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The Conservation Imperative


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#21 Bugs

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Posted 30 May 2015 - 09:06 AM

I understand that there is in the range of 15 tons of horn in Government stockpiles and there is 4 tons in private hands. There are 5000 rhinos in private hands of which it may be safe to say that 4000 can utilised for horn sales. Current demand is around 5 to 6 tons a year. Rhino produce on average 900g per year. Natural mortalities are around 4% of the gross population per year. It is not unreasonable to assume that the rhino that will be moved to IPZ's under government management will also be dehorned and can contribute. It would be responsible for government to keep at least 1000 rhino in IPZ's. Other countries also have access to rhino horn from confiscation and natural deaths as well as dehorning they did for protection. 

 

Combined with natural mortalities, stockpiles, dehorning programmes, and sustainable harvesting, we can sustainably provide substantially more horn than what is currently reaching the market without killing a single rhino. This can all be done without dehorning a single rhino in any national park, although I am thinking it may be a good idea to dehorn them anyway (trade or no trade). 

 

I will add that as exciting as it was to see a rhino with a enormous horn the other day, I can't help wondering how safe that rhino is, and it still haunts me that a rhino was killed in that park at the same time we were there. When visiting another reserve recently, I remembered a few years ago a close encounter while on foot with a big rhino and its calf. This reserve has lost 80% of its rhino and I can't help thinking how many of the ones I saw are now dead, and if the one that we had such a close encounter with is still alive; all because the appendage on the end of its face - which may be nice for me to look at, but has cost the rhino its life. In hindsight - I would have felt better seeing the rhino with no horn at all. 

 

I will leave you with another link about the myths created around rhino horn trade http://russlamberti.com/rhinonomics/


Edited by Bugs, 30 May 2015 - 09:17 AM.

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#22 douglaswise

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Posted 30 May 2015 - 10:04 AM

@Bugs:

 

Thanks for the precise information.

 

It would seem that the 5000 rhinos in private hands are alone capable of generating 60%-70% of current demand annually. As you mention, other sources can eke out the rest while sufficient extra animals are bred to meet any potential shortfall.  Thus, a delay in legalising to create further product would appear to be unnecessary.



#23 Soukous

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Posted 30 May 2015 - 10:18 AM

The same rhetoric keeps getting repeated, so I repeat myself again too, until this argument is countered.

 

Even if the trade is made legal, the price of rhino horn will remain high as the demand will not drop (more likely it will even increase) and the supply will not increase (maybe momentarily by the release of stockpiles, but those are one-off sales, only leading to an increase in demand, like what happened with ivory), thus the price will remain high, thus the incentive for poaching will remain high.

Without adjusting penalties for poachers, increasing risk for poachers, and a continued high price for rhino horn poaching levels will likely not decrease, especially not on public lands where most rhinos roam.

 

Legal buyers will possibly be part of the illegal trade too. If someone offers them illegal rhino horn they have a strong negotiating point with the person who offers, driving the price for which they buy that horn down, but they can sell it for a similar price as legal horn, thus increasing their profits. 

 

Yes, the same arguments are being repeated - on both sides - and will probably continue to be repeated until something changes.

Surely even you will accept that the current situation cannot be allowed to continue and if the debate just drags on and on as it has done so far the change that occurs will be the one none of us want - the demise of the rhino.


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#24 Bugs

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Posted 30 May 2015 - 12:11 PM

This is the presentation Michael Eustace did at the Committee of Enquiry - I have permission to publish it. 

 

 

COMMITTEE OF ENQUIRY.           25/26 March, 2015.    

A paper read by Michael Eustace.   

   

SMART TRADE

 

CITES (The Convention for International Trade in Endangered Species) banned trade in rhino horn in 1977, but trade did not stop.      All that happened was that trade went underground, where it flourishes.

 

Our rhino are under threat and it is costing us hundreds of millions of Rand (12 Rand=1US$) every year trying to protect them.    We are not winning the war.     There is a feeding frenzy going on and a need for urgency.    If we are to put a proposal to CITES on trade it needs to be next year.

 

 

Law enforcement, while essential, is not going to win, on its own.   It is expensive, and difficult to manage over vast areas.  The huge rewards to poaching encourage corruption, and corruption undermines law enforcement.

 

Demand reduction will also not work.    There are 1 billion people in China that use traditional medicines but because of the high price, only 1 million use rhino horn.  (1 million buyers who buy a course of 6 grams p.a. totals 6 tons of horn or the equivalent of  1,500 horns.)    If you change the mindset of that 1 million there are still another 999 million in the queue, at lower prices.    It is a futile exercise.

 

Last year about 1,500 horn-sets were sold from Africa to the Far East.   1,500 horns were sold and 1,500 bought.    That was the extent of the trade.   1,400 rhino were killed, and 100 horns came out of stocks.    (These numbers assume that Kruger Park lost 100 animals in addition to the 827 carcasses found, and that 75 rhino were killed in the rest of Africa.)

 

Supply and demand were brought into balance at a price of $60,000 per kilogram.  In total the value of the trade was R4.3 billion ($360 million), almost all profit, and all for criminals.   The high price limited demand.

 

The current situation is bad and all indications are that it will worsen.

 

Is there a better plan?

 

Well, we can satisfy the market, on a sustainable basis, by selling horn from stocks, and from natural deaths, and from farmed horn.     There is no need to kill even one rhino, in order to satisfy the demand.      All the killing is absurd.

 

Sensibly, South Africa is considering putting a proposal to CITES to permit a legal trade.    It should help the decision making process if there is a clear idea of what form trade will take.     There are some important choices.

 

At the one end of the spectrum is free trade, and at the other end is a highly controlled trade of a monopoly selling to a cartel of retailers, which I like to call “Smart Trade”.

Free trade implies that any one in possession of legal horn would be able to sell to anybody wanting to buy.    Most goods are traded in that way and buyers benefit from the competition amongst the sellers.   Competition leads to lower prices.

But, in the rhino horn market you don’t want competition amongst the sellers, if it leads to a drop in the horn price, because that will lead to higher demand-- demand that cannot be satisfied in the long term.    Again, price is critical.

 

A Central Selling Organisation, or CSO, that controls volumes and prices, would be a better plan.   The CSO can sell 400 horns per annum from stocks, 300 from natural deaths, and 500 from farmed horn.   That makes 1,200 horns.     Some poaching will continue, maybe 200 horns, and speculators will turn sellers of, say, 100 horns.    That will mean a total supply of 1,500 horns which will satisfy the market, at $60,000 -- the same position as in 2014.

 

Private ranchers own 25% of the national herd, and should be given a quota to sell 300 horns.  They will pay tax on the profit.  The other 900 horns should be sold by Parks.    Both Parks and the private sector appear committed to helping communities along the borders of parks to farm rhino.     They can be part of the quota.

There will be no room for corruption.     Cheques will be made out by the CSO to National Parks, and to the various Provincial Parks, and to the Private Rhino Owners Association, and to nobody else.     The CSO will charge a 3% commission and 97% of the proceeds will go back into conservation.    The CSO will be owned by Government and act purely as a broker.

 

The plan is for the CSO to sell to a cartel of retailers, probably the Traditional Chinese Medicine hospitals, or TCM hospitals, in China.  Those hospitals will be licensed, and in terms of their licenses, they will not be allowed to trade in illegal horn.   There will be no laundering of horn from the illegal to the legal market.

 

The assumption is that China will agree to be our partners in trade, subject to CITES first agreeing to trade.

 

The TCM hospitals are owned by the Chinese Government, and will make a profit on the trade of 1,200 horns, of some R1.7 billion ($144 million).   They buy at $30,000 a kg from the CSO, and sell at $60,000, to the consumer. 

(A word of caution: don’t translate the price of one 10 gram bauble into the average price at which 6 tons of horn traded.  Commodity prices have been very weak and it is unlikely that the horn price has risen in those circumstances.)

The Chinese Government, being invested in the legal trade, will have an incentive to close down the criminal trade, and they will do just that.     Having the Chinese government as business partners is a critical advantage of “Smart Trade”.

 

I have not talked about Vietnam because it is my understanding that between 70% and 90% of the trade in Vietnam is in fake horn which is of little or no consequence to poaching.    I would be surprised if Vietnam represents more than 10% of total trade in genuine horn.  After hundreds of years the market has not suddenly moved from China to Vietnam.   It is more likely that the Chinese have set up Vietnam as a trade route into China.    That is a mechanism to divert international criticism away from China.  

Given a Smart Trade, illegal horn is likely to trade at a 30% discount to the legal trade price.     That is common in illegal markets and is because of the risk of being caught trading in illegal goods, and punished.   Add to that risk, the risk that some of the horn in the illegal market will be fake, or poisoned, and the illegal price is likely to be at a 40% discount to the legal price.

 

The criminal trade will become much less profitable.   Speculators will turn sellers because prices in the illegal market will be set for decline.  Instead of buying, say, 300 horns they will want to sell, and even if they only sell 100, the turnaround will be 400 horns per annum.     Instead of encouraging poaching, the criminal syndicates will want to discourage poaching because poaching leads to more horn entering the illegal market and devaluing their stocks.    

 

Given a Smart Trade the poachers are going to find it difficult to find a market for their horn.  They will be forced into a small space where there is little volume.   

In times of strong demand, the CSO can increase supplies.   When demand is weak, it can sell less.  Having large stocks that it can access will be a great strength.    It can disrupt the criminal trade.   It can limit demand to sustainable levels through the all important price mechanism.   

 

A monopoly selling to a cartel is unacceptable in most markets but makes sense for rhino horn.   CITES will find it more acceptable than a free trade.

 

You may fear that CITES will vote against our trade proposal.  I doubt that.  The ban is not working and there is a compelling case for a Smart Trade.  But, CITES is a highly politicised organisation and logic and concern for rhino may not prevail.  If we do fail, it cannot be “business as usual”.   Surely we are not going to tolerate our rhino being slaughtered, in order to humour CITES?    There needs to be an alternative plan, a response.   Thought needs to be given to what form that response will take.

 

Smart Trade is the simple solution to the poaching problem.  It is simple by design because complexity destroys enterprise.  It will not remove the need for law enforcement but it will reduce it and Smart Trade offers an extraordinary commercial opportunity for Africa’s parks and people.   I think it is the best option for our rhino.

 

Michael Eustace.


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#25 Towlersonsafari

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Posted 30 May 2015 - 01:49 PM

This is so depressing.The pro trade argument is a mass of illogicality. It ignores the moral corruption in selling quack medicine that has no value.It ignores the fact the legal trade in anything of value always brings illegal trade.All a poacher needs is a gun and a saw.The one off sales of ivory have fueled poaching just as the original ban helped elephants recover.To quote the diamond trade is foolish .The illegal diamond trade helped support the atrocities in Sierra Leone.Illegal mineral extraction fuels conflict in DRC, illegal logging destroys forests.Can anyone point to an endangered creature being saved by legalising trade in that creature?Please help me out here!
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#26 Bugs

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Posted 30 May 2015 - 04:08 PM

@Towlersonsafari, Please understand that our aim is to save the rhino first and foremost. You make it sound like we are a bunch of quacks who sucked this idea out of our thumb, and when you use the word "illogical" - its actually an insult to the experts and specialists who have tirelessly and unselfishly donated their own time and experience to the cause - only because they want to see the rhino survive. 

 

You have however touched on the very nerve that has resulted in all the contrived logic and fear tactics to fuel the Anti-trade camp, and that stems from a moral dilemma.

 

Those people should ask how ethical is it to kill a rhino?  If cropping some of their horns and selling them results in far fewer deaths of rhino, then it is surely ethical to crop horns?   Cropping is the lesser evil by far and if there are only 2 choices, which there are, then cropping becomes the ethical or morally correct choice?   It is clearly immoral to do nothing and see the rhino die.  There should be no moral dilemma.

 

Two good examples of species being saved by trading with them are the crocodile and the vicuna. There are a multitude of plants that are endangered in the wild that are now being cultivated and utilised. The chinchilla is another example of an animal rescued from extinction by intensive farming. In South Africa - Sable and Roan are all but extinct in Kruger park, but are abundant in private game farms. Bontebok is another one which was restricted to one park in the Western Cape and is now more abundant. Even in the case of fisheries - fish farms have sprung up all over to relieve pressure on over harvested fisheries. Muscles and oysters were over harvested and are now almost completely farmed. 

 

OH - and did I forget that the white rhino was saved from extinction and numbers and range increased because they could be bought and sold..  


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#27 douglaswise

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Posted 30 May 2015 - 05:39 PM

@ Bugs:

 

Thank you for posting the Michael Eustace argument in support of "smart trading".

 

Clearly, both he and you know the subject much better than I.  I was interested that Eustace played down the importance of Vietnamese consumers, suggesting, instead, that Vietnam merely represented a convenient cloak to cover Chinese purchasers.  He also considered only the traditional medicine use rather than the jewellery one.  If the latter is of growing importance, a cartel of purchasers from the medical side of things may not be the most appropriate.

 

If there are currently 5000 farmed rhinos, the numbers are trivial relative to those of cattle of which there are some 35 million in South Africa.  The scope for increase is thus enormous.  One wonders how low the price would have to be to make poaching unattractive.  It might be better to flood the market rather than attempting to balance current supply with current demand and maintain high prices.  Obviously, there would be a point when price drops below cost of profitable production. Can you estimate what that crossover point would be?

 

Finally, does annual harvesting of horn stimulate horn growth?  I would doubt it.  Thus, it might be more cost effective to grow an animal for a good number of years and then to slaughter it.  This would avoid the costs of harvesting from live animals and produce more acceptable product from the jewellery/trophy perspective.  Clearly, animal security would have to be guaranteed on the breeding farms if this approach were to be adopted. 



#28 egilio

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Posted 30 May 2015 - 07:16 PM

In the case of diamonds - much noise is made about a parallel illicit trade. We asked Gary Ralfe from de Beers what they estimate the illicit trade was worth and he said it was less than 1% of the entire diamond market. De Beers have achieved what they did because the control more than 50% of the supply and have thus been able to control demand by the price. It may sound pretty simple economics - but I can assure you that a multi-billion dollar industry does not function on simple economics, it works because it works. 

 

In the highly controlled diamond trade, with one trader controlling 50% of the market and then asking the company who controls this share about the illicit trade what do you think they would answer? If they say it's high it looks bad on them and on the diamond trade in which they are the biggest player. De Beers doesn't control the demand by the price, they control the price by the supply and manipulate/stimulate the demand. I don't think this can be compared to potential rhino trade with many suppliers, and not a market where demand (of hunderds of millions of mainly asians) can be controlled by price.

 

An illicit trade will always be at a fraction of the genuine trade. In the case of Be Beers - should any registered trader be found to being involved in an parallel illegal trade he will forfeit certain benefits - in the case of rhino horn - he will be liable for prosecution. 

 

To simply state that illicit trade will only be a fraction of the genuine trade is a dangerous assumption. Do you really think all those people currently involved in the illegal trade will just simply stop with their highly profitable businesses? Currently the gains far outweigh the risks, if legal trade is opened the risks might increase, but also opens opportunities for them. They've been bribing officials in the past to get their stuff across borders, and then they also have the option to bribe officials to legalize their stuff.

 

Reference to the ivory once off sale keeps surfacing - and we all agree that this once off "auction" to two buyers every 10 years is a great example of how things should not be done. All that happened is that the two buyers colluded and bought the ivory at a low price - they then controlled the market by drip feeding supply at vastly inflated prices. However - there is no evidence that linked the sale to an increase in poaching that we see today. 

 

Just like De Beers, they control supply, thus inflating the price. Yes, there is no evidence that the auctions led to an increase in poaching, as statistically causal effects can only be found in randomized experiments and this obviously wasn't. However, there is remarkably high correlation between the auctions, an increase in demand, and an increase in ivory poaching. There is a report stating that no relationships could be found, but that report was written by the same organisation who allowed the auctions in the first place. They would shoot themselves in the foot if they would agree there was a relationship.

A few numbers, from 2000 to 2007 106 rhinos were poached in SA. In 2008 there was an ivory auction, in 2008 83 rhinos were poached and in 2009 122 (more than from 2000 to 2007 combined). Causal, who knows? Colinearity, definitely? Relationship, depends what you want to believe. 

 

Back to the point where a parallel trade will have to exist at a fraction on the price of a legal one - wouldn't you say that immediately that would reduce incentive to poachers by half?

 

No, why? Again a dangerous assumption to make. Even half the profits to be made by poachers are a huge incentive for poaching for them, maybe the incentive will be smaller, but it's still so big that the actual poaching wouldn't decrease.

 

One should also remember that the consumer and indeed Chinese people would happily embrace a legitimate route of acquiring horn as opposed to being party to the bad publicity that is about at the moment.

 

Why? Why would Chinese people (or Vietnamese people) happily embrace a legitimate route? They apparently perfectly fine using illegal routes? Illegal ivory is openly on sale in Chinese markets, and rhino horn powder isn't hard to find either. Chinese people don't really care about animal welfare, most are not even aware that you have to kill an elephant to get it's ivory. I've read several interviews with Chinese ivory collectors, and their attitude/advice is: "buy ivory now, the elephants are becoming rarer and rarer so the price will only go up". 

 

So they will have an incentive to use legally acquired horn - all of which have a genetic DNA blueprint. If you see Rhodis - they have already got DNA material from a vast number of rhinos and are able to track the horn from source to destination. In the event that a trader is caught with horn from a dubious supply - DNA tests will be able to prove conclusively where the horn came from and will provide strong proof when it comes to prosecution. It is far easier to be legal, and there is an incentive to do so.  

 

As long as all rhino populations are genetically mapped. But with the frequent moving around of rhinos in SA this is not really possible, so you'll have to genetically identify each individual, which is a huge task, but do-able. 

 

I think quite a few dangerous assumptions are made here. I've put my comments/questions in bold in the quoted text.


Edited by egilio, 30 May 2015 - 07:30 PM.

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#29 egilio

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Posted 30 May 2015 - 07:19 PM

I understand that there is in the range of 15 tons of horn in Government stockpiles and there is 4 tons in private hands. There are 5000 rhinos in private hands of which it may be safe to say that 4000 can utilised for horn sales. Current demand is around 5 to 6 tons a year. Rhino produce on average 900g per year. Natural mortalities are around 4% of the gross population per year. It is not unreasonable to assume that the rhino that will be moved to IPZ's under government management will also be dehorned and can contribute. It would be responsible for government to keep at least 1000 rhino in IPZ's. Other countries also have access to rhino horn from confiscation and natural deaths as well as dehorning they did for protection. 

 

Only horns from naturally died rhino could be used, confiscated horns not. Same as with tusks, only tusks from naturally died elephants could be auctioned, not illegally sourced and confiscated ones.

 

Combined with natural mortalities, stockpiles, dehorning programmes, and sustainable harvesting, we can sustainably provide substantially more horn than what is currently reaching the market without killing a single rhino. This can all be done without dehorning a single rhino in any national park, although I am thinking it may be a good idea to dehorn them anyway (trade or no trade). 

 

Bear in mind that de-horning rhinos in areas with lions will reduce survival rates of calves, and possibly even sub-adults and adults.

 



#30 egilio

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Posted 30 May 2015 - 07:24 PM

 

The same rhetoric keeps getting repeated, so I repeat myself again too, until this argument is countered.

 

Even if the trade is made legal, the price of rhino horn will remain high as the demand will not drop (more likely it will even increase) and the supply will not increase (maybe momentarily by the release of stockpiles, but those are one-off sales, only leading to an increase in demand, like what happened with ivory), thus the price will remain high, thus the incentive for poaching will remain high.

Without adjusting penalties for poachers, increasing risk for poachers, and a continued high price for rhino horn poaching levels will likely not decrease, especially not on public lands where most rhinos roam.

 

Legal buyers will possibly be part of the illegal trade too. If someone offers them illegal rhino horn they have a strong negotiating point with the person who offers, driving the price for which they buy that horn down, but they can sell it for a similar price as legal horn, thus increasing their profits. 

 

Yes, the same arguments are being repeated - on both sides - and will probably continue to be repeated until something changes.

Surely even you will accept that the current situation cannot be allowed to continue and if the debate just drags on and on as it has done so far the change that occurs will be the one none of us want - the demise of the rhino.

 

 

I agree, but there's more to the story than trade or no-trade. Increase of risk of getting caught, increase of percentage of people caught getting punishments, higher punishments, decrease of demand through publicity campaigns. I think, before considering legal trade of rhino, parties involved must first prove they can control poaching. Controlling poaching by legalizing trade is not the way to go in my opinion. 

 

There are places where rhinos don't get poached, what's different in those places?



#31 egilio

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Posted 30 May 2015 - 07:33 PM

@Bugs:

 

Thanks for the precise information.

 

It would seem that the 5000 rhinos in private hands are alone capable of generating 60%-70% of current demand annually. As you mention, other sources can eke out the rest while sufficient extra animals are bred to meet any potential shortfall.  Thus, a delay in legalising to create further product would appear to be unnecessary.

 

Don't confuse demand with numbers of rhinos poached! The number of rhinos being poached keeps increasing, the price of rhino horn keeps increasing, so clearly demand is FAR from being met currently. I bet that you can easily sell 10,000 rhino horns, still for a very good price, annually with the current demand. Legalizing trade will likely even increase the demand.


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#32 egilio

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Posted 30 May 2015 - 08:00 PM

I'm a bit allergic to terms like 'smart'. Does it imply current regulations are stupid? Or is can't other people come up with smart solutions? And just by naming something 'smart' it doesn't mean it is, but it might convince people, just by the name.

 

 

This is the presentation Michael Eustace did at the Committee of Enquiry - I have permission to publish it. 

 

 

COMMITTEE OF ENQUIRY.           25/26 March, 2015.    

A paper read by Michael Eustace.   

   

SMART TRADE

 

CITES (The Convention for International Trade in Endangered Species) banned trade in rhino horn in 1977, but trade did not stop.      All that happened was that trade went underground, where it flourishes.

It didn't florish! There was very little rhino poaching until 2008! It took some years from the ban in 1977 for the poaching to decrease, but it did in the places where they received adequate protection. But protection measures haven't kept up with demand since 2008.

 

Our rhino are under threat and it is costing us hundreds of millions of Rand (12 Rand=1US$) every year trying to protect them.    We are not winning the war.     There is a feeding frenzy going on and a need for urgency.    If we are to put a proposal to CITES on trade it needs to be next year.

 

 

Law enforcement, while essential, is not going to win, on its own.   It is expensive, and difficult to manage over vast areas.  The huge rewards to poaching encourage corruption, and corruption undermines law enforcement.

 

Demand reduction will also not work.    There are 1 billion people in China that use traditional medicines but because of the high price, only 1 million use rhino horn.  (1 million buyers who buy a course of 6 grams p.a. totals 6 tons of horn or the equivalent of  1,500 horns.)    If you change the mindset of that 1 million there are still another 999 million in the queue, at lower prices.    It is a futile exercise.

If one country has proven that it can change, it's China. Why wouldn't they be able to decrease demand? Simply stating it's futile is a weak argument, not very smart. 

 

Last year about 1,500 horn-sets were sold from Africa to the Far East.   1,500 horns were sold and 1,500 bought.    That was the extent of the trade.   1,400 rhino were killed, and 100 horns came out of stocks.    (These numbers assume that Kruger Park lost 100 animals in addition to the 827 carcasses found, and that 75 rhino were killed in the rest of Africa.)

 

Supply and demand were brought into balance at a price of $60,000 per kilogram.  In total the value of the trade was R4.3 billion ($360 million), almost all profit, and all for criminals.   The high price limited demand.

It didn't, supply limited supply. The number of poached rhinos has gone up each year since 2007, and the price has gone up each year since 2007, clearly demand is NOT being met. 

 

The current situation is bad and all indications are that it will worsen.

 

Is there a better plan?

 

Well, we can satisfy the market, on a sustainable basis, by selling horn from stocks, and from natural deaths, and from farmed horn.     There is no need to kill even one rhino, in order to satisfy the demand.      All the killing is absurd.

This is all based on the false assumption that current demand is being met by illegal rhinos horns, where clearly (as indicated by rising number of rhinos poached, and rising prices) is not the case. 

 

Sensibly, South Africa is considering putting a proposal to CITES to permit a legal trade.    It should help the decision making process if there is a clear idea of what form trade will take.     There are some important choices.

 

At the one end of the spectrum is free trade, and at the other end is a highly controlled trade of a monopoly selling to a cartel of retailers, which I like to call “Smart Trade”.

Free trade implies that any one in possession of legal horn would be able to sell to anybody wanting to buy.    Most goods are traded in that way and buyers benefit from the competition amongst the sellers.   Competition leads to lower prices.

But, in the rhino horn market you don’t want competition amongst the sellers, if it leads to a drop in the horn price, because that will lead to higher demand-- demand that cannot be satisfied in the long term.    Again, price is critical.

 

A Central Selling Organisation, or CSO, that controls volumes and prices, would be a better plan.   The CSO can sell 400 horns per annum from stocks, 300 from natural deaths, and 500 from farmed horn.   That makes 1,200 horns.     Some poaching will continue, maybe 200 horns, and speculators will turn sellers of, say, 100 horns.    That will mean a total supply of 1,500 horns which will satisfy the market, at $60,000 -- the same position as in 2014.

 

Private ranchers own 25% of the national herd, and should be given a quota to sell 300 horns.  They will pay tax on the profit.  The other 900 horns should be sold by Parks.    Both Parks and the private sector appear committed to helping communities along the borders of parks to farm rhino.     They can be part of the quota.

There will be no room for corruption.     Cheques will be made out by the CSO to National Parks, and to the various Provincial Parks, and to the Private Rhino Owners Association, and to nobody else.     The CSO will charge a 3% commission and 97% of the proceeds will go back into conservation.    The CSO will be owned by Government and act purely as a broker.

 

The plan is for the CSO to sell to a cartel of retailers, probably the Traditional Chinese Medicine hospitals, or TCM hospitals, in China.  Those hospitals will be licensed, and in terms of their licenses, they will not be allowed to trade in illegal horn.   There will be no laundering of horn from the illegal to the legal market.

In terms of the current international laws they are not allowed to trade in illegal horn, yet they do. Here's a thing. In another post DNA-fingerprinting is being mentioned. If I have 10 horns, 9 legal, 1 illegal, and I grind them all down to powder and mix them. What is the chance that I will get caught? I assume not all batches of ground horn will be tested. Maybe all horns will be tested, but illegal horns will not be tested, as they don't follow the legal trade routes. So you'll have to test at each stage of the trade route.

Are these TCM hospitals the only ones selling rhino horn? How will be dealt with with other parties currently selling rhino horn in China? Are you just assuming they will stop doing that?

 

The assumption is that China will agree to be our partners in trade, subject to CITES first agreeing to trade.

That's quite a big assumption to make. Are there any indications they will agree? Based on what?

 

The TCM hospitals are owned by the Chinese Government, and will make a profit on the trade of 1,200 horns, of some R1.7 billion ($144 million).   They buy at $30,000 a kg from the CSO, and sell at $60,000, to the consumer. 

(A word of caution: don’t translate the price of one 10 gram bauble into the average price at which 6 tons of horn traded.  Commodity prices have been very weak and it is unlikely that the horn price has risen in those circumstances.)

The Chinese Government, being invested in the legal trade, will have an incentive to close down the criminal trade, and they will do just that.     Having the Chinese government as business partners is a critical advantage of “Smart Trade”.

Good point! This might indeed push out other traders. But those are already illegal now, so why isn't China holding those to the law? Might international pressure on China not help with this?

 

I have not talked about Vietnam because it is my understanding that between 70% and 90% of the trade in Vietnam is in fake horn which is of little or no consequence to poaching.    I would be surprised if Vietnam represents more than 10% of total trade in genuine horn.  After hundreds of years the market has not suddenly moved from China to Vietnam.   It is more likely that the Chinese have set up Vietnam as a trade route into China.    That is a mechanism to divert international criticism away from China.  

What is he basing this on? And why not sell to Vietnam too? Having competing clients might be good for the price. Just some loose assumptions are made here. What if he's wrong in this assumption and most rhino horn actually does go to Vietnam, but by starting to trade with China a huge new demand is created.

Given a Smart Trade, illegal horn is likely to trade at a 30% discount to the legal trade price.     That is common in illegal markets and is because of the risk of being caught trading in illegal goods, and punished.   Add to that risk, the risk that some of the horn in the illegal market will be fake, or poisoned, and the illegal price is likely to be at a 40% discount to the legal price.

So still a market value of about USD 32,000/kg...still a very profitable business! He forgot to add that some of the horn in the legal market will be illegally sourced.

 

The criminal trade will become much less profitable.   Speculators will turn sellers because prices in the illegal market will be set for decline.  Instead of buying, say, 300 horns they will want to sell, and even if they only sell 100, the turnaround will be 400 horns per annum.     Instead of encouraging poaching, the criminal syndicates will want to discourage poaching because poaching leads to more horn entering the illegal market and devaluing their stocks.   

It might become much less profitable, but still very profitable. They used to bribe official to get horns across borders, so why won't they be able to bribe officials or CSO personell to legalize their horns? 

 

Given a Smart Trade the poachers are going to find it difficult to find a market for their horn.  They will be forced into a small space where there is little volume.   

That is assuming Vietnam (and the rest of the world) is a small space....

In times of strong demand, the CSO can increase supplies.   When demand is weak, it can sell less.  Having large stocks that it can access will be a great strength.    It can disrupt the criminal trade.   It can limit demand to sustainable levels through the all important price mechanism.   

 

A monopoly selling to a cartel is unacceptable in most markets but makes sense for rhino horn.   CITES will find it more acceptable than a free trade.

 

You may fear that CITES will vote against our trade proposal.  I doubt that.  The ban is not working and there is a compelling case for a Smart Trade.  But, CITES is a highly politicised organisation and logic and concern for rhino may not prevail.  If we do fail, it cannot be “business as usual”.   Surely we are not going to tolerate our rhino being slaughtered, in order to humour CITES?    There needs to be an alternative plan, a response.   Thought needs to be given to what form that response will take.

 

Smart Trade is the simple solution to the poaching problem.  It is simple by design because complexity destroys enterprise.  It will not remove the need for law enforcement but it will reduce it and Smart Trade offers an extraordinary commercial opportunity for Africa’s parks and people.   I think it is the best option for our rhino.

 

Michael Eustace.

 


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#33 douglaswise

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Posted 30 May 2015 - 11:05 PM

@egilio:

 

You suggest that I'm confusing demand with numbers of rhinos poached.  However, it should have been clear that I was doing no such thing, based on my subsequent statements.  It was the possibility of demand increase following the legalisation of trade that led me to speculate on the extra numbers of animals that would be required to meet it.

 

I think that one might reasonably expect a gradual diminution of demand for medical uses as traditional gives way to evidence-based medicine.  Equally, demand for jewellery might be expected to drop as raw material price falls. @Bugs has stated that there are far more attractive materials from which to create jewellery and that that made from rhino horn is purchased merely as an ostentatious indication of wealth.

 

The trick, therefore, is to ensure rhino survival until such time as demand for horn starts to drop.  Farming seems to offer the opportunity to achieve this.  However, the downside of flooding the market is that there will be no large profits available to spend on conservation.  "Smart trade", which aims to balance supply and demand at a high price, is a very attractive idea in principle because of its potential to generate high levels of funding for conservation.  Its downside is that poaching would remain highly profitable.  In such circumstances, much of the beneficial funding would have to be spent on controlling poaching rather than on more positive interventions. 



#34 twaffle

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Posted 31 May 2015 - 12:25 AM

@egilio. Thank you for giving an analytical assessment of the Smart Trade paper from a scientific point of view. In that scientists are highly trained to look at information presented and question all the suppositions therein.

It helps anyone out there who is struggling with the premise of legal trade in rhino horn to balance the information given.

I resent the implication that because many people don't agree with legal trade, that they are too blind to see what is happening out there or that they aren't trying really hard to understand the implication of opening trade, or of not trading, on the future of the rhinos.

For most of us, it will be immaterial what our point of view is as we are not the decision makers but it helps to feel informed.

Sometimes it feels that the only model being presented for the salvation of rhinos is a business one and that can't be healthy. It has to be an amalgamation of business, science, culture to get a complete picture.
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#35 egilio

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Posted 31 May 2015 - 03:00 AM

@egilio:

 

You suggest that I'm confusing demand with numbers of rhinos poached.  However, it should have been clear that I was doing no such thing, based on my subsequent statements.  It was the possibility of demand increase following the legalisation of trade that led me to speculate on the extra numbers of animals that would be required to meet it.

 

I think that one might reasonably expect a gradual diminution of demand for medical uses as traditional gives way to evidence-based medicine.  Equally, demand for jewellery might be expected to drop as raw material price falls. @Bugs has stated that there are far more attractive materials from which to create jewellery and that that made from rhino horn is purchased merely as an ostentatious indication of wealth.

 

The trick, therefore, is to ensure rhino survival until such time as demand for horn starts to drop.  Farming seems to offer the opportunity to achieve this.  However, the downside of flooding the market is that there will be no large profits available to spend on conservation.  "Smart trade", which aims to balance supply and demand at a high price, is a very attractive idea in principle because of its potential to generate high levels of funding for conservation.  Its downside is that poaching would remain highly profitable.  In such circumstances, much of the beneficial funding would have to be spent on controlling poaching rather than on more positive interventions. 

 

OK, I was wrong there, as assumptions can easily be wrong. You write "it was the possibility of demand increase....that led me to speculate..." I think that's a few too many assumptions when dealing with a species in trouble.

 

The smart model is about controlling the market, the supply, just like De Beers does with diamonds, they do that, to keep the price high. Or "inflated" as it was called with respect to the two parties who bought the ivory in the auctions and then controlled the supply to the market. This is in contradiction with your assumption that the demand will gradually decrease. "demand for jewellery might be expected to drop as raw material price falls" --> that's exactly why De Beers controls the supply of diamonds to the market, and if a 'CSO' does the same with rhino horn, it is very unlikely the price will drop.

 

Why is it that rhinos in other countries are not targeted so much? Why is it that other, more endangered animals, with equally highly valued body parts (tigers for example) are poached heavily in some places, but populations are increasing in others? 



#36 Kitsafari

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Posted 31 May 2015 - 05:44 AM

@egilio for a layperson like me coming to a heavy complex issue such as this, I too appreciate you provide a balance to views provided. 

 

all conservation efforts should be applauded and as such the conservative imperative should also be appreciated. 

 

what strikes me is the imperative comes from a financial point of view - a business solution but I wonder if it's sufficient for a worldwide problem that involves not only financial, business interests to ethical and moral interests. farming rhinos are expensive and maximising value from rhinos is clearly a critical issue for the farmers so that is understandable that farmers and breeders will require a legal trade to enjoy the fruits of breeding the rhinos. 

 

For me, the financial point of view makes a very simplistic assumption - that since a ban didn't stop the demand, a legal trade will. just as easily, a legal trade will free up stocks and easy availability of the horns will lead to even more demand as the growing affluent middle class population - which is expanding rapidly in Asia - can afford it and that will mean demand is set to grow, not diminish. 

 

just as there have been allegations that anti-trade proponents make a lot of assumptions, pro-trade make just as many assumptions - the main one that a legal trade is the answer to all the ills in the killing of rhinos. to create another cartel like diamonds or even oil is giving control of a very lucrative trade to the hands of a very few. and it sounds like a perfect recipe for an economic empire. 

 

I still feel the commitment of the governments to stopping the poaching by arresting and executing stiff sentences of poachers, by involving and educating local communities,  by creating jobs, and of governments in China and Vietnam to coming down hard in arresting and executing open sales of illegal rhino horns or trade would help reduce demand. 

 

@twaffle said exactly what was in my mind as well - questioning the merits of legal trade or being anti-trade don't make you any less passionate or committed about saving rhinos than a pro-trade person. It's disingenuous to label anyone who doesn't agree with one's views as being less passionate about the cause. 

 

just a thought. 


Edited by Kitsafari, 31 May 2015 - 05:50 AM.

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#37 Bugs

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Posted 31 May 2015 - 06:11 AM

I will have to spend some time reading through your thoughts. But much of what you are basing your arguments on is about the perceived risk of starting a trade. 

 

We might as well agree that the current situation is not a zero risk situation - to the contrary in fact you don't need to be a rocket scientist to make projections based on current statistics that the rhino will go extinct if we carry on the way we are going. 

 

Picture this

So we have a situation where the rhino is hurtling on its way towards extinction and everyone is shouting "put the brakes on!!". Of course we have applied the brakes - 8 years ago or 30 years ago - which ever way you want to look at it. So we have been calling for the brakes to be applied harder but rhino continue towards extinction - even faster. Clearly by now we should realise that there is a problem with the brakes. Some say they can apply the brakes harder if they had more money - But they don't have an idea where to get the money from. (donor fatigue). Now experienced practitioners say politely - "Hey bud I think you should turn the steering wheel and take this in a different direction". But turning the steering wheel is counter intuitive to some, and they say - "You have no proof that it will work, just give me more money and I will stop this thing".  

 

No matter how hard you apply the brakes - the rhino are still going the same direction. You can apply the brakes and turn at the same time. But what we are missing is that by taking this in another direction it can pay for itself. 


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#38 Bugs

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Posted 31 May 2015 - 06:21 AM

 

Why is it that rhinos in other countries are not targeted so much? Why is it that other, more endangered animals, with equally highly valued body parts (tigers for example) are poached heavily in some places, but populations are increasing in others? 

 

This is untrue - have you noticed that Namibia has lost a record number of rhino this year. Zimbabwe have lost most of their rhino over recent years leaving Hwange rhinos extinct and only a few in Intensive protection zones. Rhinos in a number of other countries are all but extinct. Kenya has lost rhinos despite 24hour round the clock protection. Botswana only had 130 rhinos and most of them are in IPZ's anyway - but you can't trust any news from Botswana anyway. Swaziland have done remarkably - but they are effectively in an IPZ with round the clock military protection. How do you expect a person like John Hume who owns more rhino than Botswana and Kenya put together to be able to fund a similar military cost? 

 

Kruger is a soft target, as rhinos roam free in a huge area, with a long hostile border with Moz - despite the R220 000 funds to stop poaching, it remains the hot spot. 


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#39 madaboutcheetah

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Posted 31 May 2015 - 06:26 AM

@Bugs - why would you not trust any of the news coming out of Bots?  - just curious!


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#40 Bugs

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Posted 31 May 2015 - 06:33 AM

@Kitsafari and @twaffle there is nothing extraordinary about a financial intervention. I am sure you know that. 

 

The whole (struggling) tourist industry depends on finances, and will thus has to charge outrageous rates to cover leases. Many tour operators have made good money from tourism, and I don't begrudge them - I encourage it. As tourism is sustainable utilisation, and is thus justifying habitat protection. 

 

Simply throwing money at the problem is not going to make it go away, that is why there s a need to meet the demand in a way the enables money to go to the right places that will in turn increase protection. 

 

I am willing to bet my life that if there was no moral dilemma, the solution would be a no brainer, and we would have been trading rhino horn many years ago, and we wouldn't be having the poaching epidemic that we have now. 


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