Alpaca Ownership Facts & Data
Why do people in so many countries call alpacas the world's finest livestock business? For any business asset to be valuable, it must possess certain qualities that make it desirable. Gold is scarce, real estate provides shelter, oil produces energy, bonds earn interest, stocks are supposed to increase in value, and diamonds symbolize love.
Alpacas share many of these same attributes.What makes this animal so desirable? The bottom line: alpacas can be both profitable and enjoyable.
Who Buys Alpacas?
Alpaca breeders come from many walks of life, from entire families working full time to retired couples. Many herds are owned by families where one spouse has a city job, and the alpaca business is managed by the other partner.
A large number of breeders are working couples who tend to their herd in the evening after work. There are even city dwellers who have discovered the option of boarding alpacas, thereby giving them an operational alpaca business while still retaining an urban career. For all owners, alpacas offer a great way to diversify their financial portfolio with a commodity that is both rare and in demand worldwide.
Alpaca Supply and Demand
The alpaca market has been moderated by several effects:
- Alpacas reproduce slowly. Gestation is 11 to 12 months and almost always have one cria per year. This limits the supply available for fleece and farming.
- Many breeders retain their offspring to build their herds.
- The U.S. and Canadian registries are both closed to further importation, which will further moderate North American herd growth.
- Ownership of this livestock is easy to maintain.
- Alpacas offer the ability to produce natural luxury alpaca products which is as soft as cashmere, warmer than wool, fire retardant, hypo-allergenic, almost completely waterproof and comes in 22 natural colors. Their fleece is in high demand to create warm, soft alpaca socks, coats, yarn, sweaters and other garments.
Alpaca Values
The value of alpaca fleece and finished products made from alpaca fiber are the economic market foundation for alpacas. Each animal will produce around 5 to 8 pounds of fleece a year.
Alpaca ranchers sell their fleece in a variety of ways including raw fiber, washed and carded fiber, yarns, and finished products, with lucrative margins. In addition, alpaca compost fertilizer is a terrific soil amendment, with high concentrates of nutrients creating fertilizer for vegetable and flower gardens, lawns and nearly all types of plants.
Factors that influence individual alpaca prices include color, conformation, fleece quality and quantity, age and gender. Well-conformed alpacas with superior fleece characteristics sell for higher prices. Prices can range from $300 for a pet quality male to $650,000 for a super stud herdsire alpaca.
The ARI Factor
When an alpaca is born, a sample of blood is sent to the the Alpaca Registry, Inc. (ARI) to verify its parents and become registered. ARI is a database housing the genealogy, blood typing and ownership records of alpacas in North America. When purchasing an ARI-registered alpaca, the buyer is assured of being provided a correct history of that alpaca based on DNA blood typing. In addition to being able to track and verify the genealogy of a particular alpaca, the Registry allows breeders to track progeny as well.
Capital Requirements
Alpacas do not need fancy shelters or facilities, but they do need an occasional protection from the environment. Prices for shelter, fencing, and labor vary widely based on geographic location, as well as individual needs and tastes. For example, some alpaca breeders will opt for a $500 carport structure as a shelter for animals, whereas others might spend upwards of $100,000 or more for a state-of-the-are breeding facility and showplace.
Hands-On Alpaca Ownership
There are essentially two ways to own alpacas: do it yourself or hire someone else. The first approach is to purchase the animals and begin raising them. This requires owning a small ranch or acreage. The property would need to be properly fenced and have a small barn or shelter. Many new owners already have outbuildings suitable for alpacas. The hands-on method of raising alpacas can be either a part- or full-time business.
The second approach is to purchase the animals and place (or agist) them in the care of an established breeder. Under this method, the owner typically makes important decisions about care, breeding, sales, etc. This method is often appealing to those who have not yet purchased their farm but want to start building their herd and receive income and tax benefits, as well as investors who simply want the financial benefits without farm labor.
Tax Benefits of Owning Alpacas
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 offsetting your ordinary income from other sources with expenses from your ranching business.
Methods of Financing Your Alpaca Purchase
Most alpacas are sold for cash. Many buyers convert other assets to purchase their first alpacas.
Some people have a line of credit for investment purposes; others use their equity in real estate to secure funds.
Some breeders offer financing for your purchase.
It is typically short term and involves paying for the animals before you take delivery of them. For instance, many breeders will accept the following arrangement:
Purchase price $22,500
Down payment $9,000
Three installments of $4,500 each
Balance at delivery $0
There are many different opportunities available in the alpaca industry. You can have them as pets or raise them for breeding and their fleece. You can open your own store front, retail shop and / or spinning guild to diversify your alpaca options. An owner who likes the return an alpaca investment offers, or the lifestyle they provide, can choose any level of ownership.
Many alpaca owners who have been involved in alpaca farming have found it both personally and financially rewarding. Please recognize, however, that owning alpacas involves significant financial risks, as does any business.
Your ultimate success will be determined by your own ability to market your animals; your fiber and finished goods; your employment of available resources within the alpacas industry; your communication skills; and your ability and willingness to provide top-notch customer service that results in a good reputation.