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The Economics of the Animal Kingdom

KIZITO OKECHUKWU | JULY 08, 2019

Photo Supplied: Vodacom Durban July took place on Saturday 6 July

This past weekend, the glitz and glamour of the Vodacom Durban July took place and attracted the usual affluent suspects and who’s-who from various industries. Although a friend said I could hitch a ride with him to the event, I abstained as duty called, but it is still on my bucket list.

Last year’s winner “Do it Again” did it again and pipped others to the post to snatch the whopping R4.25m prize. Staying on the money, various reports have estimated that the event raked in close to R400m and I believe that today, the horse racing industry is estimated to be worth R3bn in South Africa.

Before I get into the crux of this piece, I must confess that I have developed an estranged relationship with animals over the years. It first began when I was working on a pig farm at my boarding high school (where I was also bitten by a scorpion), visiting a snake petting farm in the Western Cape, which creeped me out, to eventually not wanting to have dogs at home, even when my family wanted to – fuelled by the fear that a buddy of mine was badly bitten by a dog during our youth.

But now I look at animals in a different light, an economics one to be precise. First, let’s get a snapshot of the wealthy equestrian-loving environment. For example, the Noordhoek area in the Western Cape is arguably one of the country’s leading ‘horsey’ havens and hosts regular dressage and jumping events for all ages and offers many top-end places for stabling.

But the costs associated with this sport (or dare I say ‘past-time’) are staggering, according to someone I know in the area. For a well-bred horse (with partially guaranteed re-sale value), expect to pay from R250k upwards to around R1.5m. Then there’s stabling at R7500 per month, a decent horse-trailer for around R100k, six weather blankets at R2k each and a good saddle will set you back around R30k. Also, don’t forget the jodhpurs and boots, regular chiro, physio and dentist appointments (not for you, for the horse!). The list goes on and on and many costs, besides the horse, are not once-off either. Yet this elitist micro animal economy is thriving and creates and sustains many jobs, for both the skilled and unskilled.

The animal-based industry presents lots of opportunities and seems to be a good future investment arena. Globally, it could be worth hundreds of billions, if one considers the abundance of pedigree dog-breeders, exotic birds (like parrots, etc.), other pet species and the obvious myriad of food sources it provides, such as chicken, beef, pork and fish.

Looking abroad, Mintel estimates that people in the UK will spend £2.1bn on pet care products and services by 2023, a 25% increase from an estimated £1.7bn in 2018. One of our start-ups, Anylytical Technologies recently built a technology for the UK market to manage mad cow disease.

Locally, some innovative local start-ups have also taken advantage of the lucrative nature of the animal industry and have developed business concepts to lure people that would not usually invest in it. “Shares are complicated, cows are easy” says Ntuthuko Shezi, founder of Livestock Wealth. The company invites individuals to invest in cows and track them through their app as they grow and develop, while also earning an investment return.

The land expropriation debate remains a thorny and sensitive issue in South Africa. Yet, if implemented with due and fair process involving all key stakeholders, it could present a wide array of opportunities for newcomers into the animal industry, such as opening more abattoirs to produce meat for export.

Usually when I travel abroad, the first thing some people say is “Oh, you’re from Africa! I’m dying to go on a safari there to see all the wild animals”. It’s no secret that private game parks and wild animals are big business across the continent and South Africa has the crown jewel with the Kruger National Park.

According to The Valuator Group, the number of game farms in South Africa since 1980 has risen at a phenomenal rate and today there are over 2000. This rise was due to three new trends. The first was a related rise in the number of game auctions, the second was a big increase in high-priced hunting establishments catering for the affluent amateur hunter (operating under very strict government controls and conservation principles).

 

The third new trend has been a swing towards estate management and controlled breeding programmes. These innovations ensure that, as in the agricultural sector, the stock is continually improved along with the animals’ appearance and their ability to resist disease and tough climatic conditions. Certain game farm breeders have also become exceptionally clever in learning how to breed the rarer, more exotic species such as black and red impala and golden wildebeest, which command very high prices. The escalation in the price of wild animals has been higher than any previous forecasts and in some cases world records have been set. I recently read that a buffalo bull sold for R40m, a kudu bull for R9m and a sable antelope bull for R12m.

 

For most of us, animals form a large part of our lives, whether for breeding, investment, fun and recreation, companionship or just as a food source. As the animal industry fast becomes rifer with prospect, we must find ways to open doors for new entrants in the industry, such as our youth, and help create a plethora of much-needed jobs.

 

Back to what spurred my interest in this topic. I just wonder if all the attendees at the Vodacom Durban July were there for the horses and the betting, or was it just a cool place to network, dress up and mingle with South Africa’s diverse and colourful mix of culture and creed – and jointly release their wild sides…

 Kizito Okechukwu is the co-Chair of the Global Entrepreneurship Network (GEN) Africa – 22 on Sloane is Africa’s largest startup campus.

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