Why Alpacas? - The Business of the Textile Livestock

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.

Livestock has been a traditional representation of wealth for many cultures around the world, long before financial stocks were sold on the New York Stock Exchange. The richest families of ancient times counted their wealth by the size of their flocks of sheep or herds of cattle. Today, wealth as a result of livestock ownership is not as common, but opportunities do exist for profitable farms and ranches. Tending to a graceful herd of alpacas can be an exciting way to earn a source of revenue and live a rewarding lifestyle.

Since 1984, alpacas have appeared, almost simultaneously, in several countries where they had never been seen before. The U.S., Canada, Australia, New Zealand, England, and many other European countries have all acquired the foundation animals for national herds. There are even beginning herds in Japan and South Africa, among others. What makes this animal so desirable? The bottom line: alpacas can be both profitable and enjoyable.

Finally, alpacas are easy to transport, which makes it easy to move them from one location to another. They have a relatively long and trouble-free reproductive life span, and alpacas can be fully insures against loss.

Alpaca breeders come from many walks of life. Entire families, young couples, retired couples and business adventurists. There are even city dwellers who have discovered the option of boarding (or agisting”) alpacas, thereby giving them an operational alpaca business while still retaining an urban career. 

The market for alpacas has been moderated by the effects of relatively slow herd growth. The total population of registered alpacas in North America accounts for fewer than 150,000 alpacas. (For current statistics of the Alpaca Registry, Inc., see http://www.alpacaregistry.net/statsitics.htm.). Supply of alpacas will continue to be limited in the near futures for a number of reasons:

The value of alpaca fleece and finished products made from that fleece is the economic underpinning of the future market for alpacas. Alpaca ranchers sell their fleece in a variety of ways including raw fiber, washed and carded fiber, yarns, and finished products, with lucrative margins. Profits or fiber production vary based on each farm’s model for fiber sales. 

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. 

Tax-deferred wealth building is another “alpaca advantage.” As your herd grows, you postpone paying income tax on its increasing value until such time as you begin selling the offspring. Most breeders elect to sell all or some of the annual offspring production for practical reasons, such as recovering their initial cash flow, acreage and building limitations, and time constraints. 

Alpacas are also fully insurable against theft and mortality. Insurance can be purchased for your stock regardless of age. Average insurance rates are 3.25% of the value of the animal, or $325 for every $10,000 of insurance.

The Alpaca Registry, Inc. (ARI) is a database housing the genealogy, blood typing and ownership records of alpacas in North America and those of a few alpacas outside this area. 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 general, ARI-registered alpacas make up the vast majority of the U.S. herd and sell for a considerable premium compared to non-ARI registered alpacas. New alpaca breeders should take note of the value provided by the ARI registration process and should factor this into their research and purchasing decisions.

There are essentially two ways to own alpacas. The first approach is to simply purchase the animals and begin raising them. The second approach is to purchase the animals and place them in the care of an established breeder - called agisting.

First, determine your goals for alpaca ownership. Pets? Family project? Showing? Business? These are not necessarily exclusive of one another, but may put you on different financial paths. Once you’ve decided on your goal, the path to alpaca ownership will be more easily defined.

Every purchase should require a written contract when acquiring an alpaca. Contracts will specify the financial terms involved, animal delivery, soundness of the animal, cria birth guarantees and other items necessary for a transfer to you.

Many alpaca owners who have been involved in the alpaca lifestyle have found it both personally and financially rewarding. Please recognize, however, that owning alpacas involves significant financial risks, as does any business start-up. 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. Although I’ve overviewed techniques that many people have used to make alpaca breeding a profitable business venture, it is, of course, impossible to guarantee the ultimate success of any business.

Join the alpaca revolution! Alpaca is a sustainable alternative that is not only good for the earth, but for all of us. Alpaca wool is stronger, softer, more eco-friendly, and offers 85% greater wicking capability than merino wool. It is also hypoallergenic! Learn more about the benefits of alpaca in our Alpaca vs. Wool blog posts, shop our collections and follow us on social media!