High Value Game shows classic asset bubble traits

The investment in high value game by commercial farmers is a fast growing trend as new price records are set continually at game auctions. But an experienced hunter and game dealer, this week came out in support of the growing number of people in the industry pointing out that high value game is portraying all the characteristics of a pyramid scheme.
The growth trend is boosted by the anticipated return on investment for high value species such as sable, roan, nyala, waterbuck, tsessebe, blackfaced impala and lechwe. Over recent years, as many of these once-rare species have become more abundant, their prices have dropped, often dramatically, only to be replaced by a new trend, investment in so-called aberrants, i.e. animals which show a genetic colour variation compared to the original, wild species.
Currently a golden gemsbok can fetch as much as N$300,000 at auction while disease free buffalo fetches close to N$800,000. At South African game auctions, trophy quality buffaloes have fetched as much as R40 million per animal while off-colour springbok recently exceeded R2 million. Namibian game hunter of Omujeve Hunting and Safaris, Corne Kruger who has 15 years of experience in the business said that the average prices for rare game such as nyala and waterbuck range from N$40,000 to N$50,000 while the colour variety copper springbok can fetch as much N$100,000.
Kruger said many cattle farmers invest in high value game on the side for breeding purposes but shy away from buffalo are these animals are known to be natural carriers of Foot and Mouth Disease and East Coast fever, both of which are easily transferable to other livestock. Namibian law prohibits buffalo near farming areas.
Kruger is of the opinion that high value game may be a good investment over the short term but the intensive breeding of game will see a collapse due to oversupply, as has happened with sables. “There are now more than 26,000 sables in South Africa, putting 4500 new sables in the market every year” he said pointing out that the only real consumers of high value game are trophy hunters, and that these are severely restricted in number. “The problem facing the industry is that game breeders are only breeding for other breeders and not for the end-user, the hunter. Since more and more breeders want to enter this seemingly lucrative market, prices at auctions are reaching astronomical heights, far above what the animals are worth from a commercial point of view.”
He added that further distortion in the value of game as an asset, comes from the upper echelons of the wealthy who invest in high value game as a means of reducing their incomes, to improve their tax situations.
Through the Roof
This year Erindi’s second annual auction of rare, exotic and plain game broke 14 auction price records for kudu and other game including the protected damara dik-dik which, for the first time ever, went under the auctioneer’s gavel.

On the opposite side of the spectrum, common game came down in price, exacerbated by last year’s drought.
“Last years drought saw above average culling of ordinary low value game which lead to a price decrease in game meat from N$22 per kg to N$14.”
Kruger said there is no logic in the high prices for game when the demand is limited “In five years’ time this investment bubble will crumble.” This year’s Waterberg auction conducted as a catalogue auction by Agra on behalf of the Ministry of Environment and Tourism, was widely seen as a major disappointment. The auction offered disease-free buffalo, eland, sable and giraffe, none of which fetched the targeted prices.
A total of 79 buffaloes were sold for an average price of N$114,430 and the highest price of N$300,000 was paid for a bull. Namibians were not allowed to bid.
Dr. John Shoopala , Chief Veterinary Officer in the agriculture ministry said “buffalo may not be moved onto protected areas within Namibia, and therefore the animals will only be made available for sale to international buyers. Buyers must adhere to all veterinary regulations set out by the country for which the animals are destined.
South African buyers, Oryx Management Services, André Els Safaris and MW de Jager bought all the buffaloes at ridiculous prices. In South Africa, the average price for buffalo exceeds R900,000.
At the same auction, the highest price for sable was N$90,000, followed by N$70,000 and two sables sold for N$50,000 each. Four giraffe breeding groups of five each, a total of twenty giraffes, were sold for an average price of N$12,500 per animal. Eland breeding groups were sold in groups of 10 and achieved a price per animal of N$5,500 for two groups and N$6,000 for three groups, thus an average price of N$5,800 each for the fifty eland. The sable, giraffe and eland were not available to South African buyers and were bought by local farmers.
Romeo Muyunda, Chief Public Relations Officer at Ministry of Environment and Tourism, when asked about the sub-par prices for buffalo, said “it could have been more, but the ministry is satisfied with what it got.“ All of the miniseries game auction proceeds go to the Game Products Trust Fund with that specific auction turning over N$10,6 million. The Minister of Tourism and Environment of the Republic of Congo and a delegation were present on that specific auction as part of an agreement for co-operation and information, expertise and information sharing between the Congolese ministry and the Namibian government.