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Economics of the wildlife industry

2 August 2013

The wildlife industry in southern Africa only really developed after the granting of conditional private ownership of wildlife to landowners through the Game Theft Act (Act 105 of 1991 as amended by Act 18 of 1996 and Act 62 of 2000). It is now providing an economically viable alternative form of land-use to livestock production on mostly marginal agricultural land. This switch is generally regarded as one of the greatest recent agricultural transformations in southern Africa. There are three basic enterprises: mixed livestock and wildlife production, intensive and extensive wildlife production. The wildlife industry contributed R7.7 billion (9.8 per cent) to South Africa’s Agricultural Gross Domestic Product in 2010. Recreational and trophy hunting, tourism, live wildlife sales, wildlife capture and translocation, taxidermy and meat production are the main enterprises. Currently, some 20.5 million ha supports an estimated 2.5 to 18 million head of wildlife on 10 000 or more wildlife ranches in South Africa. The wildlife industry is contributing significantly to job creation and, especially in Namibia, to the economic development of communal, rural communities by way of conservancies. The initial conservation approach has, however, now been replaced by one of pure financial gain.

The economics of the wildlife industry is still poorly documented, but based on the historical trends on the formal live, wildlife auctions it initially prospered on the back of economic and ecological advantages by producing smaller, common wildlife on large and largely fenced wildlife ranches. The output prices for these animals started to stagnate in 2000 and, this at first spurred a shift to breeding higher-value, rare, indigenous wildlife and currently to producing exotic colour and morphological variants which is currently driving the wildlife industry. Nevertheless, few, if any, other countries have such a large wildlife resource under the protection of private landowners as South Africa.

The Limpopo province in South Africa has almost half the wildlife ranches of South Africa. Other provinces with numerous wildlife ranches are the Northern Cape, North West and the Eastern Cape, with the largest wildlife ranches in the Northern Cape. The sustainable use of wildlife resources through hunting is a backbone of conservation and in 2010 it contributed approximately R1.1 billion to the South African economy. Hunting is a major source of income for the wildlife industry and the increase in the wildlife population in South Africa has led to many new trophy records there in the past three decades. Most of the trophy hunters prefer to be quoted a fixed price per animal shot when hunting but some prefer a fixed all-inclusive hunting fee.

Extensive wildlife production is expensive and capital-intensive and the cost of land alone forms around 33 per cent of the total investment required. When the quality and traditional source of red meat from livestock is beyond suspicion, larger wild herbivores cannot compete with domesticated herbivores on a kg of meat produced per animal basis. However, the main advantage of wildlife production lies in the diversity of its products and enterprises. For wildlife, trophy hunting yields the highest gross income per kg of wildlife cropped in the Limpopo province. The more common antelope are mainly being hunted for their meat.

Wildlife also plays an important role in ecotourism as ever increasing numbers of tourists visit South Africa which attracts the largest proportion of foreign tourists who visit southern and East Africa. Yet, there still is a great potential for expansion of moderately priced, quality accommodation for local tourists. The sale of live animals is a major economic force in the wildlife industry. In 2012, there were 58 formal live animal auctions which generated a turnover of R962 143 501 from the 18 217 animals that were sold. Moreover, it is estimated that private sales are at least double that of the formal auctions.

Since 1991, the market for live wildlife has gone through three major phases, with restocking new wildlife ranches and conservation initially driving the market, followed by producing rare indigenous wildlife for greater financial gain and the current demand for exotic and rare colour and morphological variants purely for short-term financial gain. This reflects the impact of changes in supply and demand. New record prices are no longer rare and new high-priced, colour variants are entering the market continually. However, the potential buyers of the future are limited and meat hunters do not hunt high-value animals because they prefer to pay meat-related prices. The inflated prices also do not contribute to the maintenance of the sustainability in live wildlife prices. Based on pure economic principles these prices are likely to decline in the near future. The more common types of wildlife now seem to have reached price maturity. Nevertheless, the influence of external factors such as drought and economic depression will probably always create new market opportunities for live, wildlife sales.

The wildlife ranching industry in South Africa has a total employment multiplier of 14.58 and ranks sixth in terms of its potential to generate full-time employment opportunities per R1 million of production. The creation of further employment opportunities is possible because most wildlife ranches still do not employ professionally trained staff to look after their asset. Moreover, only a limited number of the wildlife producers are members of formal wildlife ranching organizations.

Meat production from larger, wild, African herbivores is a largely unexplored market in southern Africa, especially following scares about the quality of traditional red meat and an increasing health consciousness in the developed world. A major step forward is the development of an abattoir to process large, herbivore meat in the Limpopo province where the majority of the wildlife ranches of South Africa occurs. Yet, the production of meat from the larger, wild herbivores for export has stuttered along sporadically for many years although it has the potential of becoming one of the wildlife ranching industry’s largest future sources of income. Major potential markets for animal protein already exist in the European Union, with future large markets in China and other Asian countries.

The wildlife industry has become a major and multifaceted economic and conservation force in southern Africa. Yet, personal pleasure still is one of the major reasons for owning a wildlife ranch, and for many wildlife ranch owners aesthetics is still more important than economics. Those who only seek short-term financial gain do not benefit the industry and it cannot afford this luxury. However, wildlife ranches should be economically productive, contribute to food security and be managed in an ecologically responsible way. Failure to do so could well put the entire wildlife industry at risk. Moreover, every landowner must focus on those enterprises for which his habitat and region are most suitable.

 

References:

Anon. 2002. Game Theft Act No. 105 of 1001 as amended in Act 18 of 1996 and Act 62 of 2000. Government Gazette 23548: 1463-1467.

Bothma, J du P, H J Sartorius von Bach & P C Cloete. In prep. Economics of the wildlife industry in southern Africa. In J du P Bothma & J G du Toit (Eds), Game ranch management, 6th edition. Pretoria: Van Schaik.

Cloete, F. 2013. Tendense van lewendewild verkope 2012. Game & Hunt 19(2):51-55.

By: Prof J du P Bothma

 

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