Once in dire straits, SA’s game heritage has transformed into a multibillion-rand industry.
Stafford Thomas reports on this success story.
WHAT IT MEANS
South Africa is a world leader in game conservation. Game could be a key factor in food security.
« In common with other agricultural sectors, game ranching represents the sustainable use of a national resource » — GERT DRY
Rural job creation, food security and scarce water resources are among SA’s most pressing challenges. One burgeoning SA industry that more than meets these challenges is commercial game farming. The game ranching industry is a largely unsung success story that now ranks as SA’s sixth-biggest agricultural sector. It employs more than 100 000 people, primarily in agriculturally marginal rural areas. And it is only getting to grips with its potential. “The game industry is booming,” says Jacques Malan, president of Wildlife Ranching SA (WRSA).
Proof enough is Senatla, a celebrity not well known outside game industry circles. He is no ordinary celebrity: Senatla is an African buffalo bull that was snapped up at an auction in September 2011 for ZAR18m. The previous record price for a buffalo bull, set two years earlier, was ZAR 9m. According to ABSA Bank records, the record seven years ago was ZAR 165 000. Prices for other game species are also setting new records. A sable antelope bull was knocked down for ZAR 3m recently and a black-faced impala fetched ZAR 550 000. In 2005, the record prices for these two species were ZAR 75 000 and ZAR 160 000 respectively.
“Demand for breeding game is exceptionally strong,” says Malan. “The industry’s problem is a lack of stock.” At the forefront of demand are breeders whose aim, like that of their counterparts in other livestock sectors, is to produce outstanding examples of a particular breed, he says. The demand is reflected in the strong surge in value of game sold at auctions. In 2010, the annual value of game sold at auctions was about ZAR 315m, says WRSA deputy president Gert Dry. This was up from about ZAR 200m in 2008 and just under ZAR 100m in 2006. Auction sales account for about a third of total sales, most of which are between game ranchers. Breeders are supplying an industry which the Southern African Wildlife Management Association (Sawma) estimates generated annual revenue of ZAR 7,7bn in 2008. There are now more than 10.000 commercial game ranches covering 20,5mha, says Dry. This represents about a quarter of SA’s 84mha of grazing land. Game ranches covered 14,9mha in 2005 and 7,1mha in 1993.
Dry says the game industry’s revenue has grown at an average 20,3%/year over the past 15 years. In addition to hunting, ecotourism represents about another ZAR 1bn in direct revenue, he says.
FOREIGN LEISURE HUNTERS
The significant scale of the SA game industry is in stark contrast to the picture less than 50 years ago when the survival of many of SA’s now abundant game species hung by a thread. Beyond the confines of SA’s national and provincial parks, the country’s wildlife had been decimated by indiscriminate hunting, primarily during Victorian times, the ravages of the Anglo Boer War, a rinderpest epidemic and just plain ignorance about conservation.
“A census in 1964 revealed that SA had a mere 557 000 head of game ,” says Peter Flack, now a conservationist, hunter and wildlife author. Previously he was a businessman whose career included chairmanship of Randgold and serving as Rembrandt’s representative on the Gold Fields board. “A census in 2005, by the same team using the same measurement process, found that the number of game had soared to 18,6m. ”As examples of some of the amazing recoveries in game populations from perilously low levels, he says rhino numbers have risen from 28 in 1964 to 18 000, and black wildebeest from 34 to 26 000.
Flack says there is one main reason for the recovery from the brink of disaster of wildlife outside reserves: “It is thanks to a quiet private-sector conservation revolution that has been built on leisure hunting.” For conservation to succeed, Flack says wildlife has to be economically sustainable and able to compete with commercial farming . Photographic ecotourism alone has been shown to be incapable of ensuring this, he emphasises, pointing to Kenya, where hunting has been banned since 1977. “Since then Kenya’s game numbers have fallen by 80%,” says Flack. His view is strongly supported by a number of other game conservationists, among them Wouter van Hoven, professor of wildlife management at the University of Pretoria. “Hunting has been the single biggest factor in the success of conservation in SA,” he says. “When game began to have a commercial value, it became protected.”
Not all agree with Flack and Van Hoven. “Hunting is unacceptable in a normal society,” says Steven Smit, a spokesman for Animal Rights Africa. “Hunters enjoy killing for its own sake.” Of the decline in animal numbers in Kenya, he says: “You can’t just look at the total number of animals.” To this, Van Hoven replies: “They are thinking emotionally, not scientifically.”
Kenyan-born palaeoanthropologist Richard Leakey, once a vehement opponent of hunting, conceded this to The Economist a few years ago: “Market forces are essential for the long-term survival of species.” The banning of hunting in Kenya provided the SA game industry with the demand kick-start it required, says Flack. From a mere three game ranches in 1960, the numbers grew rapidly, reaching 3 300 by 1987 and passing the 9 000 mark less than a decade later. A major factor in the success of the game industry has been the influx of foreign leisure hunters, especially from North America, Germany and Spain. Though few in number, foreign leisure hunters make up for this by being big spenders. The most recent statistics on foreign leisure hunting published by government were for the 12 months to March 2007. They show that SA hosted 16 394 foreign leisure hunters who spent almost ZAR 2bn during the 12 months. The spending was both directly on hunting and indirectly on travel, accommodation and specialist services, including taxidermy and fees for professional hunters. The WRSA estimates taxidermy to be worth ZAR 300m annually. According to SA hunting regulations, a professional hunter must accompany foreign leisure hunters. On a per person basis, in 2006/2007 each foreign leisure hunter spent about ZAR 122 000. This was roughly 14 times more than that spent by the average foreign tourist arriving in SA by air. Sawma estimates that foreign hunters’ direct spend on hunting in 2008 was ZAR 1,2bn, with the balance of ZAR 800m made up by spending on other services. “Americans represent the largest number of hunters coming to SA,” says Francois Schutte, a game rancher in the Theunissen district of the Free State who specialises in buffalo. “For many hunters the buffalo is the big attraction and we find that the same people come back year after year to hunt them.”
Schutte says there is also increasing interest in SA as a destination among hunters from emerging market countries. “We are seeing a growing number of hunters from Russia and Eastern Asia, in particular,” he says. SA has a significant competitive advantage over many other countries in Africa, says Schutte. “Foreign hunters often encounter problems in other African countries to a point of harassment,” he says. “That’s why they prefer to come to SA, where things are run well.” But the game industry has not been immune to the tough economic times that the global financial crisis ushered in 2008. The number of foreign leisure hunters visiting SA has fallen since 2008, says Adri Kitshoff, CEO of the Professional Hunters Association of SA (Phasa). “I attribute the decline entirely to the global economic recession,” she says.
But Kitshoff believes the lowest point of the market has probably been reached. Indicative of this, she says, was the upbeat mood at the world’s largest gathering of the hunting fraternity, the Safari Club International convention held in Las Vegas in February. “The views on the outlook for the industry of those attending were far more positive than they have been for a number of years,” she says. Malan agrees that the worst is over. “Bookings from foreign hunters are up on the numbers we have seen over the past three years,” he says. The SA game industry also has strong support from local leisure hunters who, Flack says, number around 300 000. Sawma estimates that local hunters spent ZAR 3,1bn on direct hunting costs in 2008. What the game industry is in need of is more co-ordination and self-regulation, Flack believes. “At present there are four major industry bodies all speaking with a different voice,” he says. “A unified body would be far better positioned to champion the industry’s cause.” Flack is also highly critical of other aspects of the industry, such as the standards laid down for professional hunters. A professional hunter, he says, can qualify after a totally inadequate 10-day course. “PHASA has done its best to improve standards but only about 1 200 out of the 2 500 professional hunters are members,” Flack says.
He believes all professional hunters should be required to be PHASA members and comply with minimum standards. The same applies to other areas of the industry, including ranching that involves running hunting trips for profit. “There should be industry bodies that lay down standards, just as it is done in the legal, medical and other professions,” he says. “If you don’t comply with the requirements laid down, you are barred from practising.”
A GROWING AGRICULTURE SECTOR
The need for a better co-ordinated game ranching industry would certainly appear called for given its rapid growth and scale and its emergence as a larger component of the agricultural sector. There has been a significant shift away from conventional cattle and sheep farming to game ranching. Dry says this swing should be viewed realistically. “Game ranching should not be seen as being different to any other agricultural sector. In common with other agricultural sectors, game ranching represents the sustainable use of a national resource.”
The reason for the swing to game ranching is not hard to fathom: game is capable of producing significantly higher returns, particularly in regions that are not suited to crop farming or conventional stock farming . And for the most part regions unsuited to conventional farming represent the greatest proportion of SA because of its limited water supply. SA ranks as the country with the 30th-lowest average annual rainfall. According to the department of agriculture, only 12% of the country — about 15mha — can be used for crop production. And only 2,6% of SA is considered high-potential arable land. Taken across the entire agricultural industry, Dry says the average output per hectare is US$ 200 less than the world average. He says the return on capital achieved by cattle farmers in grasslands suitable for cattle averages 4,8%. In the agriculturally marginal bushveld regions, the return falls to 1,9%. In the even tougher lowveld regions, the average return is just 0,9%.
By contrast, even under tough lowveld conditions, Dry says the average return on capital deployed in a game ranching venture is 3%. In the bushveld it rises to 5,7%. He says Limpopo province, which is predominantly bushveld by nature, is home to about half of SA’s game ranches. The return for game ranchers in the lowveld who breed buffalo is significantly higher, at about 21%. This explains the record ZAR 18m paid for Senatla, as well as the more standard prices of around ZAR 1,2m for top breeding animals. “Foreign hunters are prepared to pay anywhere from $10 000 to $25 000 for a trophy buffalo,” says Schutte. Game farming also more than holds its own in regions where conventional stock farming is confined primarily to sheep and goats because of arid conditions. “There are thriving game ranches even in areas where goat farming is unprofitable,” says Flack. Dry says that in the Karoo the average return on capital of a large sheep farm is 7,2% and in the Kalahari 7%. Returns for game ranching average 9% in the Karoo and 8,3% in the Kalahari. About 20% of SA’s game ranches are located in Northern Cape province, which incorporates 370 000km² of the Karoo and Kalahari.
Wherever it is located, establishing a game ranch calls for deep pockets. “On average, even the most successful game ranch requires at least ZAR 6 in capital outlay for every ZAR 1 generated in revenue annually,” says Dry. “A small ranch requires an investment of ZAR 3,5m. A large ranch would require at least ZAR 16,5m.” The total existing investment in game ranches is estimated to be about ZAR 20bn. It is not only South Africans who are being attracted into the game ranching industry, says Van Hoven. “We have assisted investors from as far afield as Saudi Arabia, Russia and even Bulgaria to develop game ranches.” The industry is also attracting wealthy black business people, says Schutte. Probably the most prominent among them is Cyril Ramaphosa who became a member of game breeding industry association Stud Game Breeders in 2010. Quoted by the association, Ramaphosa had encouraging words for the game ranching industry. “SA is uniquely positioned to capitalise on the tremendous opportunity that the game industry presents, if the industry is developed appropriately. Sustainable and inclusive wildlife breeding approaches will deliver economic value and preserve our wildlife heritage for generations to come.”
The role of SA’s wildlife heritage and game ranching extends well beyond hunting and ecotourism. It has the potential to play a role in ensuring the country’s food security. Up to now the game industry’s role has been relatively limited. “SA exports about 75 000 head of game a year, primarily to EU countries,” says Piet Neethling, MD of Camdeboo Meat Processors, which operates SA’s biggest game and ostrich abattoir in Graaff-Reinet. He says springbok is the primary venison export and earns SA only around ZAR 60m-ZAR 70m annually.
Neethling continues: “Domestically there is a small restaurant and retail market for venison. Hunters also take a lot of meat home. But even including these, I would estimate the total value of SA’s venison market at only ZAR 300m to ZAR 400m annually.” The value of exported venison is dwarfed by SA’s red and white meat imports which, Dry says, are running at almost ZAR 4bn/year. SA’s red meat industry in particular is experiencing capacity constraints that have been highlighted by wildlife veterinarianand researcher Kobus du Toit. He estimates that the number of cattle farmed commercially in SA has been stable at around 8m since 1971. Du Toit also estimates that the number of sheep farmed commercially in SA has held steady at about 28m over the past four decades. But over the same period, SA’s population has grown from about 20m to 50m. Providing similar estimates for commercial cattle stock numbers, Red Meat Research & Development SA (RMRD) reports that cattle meat imports into the country are running at 32 000t/year, or about 5% of local consumption. In addition, SA imports 170 000 live cattle from Namibia annually. RMRD reports that mutton imports are about 50 000t/year or almost a third of local consumption. Taking a more pessimistic view than Du Toit on stock levels, RMRD estimates that the number of sheep on commercial farms has fallen by 3m over the past decade to about 22m. One of the reasons for the stagnation in SA’s commercial cattle numbers and decline in sheep numbers RMRD puts forward is a lack of suitable grazing. This is not a problem faced by game ranching. Game animals are better adapted to local arid conditions, and the carrying capacity of land is far greater for game than for cattle and sheep, says Van Hoven. “Cattle and sheep only graze ground vegetation while different species of game utilise different plant material, from grass to trees,” he says.
Flack points out that game such as springbok, impala and wildebeest are also prolific breeders. “Their numbers grow at between 25% and 35% annually,” he says. Malan believes the time has arrived for the game industry to increase its penetration of the red meat market. “The industry now has the stock levels to expand significantly,” he says. A big step in this direction is being taken with the establishment of an abattoir focused on game meat in the Waterberg district in Limpopo. “We are in the process of having the abattoir certified by health authorities,” says Peter Oberem, a local veterinarian who heads the initiative, Waterberg Natural Produce. The abattoir, says Oberem, has the financial backing of a number of game ranchers in the region and will have an initial daily capacity of 140 wildebeest. “There is more than enough stock to meet our requirements,” says Oberem. The slaughtered weight of wildebeest varies from about 100kg to 150kg. The initial focus, he says, will be on supplying the domestic market. “You have to build a local base first. We have learnt a lot from the ostrich industry, which built its model on meat exports.” The ostrich industry is facing serious problems as a result of an outbreak of avian flu which has led to a complete cessation of exports to the EU, its biggest market.
However, exports do form part of Waterberg Natural Produce’s longer-term strategy. “There is huge potential for exports to Europe,” says Oberem. “New Zealand alone exports around ZAR 2,5bn annually, primarily to Germany.” The big attraction of venison is that it is a high-value product. “Every 1kg of venison exported pays for 3kg of red meat imported,” says Oberem. At a time when SA is facing growing food insecurity, its wildlife ranching industry could not be in better shape to play a role in providing part of the solution. Summing up the situation, Flack says: “Wildlife and wildlife habitat in the country have never been on a sounder footing in at least the past 100 years.”
Published in the Financial Mail (April issue)