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6. ECONOMIC CONSIDERATIONS, PRODUCTION AND MARKETING

At the time of writing no crocodile farmer is known to be making a living soely by breeding crocodiles for skins and by-products.

Most captive breeding stock is still very young and has yet to come into full production. Some farms are breeding crocodiles successfully but are still dependent upon an annual intake of eggs and/or hatchlings from the wild (ranching). Others derive a significant part of their income from tourists or other sources. As in any farming enterprise the constraints and prospects vary with the location but farms which are totally dependent upon captive breeding and have no involvement with tourism have yet to prove themselves to be economically viable.

Some, perhaps many, small crocodile farms have been started with little chance of success because the projected turnover of skins will simply not cover the running costs. In the following sections the nature and extent of the common financial concerns is considered.

6.1 Production

In countries fortunate enough to be able to adopt the policy, ranching is likely to be the most cost-effective method of producing crocodiles. Harvesting eggs and/or hatchlings can serve to keep wild crocodile numbers within the required limits while supplying the farms with stock.

Research into wild crocodile populations can be very expensive but if harvesting can be restricted to closed systems such as lakes or separate river systems it is comparatively easy to monitor nesting trends during the course of egg collecting patrols. The number of nests per unit area can be recorded and used as a measure of the nesting effort each year.

As a precaution against over-exploitation during the first few years the release of juvenile crocodiles (1 m long) equivalent in number to 5% of the eggs collected should more than compensate the wild resource for the harvest and could cost much less than accommodating and feeding the breeding stock.

Unfortunately, in most countries, the crocodile resource has been so depleted that captive breeding may be required in order to restock suitable areas in the wild.

In some populous countries it may even be difficult to find areas where wild crocodiles can be managed for ranching. Under these circumstances it could cost more to protect the wild crocodiles than to keep them in captivity.

6.1.1 Feeding

The problem of finding cheap animal protein is a major limiting factor in crocodile farming and ranching throughout the world.

No doubt, as crocodile nutrition becomes better understood, diets will be specially formulated to reduce rearing costs but at present there appears to be no alternative to bulk feeding of high class protein. It seems that crocodiles are just not very versatile in the range of food which they can utilise for growth. Poor quality protein, even though animal in origin, has not been shown to produce satisfactory growth rates and in the extreme can even be toxic.

From a nutritional point of view gelatin is probably the poorest animal protein. It is obtained by the chemical breakdown of collagen by boiling in water. The amino acids present in gelatin (and collagen) occur in ratios very different from those found in other body proteins. Several important amino acids are not present at all.

In caimans gelatin was found to be toxic at 7.5 grams of protein per kilogramme body weight. When caimans were fed gelatin protein at 15g/kg body weight they died within a few hours apparently because of a great rise in the level of 'unusable' amino acids in their blood plasma (Coulson & Hernandez, 1983). This is a condition similar to that which occurs when crocodiles are too cold to assimilate their digested food (2.1).

It has been stated earlier that a diet of whole fish is perfectly satisfactory for rearing stock. This is because fish protein contains all the essential and non-essential amino acids in similar proportions to those found in crocodile tissues. Everything needed for rapid crocodile growth is present in near optimal amounts (Coulson & Hernandez, 1983).

The problem is that fish is also a valuable component of the human diet. Trash fish obtained as the by-catch from prawn trawlers in Papua New Guinea, for example, brings more money at the fish market than could be realised by converting it into crocodile skins.

Much of the by-catch from prawn trawlers in the South Pacific is dumped overboard because it comprises very small fish and unpalatable species. It would be excellent crocodile food but the cost of bringing it ashore can be prohibitive. It cannot be accommodated in the prawn freezers and, depending upon the distance offshore, it is not always feasible to collect it from the trawlers at sea.

Fish waste, such as heads and shoulder girdles, from processing plants is useful food but large plants may convert it to fish meal. Similar waste from small local fishing operations and retail outlets can be difficult to collect in sufficient quantity year round.

Offal from slaughterhouses includes valuable crocodile food but, again, the larger abattoirs may have processing plants for producing meat meal, bone meal, blood meal etc. Small slaughterhouses in economically less developed countries may sell most or all of the edible offal for human consumption.

In abattoirs without a processing plant at least the blood and possibly intestines and lungs will go to waste. Instestines must be hosed clean and chopped into short lengths. Crocodiles will eat this especially if mixed with other food. Lungs are convenient food and contain about 16% protein and 3% fat.

Blood makes up about 7-9% of an animal's live weight although not all of it can be recovered. Ten litres of blood (easily collected from one large animal) contain about 2 kg of solids, rich in vitamins and with a highly nutritious protein content of over 80%. As blood is often wasted it would seem to have outstanding possibilities for the crocodile farmer. In practice, however, the possibilities have yet to be explored.

Assuming that blood can be fed in an acceptable form to crocodiles it is most likely to be of value as a high protein concentrate for enriching poorer diets - especially those with a high proportion of bone and skin.

A small amount of fresh blood could certainly be mixed with other food but this might not be enough to improve growth rates. Another problem is that blood decomposes very rapidly so that fresh supplies would have to be collected frequently even though very little could be used each time.

Blood can be quickly coagulated into a firm consistency by adding quicklime (CaO). The lime is slaked in the process and will not harm the crocodiles; indeed it provides calcium. Limed blood has been used as pig and poultry food but there is no record of its having been used for crocodiles.

Instructions for making limed blood are given by Mann (1962) as follows:

Approximately 1% by weight of unslaked lime is added to the blood, converting it into a black, rubber-like mass. The process is very simple. The finely-powdered lime is put into the bottom of a blood-collecting bucket, the bucket filled and the contents stirred until the mass sets. Where quicklime is not available, 3% powdered, slaked lime can be used, but the process of hardening is slower than with quicklime.

Poultry offal is the mainstay of several large commercial farms. It produces satisfactory growth but the rate is slower than in crocodiles reared on fish.

In a 100 day trial in Papua New Guinea crocodiles fed on a diet of half fish and half poultry offal grew about 30% faster (as measured by weight gain) than those fed only on poultry offal. The average difference was about 50% in two groups of C. porosus. There is unlimited scope for cost benefit trials of this sort. If a basic diet of poultry offal, for example, is assured at low cost it might be worth mixing a proportion of fish at a cost that would be prohibitive ifonly fish were available. Conversely, if a farm is meeting the price of fish it might be possible to reduce feeding costs without slowing growth rates by mixing a proportion of cheaper feed.

Most farms feed a staple diet of whatever is most cheaply and conveniently available - fish in Thailand, poultry offal in Papua New Guinea and Australia, fish or game meat in parts of Zimbabwe, fish or nutria in Louisiana. Very little research has been done on mixed diets as they affect the growth rate of rearing stock.

The value of conventional stock feeds for pigs and poultry depends mainly on the protein content and this determines the price. Crocodiles are far more exacting in their nutritional requirements than pigs and poultry but reported growth rates in young crocodiles fed on diets of poultry offal, fish, nutria and game meat do suggest that they respond, as one would expect, to the proportion of high class protein in the diet.

Despite the low winter temperatures in Zimbabwe captive Nile crocodiles grow almost as fast as fish-fed C. novaeguineae in the farms of Papua New Guinea. The Nile crocodiles are fed on game meat (mainly elephant) with bone meal, vitamins and trace elements. Growth rates of 40-50 cm (increase in total length) per year can be achieved during the first three or four years (Blake, 1982).

Fish-fed saltwater crocodiles reared in outdoor pens in Papua New Guinea averaged 2 metres in length and weighed 37 kg after 4 years. During this period they had consumed about 260 kg of food. Table 5 shows belly skin width (approximate) against predicted food requirement for four and a half years.

Table 9 Belly Skin Width (live animal) and Food Consumption in C. porosus

Age years Belly width at year end Food Requirement cumulative total per animal
1 18 cm  
2 30 cm

50 kg

3 39 cm

130 kg

4 49 cm

260 kg

4.5 52 cm

325 kg

It can be seen that food costs will begin to rise steeply after about 30 cm belly width but skin value per centimetre is usually quite constant between 30 and 50 cm. In other words the law of diminishing returns begins to operate after about 30 cm and is very obvious after about 40 cm. This has been observed in other species including C. novaeguineae, C. niloticus and American alligators.

If crocodiles are available but food is limited or expensive it will obviously be more profitable to slaughter earlier. Some farms, however, have a surplus of very cheap food but are limited by the annual intake of stock. In this case, depending on labour and other running costs, a higher return might be obtained by keeping the crocodiles for an extra year.

There is reason to believe that at an optimal temperature crocodiles will not only feed well but will use their food more efficiently for body building. If this is so then in some circumstances it may be worth paying more for temperature control in order to obtain a better food conversion ratio and so save on food. More research is needed before such details can be worked out.

6.1.2 Other Production Costs

Capital outlay can vary so much that it is difficult to make any generalizations. Concrete pools cost many times as much as earth pools but may prove cheaper in the long term because of the maintenance problems that earth pools often present. More water will also be needed to compensate for seepage in earth pools. Total water requirements are easily estimated for concrete pools on the basis of total changes at fixed intervals daily in the case of hatchling pools. This, in turn facilitates the estimation of pumping costs.

Labour requirements depend very largely upon the amount of time needed for food collection and preparation. If small trash fish are available this will be minimal but if abattoir offal has to be collected and prepared it could occupy several labourers for a significant part of each day.

Another difficulty is that the labour force needed for routine running of a farm may be hopelessly inadequate at culling time. And yet it may not be practicable to spread the culling work more evenly throughout the year. Crocodiles naturally tend to reach the preferred commercial size in batches. In parts of Papua New Guinea so many people are experienced in skinning crocodiles that it is not difficult to hire casual labour for skinning. In other regions it may be possible for two farms to pool their labour during skinning sessions. Farms involved with tourism or some other enterprise may have an off season' period when personnel are not busy and can help with culling operations. But skinners need to be given careful instruction and supervision until they gain experience. A careless,hand with a knife can quickly ruin the product of three or four years' careful rearing.

As a rough guide to labour requirements a manager, foreman and team of five labourers should comfortably manage a farm of 5000 crocodiles on a tree-year rearing cycle with moderate food preparation time.

Skinning and initial skin preparation seem to take longer than one would expect. A team of 22 experienced skinners working two to a crocodile managed to process about 120 crocodiles a day. This includes catching, killing, skinning, fleshing and applying the first salting without recovery of by-products. This average of less than 6 crocodiles per skinner/day can be bettered but even the best skinners in a team usually prepare only about 6 to 8 skins of 40 cm belly width each day.

6.2 Marketing

It has been estimated (Inskipp & Wells, 1979) that world trade in crocodile skins in the late 1950s reached a peak in excess of 5 million skins a year. World trade today probably amounts to no more than 1.5 million skins annually and Caiman crocododilus skins have probably made up at least two thirds of the total during the last few years (Hemley & Caldwell, 1984). Informed sources in the leather trade put the present total of classic skins at no more than a third of a million. The number of tanneries processing crocodile skins has been correspondingly reduced and certain countries which formerly produced high quality crocodile leather no longer have any specialist tanneries.

The world scene then, is one of a severely contracted industry caused by a decline in the supply of raw material. All available evidence suggests that supply is still well below demand and that demand shows no sign of weakening. It is at the high quality end of the market that the shortage is most acutely felt and tanners who now tan mainly low quality skins would welcome the opportunity to 'trade up' if the raw material were available. In terms of supply and demand for raw material it is clearly a seller's market but there is obviously an upper limit to skin prices beyond which the price rise in manufactured goods cannot be passed on to the consumer without a decline in sales.

Another danger, from the skin producers' point of view, is that the bulk of production is channeled through such a small number of tanner/buyers that, despite the keen competition, the buyers could collaborate to force prices down. Some crocodile farmers believe that this was a factor in the price decline of 1982/83.

The prices paid for wet salted classic skins increased steadily in the late 1970's to reach a peak in early 1982. At that time, and only for a short time, as much as US$ 5.70 per centimetre belly width was being paid for first grade C. porosus skins of 25-50 cm belly width. At the end of the year the price had fallen to less than half that amount. By mid 1987 prices had recovered such that a skin as described above was selling for more than the 1982 price.

Caiman and other bony skins have never brought such high prices and even among soft belly skins C. porosus is supreme. For example, when buyers were offering US$ 3.80 Zimbabwe crocodile skins were bringing a similar price to those of C. novaeguineae and American alligator skins were worth rather less.

These are F.O.B. prices. Air freight can amount to a very significant percentage because wet salted skins are several times heavier than leather. (Table 6).

The bulk of skin production from captive crocodiles is exported in the wet salted state though a few farms with a tourist trade sell leather goods and curios which have been manufactured locally.

Table 10 Average weight of Wet Salted Skins

Belly width
cm
Wgt grams Belly width
cm
Wgt grams
18 175 36 1,520
20 290 38 2,000
23 405 41 2,300
25 550 43 2,740
28 730 46 3,240
30 940 48 3,940
33 1,225 51 4,570

Most sales are probably arranged by private negotiation between producer and buyer. This works well insofar as good working relationships are established but it may not be in the best interests of the larger producer to restrict his market outlets. And yet if a skin producer tries to deal directly with several buyers it will be difficult to maintain the advantages of direct dealing. The special requirements and possibly grading standards of buyers will differ and export documentation work will multiply. A crocodile farmer who can offer a large consignment of top grade skins in the preferred size range is in a strong position. He loses this advantage if he sells in small batches in order to gain a broader front to his market. A small consignment is less attractive to the big buyers and yet it involves the same export-import documentation, customs clearances, insurance procedures, freight documentation etc.

One way out of the dilemma, assuming that a farmer is free to make his own marketing arrangements, is to sell through an agent. Internationally established skin, hide and leather merchanting groups do exist. Countries with a large production of crocodile skins may, of course, have their own centralised marketing system with or without government control.

In a free enterprise situation crocodile farmers may find it useful to unite for mutual benefit. In Papua New Guinea crocodile skin exporters hold regular meetings and in Zimbabwe there exists a Crocodile Farmers' Association which also functions as a marketing agency (Van Jaarsveldt, 1982 b).

6.3 Wildlife Conservation and International Trade

Only one legaI instrument in the fight to protect endangered wildlife has global application. It is the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). The Convention took effect on 1 July 1975 following ratification by twelve nations. By 1989 one bonded and six nations had become Parties to the Convention. Each Party to CITES has designated specific national authorities to administer the licensing and control system for wildlife and wildlife products. These national authorities cooperate directly with their foreign counterparts in a unique global network of wildlife administrations.

The Convention has an international secretariat in Switzerland and is administered by the United Nations Environment Programme (UNEP). In collaboration with the International Union for Conservation of Nature and Natural Resources (IUCN) the secretariat assists in trade monitoring and information exchange. It also services the meetings of the parties which are held every two years - the seventh having been held in Lausanne in 1989.

Parties to CITES undertake to prohibit trade in endangered species except as allowed by the Convention. Threatened species are grouped in three Appendices. Appendix I contains animals and plants in actual danger of extinction. Trade in these species may only be authorised in exceptional circumstances. Appendix II contains species which could be in danger of extinction if trade is not controlled. It also contains species in which trade must be controlled in order to safeguard Appendix I species. Appendix III contains any other species identified by a signatory to the Convention as being in need of trade control. Most crocodilians are listed on Appendix I.

In practice trade in Appendix I species is generally forbidden and trade in Appendix II species is allowed on a permit system. But a special 'opting out' clause was built into the Convention which allows Parties to trade in Appendix I species simply by entering a 'reservation' when that species is listed or when CITES comes into effect in that country. As a result of pressure from the leather industry certain major importers of crocodile skins entered reservations, notably France, Germany (FR), Italy, Switzerland and Japan. On 1 January 1984 the European Economic Community enacted its own legislation to ban the importation of Appendix I species and all EEC member states subsequently withdrew their reservations.

6.3.1 Farming

Another provision of CITES was for special treatment of wildlife bred in captivity. In 1979 it was recommended that animal species in Appendix I bred in captivity for commercial purposes should be treated as if they were in Appendix II. The term 'bred in captivity' is carefully defined in the Resolution (Conf 2.12). Very briefly, it means the offspring of animals kept in a controlled environment. It was recommended that Appendix I animals (or products) bred in captivity should be identifiable by some means in addition to documentation.

Clearly, any 'loopholes' of this sort are open to abuse, especially by states which are not Parties to the Convention. Accordingly, in 1983, a further Resolution (Conf. 4.15) recommended that Parties provide the secretariat with details of breeding operations within their territories so that a register could be compiled. It was recommended that Parties should then reject documents relating to animals said to have been bred in captivity but not originating from an operation registered by the secretariat.

6.3.2 Ranching

A major problem in categorizing species in terms of how seriously they are endangered is that a species may be nearly extinct in one part of its range but reasonably safe in another. An overall assessment has to be made but this may be challenged by nations in which the species is least threatened, especially where wild stocks have recovered as a result of conservation measures.

In recognition of this, and of the wishes of some Parties, the Convention recommended that subject to certain criteria, populations of Appendix I species be included in Appendix II for the purpose of ranching (Conf. 3.15, 1981).

Ranching is defined as the rearing in a controlled environment of specimens taken from the wild.

In order to be considered by the Parties a ranching proposal should satisfy the following general criteria:

i) the operation must be primarily beneficial to the conservation of the local population.
ii) The products of the operation must be adequately identified and documented to ensure that they can be readily distinguished from products of Appendix I populations.

To obtain approval for transfer to Appendix II of the country's population, or a smaller geographically separate population of a species, the management Authority must submit a proposal to the CITES Secretariat at least 330 days before the meeting. The proposal should contain:

i) evidence that the taking from the wild shall have no significant detrimental impact on wild populations,
ii) an assessment of the likelihood of the biological and economic success of the ranching operation,
iii) assurance that the operation shall be carried out at all stages in a humane (noncruel) manner,
iv) assurance that the operation will be beneficial to the wild population through reintroduction or in other ways,
v) a description of the methods to be used to identify the products through marking and/or documentation,
vi) assurance that the criteria continue to be met, with records open to scrutiny by the Secretariat, and that the Management Authority shall include in its reports to the Secretariat sufficient detail concerning the status of its population and concerning the performance of any ranching operation to satisfy the Parties that these criteria continue to be met.

In 1983 a ranching proposal from Zimbabwe was unanimously and warmly approved and the Zimbabwe population of C. niloticus was transferred to Appendix II to facilitate ranching and farming.

In 1985, following extensive research and a published proposal (Webb et al. 1984), Australia's C. porosus was also placed in Appendix II. Indonesia succeeded in having C. porosus similarly transferred but subject to a set quota. This arrangement was also agreed for C. niloticus in nine African countries following a proposal submitted by Malawi.

At Mid 1988 the list of Appendix I species was as follows:

All Crocodylus species with the exception of C. novaeguineae, C. johnsoni and the populations of C. porosus and C. niloticus mentioned above.
Alligator sinensis
Caiman latirostris
Caiman crocodilus apaporiensis (other subscpecies of C. crocodilus in Appendix II)
Melanosuchus niger
Tomistoma schlegelii
Osteolaemus tetraspis
Gavialis gangeticus
Both species of Paleosuchus are listed on Appendix II.

There are now at least 23 countries in which crocodile farming and/or ranching is being practised. In most cases programmes are in an early stage of development and formal proposals have not been submitted to CITES but it is a measure of the growing international interest and an indication of future needs.

6.3.3 Control Procedures

Export documentation differs from one country to another but for the purpose of satisfying international requirements it is the responsibility of each government's management authority (eg. wildlife or livestock department) to devise a satisfactory system of checks, controls and markings.

In Papua New Guinea, for example, anyone wishing to export skins (licenced exporter) must apply to the management authority giving full details of the intended consignment of skins, flight details, destination and where the skins may be inspected.
Government officials then inspect the skins and if all is in order, serially numbered tags are attached to each skin and the stamped and sealed export documentation (as lodged with CITES) is handed over (Hollands & Wilmot, 1985). Farms are registered with the management authority who maintain records of breeding animals.

The security tags used in Papua New Guinea are plastic strips serially numbered and lettered by the manufacturer to customer specifications. They are available in different colours and have a simple locking mechanism so that when attached to a skin they can only be broken off and cannot be re-used. Called 'Poly-Lok' seals they are obtained from E J Brooks Co 164 North 13th Street P.O. Box 7070 Newark New Jersey 07107 USA.

A similar type of tag is used in Louisiana and Zimbabwe, and will be used in Australia.

In Australia all farming operations are controlled by the management authority and are only licensed subject to detailed registers being kept and monthly stock details being produced. Nuisance animals captured for farms are marked by tail scute removal at the time of capture. Permits are required for all slaughtering on farms and will only be issued after details of the application have been checked against the farm stock records. Skin tags will be issued with the permit for the number of crocodiles to be slaughtered.

A similar system of controls operates in Zimbabwe.

Identification of by-products presents special problems but it will obviously be easier to monitor and control trade in products from captive animals slaughtered under permit than from any wild harvest.

6.4 Outlook for the Trade

It is too early to predict whether the move towards crocodile ranching and farming will be successful in regenerating the industry. The consumer demand for crocodile leather goods appears to be strong and the indications are that a demand could probably be rekindled in countries that have largely lost contact with the industry because of the skin shortage.

The pattern of world trade has changed to some extent but France remains the leading importer of classic skins. Italy, Germany FR, Japan, Switzerland, Austria, Hong Kong, Singapore and the United States are also prominent importers of crocodilian skins (Hemley & Caldwell, 1984). In most, if not all of these countries, demand exceeds supply.

The long-term future of the industry appears likely to hinge upon the success or failure of crocodile management. Several producing countries, some of them with UN/FAO assistance, have made praiseworthy efforts to implement management programmes in which crocodile ranching and farming have a central role.

Management of the crocodile resource and public opinion in consumer countries will act together in a powerful influence on future trade. Crocodile leather is a distinctive and exotic material which gives luxury status to utility articles such as bags and wallets. These products are bought not only for their qualities but because they can be carried with pride as a mark of sophistication and good taste. The value is largely destroyed if a significant number of people regard these purchases as a shameful contribution to the destruction of wildlife. Crocodile leather has not attracted this stigma to the same extent as certain furs, presumably because crocodiles lack popular appeal. But there are reports that an increasing number of consumers are asking for goods made from pen-reared crocodiles. This offers a further advantage to the dealer who can produce leather from
an internationally approved ranching or farming programme.

From a conservation viewpoint it may even be fortunate that the crocodile species most often considered to be a nuisance in the wild yield the most sought-after skins. It has now been demonstrated that these species can be managed as a renewable resource instead of being regarded as vermin for which the killer gets the prize.

In the long term only successful management can increase and sustain the output of skins. Only management, seen to be successful, will influence international conservation movements, lift trade restrictions and enable more consumers to buy crocodile products with pleasure and confidence.

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