The Ostrich industry in the United States probably started when feathers were in demand and the first ostriches were imported from Africa in the late 1880’s. The industry rose and fell when the fashion demand for feathers waned. A brief rebirth occurred in the late 1930’s before falling once again. Almost a hundred years after the first ostrich farms appeared in America, the industry was again reborn in the very early 1980’s when an American embargo interrupted the importation of Ostrich leather and disrupted the American leather industry. As a small American flock was being grown and processed, it was discovered that Ostriches produce red meat that mimics beef, but with significantly lower fat and cholesterol. As Americans were becoming more health conscious and aware of the importance of a healthy diet, an expected demand for such a healthy meat became the driving force of the industry in addition to the leather.
The Breeder Market
The mid 1980’s when “The New Alternative Agriculture” was the mantra.
The ostrich breeder market was a crazy place back then. Many individuals invested in ostrich without ever seeing them. Brokers got into the business of buying and selling ostrich without ever taking possession of a single bird. Investment packages in ostriches and their potential production were being marketed without verification. Investors eagerly poured funds into such investments and prices climbed to unreal levels.
An Egg For Several Hundred Dollars?
The market for ostriches climbed rapidly with breeder pairs priced in the tens-of-thousands of dollars. Single eggs were being sold for several hundred dollars each; with no guarantee the egg would even hatch. With such demand, eggs and chicks were being smuggled into the country by unscrupulous dealers looking to cash in on the frenzy. Several such individuals were caught, arrested, and prosecuted by the authorities. Scammers popped up around the country taking deposits on non-existent birds. The industry had been infiltrated by fraudulent scam artists who often sold investment packages of non-existent ostriches to unsuspecting individuals seeking to enter the industry.
A Fragile Foundation
All of this occurred because of promised returns and production levels that never materialized. Although a projected marketplace that would have meat buyers flocking to the door was not without a foundation, the reality was that only a few ranchers were actually sending birds to be processed at the time. The demand from those seeking to invest or buy breeding stock was simply too great and most ostriches were sold at higher prices in the breeders’ market rather than at lower prices for processing. This left the commercial processing market without a supply of ready and available birds. In general, the meat industry operates economically on volume and such a volume of birds for processing was not going to happen in a frenzied breeder market. A few attempts were made to create a customer base by a few hardy souls that ventured into starting up processing facilities, but they failed under a mountain of debt. Moreover, there were few standards and little infrastructure in place for the distribution of ostrich products at the time.
A Hard Landing
When the industry fell in the late 1990’s, it fell really hard. Although many bad actors contributed to the collapse, they were not entirely to blame. During the 1990’s, the USDA changed importation regulations, causing an immediate industry overload by increasing the numbers of eggs and live ostriches that could be brought into the United States through USDA approved quarantine facilities. This contributed to a great rise in ostrich numbers in a short amount of time creating an oversupply in the market. A perfect storm continued to build when South Africa enacted policy changes that had adverse effects on the previously stable world-wide price for Ostrich Leather as well.
Take The Money And Run
Brokers and marketers disappeared quickly. Small brokers imitating ranchers because they actually had birds in their possession were hit first. There was little demand for the birds they had been “flipping” at higher prices and such flippers were stuck with birds they could no longer sell for a profit. As the market prices for ostriches continued to tumble, the little ranchers that started and invested with the best of intentions sold their birds off very cheaply which had a snowball effect of driving prices down further and faster. There were instances where ostriches were given away for free if someone would just pick them up. As the dust settled from the collapse, some unscrupulous individuals found themselves defending civil and criminal litigation due to allegations of fraud, smuggling, and violation of securities laws.