trade cartoon In an article I wrote in July 2015 Desire To Supply Rhino Horn Drives Manufacture Of Demand:  I pointed out that while the South African government continues to keep the option of a legal trade in rhino horn on the table, the pro-trade lobby will focus on creating a ‘legal’ sales channel. To-date, the options discussed are:

  1. A legalisation of international trade, or
  2. A one-off sale of their stockpile, or
  3. Overturning the domestic trade ban in South Africa
In recent weeks, and based solely on a legal technicality (see box on the right), the ban on domestic trade in South Africa was overturned.  Minister Molewa immediately appealed the ruling and so, for now, the rhino horn domestic trade ban is still in place while the High Court considers the appeal.

Yet the real result of this ruling is to give hope to the pro-trade group that a legal trade, in one form or another, is still possible and it is worth their while to keep lobbying hard. 

How Did the Judge Rule?
The judge ruled in favour of the rhino breeders – on a technicality. He said that the minister had a responsibility to give the public opportunity to comment. There are a host of regulations she should have followed, including publishing a notice of the proposed ban in at least one national newspaper. But she didn’t, and that was enough to invalidate the ban.

If the domestic ban was overturned what are the implications?

Given there are no ‘end users’ of rhino horn in South Africa, what is the purpose of lobbying for the legalisation of domestic trade? A legal domestic trade in South Africa will allow speculators to buy horn which could be kept in the hope that one day it can be exported. Speculation only makes sense from a self-interest point of view if your expectation is:

  1. Prices will continue to go up and
  2. You will be able to liquidate your asset.

The latter can only be achieved by either legalising the trade with Viet Nam (or China etc) or selling to traffickers if legalisation does not eventuate (see below). What it does immediately for the pro-trade lobby is result in a larger group of self-interested people who will be pushing for overturning the international trade ban and giving them the ability to sell horns locally to prop up their farming operations.

Would the rhino farmers really sell horn to traffickers?

In an article earlier this year, Izak du Toit, a lawyer representing the rhino owners, said [If the domestic trade ban was overturned] “We would sell [rhino horn] to the poachers to prevent them from killing rhinos,”!!!!  What can we read from this astonishing statement? All you can take from this is that they will sell horn ‘legally’ into the domestic market to people who can afford to buy. What happens after that they don’t care about and isn’t their problem. They got their money by selling it legally in a domestic market. Several of the buyers I spoke to in Viet Nam said ‘I trust my South African supply chain’, so it doesn’t seem hard to smuggle it out of South Africa. South Africans and people around the world would be completely naïve to believe that South Africa’s border is not porous and that the rhino horn permit system can’t be subverted.

The pro-trade groups have shown no evidence that they have invested in creating a fully auditable and tamper-proof tracking system for rhino horn. Of course such a system should be a pre-requisite for any legalisation of the international trade via the CITES process, so why the lack of interest from many rhino farmers? Why decide to invest time and money in overturning the domestic trade ban instead of paying for a proper system for permits and horn transactions? Given the tarnished image of the wildlife permit system, the pro-trade groups quote South Africa’s Sugar Association as their example that a good governance system can be put in place in the country. Sugar – not quite the same!!

Similarly, in all the years that the trade/no-trade debate has been going on (and on and on and on) I have seen no evidence that a customer analysis has been done by the pro-trade lobby. Certainly, they have always ignored this question, even when I have posed it directly via email. Their often quoted generalisation that ‘Why should the West write off 2,000 years of Asian traditional medicine’ confirms their lack of understanding of the current demand for rhino horn which is now used to demonstrate status in your peer group or for speculation purposes. In a recent one hour video created to try and convince people of a pro-trade approach, the only time the demand side was discussed, over the 60 minutes, the nature of the demand was said to be quote “beside the point” – that was it!

Finally, if rhino owners are so convinced that a legalised trade will stop the poaching, they should have no problem creating an ‘insurance fund’ where they deposit all profits until they demonstrate the legal trade strategy has worked. I have seen zero evidence the rhino owners volunteering to set aside profits now in case trade legalisation is not going to stop the poaching. That trade will stop the poaching is an assertion simply made to justify their push for selling horn and becoming rich(er) in the process. If it turns out to be wrong, as many people believe, what will they do is probably say “Oops, sorry” as they count their money.

The standard argument they originally trotted out over-and-over was that increasing (legal) supply will reduce prices and hence make poaching less lucrative. That can happen, but it depends on the scale and nature of the demand. In terms of scale, the demand from Viet Nam vastly exceeds current and even potential (legal) supply, which is currently met by fake horn. At the same time, the nature of the demand from the wealthy Vietnamese elite means they will continue to buy ‘wild’ horn – in their eyes the genuine article:  This demand cannot be met by farmed horn, in the same way that increasing the supply of fake Louis Vuitton bags will not affect the demand for and price of the genuine article.

In their latest round of publications, the pro-trade lobby has switched tactic. They no longer want legal trade to drive prices down. Instead they want to set up a cartel for controlled selling of horn and keep prices high by restricting supply – like the De Beers diamond model. So what will stop the poaching then? That it is easier and more convenient to buy legal horn. If one argument doesn’t work out for them they will always have another one…

What is all this saying to demand side countries?

Detox DrinkFrom a Vietnamese government perspective, it gives them more excuses to do nothing about the buyers. South Africa’s pro-trade/no-trade debate is the key thing slowing the Vietnamese Government’s response to tackling consumption of rhino horn in Viet Nam. This makes perfect sense when you consider, why would any government target its high net worth citizens, who are the primary users of genuine rhino horn, when:

  1. These are the business people and entrepreneurs driving Viet Nam’s rapid economic growth and
  2. What they are doing could be made legal in 2016 if the South African Government decides to take the pro-trade route.

As people told me when I was in Viet Nam, the pro-trade debate in South Africa effectively neutralises law enforcement based success in Viet Nam. The overturning of the domestic SA trade ban only re-enforces this thinking in Viet Nam.

In Summary

At the moment it appears likely that the South African government will take rhino horn trade talks off the agenda for the 2016 CITES meeting as it would be very embarrassing to lose a vote on the legalisation of trade on home soil and they simply have not gained much support internationally for their pro-trade stance. The plan would instead be to keep the trade debate open until the next CITES meeting in 2019.

domestic tradeIn the meantime, and given the rumours, they will enable domestic trade (by quietly dropping the appeal against the overturning of the ban once the media attention dies down) so that local speculation can proceed and rhino farmers have a source of revenue. With speculators allowed into the market, the value of stockpiled horn continues to increase in anticipation of a legalised international trade from 2019. Having a great number of ‘investors’ who bought horn locally pushing for legalisation would make it easier to garner support on the international stage (“we already run a successful domestic market…”).

So the strategy we see unfolding in South Africa makes sense from a money-making perspective, but has zero benefits for the rhino. Poaching will continue to rise exponentially as long as demand from Viet Nam (and China) keeps rising. On the ground protection measures can’t stop this and as outlined this means Viet Nam won’t make a commitment to ramping up law enforcement targeting the buyers/user.

Ironically – The Golden Rhino

Golden rhino 2It seems ironic that as South Africa watches its rhinos edge closer-and-closer to extinction in the wild, a little golden rhino, more than 700 years old, has become a defining symbol of precolonial civilisation in the country.

From the article: For years, South Africa’s apartheid government ignored the significance of a “golden rhino” figurine that provides undeniable proof of a sophisticated society existing before white men arrived. Despite its obvious significance, the golden rhino was ignored by the colonial — and, later, apartheid — governments, whose regimes were premised on the belief that Africans were primitive. It had been described as southern Africa’s equivalent of Tutankhamun’s mask.

For South Africans, both black and white, this little golden rhino appears to the Breaking The Brand team to be the perfect mascot to rally behind to save the amazing animal that inspired someone, more that 700 hundred years ago, to create this stunning object. It not only clearly provides proof of a sophisticated society but also one that recognised the importance of the natural world in which it was embedded.

These are the views of the author: Dr. Lynn Johnson, Founder, Breaking the Brand