For most people in SA, cattle represent a multitude of ideas and devotions, including wealth and power, and veneration for the ancestors, and they can also be a promise of respect, an honour shown to the family of a bride-to-be.
Primarily, though, they are raised by farmers who sell them to feedlots where the cattle are fattened up before being slaughtered to be turned into burgers and steaks.
How then do we determine the price of something suspended between the most earthly purpose of feeding people, and an almost ethereal fate as messengers between worlds?
An impatient economist might argue that things are worth as much as people are willing to pay for them. And as crude as this definition of the measure of value might be, when it comes to a buying and selling environment as highly charged with emotion as a cattle auction, the explanation might be true to some extent.
Livestock auctions are a daily occurrence in SA and thousands happen every year without attracting much attention outside farming communities. But a powerful combination of money, cattle and politics caught the attention of the public when President Cyril Ramaphosa first showed up along with his billionaire brother-in-law Patrice Motsepe to buy and sell majestically horned Ankoles.
Ramaphosa was the first to introduce Ankole cattle to SA by initiating a project in 2004 to import the breed from Uganda, from where they originate.
His passion proved infectious and, apart from launching a vibrant Ankole breeding business in SA, it also inspired Motsepe, brother of SA’s first lady, Tshepo Motsepe, and the founder and chair of African Rainbow Minerals, to start his own Ankole herd.
With these big names (and their even bigger wallets) firmly in the Ankole kraal, the breed’s popularity took off and with it, the prices breeders are willing to pay for top genetics.
The story, of course, got a new twist just a couple of weeks ago, when former spy boss Arthur Fraser alleged that millions of US dollars in cash, supposedly the proceeds of cattle and game sales, was stolen from Ramaphosa’s farm, and an alleged cover-up ensued.
With all this intrigue and anticipation, the eyes of the nation turned to Bela-Bela in Limpopo on Saturday where the Ankole Cattle Breeders Society of SA held its second national auction at Ramaphosa’s Phala Phala farm.
It is true that members of the media were not allowed at the auction, but it was live-streamed by the auctioneering platform Veewinkel.
Since the society held its first national auction in 2021, Ankoles have broken all records set for prices paid in SA for cattle of any breed. At last year’s auction, a bull was sold for the SA record price of R3m. At Ramaphosa’s own auction in March, a record was set for a female animal at auction, when Motsepe bought a young heifer for R2.1m.
The national auction that took place at the weekend didn’t deliver record-breaking prices for animals, but a new record was set for an embryo at R340,000.
Despite the muted fireworks, the prices paid at the auction were still high enough to produce a loud hayibo and vigorous head shaking from the average South African.
Ankoles are rare and in high demand, not least because of the publicity the breed gets for its association with Ramaphosa.
A heifer sold for R950,000, one bull for R1m and another for R1.65m. The average price of female animals on the live auction was about R334,000 and bulls fetched R313,000.
Clearly, these values cannot be recouped by slaughtering the animals and selling the meat, so what makes them so expensive and will it pay to invest this much in a bull or a cow?
The cattle industry is divided into the commercial breeding business, which produces weaners for the beef market, and the stud-breeding business, which produces the bulls and cows that are used as breeding stock by beef farmers (and other stud breeders). To put it bluntly, the value of beef cattle is measured in kilograms of meat, while the value of a stud animal is determined by its genetic potential and the progeny it will produce.
The two are not independent of each other. When there is a shortage of supply of breeding stock in the commercial sector, the prices of stud animals will increase. Typically, this will happen in the years just after a drought, when farmers have reduced cattle numbers to survive the drought and then start rebuilding their herds after good rains that help the veld recover.
As a rule of thumb, a fair price for a registered stud bull earmarked for the commercial market is equal to the price of an eight-month-old weaner (the age at which a calf is usually sold to a feedlot) multiplied by 10. Assume an average live weaning weight of 230kg, multiplied by prices being achieved now of about R37/kg for a live weaner, then the value of a weaner calf in SA is roughly R8,510. A fair price for a bull would then be about R85,000.
But unlike with most beef cattle breeds, Ankoles are not, in any meaningful numbers, being sold to commercial beef farmers. For the time being, buyers of Ankole genetics are mostly other stud and aspirant stud breeders. This is why the prices are so high, but also why, as some in the industry would argue, not sustainable.
Pieter Ernst Snr of Bona Bona Game Breeders, who bought the R3m bull Sebastiaan at the national auction in 2021, sold 10 semen straws from Sebastiaan at R12,000 each at Saturday’s auction, as well as five embryos fertilised by the bull at R26,000 each. The sale of genetic material from the bull earned the owner R250,000 at a single auction. That is an 8.3% return over one year — not bad by any investment standard.
Sebastiaan’s progeny sold at the auction by his previous owner, Twin City Prime Genetics, earned a total of R560,000. It is more than likely that this bull will earn back his R3m price tag and then go on to make his owner a lot more in profit.
Ankoles are rare and in high demand, not least because of the publicity the breed gets for its association with Ramaphosa.
As Jacques Malan, president of the Ankole Cattle Breeders Society of SA, told Business Day, there are only about 1,040 Ankoles in SA, of which about 800 are full-blood stud animals. Compare this with the Bonsmara, one of the most popular beef cattle breeds in SA, which has more than 130,000 registered animals on the books.
Eco-tourism
In addition, said Malan, apart from their value to the beef cattle industry, Ankole cattle are unique because of the role they play in eco-tourism.
“In Uganda, Ankole are the second-largest tourist attraction after gorillas,” he said.
It is expected that once herd numbers allow for this, Ankole will feature prominently as the breed of choice for lobola. And they are popular with hunters who value them for the impressive trophies they make. At the auction on Saturday, a mounted Ankole head sold for R40,000.
The problem will come when the demand from other stud breeders and from the eco-tourism industry slows down. Then Ankoles will have to compete for the value they bring to the commercial beef cattle market, and against prized beef breeds such as Bonsmara, Beefmaster, Brahman and Boran.
Dewald Olivier, CEO of the SA Feedlot Association, does not foresee the Ankole playing a significant role in the beef industry.
From a “beef” perspective, there isn’t a lot of opportunity for Ankole cattle in SA, and there is a risk that what we are seeing now at Ankole auctions will turn out to be a bubble like what happened with rare and colour-variant game a few years ago.
“Ankole are not bred and selected for ‘beef qualities’, they are bred for their horns,” he said.
In other beef cattle, breeders will select for traits such as their feed conversion ratio — a measure of how many kilograms an animal must eat to gain 1kg of weight. This is one of the most important aspects in the industry, where feed represents the single largest input cost.
Furthermore, feedlots prefer to buy animals that do not have horns because this reduces the risk of injury, which affects the quality of the beef. More than 80% of all beef sold in SA comes from cattle reared in feedlots, according to Olivier.
“Breeding Ankole is a hobby, they are not bred with food security in mind. I think somewhere down the road, the prices are going to start falling. I can’t understand why someone would pay this much for a bull.”
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