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The Alpaca Markets

 

Market.  An alpaca is a superior investment opportunity with excellent tax write-offs and financial gain compounded through the years.  The lovable, curious, and fun disposition of the alpaca provides many hours of enjoyment and entertainment for their owners, friends, and family.  Alpacas make excellent show animals with universal appeal to both children and adults.  They are easily trained to lead and are gentle enough to be handled by children. 

 

There are approximately 100,000 ARI registered alpacas in the U.S. as of May 2007.  Extensive research shows that the alpaca livestock market is unlikely to become saturated at a level much below 400,000 animals.  Even at the worst case of, say, 250,000 animals, it would take until 2012 to reach that figure at the current rate of growth.  We are nowhere near saturating the market place for alpacas.  As a comparison of market share, consider that there are 6,000,000 horses in the U.S. and only 100,000 alpacas.

 

At present, the major market is in selling alpaca livestock, but the industry is moving to establish an alpaca fiber market.  If and when the market for livestock declines, the fiber market should pick up the slack.  The characteristics of overall alpaca fiber quality can be altered by husbandry, breeding, nutrition, and herd management procedures.   So, as the market pays more attention to fiber, and less to “cute,” the prices of high quality animals will increase, and those with mediocre fleece will decline. 

 

A strong domestic commercial market for large volumes of alpaca fleece is easily envisioned.   Alpaca fleece is prized for its fineness, lightness in weight, luster, and hypoallergenic properties.  It is comparable to cashmere in softness and is often mixed with other fibers, such as mohair or silk, to vary the texture of the yarn produced.  Alpaca fleece is strong and resilient and has more thermal capacity than almost any other animal fiber.  The fiber actually contains microscopic air pockets that contribute to the creation of lightweight apparel with very high insulation value.  Alpaca fleece is 5 times warmer than sheep’s wool and more luxurious than cashmere.  It does not itch as wool often does because it does not contain lanolin and has a smooth cell structure.  There are more than 22 natural colors of alpaca fleece and it can easily be dyed.  

 

There will always be a market for good quality animals with good fleece characteristics.

 

Supply.  The developing market for alpaca livestock and fleece has been restricted by lack of supply and supply will continue to be restricted in the near future for a number of reasons.  Alpacas reproduce slowly and take 2 years to reach breeding maturity.  Many breeders retain their offspring, building their herds.  Mass production of cria, via embryo transplant is not feasible, since there is no available supply of suitable host females.  Artificial insemination is not feasible because alpacas breed through induced ovulation.  The national herds in each country outside of South America are relatively small in size.  The U.S. alpaca registry is closed to further importation to protect our national herd, which will further limit U.S. herd growth. 

 

Demand.  Demand for alpacas has increased dramatically every year since their introduction to the U.S. in the early 1980’s.  99% of the world’s 4,000,000 alpacas are in Peru, Chili and Bolivia.  As a result, not only are there more breeders entering the alpaca market each year in established countries such as Canada, New Zealand, Australia, and the United States; 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.  As the international market for alpacas continues to expand, it will present export opportunities for U.S. breeders.  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.

 

Historically, alpaca production has been concentrated in the high Andes Mountains where pasture is limited.  The worldwide population of alpacas is barely 4,000,000 animals.  As a result, alpaca fleece is considered a specialty fiber with limited supply.  Alpaca clothing and home products are pure luxury.  Raw fiber can be sold directly to hand spinners and other crafts people.  By joining a fiber cooperative, fiber can be pooled with other North American alpaca breeders and made into a variety of designer apparel.  In addition, it can be processed by a commercial mill and spun into yarn.    

 

Price.  Alpaca livestock prices are holding very well in today’s market.  A junior herdsire (young, unproven male) sells for $2,000 and up.  A maiden (young, unproven female) sells for $5,000 and up.  A productive male or a proven female can sell for $10,000 and up.  Geldings (neutered males) or non-breeding females sell for $500 to $2,000.  Stud fees range from $500 to $5,000. 

 

An adult Alpaca in their prime years can grow a coat 3 to 6 inches long that produces 5 to 10 pounds of fleece per year.  Current prices paid for clean, high-quality alpaca fleece range from $3.00 to $5.00 an ounce.  Using these established figures, an alpaca fleece weighing 7 pounds, which sells for $4.00 an ounce would produce a $448 income.  This should be sufficient to cover annual feed costs, veterinary fees, and other maintenance expenses for that animal.  This cycle repeats itself every year and makes the alpaca one of the few types of livestock that can virtually pay for its own room and board.

 

Competition.  Although others in the market provide similar alpaca products and services, there are very few alpacas worldwide.  Demand will increase as more and more people become aware of the benefits of alpaca ownership.  Newcomers and existing breeders alike become part of a mutually beneficial support group if they form strategic alliances with the people they buy their alpacas from.  Therefore, it is advantageous if the sellers are prepared to offer this type of ongoing relationship to their buyers.  Commitment to building ongoing marketing, sales, and educational relationships with customers and the public will further the alpaca industry and benefit all alpaca owners. 

 

Herd Plan.  Alpacas have a lifespan of 15 to 25 years.  The reproductive lifespan of a female is 12 to 14 years, from 2 to 17 years of age approximately.    Female alpacas are induced ovulators and can become pregnant without waiting for a heat cycle.  The gestation period is 345 days and healthy females can produce offspring at an average of one cria (baby) each year (multiple births are extremely rare).  The reproductive lifespan of a herdsire is 10 to 12 years, from 3 to 16 years of age approximately.  Prime years are 5 to 10 years of age.

 

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 40% of their cria are females.  When you retain the offspring in your herd, they begin producing cria.  This is “Alpaca Compounding.”   The following chart illustrates how a herd can grow over a 5-year period based on an 80% birth rate and 40% of the cria being female.  Assumptions:  To begin with, purchase 2 bred females, 2 female crias, and 2 geldings:

 

 

                                2009        2010  2011  2012  2013   

                             Start End

Females                  2      2         4        4        4        5         

Female Cria             2      2         0        1        2        2         

Male Cria                 0      2         4        4        4        4        

Geldings                  2      2         2        4        6        8     

 

Total                        6      8       10      13       16      19    

 

Offspring

Available

To Sell                    0      0         0        2         4        7     


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