012, he sold three of his white impala for R28-million. He also owns black impala, buffalo and golden wildebeest.

    Ramaphosa was one of seven members of the Stud Game Breeders group, which City Press reported raked in between R130-million and R140-million from wildlife auctions annually at the height of the boom.

    Ramaphosa told Farmers Weekly that, when he realised that the game industry was beginning to boom, he decided to enter into the more “exotic” side of things.

    From 2009 to 2014, prices for exotic game shot through the roof. The selling price of sable rose by 479% and of disease-free buffalo by 540%, according to figures from Wildlife Ranching South Africa.

    In 2015, a Zambian sable antelope bull sold for R27-million at a game auction in Limpopo. Another sold for R21-million on the same day.

    These auctions became the domain of the rich trying to outbid each other. Magnate Johann Rupert paid R40-million in 2013 for a Cape buffalo bull.

    In 2014, breeders advertised golden wildebeest for between R500 000 and R1.4-million and black impala from R190 000 to R500 000. In 2012, Ramaphosa was involved in a bidding war with businessman Jaco Troskie, who eventually paid R20-million for a sought-after buffalo cow.

    In April 2015, prices started to decrease slightly, which was not unexpected because the season had come to an end. But the decline continued into the next season and the prices never picked up again. Instead, the bottom fell out of the market.

    In 2016, the average weighted auction price for roan antelope was R269 156 an animal — a solid price. In 2018, it was a mere R59 124, according to Flippie Cloete, head of Terratek at Suidwes Landbou.

    The same applied to sable antelope, which fetched R122 437 in 2016 and only R43 209 last year. In 2016, buffaloes averaged R354 675 but now are less than half of this at R154 309, Cloete’s figures show.

    At a game auction in April last year in the Eastern Cape, a pregnant buffalo cow fetched R4.5-million. The highest bid of the day, her price was dwarfed by her sire’s, which had sold for R178-million in 2016.

    These days the auctions are much more subdued affairs.

    Lizanne Nel, the conservation manager of the South African Hunters and Game Conservation Association, said in a presentation a year ago that some game farmers had believed that the market could outperform even the JSE for returns. And so the farmers and breeders hedged.

    In 2012, it certainly appeared that the gamble would pay off because of the growth in the value of colour variants, such as yellow blesbok or golden gemsbok estimated to be above 400%.

    But alarm bells were already ringing and critics warned that it was nothing more than a pyramid scheme, in which the first to invest raking in huge returns, whereas the latecomers paid astronomical sums that simply were not sustainable in the long run.

    In the midst of the boom, breeders faced a barrage of criticism from conservationists, and international hunting organisations also cautioned against hunting game bred in captivity for exotic trophies.

    The International Council for Game and Wildlife Conservation said colour variants should not be hunted because they were a manipulation of wild game.

    The 45 000-member South African Hunters and Game Conservation Association took the view that, in fact, there was no real demand by hunters, who were apprehensive about the intense captive breeding practices involved. The association warned against exotic breeding, saying it added nothing to conservation and ethical hunting.

    Ethical questions may have contributed to the lower demand for exotic animals, but ultimately economics was the death knell.

    Large-scale breeding meant the scarcity of animals decreased, influencing prices. Although some game farmers blame drought, Cloete believes the record-high prices were largely responsible.

    There is a saying that “high prices have the ability to kill high prices”, Cloete said. “This is to a large extent what happened in the industry.”

    He recalled that prices almost doubled overnight in February 2015. “But with the start of the breeding season, demand started to decrease and so did prices, which, up until 2015, was a normal cyclical tendency. In seasons before, demand and successively the prices of most species tend to be slightly lower during the winter months, or breeding season.”

    This time, however, the significant increase in prices during February last year was followed by the initial decrease in April-May, which led to uncertainty in the market and, unlike the years before, the prices never recovered and the bubble burst.

    “Theoretically, one could argue that is was an economic bubble based on the fact that a significant price increase occurred only to be followed by a significant decline,” said Cloete.

    But it was important to remember that the assets, the animals, still had value and the animals were still being traded.

    “This makes it different to the tulip mania bubble,” he said, in which the Netherlands government stepped in to ban the trade.

    South Africa’s game industry is no small player in the economy. His research shows that higher-value species such as sable, roan and buffalo make a hefty contribution. In 2018, the total formal wildlife auction turnover amounted to R750-million, and the higher-value species accounted for an estimated 59% of the total turnover. This was about 8.5% of the total number of animals that were sold on auction.

    The sale of colour variants contributed 11.7% to total turnover. This was 10.8% of the almost 40 000 animals sold on auction.

    Cloete said he didn’t expect the extreme price trends to be repeated, or at least not to the same extent.

    “These animals are not scarce anymore. At the end, the live game prices for all these animals will be derived on the hunting prices.”

    He said the market’s decline had definitely led to job losses.

    “The impact hasn’t been quantified, but these wildlife-based activities, such as game auctions, made a notable contribution towards the local economies.”
     
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  2. CAustin

    CAustin AH ENABLER BRONZE SUPPORTER AH Ambassador

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    Very informative and thank you for sharing!
    When I first traveled to Africa in 2013 my outfitter was asking $12,000, retail, for a roan which was way out of my price range. The article notes that an auctioned animal, and I assume a breeder bull, is now running about $4200, wholesale if you will, given the current exchange rate. So we are talking a massive drop in price that the article points out was brought in by low demand. Yep they priced themselves out of a shooter in 2013...... no way I was paying that kind of trophy fee. The feees for that animal are still too high in my opinion. Where is the bottom??
    Who knows but there may yet be some further pain for the South African breeders and farm owners looking for hunters to take trophies that seem over priced.
     
    Last edited: Jan 15, 2019
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  3. BRICKBURN

    BRICKBURN AH ENABLER SUPER MODERATOR CONTRIBUTOR LIFETIME TITANIUM BENEFACTOR AH Ambassador

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    o_O

    Someones mindset and business model needs an adjustment.
     

  4. Catchaser

    Catchaser AH Member

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    Just saw a Sable and Roan hunt sell for 5,000 this past weekend on an auction. This also included your daily rate...
     
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  5. Hank2211

    Hank2211 AH ENABLER GOLD SUPPORTER AH Legend

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    I recall some threads on the subject of prices over the years, and many, if not all, of them expressed surprise that animals whose destiny it was to be hunting trophies could be traded for such high prices. I'm not saying we all knew what was going to happen, but we, as end users, had a pretty good feel for what was likely to happen. And we were pretty much right. Because we knew what we would - and more importantly would not - pay to hunt these animals. Especially since given the value of these animals, most were kept in pretty close quarters, resulting in a less than impressive hunting experience.

    When I first began hunting sable, they were twice what they sell for today. Roan was north of $10k, and now can be had for half that or a bit more. No one seems to care much for golden oryx or wildebeest, or black impala, at least not at prices that were once in the tens of thousands.

    People went into this business with their eyes open . . . so sad as it may be to see ranchers lose their shirts, and maybe their farms, the sensible ones who ran sustainable businesses will reap the benefits, and hunting will continue, but on a more reasonable basis. Frankly, today's hunters have not had it so good since I began hunting Africa many years ago.
     

  6. Docpk

    Docpk AH Member

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    Does anyone really want to hunt farm raised animals?
     
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  7. Ryan

    Ryan AH Fanatic

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    While I understand captive breeding is used to repopulate an area, I'm after a wild animal that will evade me if I make a mistake. And I'm not going to hunt a specific animal, nor have I any urge to hunt any of the color phases that have been bred. That's my choice, to each their own. A few years ago I read a book that mentioned captive reared sable in RSA and some of the farmers calling them their retirement plan. At that point I figured they were out of my price range until the market was flooded. Heck, just a couple/few years ago I went looking out of curiosity and it was easier and cheaper to hunt one on a ranch in Texas that had a herd. Now the market is flooding and things may get back on an even keel.
     
    Last edited: Jan 15, 2019
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  8. Hank2211

    Hank2211 AH ENABLER GOLD SUPPORTER AH Legend

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    Apparently, lots (and lots) of people do. And to be realistic, it is exactly this which has made African safari hunting available to so many people, rather than just to the wealthy.

    But that apart, there is very little doubt that this South African model of wildlife privatization has massively increased wildlife numbers in the country. Equally, I think I can say with little fear of contradiction, that as long as people can own animals, they are unlikely to become extinct, if only because if and as they become scarce, the value will increase, and more will get into the game. Same supply and demand equation which we started this thread with!
     

  9. Wheels

    Wheels AH ENABLER AH Legend

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    Unfortunately for many, the game ranching bubble has popped. I feel for everyone affected. Most of us have been caught in a bubble before. I know I have.

    The world has lived with low interest for 10+ years. When the return is not commiserate with the risk, people look for returns in other asset classes. Stock markets, real estate, hard assets, etc. have risen. Today, interest rates have started creeping up. Virtually all asset classes are now starting to look like bubbles.

    Bubbles expand. Bubbles seldom contract. Bubbles float around searching for pins!
     

  10. Royal27

    Royal27 AH ENABLER AH Ambassador

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  11. Wheels

    Wheels AH ENABLER AH Legend

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    Interesting to reread some of that thread. Also interesting to note that we were acting like the pricing couldn't continue the upward trend in the year it started to collapse.

    It is unfortunate that there is was no market where we could all use our great incite and buy a put on RSA exotic game.
     

  12. Royal27

    Royal27 AH ENABLER AH Ambassador

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    Funny thing is, some of the same people I heard saying back then that "prices are definitely going to keep going up" are still saying the same thing today. LOL!

    Wishful thinking and trying to sell a hunt now.
     
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  13. Wheels

    Wheels AH ENABLER AH Legend

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    Wonder how many landowners have CBL's they can't afford to sell that they have hung onto since January 20, 2016, waiting for the laws to change.
     
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  14. gizmo

    gizmo AH ENABLER SPONSOR Since 2015 AH Ambassador

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    Texas market is next. These breeders are insane on what they want for animals. I refuse to pay prices that are ridiculous for animals of certain species. When it crashes I’ll get to start herds of many of the animals I’ve dreamed of owning. Had a guy call me the other day with “the deal of the decade” he “only” wanted 10k for a 50 inch Kudu. I told him he really need to lay off the drugs.
     

  15. Royal27

    Royal27 AH ENABLER AH Ambassador

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    Probably more than most think!

    And don't forget, lions don't eat grass. It's a heck of a lot cheaper to blindly hold on to a Sable...
     
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  16. lwaters

    lwaters BRONZE SUPPORTER AH Elite

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    Be kind of like feeding a worthless dog.
     
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  17. AB2506

    AB2506 AH Enthusiast

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    This reminds me of the potbelly pig and emu, llama markets in NA. The first ones in made out like bandits. The poor slobs who bought later were left with no value and lost money. Matter of fact my brother in law bought several emu just in time to see the market crash. One killed itself when it escaped. Couldn't give the other away. Big loss of money. So much for sure thing big profits.
     

  18. gizmo

    gizmo AH ENABLER SPONSOR Since 2015 AH Ambassador

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    #ostriches in North America. What a flop that crap was.
     
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  19. lwaters

    lwaters BRONZE SUPPORTER AH Elite

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    Another was super lean beef. It was better for you but didn't taste like an Angus corn fed rib eye
     
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  20. johnnyblues

    johnnyblues AH ENABLER AH Ambassador

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    Greed always gets ya. If not now...tomorrow or next month or...… Hell I am hoping to hunt Benin in 21 Roan trophy fee now $1800. Yes $1,800.
     
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