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Alpacas as an Investment

Around the world, alpacas are in strong demand, and people pay high prices for them. They are scarce, unique, and the textiles produced from their fleeces are known in the fashion centers of New York, Paris, Milan, and Tokyo. There are excellent profit opportunities and tax advantages available to alpaca breeders. Today, alpacas represent the primary source of income for millions of South Americans.

In the U.S. we have a number of different trends that cumulatively insure the future of the industry.  There is a large portion of the population, “baby boomers”, which will be reaching retirement age during the next decade.  They will retire from their current employment, with a lot of wealth, and want to remain active.  With the need for wanting something to do, many will turn to getting involved with Alpacas. 

Another shift in our country is the movement from the cities to the country.  When we move to the country, we want to raise something.  What is better than the friendly alpaca that we don’t kill, and can be raised on very small acreage?

The tax system in the U.S. has become more and more restrictive to businesses and individuals.  Each year deductions are disappearing, in effect raising taxes.  This is not true for our nation’s farmers.  Farmers are still one of the largest voting blocks in America and they have seen more benefits, not less.  We are able to depreciate our animals over a short period of five years and have the availability of section 179 small business accelerated depreciation for the first year that one acquires new capital assets, which includes alpacas.

The Alpaca Registry, known as ARI, closed its doors to imported alpacas on December 31^st, 1998.  Also at that time, America’s only high security import stations, known as HISTAC, was closed by the US Government.  These two actions have made for a very strong, stable U.S. market.  The Alpaca Registry is a very important part of the industry, since each animal’s pedigree is DNA verified.  Buyers, new and old, can be assured that the progeny they are purchasing are indeed from the sire and dam that is recorded in the registry.  With Peru and Bolivia no longer able to export animals to the U.S., we have a very stable market.  We have some 60,000 alpacas in the U.S. today, and around 300,000,000 people.  The saturation point, if it truly ever occurs, is years into the future.  We all know that our alpacas only produce one cria per year, thus assuring a slow and steady growth long into the future.

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; males breed beginning at about two years. The females produce one baby per year during a reproductive life of twenty years.

The factors which influence individual prices include color, conformation, fleece quality and quantity, age, and sex. Females sell for more money on average than males, but herdsire quality males command the highest individual prices.

An alpaca rancher with a small herd on small acreage can expect to harvest his animals' fleece and sell their offspring profitably.  Alpaca ranchers can, and do, sell their fleece for $2 to $5 an ounce to local artisans. Each animal will produce five to eight pounds of fleece a year. The Alpaca Fiber Cooperative of North America (AFCNA), endorsed by the Alpaca Owners and Breeders Association (AOBA), is in its growing stages and will provide a commercial outlet for all breeders.

The price range for females is currently between $12,000 and $35,000. Females with unique attributes have sold for more then $35,000. Young, unproven, high quality stud prospects routinely sell for between $7,500 and $25,000.  Many breeders start with several breeding age females and perhaps a 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.

Alpacas are much like other items in the market place that are heavily sought after; the market will pay a premium price for flawless examples.

Finally, alpacas are easy to transport, which makes it easy to move them from one location to another. They have a relatively long and trouble-free reproductive life span, and alpacas can be fully insured against lost.