Legal Trade in Rhino Horn Will End Poaching
Trade will make poaching financially unappealing and unacceptably dangerous. In all of human history, no illicit industry has ever survived legal competition.
Poaching exists for two reasons. It is very profitable. And it is relatively low risk. If we can change either one of those dynamics, we can significantly diminish poaching. If we can change both of the dynamics, we can end it.
Raw, unworked, rhino horn sells for $20,000 (R400,000) per kg in Asian markets. The price can go as high as $100,000 per kg for finely carved items, but the price paid for the raw material is surprisingly consistent. By the time it reaches a market in China, Vietnam, or Laos, the horn has gone through a number of middlemen, each of whom, must cover his costs and add his profit margin. When one goes all the way back to the poaching team that cut the fence, shot an animal, and ran for their life, that team received from R60,000 to R120,000 per kg for any horn they obtained. That’s $3,000 - $6,000 per kg. Roughly 25% of the final wholesale price for the raw horn.
If the poaching team had an unusually lucky outing, they may have managed to kill two animals, yielding 15 kgs. That means about $75,000 (R1.5m) for the team, which is a considerable sum. This must be split between all the members of the poaching team – the informant, the tracker, the shooter, the driver, and any other elements each specific team might contain. Thus, each poacher will get $10,000 to $20,000, for what might be a single night’s work.
To the impoverished and unemployed, such opportunities must be very difficult to ignore.
If poaching syndicates manage to ship 5,000 kgs of rhino horn per year to Asian markets, and if we can ship 7x or 8x that, every single year, forever (as demonstrated in the prior chapter of this document) then we can very reasonably expect the increased supply to bring price down quite significantly.
How much would price for a kilogram of horn in China drop if the market was receiving a predictable 35 tonnes instead of an unpredictable 5 tonnes? We don’t really have enough data to predict that with any meaningful confidence. We often use an assumption of a 50% price drop in our calculations, and it is certainly reasonable to assume a drop of at least that quantum to a 7x increase in supply. But nobody knows for sure. What we do know is that price will drop by some very meaningful amount, which means poachers would get less for their efforts.
Any decrease will diminish a prospective poacher’s appetite for risking prison or death, both of which are reasonably predictable outcomes when poachers are confronted or captured. The bigger the decrease in price, the less inclined the poacher will be to assume the risks.
In this fashion, trade will inevitably diminish the poacher’s willingness to poach. Having said that, nobody believes that this factor, on its own, will ever be enough to end poaching. Africa’s problems with poverty simply run too deep. We will always find people desperate enough to act in desperate ways, even if the pay-out slips from $10,000 to only $1,000.
Fortunately, the second effect of legal trade is far more powerful in ending poaching.
With $20,000 per kilogram being paid to poaching syndicates for raw horn, and with those syndicates then increasing the value to an average of $200,000 through beneficiation and ‘cutting’ of medicinal product, criminal movement of 5,000 kgs per year, means we are looking at organisations earning roughly a billion dollars a year. If they put just 10% of that into equipping the poaching teams, we face an enemy with a $100m annual budget – two billion Rands.
They face reserves that are financially desperate and entirely unable to mount the vigorous defense such organized crime requires.
Legal trade would strip the syndicates of their income. Criminals who must pay an entire supply chain – from gunmen to crooked customs agents – cannot compete on price against reserves that don’t have to pay anything at all for the 70 tonnes they already have in storage, and that can cheaply and easily produce more horn by trimming the animals they protect. And when those 70 tonnes hit a market that previously only purchased 5 tonnes a year, it is clear that the criminal syndicates will either abandon the effort or fail comprehensively.
Even more importantly, the income that used to go to the syndicates will now go to the conservationists who are protecting rhino. So reserves that could not afford high tech equipment like thermal cameras and radar systems will now be able to afford them. And when you have the revenues to access the right tools, it is easy to stop poaching.
As discussed elsewhere in this document, poaching can be stopped. The biggest four private reserves have not lost a rhino to poaching in more than three years. Two of them have not lost an animal in more than five years. Protecting rhino so successfully is very costly, and it comes at great personal risk, but it can be done if enough money is available to buy the right tools and pay the right rangers.
At this point in the discussion, opponents of trade usually accept that they have lost the argument about poaching on private reserves, and switch their energy to the claim that legal trade will increase poaching on government reserves. But this argument ignores much of what we have already explained.
First, trade will throw so much more horn at the market than it has ever before experienced that a ‘glut’ is inevitable. Prices will plummet, and this will create far less interest amongst the syndicates in maintaining their poaching supply chain, whether the horn they will sell for a pittance is coming from private reserves or public.
Second, and this is quite important, most of the horn South Africa and other SADC countries wish to sell belongs to the government. Thus, governments will make far more money than the private reserves will earn, and will have more money to invest in protecting the rhino than even the private reserves will have. If private reserves can end poaching when they are properly resourced, so can public reserves.