Are Alpacas a Craze or Fad???

Feeding TimeWe had a visitor to our ranch the other day who had experienced a terrible financial loss in his family when they tried raising Emus & Ostriches in the 1980’s. So he was very curious about what made the alpaca investment different … since he had heard some of the same promises applied to that craze in the 1980s.

But I really don’t think they’re much alike at all, and here’s why:

First, with Emus, the profit center was supposed to be the meat market (which never really materialized in the U.S.)

With Alpacas, there is NO meat industry, and no one is relying upon it to produce revenue in their business model. 

That’s a good thing for two reasons.

First and foremost … if you have to slaughter an animal to derive value from it, you have an inherent limitation in your
model.

Second, you’re going to get kind of emotionally attached to these animals … (they’re very sweet) … so it would be heartbreaking to sell them for slaughter.

Emus also produced valuable oil, but not really enough to make a real profit.

But the biggest difference between the alpaca and emu industry is that one female emu could have DOZENS of offspring every year, which grew the USA herd size too quickly to allow for stable market values.  There was no way that demand could keep up with supply.

(The rapid reproductive rate of emus also made it difficult for farmers to keep up with expenses and needed equipment – and people were confused about how large an omelet you’d get from one Emu egg.)

Alpacas have only one baby a year, so herds grow slowly unless you buy more alpacas. (That’s also why it takes a few years to start earning significant income, and that this is an industry suitable for those willing to put in five to ten years.)

Another reason that alpacas appear to be a much hardier investment than emus is that the fleece usually earns enough money to feed the herd, and is expected to become more marketable over time.  So there is inherent stability for the alpaca farmer.

Last, because the value of an alpaca is directly related to the quality of it’s bloodline, alpaca farms often have a need to purchase animals from each other, or at minimum to buy breeding services. This creates the need/possibility to improve the genetics of the offspring and generate another revenue stream..

Long story short, although there is, of course, market risk in any investment, most of the experts I speak to, feel the alpaca market would remain stable for the foreseeable future, as it has for the past 20+ years.  (This is not a certainty though … only a probability.)

I worked with a professional researcher who tested this theory. He asked an MBA in finance who also happened to be a successful alpaca rancher what he personally would do if he inherited a hundred thousand dollars tomorrow.  He was anticipating that he would hear that he would be putting half in some type of safe and reliable instrument like treasury notes, some in stocks, and perhaps 25 – 30% into his alpaca business.

But this rancher pleasantly surprised the researcher by emphatically stating (without hesitation, I might add) that the 100% would go into alpacas. That validated exactly how I feel about my investment.

Please give me your thoughts on this subject by completing the comments section below.

2 thoughts on “Are Alpacas a Craze or Fad???

  1. I enjoy getting your e-mails. I am concerned as I am researching this industry that with the economic woes our country is facing, that there aren’t going to be more people wanting to enter the alpaca ranching business. If fewer people start their own herds, then who will the established or new breeder/owner sell too? I have also heard of people in the midwest going bankrupt and giving away their herds or selling them for 2,000 to 5,000 dollars each.

    I am considering becoming an alpaca owner/breeder but wonder if this isn’t the wrong time to take the market risk.

    Please give me your thoughts.

  2. Hema you ask a good question. Here’s my point of view about getting into the alpaca market right now. 1. There is a fluctuation in the prices of alpacas now more than in past years. Farmers who are desperate – have reduced their prices drastically. However, those of us who are not desperate have been selling to each other, new breeders and at auctions for the standard prices. 2. Now is a great time to invest in alpacas and negotiate with sellers for value added benefits. 3. I still receive an average of 20 new sign-ups to my free newsletter every day. That tells me that there is still the interest in owning alpacas. 4. Since it takes about 3 – 5 years for your initial herd to reach a size where you could sell offspring, I feel that anybody who has an interest would be very smart to take advantage of the tax incentives and start now. The alpaca market will continue and the economic woes should be behind us by then.

    Check with your personal accountant to see what other advantages there may be for your economic situation.

    Hope that helped.

    Julie

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