The Ostrich Bubble

Sep 2021



“What we do know is that speculative episodes never come gently to an end. The wise, though for most the improbable, course is to assume the worst. Once a boom is well started, it cannot be arrested. It can only be collapsed.”

–John Kenneth Galbraith

“You never know you’re in a bubble until it pops.”

– Andrew Revkin, Journalist


In the early 1990s something weird happened in Australia. The value of an ostrich, a native bird in the country for over a hundred years, suddenly skyrocketed for no apparent reason. The value of a single ostrich went from close to zero to crossing $50,000 each, with a breeding pair of ostriches being well over $100,000. Banks would even lend mortgages to fund ostrich purchases.

The reason is that there was a nascent industry developing of ostrich farming and production. The thinking was that ostriches would be bred on farms and then used for ostrich products such as feathers, leather, eggs, meat etc. That products coming from ostriches were better, higher margin and could be made cheaper than their alternatives like goose, birds, cows, chickens etc. Which was all true – ostrich feathers and leather are supposed to be better.

The ostrich seemed to be an overlooked gem of an industry, an animal that existed wild locally forever, but that no one had realised would make for profitable farming. Until all of a sudden everyone realised all at once and there was an ostrich bubble as everyone rushed to own their piece of the future ostrich industry. All sorts of investors lined up to invest – medium to large farmers, corporate conglomerates, hedge funds, private equity, public companies, governments etc.

This bubble lasted the better part of a decade until eventually all these businesses went bankrupt. The demand never showed up. The consumer didn’t buy into the same dream that the producers had. Why bother buying ostrich leather when cow leather had been sufficient for as long as they’d known? Why eat ostrich meat when they could eat chicken? And so on.

All of a sudden by 2000 the market collapsed and the value of an ostrich plummeted from tens of thousands of dollars each to worthless again, with many farms even letting their ostriches loose into the wild. The same ostriches that they had paid over $100,000 for years earlier. Bankruptcies loomed and just as fast as people had made all this ostrich wealth, they lost it.

The lesson is that sometimes when people think there’s a revolutionary new thing, the real test is whether people actually want it or not. And if they do want it, do they use it if you give it to them. History is full of irrational bubbles. Tulips in Europe. Oil in America. Shipping companies in the UK. Some might argue that today with things like cryptocurrency, we’re in another one. But few know of the Australian bubble, the ostrich bubble.