The Business of Alpacas:
Investment Opportunities
OR . . . What Am I Getting Myself Into?
There are large ranches with over 500 alpacas, and small farms of only two or three alpacas. The average alpaca herd is made up of about eight to ten alpacas. Most herds start out small and evolve to the size that fits the breeder’s farm and financial goals.
Almost all breeders are in business for the long haul; they believe in the future of the animal. With the small number of alpacas currently available, there will be an extended and steady demand for breeding stock to continue meeting the needs of our growing industry for many years.
An alpaca rancher with a small herd on a small acreage can expect to harvest his animals’ fleece and sell their offspring profitably. The value of alpaca fleece is the economic underpinning of the future market for alpacas. Breeders outside of South America are beginning to organize wool co-ops for the commercial processing of the fleece.
Domestic fiber is often sold to cottage industries that revolve around handspinning and weaving. Most alpaca ranchers readily sell their fleece for $2 to $6 an ounce to local artisans. Each animal will produce four to eight pounds of fleece a year. A North American fiber co-op, endorsed by the Alpaca Owners and Breeders Association (AOBA), provides a commercial outlet for all breeders.
The current alpaca industry is based on the sale of quality breeding stock, which demands premium prices. Female alpacas begin breeding at between 14 and 18 months of age, while males begin breeding at about three years. The females produce approximately one baby per year during a reproductive life of 13-20 years.
Supply and Demand
The developing market for alpacas has been restricted by lack of supply. There are approximately 65,000 alpacas in America and about 75,000 in Australia. Until recently, there has been little aggressive marketing of the animal, very few auctions, and very little national media attention for the alpaca.
Yet both North America and Australia have experienced exceptional demand for high quality alpacas at excellent prices. Canada has an active alpaca market, and many Canadians have recently purchased animals in the United States.
Supply will continue to be restricted in the near future for a number of reasons:
* Alpacas reproduce slowly.They have a gestational period of 11.5 months and produce one offspring (cria) per year.
* Many breeders retain their offspring, building their herds.
* Mass production of "cria," or babies, via embryo transplant is not feasible, since there is no available supply of suitable host females.
* The limited size of the national herds in each country outside of South America will restrain growth for some time to come.
* The U.S. alpaca registry is closed to further importation to protect our national herd, which will further limit U.S. herd growth.
Demand for alpacas has increased dramatically every year since their introduction outside of South America. The American and Australian breed associations each have over two thousand members, while only a few short years ago there were none. Each association publishes a full color Alpacas magazine which is available to its members.
Not only are there more breeders entering the alpaca market each year in established countries such as Canada, New Zealand, Australia, and the U.S., but there are more countries competing worldwide to establish alpaca herds. Japan, Britain, Israel and France now have alpacas. This growth is sure to continue as the alpaca gains international recognition.
Market for Fleece
The demand for alpacas is part of a larger appetite for investment in rare breeds. Whole industries have sprung up around ostriches, miniature donkeys and even Tibetan yaks. Investment in rare livestock coincides with people’s desire to live in the country, raise their children on a farm, or retire to a rural lifestyle.
Alpacas offer an outstanding choice as a livestock investment. They have long been known as the aristocrat of all farm animals. But most of all, alpacas are easy keepers, they have a charismatic manner, they do very well on small acreage, and they produce a luxury product which is in high demand. Consumers are drawn to alpaca sweaters with just one touch.
Alpaca fleece is several times stronger and much warmer than sheep’s wool. The fiber itself is semi-hollow and makes very light, thermal garments. Alpaca fleece is easy to process and readily spins into both woolen and worsted yarn. Fabrics made from alpaca are sewn into the finest European suits and jackets. Now, a new use of the fleece has surfaced, denim, from a newly formed group in Texas,
American Alpaca Fleece Federation.
Historically, alpaca production has been concentrated in the high Andes Mountains where pasture is limited. The worldwide population of alpaca is barely three million animals. As a result, alpaca is considered a specialty fiber with limited available supply.
Alpaca fleece is comparable to cashmere in softness and is often mixed with other fibers, such as mohair, to vary the texture of the yarn produced. A strong domestic commercial market for large volumes of alpaca fleece is easily envisioned and a national fiber co-op is working with breeders large and small to see this vision become reality.
The potential market for an animal with the characteristics of the alpaca is vast. Alpacas are loved by their owners and respected by those who process or wear products made from their fleece. They are truly the world’s finest livestock investment.
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