Ostrich Farming (Ostrich)
Case Number : 289
Case Mnemonic: Ostrich
Case Name : US Ostrich Farming
About TED Categories and Clusters
A. Identification:
1. The Issue:
The ostrich market is now experiencing large growth increases,
due to the breakup of a South African ostrich monopoly. This
breakup has caused the worldwide price of ostrich products to
decrease, and these goods are now beginning to become affordable to
the common man in both Europe and the US. In order for ostrich
products to continue to become affordable, more breeders must be
distributed worldwide distribution of ostrich ranches increases, it
will cause governments of nations with ostrich farms concern that
the imported ostriches may carry with them the deadly heartwater
fever virus. This virus is extremely contagious within the chicken,
turkey, and cattle ranching industry, and if unchecked, can wipe
out entire populations of these animals. The governments of the US,
New Zealand, and Australia, which all contain large ostrich
ranches, have agreed on a thirty day quarantine on each ostrich
imported from South Africa, so that the heartwater virus will not
be allowed to be introduced into native livestock farming within
those countries.
2. Description
There is a new and exciting market worldwide for ostriches and
the products from them. These ostrich products include the likes of
boots, handbags, jewelry, feather dusters, as well as red meat, and
these products are beginning to gain global attention for their
ultra-fine quality. Ostrich ranchers both in the US and South
Africa are beginning to turn over high profits. However, the
industry is not without its problems, and these include the
introduction of a deadly bird virus into existing populations of
US, Australian, and New Zealand birds, from imported ostriches
coming from South Africa. Another problem is found in that the
prices of ostrich meat, and the other associated ostrich goods, are
extremely high, due to the lack of ostriches available for
slaughter.
Background:
The Ostrich is a type of bird known as a "Ratite," which means
that it is a flightless bird, having underdeveloped wings, and a
breastbone without a keel. Even though the ostrich and its ratite
relatives cannot fly, it did descend from flying ancestors. These
ancestors, known as Struthionidae originated on the Asiatic steppes
sometime between 40 to 50 million years ago. Later, the ostrich
broadened its range to encompass Africa, and it has currently
evolved into four sub-species which roam freely throughout the
African continent.
The ostrich is the largest of all birds, and an adult may
stand 3m or 10 feet tall, and may weigh more than 400 pounds.1 Due
to this large frame, the ostrich's legs are quite long, and they
allow the animal to achieve strides of up to 12 feet in length,
along with the ability to run at 30 MPH for up to 15 minutes or
more if need be, and the top speed of an ostrich is quite fast, in
that it may reach up to 43MPH.(2)
Advantage of the Ostrich:
Many observers of the ostrich industry believe that the time
is right for the business of ostrich farming to boom. These
optimists believe that ostrich meat, as well as other ostrich
products, such as its leather and feathers, will exceed the beef
cattle market in the years to come, and they give some compelling
reasons for this. The first advantage to ostrich farming is that
the birds do not require an enormous amount of land to graze upon,
which is unlike cattle or sheep. Only 1/3 of an acre of land is
required to raise a pair of ostriches, and if a third bird is
added, then only 1/2 of an acre would be required.(3) A second
advantage to ostrich farming is that they breed extremely earlier
and more regularly than traditional animals such as beef cattle.
For example, the female ostrich may begin to produce eggs at the
age of 2, and can produce anywhere from 30 to 90 eggs per year.(4)
Due to these figures, the potential for the ostrich market is
enormous, in that the meat tastes similar to beef, however, it is
much healthier than beef due to the fact that it is very low in fat
and cholesterol. Since this "red" meat has been proven to be quite
healthier than traditional red meat, many health conscious
consumers throughout the world, who are worried about the risk of
heart attacks, high bloodpressure, and heart disease, would be
interested in the purchasing of ostrich meat.
Another benefit to the ostrich rancher is that when an ostrich
is slaughtered, very little is wasted in the slaughtering process.
When an ostrich is brought to slaughter the meat is sold to
distributors and restaurants, the hide is sold for the production
of high quality leather products, the feet are ground into a fine
dust and sold to the far east as an aphrodisiac, the feathers of
the ostrich are sold to automobile manufacturers and are used in
the final stage of painting new automobiles, and lastly, the eyes
are sold to research facilities to perform studies to gain more
knowledge on human cataracts.
Some of the other advantages to the ostrich industry are that
it currently has access to buying and breeding programs On-Line,
and ostrich farms can communicate with each other from the US,
Australia, and New Zealand via the inter-net. Ostriches On-Line can
do all of the husbandry for the prospective farmer, which includes
incubation, hatching, boarding, sales of eggs and chicks, and even
the taking of the birds to slaughter.
Ostriches On-Line, predicts that the ostrich market could be
in for a huge increase in demand in the near future. The potential
is there for this growth, if the industry can possibly gain a 1%
share in the US 28 billion pounds of beef, pork, chicken, and
turkey consumed annually.(5) If this 1% goal is reached, then 3.5
million ostriches would be needed for slaughter, even though the
current population is at 400,000-700,000, which includes prime
breeders that would not be slaughtered.6 Therefore, many more birds
are needed in order for the burgeoning market to flourish.
Currently, the largest problem with ostrich meat is that there
are not enough birds, and the meat is too expensive. Therefore, it
is recommended that producers come together in alliances, or Coops,
to provide the ostrich packers with a consistent supply of meat, so
that the packers may be able to find restaurants and retail outlets
to provide meat to at an affordable price.
The Ostrich Industry:
Commercial ostrich farming began in South Africa approximately
150 years ago, and South Africa has had a virtual monopoly on the
industry up until the 1980's. Then, a group of US cattle farmers
began to import breeder ostriches into the US in the early to mid
1980's with the idea of eventually ranching the bird. These
breeders were being exported from South Africa, and with these
exports, South Africa was concerned that it would eventually lose
its monopoly on the ostrich industry. Therefore, the Apartheid
driven South African government put a ban on the birds being
exported, due to the possibility of South Africa losing its
monopoly on the ostrich.
Another problem was also looming from the exports of South
African ostriches into various countries, and that was the
heartwater fever virus. Heartwater fever is a virus which has the
potential to spread to other birds which are raised as livestock,
such as chickens or turkeys, in which the virus contains the
possibility of killing off entire populations of ranched animals.
However, once the ban on ostrich imports was lifted by the South
African government, the US, New Zealand, and Australia began a 30
day quarantine program to ensure that the ostriches being imported
into their countries did not carry the virus.
Currently, between 400,000 and 700,000 birds are being
ranched on US farms as livestock, however it is estimated that
three million more are needed to be raised before the demand in the
global market can make the bird profitable, and thus, it can begin
to be brought to slaughter.
The premium strain of ostrich is the "African Black," which
originated on the ranches of South Africa through various forms of
selective breeding. These quality birds live an estimated life span
of between 20 to 30 years in the wild, and domestically may live up
to 50 years of age. The "Blacks" reach an adult height and weight
in approximately 18 to 20 months, and they reach sexual maturity
between the ages of 2 and 3 years of age.(7)
The "African Blacks" are the strain of ostrich with the
highest quality hide for leather goods, greatest amount of oil for
skin lotions, and most amount of lean red meat. For example, one
"Black" hide can produce 14 square feet of leather, which in turn
can produce about three pairs of boots at a price of approximately
$800 per pair.(8) This leather is not only utilized for boots, but
it can also be found in clothing, and expensive upholstery.
Another quality product which is obtained from the "Black" are the
oils from its lard. These oils may be extracted, to produce fine
skin lotions, which may be purchased at very high prices. After
these oils are extracted, then the meat may be butchered, and a 250
pound "African Black" ostrich may yield up to 130 pounds of red
meat, which may then be processed into(see table 1) tenderloin,
choice, and ground, which all demand extremely high prices on the
world market.
Once these products are taken from the ostrich, they are
produced into various goods in the high fashion cities throughout
the world. These cities include Paris, New York, and London, which
are all known for their influences on the fashion community.
The butchering and processing of the ostrich meat is produced in
various regions throughout the world also, and occurs where the
animal is ranched. The areas include South Africa, Texas, London,
Paris, and Lisbon.
TABLE 1 Current Prices of Ostrich Meat
CUT DESCRIPTION PRICE PER POUND(US$)
Tenderloin $14.95
Choice $8.95
Ground $3.95
Source: American Ostrich Association
According to the American Ostrich Association (AOA), ostrich
farming is the fastest growing agri-business in the US today, and
is currently found on 3,000 ranches in the US, and this figure is
increasing rapidly. The reason for this high growth rate in ostrich
farming is that first, the ostrich is a fairly easy animal to farm,
requiring little land and small amounts of feed. Second, the
ostrich reproduces and grows extremely quickly, thus their
profitability is increased. Third, the price of the ostrich market
is currently extremely high, and can be quite profitable if a
rancher involves himself with some intelligent investors, and this
profitability (US$) in which the ostrich has maintained is shown in
Table 2. The initial price of getting into the ostrich market can
be extremely high, but once firmly anchored in the market for five
years or longer, the rancher can see a considerable gain in
profitability.
TABLE 2 Years to Obtain Profitability for Ostrich Ranch
Age of Birds(months) Year 1 2 3 4 5
Number of yearlings sold 12 24 36 48 60
Owner's gross revenue 0 0 20 50 50
Owner's expenses 0 0 5000 12500 12500
Owner's income 11340 4140 6840 6840 6840
Return on total costs 11340 4140 1840 5660 5660
Source: American Ostrich Association
In table 3, current market prices for the "African Black"
ostrich are shown. It should be noted, that as the age of the bird
increases, so does the ostrich price, due to the high mortality
rates of the chicks and younger adults. The safest investment is
the purchase of a proven adult breeding trio, however this is the
most expensive choice of birds to purchase.
TABLE 3 Current Prices for Breeders
Current Market Prices for Ostriches (US$)
6 month old pair 3000
yearling pair 5000
yearling trio 9000
coming two year old pair 15000
proven breeder pair 15000
proven breeder trio 25000
Source: American Ostrich Association
The ostrich is an extremely versatile bird in that one animal
can produce so many varieties of high quality goods. What must now
be accomplished, is that the ostrich farmer must market this
versatility and variety, and meet the challenge of a changing world
marketplace. Currently, ostrich products are extremely expensive,
and can only be marketed to the elite upperclass in both Europe and
the US. However, with the breakup of the South African monopoly on
the birds, and their ever increasing agri-numbers, their price is
sure to fall to a reasonable level. Once this drop comes to
fruition, the benefits of healthy, lean ostrich meat, and fine
ostrich leather will surely have a bright future in the existing
global marketplace.
3. Related Cases:
CROCODILE Case
MIGRATE Case
BEAR Case
WALLEY Case
NUTRIA Case
EASTANIM Case
Keywords:
(1) Ostrich Farming
(2) South Africa
(3) Infestation
4. Draft Author: Jason R. Miller
B. Legal Cluster
5. Discourse and Status: AGReement and COMPlete
Since it has been realized that the Heartwater Virus is the
culprit of so many livestock deaths, the agreement to quarantine
all ostriches entering into the US, New Zealand, and Australia from
South Africa has reduced the likelihood that the fatal disease will
spread.
6. Forum and Scope: USA and MANY
This case may fall under the jurisdiction of many legal areas
throughout the world, as well as the states involved in the
industry have come together in a multilateral manner to attempt to
control the spread of the Heartwater Virus.
7. Decision Breadth: 4 [USA]
8. Legal Standing: Non Government Organization
The quarantine has been brought about and is currently
monitored by the governments of the states involved, however it was
aided in its existence by the fact that there is the American
Ostrich Association, which put pressure on the governments involved
to create the quarantine in the first place.