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Yukonomist: Geopolitics and the Yukon beaver

Being out on a Yukon trapline is a wonderful antidote to the stresses of modern life. There’s no traffic. Social media can’t find you. Mortgage bills rest safely unread.

Being out on a Yukon trapline is a wonderful antidote to the stresses of modern life. There’s no traffic. Social media can’t find you. Mortgage bills rest safely unread.

Trappers seldom start their day with an 8 a.m. Zoom standup where the boss has been watching too many Youtube videos on agile scrum methodology.

But the world is, as pundits keep telling us, interconnected. And not just like the Yukon trapper I know who, after spending a few weeks prepping his line for winter, climbed into his plane on Sept. 12, 2001 and flew back to Whitehorse to see Korean Airlines 747s lined up on the runway.

Markets are the connection. It is widely reported that, for example, Yukon copper goes to Japanese buyers. If the world’s car makers and home builders need more copper, their buyers phone Sumitomo, and then Sumitomo phones a Yukon copper mine (if one is operating, of course).

Fewer people follow the money through global fur markets. This is important these days. Let me name three countries with large numbers of fur buyers, and tell me if they ring a bell from the last time you flipped the geopolitics section of the News: China, Russia and Ukraine.

The Trapper magazine reported the excitement at last March’s fur auction in North Bay, Ont. as international buyers returned en masse for the first time since the pandemic.

Chinese buyers are particularly important, because of both the size of the Chinese end market and the number of fur garment makers in the country.

Chinese demand was hit hard over the pandemic, including by the strict lockdowns that continued well after other countries opened up. Now that China’s COVID-19 lockdown is over, however, new worries have emerged about the Chinese economy. Several enormous Chinese housing developers have tipped into crisis, alarming the homebuyers who pre-purchased units.

The Chinese government’s restrictions on the tech industry have taken the buzz off the country’s tech sector. Chinese tech investors have seen the value of the MCSI China Tech Index fall from over 200 in 2021 to 85 as of September 2023.

Ongoing crackdowns on corruption have also hit the luxury good sector hard in China, where the market for expensive gifts was once a boom area for Western fashion houses.

None of this is conducive to buying fur coats.

As for Russia, while it is a major producer of fur, Russians are also active buyers at Canadian auctions. I was in Russia a few winters before the pandemic and strolled down Tverskaya Prospekt, the closest thing Moscow has to Main Street in Whitehorse. I was impressed by how many businesspeople and chic Muscovites were wearing fur.

Today, however, neither Russians who fled to Istanbul nor those preparing for a long war at home are much in the market for fur.

Prior to Russia’s brutal invasion, Ukrainians were major fur buyers. They now have much more existential things to spend their money on.

So how has all this been playing out in the markets?

Despite the troubles above, the May 2023 auctions went relatively well for trappers. Fur Harvesters Auction Inc., which runs the Thunder Bay auction, reported “a very strong number” of Chinese buyers.

At the North Bay auction, the average sable (a category that includes marten, a mainstay of Yukon trappers) traded for $53.92. Importantly, 100 per cent of fur on offer sold. That price is up from $42.64 in May 2022, a gain more than 20 points faster than inflation. It’s also up from prices in the low 40s in the 2019 auctions before the pandemic.

Lynx averaged $148.49 in May 2023, compared to $110.38 a year earlier. This was, however, down from $151.17 in May 2019.

The market was gloomier about muskrat. Most of the pelts on offer found no buyers at any price. Market watchers point to the collapse in ranch mink prices as a key factor.

It was beaver where the market made its biggest move. Our national icon went for $37.49 per pelt on average in May 2023. This is more than double May 2022’s price of $18.38 and the figure for May 2019 of $24.67.

For trappers planning for this winter, the big question is whether these prices will be sustained.

For readers bored of speculating in GameStop or cryptocurrencies, you may be thinking of investing in a cheap bale of muskrat and heading onto one of Reddit’s investor forums to boost the market. However, unlike Dogecoin, you can’t trade muskrat on your phone’s brokerage app. You need to take physical delivery of your bale of muskrat and keep it in the basement until you find buyers.

Taking the longer term view, it is remarkable how low fur prices are.

This is not the beaver’s first brush with geopolitics. The European mania for beaver pelts was fundamental to the English colonizing Hudson’s Bay and the French pushing west from New France. (It’s the sea otter that was responsible for attracting Russian colonial interest in our region).

Today, however, the beaver is an archaic niche in global commodity markets.

When my grandfather was getting into the Yukon fur market, his brothers gave him a copy of the 1930 edition of Fur: A Practical Treatise by Max Bachrach. It includes everything you need to know about the fur business. Beaver is first in the table of contents.

Back then, according to the Wisconsin game department, beaver pelts averaged $15-20 (converted to Canadian dollars). The Bank of Canada’s inflation calculator says that would be $267-$356 in today’s money.

So even with beaver surging to $37.49 last May, it remains barely a tenth of what it was worth in real terms when my grandfather was starting out in 1930.

We shall see what geopolitics does to Yukon fur prices next spring. But, in addition to the vagaries of global markets, fur also has to deal with the ups and downs of fashion. Even when it’s -40 C on Main Street, I don’t see that much fur these days.

Sometimes the best antidote to global mayhem is local solidarity. With the holidays coming up, maybe we should all think about supporting Yukon trappers and crafters. If you missed last Saturday’s annual Yukon Trappers Association Fall Fur and Craft Sale, you’ll still see lots of Yukon product in local shops and at our local seasonal markets.

Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He won the 2022 Canadian Community Newspaper Award for Outstanding Columnist.