We 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.