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August 31, 2012

By: Nancy Lake with contributions from Yahoo Alpacasiters

Is 2012 a Good Year to Buy Alpacas?

Yes!


Tumbling stocks, tightened lending restrictions, soft real estate market, and generally sluggish economy have defined much of 2008-2012. Does it follow that 2012 would be a good year or a bad year to buy alpacas?

Let’s begin with those already in the alpaca industry who have a herd and or farm in place. Most would agree the market has slowed a bit because of the economic factors listed above. In addition, aging and/or health issues of many current alpaca breeders are causing some turnover as their whole herds are put up for sale. As a result, established breeders may temporarily offer special incentives, more attractive financing or lower prices to compete and sell a few more alpacas. What a terrific time to fine tune our herds with new additions or trades that can benefit both parties as far as new bloodlines, colors, upgraded quality, etc. Operators pursuing the same strategy in the stock market, are affectionately called “bottom feeders”. Where some see panic, others see opportunity. Snatching up quality alpacas for sale right now is a very savvy tactic, and in fact that is exactly what many are doing!

For those contemplating the purchase of their first alpaca, it is always scary to think of spending so much for an animal; however, all the good reasons for getting into the industry are still as strong as ever. Right now there are only around 165,000 alpacas in the US which is a very low number compared to most other livestock. With perhaps 70% of the females having only one offspring a year (remainder are too young, too old, taking a year off), growth will be relatively slow, and simple supply and demand will keep prices fairly stable. There are still many people who have never heard of alpacas, and we have a long way to go before the strong breeding market eases into a softer edged fiber market. A recent annual alpaca auction shows the market is rebounding. A top male sold for $675,000, another for $150,000, and a female for $100,000.

The good news for entry buyers/breeders is all the same opportunities listed above apply to everyone. A large number of new breeders are baby boomer retirees, many who are still very energetic and looking for a new, rewarding chapter in their lives. One big advantage right now is the group coming into this industry is able to reap the benefits of the efforts of the earliest alpaca breeders. There are many experienced farms very willing to share what they have learned over the years, and because of this, new buyers are better educated about alpacas than ever before. Choices are better than ever, too, because of years of effort put into strong breeding programs nationwide, geared towards producing the best alpacas in the world.

It’s also worth mentioning that while the bottom has dropped out of the sub-prime mortgage market, the fact is that qualified, creditworthy individuals are still able to borrow without problems, although at slightly higher rates. Thus, the option of using a home equity loan for an alpaca purchase is still very much alive. Also some breeders offer attractive financing options. Now is a great time to shop around and find good prices and flexible terms on quality alpacas. In addition, there are many levels where a new breeder can enter the market. Whether one chooses initially to buy one alpaca and board it, or buy a small or large herd and farm at the beginning, growth and profit are possible for both options. The numerous tax advantages are exciting, and accountants experienced with alpacas can explain all in detail.

Instead of buying a new car this year, an alpaca can be purchased and insured, and instead of immediately losing value when driven off the lot the way a car does, a bred alpaca has the potential for being worth twice its purchase price by the time it delivers its cria (two for one purchase if female is bred). While purchasing stocks is always an option, you cannot insure this investment the way you can insure alpacas.

Perhaps the best reasons to be part of the alpaca industry right now are the love of the animals, access to a great network of experienced breeders, the chance for an enhanced lifestyle, and a window of opportunity to participate in a market that for the foreseeable future has superb potential for continued strong pricing driven by the demand for breeding. Dr. Steve Hull who has been a valuable part of the alpaca industry for many years also endorses the above sentiments.

I think we can all relate to the word ‘addict’ when it comes to alpacas. Alpaca breeders simply love what they are doing. It is challenging hard work every day, and there is always something new to learn, but at the end of every day those big eyes are always communicating with us, and the next little alpaca miracle is right around the corner. There is no other industry right now quite like this one, and it is hard to imagine what animal in the future could begin to compare with the alpaca.

The uniqueness of these creatures, exquisite fiber, and prospects for the next few decades when we can build up herd numbers are some of many reasons why the best time to get into the industry is now.

Nancy Lake with contributions from Yahoo Alpacasiters
Alpine Alpacas Breeding Grey Huacayas since 1998 Hagerstown, MD