Investing in Alpacas
Demand for alpacas has increased dramatically every year since their introduction outside of South America in 1984. There are more breeders entering the alpaca market each year in established countries such as Canada, New Zealand, Australia and the U.S. This growth is sure to continue as the alpaca gains international recognition. The market for alpacas has been moderated by the effects of relatively slow herd growth. Females birth one cria once per year. In addition, the U.S. alpaca registry is closed to further importation.
As of 2008, the total population of registered alpacas in North America is only 120,000. It would take a national herd of over one million animals to support one full-time fiber mill. In the meantime, alpaca fiber is highly sought after by fiber artists, smaller mills and national cooperatives. Fashion designers continue to create heirloom garments of alpaca and alpaca blends. Supply and demand is expected to remain very strong well into the foreseeable future.
There are two parallel industries within the U.S. alpaca market: the fiber industry and the livestock industry. An alpaca rancher with a small herd on minimal acreage can expect to harvest his animals' fleeces and sell their offspring profitably. The value of alpaca fleece and finished products made from that fleece is the economic underpinning of the future market for alpacas. Breeders outside of South America are beginning to organize fiber co-ops for the commercial processing of the fleece. Domestic fiber is often sold to cottage industries that revolve around hand spinning and weaving. Each animal will produce around three to ten pounds of fleece a year.
Breeding, raising and selling quality alpaca stock commands premium prices. Female alpacas usually begin breeding at between 18 months and 24 months of age, while most males can successfully settle a female at about three years. The females produce one baby per year (twins are uncommon) during a reproductive life about 10-12 years. Factors that influence individual alpaca prices include color, conformation, fleece quality and quantity, age, and gender. Females sell for more money on average than males, but herd sire quality males have historically commanded the highest individual prices. Well-conformed alpacas with superior fleece characteristics command the best prices.
Tax-deferred wealth building is another alpaca advantage. As your herd grows, you may postpone paying income tax on its increasing value until you begin selling the offspring. Alpacas actively raised for profit enable the owner to deduct expenses against ordinary income and depreciate certain assets. The major tax advantages of alpaca ownership include the employment of depreciation, capital gains treatment, and if you are an active hands-on owner, the benefit of off-setting your ordinary income from other sources with expenses from your ranching business. For more information, contact your tax adviser. Alpacas are also fully insurable against theft and mortality.
First, determine your goals for alpaca ownership. Would you like to own gelding males for fiber production or as pets? Are you going to be a full-time or part-time breeder? Will you invest in alpacas for current financial returns or are you going to build a herd toward the goal of becoming a full-time breeder? Once you've decided on your goal, the path to alpaca ownership will be more easily defined.
The key to getting started is information gathering. The Alpaca Owners Association offers a 30 minute video entitled "Alpacas: A Rewarding Lifestyle." It provides an in depth understanding of alpacas and their fiber, from farm requirements to care and nutrition, then concluding with the business and financial aspects of ownership.
Another great way to learn about the joy of owning alpacas is to visit existing alpaca farms. Alpaca breeders are friendly folks who are passionate about alpacas and sharing their journey with others. Sage Bluff Alpacas is no exception! We welcome your visits throughout the year. Simply phone or email firstname.lastname@example.org to arrange your farm tour. We can also suggest other area breeders to visit.
Alpacas Magazine provides a continuing up-to-date wealth of information. We’d be happy to loan you some of our current issues. The AOA web site is the most thorough resource for all things alpaca. The link is provided here and on our links tab. http://www.alpacainfo.com/.
Many breeders start with several breeding age females and perhaps one male. Other new breeders may elect to start with several young females and hire stud services from other breeders. There is an approach suitable for your level of interest and financial position.
Start up expenses include pasture preparation and basic equipment. A minimal three sided shelter provides protection against heat in summer and wind in winter. Costs for fencing against predators will vary with the size of your pastures, materials and labor. A water source, and perhaps an electric supply, will be needed for each paddock. An inventory of halters, shears, toenail clippers, lead ropes, and other miscellaneous gear will be necessary. Minimal veterinary care should be budgeted for as well. Insurance generally costs approximately 3.25% of the purchase price of the alpaca, paid each year in advance.