What's going on with the Rand?

[Hogpatrol]

Can someone help me understand why South African prices for trophies, day rates and taxidermy are going up in U.S. dollars at a rate of 25% versus the rand when their inflation rate year to year is hovering around 5%? Sounds like the industry is taking a HUGE advantage of the drop in the rand's value versus the dollar. Example: 2014 rand = .09 USD, 2015 rand = .07 USD. I could write all the figures but suffice to say prices are INFLATED beyond the 5% in country inflation rate. Before anyone gets their shorts twisted about the RSA government stated inflation rate versus the "real" rate, don't forget the price of oil is HALF of what it was last year.

 

[Royal27]

My opinion, it is what the market will bear.

Some game prices have come down but certainly not all. As long as the pricing appears to be a "good deal" to the consumer prices will go up. When people start finding better deals elsewhere prices will come down.

Don't forget that African hunting is still part of a global hunting economy. Even with the higher prices I still view Africa as a better deal than big guided hunts in NA. Just my opinion.

 

[enysse]

People can charge whatever they want, that's just the way business is done. All the game breeding and auctions have artificially inflated the market. I've been there and everything thinks their game is worth a sack of gold, nothing wrong with that either. It's no different than land prices, houses and everything else over here. Outfitters hunt on properties, not just their own. Prices will adjust over time, in the end it is what it is. If you want to go hunting you find an outfitter and make a deal you both can live with at the end of day.

The other thing is the economy could flip in 6 months to a year especially with a new President being elected in a year. Things change and outfitters have fixed costs to bear.

 

[Areaonereal]

Rand down to 7 cents US. 30% decline in a year. Those from SA coming over here in January for the shows, I am sure will be in for a eye opener...Tough business when you compare currencies to the US $.

 

[KAROO WILD Safaris]

Can someone help me understand why South African prices for trophies, day rates and taxidermy are going up in U.S. dollars at a rate of 25% versus the rand when their inflation rate year to year is hovering around 5%? Sounds like the industry is taking a HUGE advantage of the drop in the rand's value versus the dollar. Example: 2014 rand = .09 USD, 2015 rand = .07 USD. I could write all the figures but suffice to say prices are INFLATED beyond the 5% in country inflation rate. Before anyone gets their shorts twisted about the RSA government stated inflation rate versus the "real" rate, don't forget the price of oil is HALF of what it was last year.

I don't see that prices in the hunting industry have gone up at all. In my opinion, they've stayed the same for the past 3 years. The taxidermist I use for my clients for example hasn't increased his prices for the past 4 years. Also bear in mind that when your country's economy is going down the toilet, outfitters aren't jumping for joy that the rand has devalued to the dollar. Most of us own our own land and have significant investments in South Africa and we also need to import a lot of products that are dollar based. The fuel price hardly budged here despite the weaker oil price.

 

[ack]

When I was there in August the rate was13.5 to 1 US..World economy is in a mess.

 

[JimP]

That is the way that a lot of this stuff works. As the dollar gets stronger the rand will get weaker.

This last May when I exchanged some US dollars for rand the exchange rate was 9:1. When I got over to SA 2 weeks later it was 10:1 and 3 weeks later when I returned the money mongers in the airport wanted to give me 14:1 but they are in the business to make money.

 

[Hogpatrol]

I don't see that prices in the hunting industry have gone up at all. In my opinion, they've stayed the same for the past 3 years. The taxidermist I use for my clients for example hasn't increased his prices for the past 4 years. Also bear in mind that when your country's economy is going down the toilet, outfitters aren't jumping for joy that the rand has devalued to the dollar. Most of us own our own land and have significant investments in South Africa and we also need to import a lot of products that are dollar based. The fuel price hardly budged here despite the weaker oil price.

Gasoline prices in RSA are down 25 percent year over year, october '14 to october '15.

Click on the 1Y link at the top of the chart.
http://www.tradingeconomics.com/south-africa/gasoline-prices

Inflation rate at 4.6% due to a fall in petrol prices.

http://www.tradingeconomics.com/south-africa/inflation-cpi

 

[KAROO WILD Safaris]

Gasoline prices in RSA are down 25 percent year over year, october '14 to october '15.

Click on the 1Y link at the top of the chart.
http://www.tradingeconomics.com/south-africa/gasoline-prices

Inflation rate at 4.6% due to a fall in petrol prices.

http://www.tradingeconomics.com/south-africa/inflation-cpi

Thanks, you've made my point for me. In Oct 2014 gasoline was $1.2, Oct 2015 it was $0.91. That's a 25% decrease. In Oct 2014 the Rand to Dollar exchange rate was 11.02, this October it was 13.63 (It's currently on 14.01). That's more than a 20 decrease in the exchange rate and as a result the cost of fuel hasn't moved much at all for us. It was near it's highest ever levels from June to October 2014. If you had to take the fuel price move and inflation versus the rands depreciation to the dollar over the past 3 years I think my point would be glaringly obvious to you. Imagine if the oil price moves back to $100 per barrel and the rand depreciates even further.

Now also consider the other imports that are dollar based and haven't had a major decrease in price like the oil price has. It's not easy running a business in Africa. Our political and economic prospects are dire but we remain positive because it's in our nature. I'm not complaining but please don't tell me I'm doing well because the rand is depreciating to the dollar. It's like telling the captain of a sinking ship that he's saving fuel because his engines aren't running.

 

[Hogpatrol]

Victor, Fuel prices are still lower vs. the inflation rate but I have to ask are you paying your employees in USD or rand? Are ALL your expenses in USD based imported goods? Food, utilities, insurance, and labor are local. Are you paying those in USD or rand? Are you charging your clients in rand or USD? I can sympathize with the political situation and I know a certain class of people have their backs against the wall but when the dollar is strong, the American tourist will travel and spend more abroad because he actually is getting more for his money. Having said all that, I fervently hope the safari business in all of Africa can be maintained for its contribution to conservation, political stability and jobs.

 

[KAROO WILD Safaris]

The safari industry in Africa has been around longer than both you and I and will be maintained long after we're gone. What outfitters and Africa have to offer hunters and tourists is amazing and it's offered at a very fair price. All the hunters and tourists I've ever dealt with have appreciated this and I've appreciated them supporting our business. There are over 3000 registered hunting outfitters in SA alone, supply and demand will keep prices at a fair level. This rand/dollar debate has been debated to death in the past and I think we should leave it at that. International economics is way more complicated than either you and I have touched on here. This forum is great but perhaps we're getting a little too personally involved in how outfitters run their business and price their product. There's plenty of good deals on this forum at the moment.

 

[Hogpatrol]

The safari industry in Africa has been around longer than both you and I and will be maintained long after we're gone. What outfitters and Africa have to offer hunters and tourists is amazing and it's offered at a very fair price. All the hunters and tourists I've ever dealt with have appreciated this and I've appreciated them supporting our business. There are over 3000 registered hunting outfitters in SA alone, supply and demand will keep prices at a fair level. This rand/dollar debate has been debated to death in the past and I think we should leave it at that. International economics is way more complicated than either you and I have touched on here. This forum is great but perhaps we're getting a little too personally involved in how outfitters run their business and price their product. There's plenty of good deals on this forum at the moment.

Victor, Well stated.

 

[KAROO WILD Safaris]

Thank you Hog. I do agree with you that any increases for 2016 in day fees or trophy fees aren't justified.

 

[Royal27]

International economics is way more complicated than either you and I have touched on here.

This is SO true, but this is still one of my favorite topics here. With simple and truthful facts it is easy to make the argument you want to. And the overall implications are far more complex than a simple conversion rate or the price of oil.

I also agree that African hunting is still one of the best values around today for guided hunting and bang for the <insert currency of your choice here>.

 

[Desert Dog]

Even with the higher prices I still view Africa as a better deal than big guided hunts in NA. Just my opinion.

^^^^^100% true

An African safari is cheaper than an elk hunt in my home state. A 10-day Africa hunt with lots of animals and including airfare, is cheaper than an Alaskan moose hunt. I spent thousands of $$$ just to hunt wild pigs and blacktail deer on private land this year! Africa hunting is a bargain unlike any other continent.

 

[vinnymbogo]

^^^^^100% true

An African safari is cheaper than an elk hunt in my home state. A 10-day Africa hunt with lots of animals and including airfare, is cheaper than an Alaskan moose hunt. I spent thousands of $$$ just to hunt wild pigs and blacktail deer on private land this year! Africa hunting is a bargain unlike any other continent.

...and you can hunt in shorts and a t-shirt!

 

[Royal27]

...and you can hunt in shorts and a t-shirt!

Although I could have done that in CO this year too!!!

 

[JimP]

...and you can hunt in shorts and a t-shirt!

Although I could have done that in CO this year too!!!

And just about any other western state. The mule deer I shot this year in Utah at the end of September was jerky by the time I got him back to camp.