Welcome to the Wonderful World of Alpacas
 
 
 

Jersey Breeders, LLC

Jerry and Lynne Braatz
364 Tuckerton Rd.
Tabernacle, NJ 08088
(609) 268-8656

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Investing in Alpacas

Who Buys Alpacas?
There are few large ranches with over 500 alpacas, small ranches of only two or three alpacas, and everything in between. The average alpaca herd consists of about ten to twenty alpacas. Most herds start out small and grow to the size that fits the breeder's ranch and financial goals.
Almost all breeders are in business for the long haul; they believe in the future of the industry. With the relatively 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.

It is important to recognize that alpaca ownership has inherent risks, as do all livestock and financial assets. You should talk to breeders such as Jersey Alpacas to familiarize yourself with the risks as well as the rewards of alpaca ownership.

Alpaca Supply and Demand
The market for alpacas has been moderated by the effects of relatively slow herd growth. As of early 2009, the total population of registered alpacas in North America is over 151,377.

Supply will continue to be limited in the near future for a number of reasons:

  • Alpacas reproduce slowly. A female generally breeds for the first time between 18-24 months of age, is pregnant for 11-12 months, and almost always only has one cria per year.
  • Many breeders retain their offspring to build their herds.
  • The limited size of the national herds in each country outside of South America will restrain growth to a small degree.
  • The U.S. alpaca registry is closed to further importation to protect our national herd, which will further moderate U.S. herd growth.

Meanwhile, demand for alpacas has increased dramatically every year since their introduction outside of South America (1984). Not only are there more breeders entering the alpaca market each year in established countries such as Canada, New Zealand, Australia and the U.S., but there are more countries worldwide also actively establishing alpaca herds. This growth is sure to continue as the alpaca gains international recognition.

Alpacas offer an outstanding choice for livestock ownership. They have long been known as the aristocrat of all ranch animals. Most of all, alpacas have a charismatic manner, they do very well on small acreage, and they produce a luxury product which is high in demand.

An Alpaca rancher with a small herd on a small acreage can expect to harvest his animals' fleece and sell their offspring profitably. The entire investment can be insured. Alpacas are easy to raise, very hardy and require minimal shelter. The entire family can participate in their care. Alpacas are respectful of children and value a peaceful co-existence with humans.

The value of Alpaca fleece is the economic underpinning of the future market for Alpacas. The herds found outside of South America are not currently large enough to justify industrial processing of the fleece they produce. For the foreseeable future, domestic fiber will be sold to the cottage industries which revolve around hand spinning and weaving. Most Alpaca ranchers readily sell their fleece for $2 to $5 an ounce to local artisans. Each animal will produce five to eight pounds of fleece a year.

Alpaca Values
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 command the highest individual prices.

Breeders often prefer one Alpaca color over another, with the rarest colors demanding the highest prices. However, the parents' color does not necessarily guarantee a cria of the same color. Correct, well- conformed Alpacas sell for higher prices. Fleece density, uniformity and fineness also affect the animal's price.

The range of value for females is currently between $6,000 and $20,000. Many still sell for more than $20,000.

Males have a wider price differential. Herd sire quality males have sold in excess of $75,000 and are often insured for more than $100,000. Young, high quality stud prospects routinely sell for between $7,500 and $25,000, unproven. Alpacas are much like diamonds. The market pays a premium for brilliantly colored, flawless examples of the breed.

Alpacas are also fully insurable against theft and mortality. Insurance can be purchased for your stock regardless of age. Average insurance rates are 3.25% of the value of the animal, or $325 for every $10,000 of insurance.

Capital Requirements for Alpaca Investing
Prices for shelter, fencing and labor vary widely based on geographic location, as well as individual needs and tastes. For example, some alpaca breeders will opt for a $500 carport structure as a shelter for their animals, whereas others might spend more than that for a barn that suits their needs and enhances their property values. Additionally, 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 generally costs approximately 3.25% of the purchase price, paid each year in advance. If a person were to begin raising alpacas at his or her own ranch, a typically start-up budget might look like this (prices estimated based on typical costs in the U.S.A.):

  • Acquisition of two to four pregnant females - $2,000-$10,000 (cost varies)
  • Insurance on animals, one year # - 3.5% of purchase cost
  • Equipment - $500
  • Small barn and fences *optional - $10,000
  • One year's feed - $300
  • Veterinarian and miscellaneous reserve - $1,100

#This is an optional item to purchase.
*This budget item depends on what you currently have on your property as well as your personal needs and desires. Many farms get by with just a lean to.

Types of Alpaca Ownership
There are essentially two ways to own alpacas. The first approach is to simply purchase the animals and begin raising them. The second approach is to purchase the animals and place them in the care of an established breeder such as Jersey Breeders. This arrangement for care and boarding of an animal on behalf of another is known as agistment. Under this method you, as owner, typically would still make the important decisions about care, breeding, sales, etc.

This discussion will focus on the owner-raised scenario. Many breeders will work with you to develop an analysis designed for your particular situation; however, you are encouraged to independently develop your own financial analysis utilizing professional support if necessary. Expenditure of funds warrants a full assessment of risks. The buyer needs to establish a comfort level that this is the right balance for their lifestyle.

Analyzing the feasibility of alpaca ownership requires making a set of assumptions. Determining the costs associated with raising the animals and how much they might sell for in the future are the basic elements used in projecting a return on the investment. The assumptions found here are estimates based on many breeders' experiences.

The hands-on method of raising alpacas, as either a part- or full-time business, requires that the alpaca breeder own a small ranch or acreage. The property would need to be properly fenced and have a small barn or shelter. Many new owners already have outbuildings suitable for alpacas. The alpaca owner is presumed to supply the day-to-day labor.

Many new buyers start with a breeding pair or two females (and purchase stud services). The financial returns are similar at different ownership levels, so don't feel that you have to be a large ranch to participate.

Methods of Financing Your Alpaca Purchase
Most alpacas are sold for cash. Many buyers convert other assets to purchase their first alpacas. Some people have a line of credit for investment purposes; others use their equity in real estate to secure funds. At Jersey Breeders we offer financing for your purchase.

We will work with you in developing a payment plan that will assist you and starting your alpaca business. For a financed sale, we do require that the purchaser obtain insurance for the animals with the seller listed as a co-insured party and insurance proceeds distributed first to pay the remainder of the lien.

Creating a Herd
First, determine your goals for alpaca ownership.

  • Would you like to own an inexpensive pair of gelding males for fiber production or as pets for you and your family?
  • Are you going to be a full-time or part-time breeder?
  • Will you invest in alpacas for current financial returns or are you going to build
    a herd toward the goal of being a full-time breeder?

Once you've decided on your goal, the path to alpaca ownership will be more easily defined.

If you're interested in acquiring a producing alpaca herd with immediate sales, you may want to consider a larger initial outlay. You would probably buy a number of pregnant females who would deliver a cash crop of crias immediately. This larger expenditure might also encourage you to become more involved in the industry and spend more time marketing your herd.

Some breeders with larger herds have full-time ranch managers or hire additional labor to assist them with the day-to-day chores. However you choose to be involved, there is an "Alpaca Approach" suitable for you. The industry is young and innovative strategies abound. Very few assets have the potential to reproduce themselves every year as an alpaca does. Today's smaller breeder can choose to be almost any size in the future. An owner, who likes the return alpacas offer, or the lifestyle they provide, can choose any level of ownership.

Alpaca Purchase Contracts
We provide buyers with a written contract when acquiring an alpaca. Our typical contract will call for a veterinarian exam certifying the alpaca's health at the time of purchase. Other clauses warrant that a breeding male will, in fact, settle females and that he is not sterile as a condition of birth. A contract for purchase of female alpaca will often warrant that she is anatomically complete and capable of producing live offspring.

Our contracts will specify the financial terms involved and include small details such as who delivers the animals. It is important to know what happens if there is a future problem with the alpaca that you purchase. For instance, a young male could grow up to be sterile. This condition may not be known for one or two years after purchase. Because we are dealing with livestock it is impossible to know what could happen with these animals, to alleviate anything that could happen we are very specific in our desire to protect your investment.

Contracts are important so that all the elements of a purchase can be accounted for. It is also important to deal with a breeder of good reputation, one who will provide follow-up care. You are making a large purchase when you buy alpacas and it's important that you feel good
about it.

For more information , please feel free to contact us.

 

 
 
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