You can't blame an elk farmer for being a little down these days. The discovery of CWD in Saskatchewan elk herds has resulted in a "temporary" ban by Korea on any elk product imports from Canada and the United States. Koreans are by far the largest buyers of North American velvet. New Zealand has also served notice to Canada that it plans to ban Canadian velvet imports.
Consequently, the prices for elk velvet antler are as low as they have been for a long time. The prices for breeding stock are also down drastically. At a recent sale in Alberta, bred elk cows sold for $1,600 down from $15,000 about 4 years ago. Bull calves were sold as low as $400 each. These lower prices will obviously have an impact on farm cash flows and asset valuations.
So, is the elk industry in trouble, and it is time to cut your losses and get out? Or is this a temporary down cycle, and a great opportunity to get in at bargain prices?
Based on the evidence I heard at the recent Alberta Elk Association conference, I would say that the prognosis for the industry is excellent! This prediction is based on the view that, as the financial analysts on television like to say, "the fundamentals of the industry are sound."
Let's take a look at the evidence upon which this positive prognosis is based.
1. Quality assurance - one of the benefits of the CWD scare is that more and better quality assurance programs will be implemented at all levels of the production and distribution systems. (See next article). Once this is done, buyer and consumer confidence will be restored and closed markets will be opened again.
2. Multi-product animal - raising elk provides different products for different markets. This increases the market opportunities and reduces the risks to the producer. There are five major product groups: a) elk velvet antler (EVA), b) genetics - breeding animals, semen, c) trophy animals for hunting preserves, d) venison and value-added meat products, and e) by-products such as urine, hides, ivories, etc.
3. Hunting preserves - there are still many people in North America that like to hunt. The opportunities and odds of harvesting a wild trophy elk are almost nil. This is due to limited availability of licenses, costs, travel and time involved, and concerns about CWD and TB among wild animals. Well-managed hunting preserves offering trophy elk hunts are doing very well. Selling to these preserves provides a profitable market for surplus and older bulls. Offering more affordable elk hunts would increase this market even more.
4. Venison - due to the demand for other elk products, this market has never really been developed. However, it deserves serious consideration based on the demand for lean, low-cholesterol meat products. Another advantage elk meat has, according to Dr. Al Schaefer from the Agriculture Canada Research Station in Lacombe, Alberta, is that it stays tender longer than most livestock. Thus even older animals can be used for the venison market. However, to develop this market, a grading system and an infrastructure is required.
5. New products and markets - the elk industry has known for some time that it must reduce its reliance on the Korean markets. There are some major initiatives to develop new markets and products in the North American market. The dietary supplement industry in the United States is over $44 billion per year. In 1999, some 71% of US households were using dietary supplements. Some large players are beginning to sell elk velvet antler health products in the United States and this should significantly increase demand.
Another new market for elk velvet is the pet market. Some excellent results have been achieved in dogs that are fed EVA supplements, especially in relieving symptoms of arthritis and joint stiffness. (See http://www.qeva.com ). There are some 60 million dogs in the USA of which about 15% suffer from arthritis. This market alone could absorb all the velvet antler produced in the world.
Several companies have found that by adding other natural ingredients to EVA, their products have been successful in enhancing sexual health and vitality. Now, I know that the industry has traditionally shied away from this use of their product, but it represents an enormous market. Remember that today's baby boomers were part of the most sexually-liberated generation yet. Most of them are not willing to give up on sex as they get older.
6. Research - several research studies have recently been completed, or are underway, that will give the industry a boost. First, research funded by Qeva Corp. has shown that EVA is safe. Toxicology studies on animals found that, even at 250 times the normal dosage, there were no negative effects. Of course, these results assume that appropriate quality assurance procedures are in place to prevent any foreign substances or chemicals contaminating the elk velvet, and that only safe, known additives are used.
Dr. Marion Allen from the University of Alberta completed a pilot study on use of EVA on rheumatoid arthritis patients. She found that there were no negative effects of using EVA with existing medications. The group that received EVA had the largest improvement, but the results were not statistically significant (probably due to small numbers and short time of treatments). Based on these preliminary results, Dr. Allen and her team are now undertaking a clinical trial of about 220 people and following their progress over 6 months. This will be a double-blind, controlled study and will determine whether EVA can alleviate symptoms. The entire study is expected to take about 3 years.
Two other studies using EVA in the treatment of dogs with arthritis are under way. Confirmation of positive results would be a big boost for the industry and increase demand for velvet.
7. New organizations - in Canada, three new organizations have appeared that can contribute significantly to the advancement and promotion of the elk industry. First, there is the recently established Alberta Elk Centre - a joint venture among the Alberta Elk Association, Alberta Agriculture and the University of Alberta. The AEC will have staff, expertise and resources to undertake research, production and marketing activities.
The Elk Breeders of Canada (EBC) is a national organization representing the various provincial elk associations. EBC's mandate is to identify markets, develop and promote the Canadian elk industry.
The Northern Alberta Elk Meat and By-Products Cooperative is in the initial stages of being established. This will be a new generation cooperative (see Nov. 2000 Digest) that will focus its efforts on developing elk venison products and markets in North America. This initiative should make big strides in developing the necessary grading systems, infrastructure and value-added products.
Although much progress is already being made to sustain the industry, here are a few more things the industry should do.
1. More cooperation in research - even though the elk associations often jointly fund research projects, it would be of benefit to all if they pooled their research funds. The big four - Alberta Elk Association, Sask. Elk Breeders Association, Elk Breeders of Canada and North American Elk Breeders Association - could significantly leverage their research funds if they worked together. I believe more matching research funding could be obtained from governments and foundations by using a cooperative approach.
2. Public information website - the industry could a better job keeping the public informed about their industry, and about issues affecting the consumers. We have proposed that a common, jointly operated site - elkfarming.org - be set up and maintained for this purpose.
3. More education and training - the industry should work with governments and private companies to develop and deliver training programs to producers. This is already being done with the Velvet Removal Accreditation course in Alberta, but more needs to be done, especially regarding the implementation of HACCP on the farm.
When all these developments come together, the elk farming industry will again be thriving and growing. You might want to pick up your checkbook and go and buy some of those bargain priced animals. After all, you are going to need them.