1. Choosing a lifestyle at home with animals(personal satisfaction)
2. Unique and different(Diversification)
3. Easy animals to handle
4. Immediate profit by breeding and selling offspring
5. Future textile market when national herd size reaches potential.
6. With small acreage alpacas are the only animal able to provide sound returns under easy management. Alpaca compounding (deferred wealth building)
The value of alpaca fleece is the economic basis of the future market for alpacas. An alpaca breeder with a small herd on a small acreage can expect to harvest his animals' fleece and sell their offspring profitably. Most alpaca ranchers readily sell their fleece for $2 to $6 an ounce to local artisans. Each animal on average will produce five to eight pounds of fleece a year. Domestic fiber is commonly sold to cottage industries that circulate around hand spinning and weaving. Producers outside of South America are beginning to organize wool co-operatives for the commercial processing of the fleece. A North American fiber co-op, endorsed by the Alpaca Owners and Breeders Association (AOBA), provides a commercial outlet for all breeders.
Presently, the 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 15-20 years.
The alpaca industry is new to the U.S., but it has had the foresight to create a basic condition for maintaining the value of its bloodstock, namely, a breed registry.
The alpaca registry is a state of the art and highly sophisticated system to document bloodlines. Each animal is DNA blood-typed prior to registration. Alpaca crias (babies) cannot be registered unless their dam and sire are also registered and their parentage is proven by the blood test. The owner of each registered alpaca receives a certificate that documents its bloodlines and serves as evidence of ownership for the animal.
The value of this registry cannot be overstated. Almost every alpaca in the U.S. is registered. Alpacas without registration papers are difficult to sell. As a result of the registry, bloodlines have been kept pure, and cross breeding with other camelids has been virtually eliminated. The registry will only accept naturally reproduces alpacas meaning artificial insemination and embryo transplant is not permitted Every alpaca breeder's investment benefits from this bloodstock registry. The registry has been closed to entering new animals since 1998. The Clinton administration also closed the only high security quarantine facility in Key West Florida which was the only way to import animals from countries with recorded cases of foot and mouth (most of South America.)
Factors that influence price:
The factors which influence individual alpaca prices include color, conformation, fleece quality and quantity, age, and sex. Females sell for more money on average than males, but herdsire quality males demand the highest individual prices. Breeders often prefer one alpaca color to another; however, the heritability of color is never guaranteed. Correct, well-conformed alpacas sell for higher prices. Fleece density, uniformity and fineness also affect the animal's price. The best combination of fleece, conformation and pedigree will equate high value and demand for your animals. We recommend purchasing the best animals for your budget.
The range of value for females is currently between $12,500 and $40,000. Females with unique attributes have sold for more than $40,000. Young, unproven high quality stud prospects routinely sell for between $7,500 and $25,000, and the highest quality males with unique characteristics or exceptional offspring on the ground have sold in excess of $100,000.
Many breeders start with several bred females and perhaps one male. Other new breeders may elect to start with several young animals or a breeding pair. There is an approach suitable for your level of interest and financial position. The financial analysis found in this brochure incorporates animal prices that a buyer can expect to pay for good quality, sound breeding stock. Alpacas are much like diamonds. The market pays a premium for flawless examples of the breed.
Membership continues to grow with more and more people learning about alpacas and wanting to have a business at home with their families. Almost 4,000 members and 54,000 alpacas right now and growing. The state of Washington has almost 6,000 alpacas and is second to Ohio in the nation. Industry growth is driven from a demand for a peaceful lifestyle and tax advantages of building your business at home. We see people leave the city to find a few acres and produce alpacas and enjoy the lifestyle that it allows.
So how do I make money?
No other farm animal can equal the alpaca in terms of offering a sound investment return and easily managed animals on small acreage. Alpaca’s added benefit to your portfolio includes a healthy at home lifestyle and added family cohesiveness. Every breeder will agree there is no greater enjoyment that owning intelligent, beautiful and charming alpacas.
Currently, profits are made by breeding and selling offspring, as well as the personal satisfaction gained by running your own farm. In the future, when we increase herd sizes and production is optimized of their valuable fiber, we will profit largely in a world textile market. Alpaca fleece is possibly the worlds finest fiber, combining the best qualities of all natural fibers.
Tax deferred wealth building
Bottom Line: A small farmer can purchase several alpacas and allow the herd to grow over time without paying income tax on increased size and value.
U.S. alpaca industry is currently based on breeding. This means return on investment is realized through sale of breeding stock from compounding initial investment for herd growth.
Example- If you started with 4 bred females, would grow to approximately 31 animals in five years. Remember half are male and half female. And assuming 80% reproduction:
(note: starting with males is not mandatory)
(Click to Enlarge)
A major investment benefit of owning alpacas is based on the concept of compounding. Savings accounts earn interest, which if left in the account, adds to the principal. The increased principal earns additional interest, thereby compounding the investor's return. Alpacas reproduce almost every year, and about one-half of their babies are females. When you retain the offspring in your herd, they begin producing babies. This is "Alpaca Compounding." Tax-deferred wealth building is another "Alpaca advantage." As your herd grows, you postpone paying income tax on its increasing value until you show profit from selling the offspring.
Herd Growth form AOBA actual results
An average of two males and five bred females initially cost $102,500 and grew to a value of more than $1,272,500 in ten years. The net return after deducting all the projected costs is $960,260. This equals a 57.8 percent annual average rate of return, the average amount invested over the ten-year period was $166,200. Your investment is not only stable and showing positive growth, it is insurable. (AOBA)
Many breeders start investing in alpacas by purchasing several females and one male. Others wait to purchase a quality breeding male. Prices can vary substantially depending on color, conformation, fleece quality, fleece quantity, age and sex.
A small barn or shelter, built specially to house 15 to 20 alpacas might cost about $10,000 to $15,000 if you contract for its construction. Fencing could add several thousand dollars to your budget. If you manage the herd yourself, you'll require an inventory of halters, shears, toenail clippers, lead ropes and other miscellaneous gear. These items would probably add $500 to your initial costs. Insurance is a consideration, and a years supply of feed and grain will probably be required.