Farm Business Opportunity
The alpaca business has been referred to as "The world's greatest livestock investment". I prefer the wording " Farm Business Opportunity". Although alpacas have been a great investment for many people over the years the word "investment" implies a static entity; something that just sits there and makes money. Most people that are successful in the business know that it requires time and energy: time and energy that can be very rewarding both financially and emotionally.
The work involves firstly looking after the animals. Most people love this part of the business and it is probably the main reason they get involved with alpacas in the first place. Many find it therapeutic, a real change from the stresses and strains of working life. Others find it a great way to get kids involved, a family activity that has an educational component.
The work activities can then expand into marketing and promotion. Showing your animals is a great way to promote. This process can be an exciting and very social experience. Other time commitments may be working your web site, having groups visit your farm and developing and implementing an advertising campaign. It all boils down to running a farm business but with returns that are generally not associated with farming.
I should say at this point that those people that do not want to get involved in anything beyond raising and breeding can make use of Brokers to sell their animals. This option is available through WestWool Alpacas.
Investment qualities of the alpaca business
As is well known the value of a commodity has to do with supply and demand. The registries in both Canada and the United States are both closed, which means that only offspring of animals already in the registry can enter the registry. This also means that the marketplace has a controlled and measurable supply. This has worked very well for the United States whose market has gone from strength to strength over the last few years: demand is strong and steady and prices have remained high. The population of alpacas in the U.S. is now about 50,000. which is still extremely small compared to other animal populations and also to the number of alpacas required to have a sustainable fiber business. Canada has yet to experience that secure market. The population of alpacas in Canada has remained fairly steady, at around 13,000. animals, over the years unlike other countries like the United States, Australia and Britain who have seen their populations increase. The reason for this is that, with stronger prices and a favorable exchange rate in the U.S., a lot of the A.R.I. registered animals in Canada have moved south. Even C.L.R.C. ( Canadian ) registered animals have moved south, although at lower prices. Some U.S. breeders prefer to get into the alpaca business with Canadian registered stock: they can have a registered herd of alpacas whose offspring can be registered in Canada and do all this at a lower cost. A lot of Canadian stock has also gone to Europe where markets are just developing especially in France, Germany and Italy.
This situation in Canada would seem to have investment qualities; a potential to have significant price increases over time against what we have now. We will see people with greater resources getting into the industry as has happened in the United States. These people are not intimidated by the uncertainties of the marketplace and can act as a stabilizing force. They have the money and the confidence to promote the industry, which creates success for themselves and other breeders. I believe the opportunity is there and now is the time.
Fiber Industry
The purpose of the alpaca industry is to produce fiber. Alpaca is an exotic fiber just like Cashmere and Mohair. Not much alpaca fiber is produced; world demand is strong and prices are relatively high. This situation has occurred with very little promotion. Supply can be variable because the worlds biggest producer, Peru, can have years where a great percentage of its crop of alpaca babies are lost due to bad weather. There is huge potential on a world and local level to increase the use of alpaca fiber. Right now there is no correlation between the price of alpaca fiber and the cost of the animals in North America. At this point in the evolution of the industry, it is mainly a breed stock business. We simply do not have the numbers of animals to maintain a fiber industry. Experts reason that it requires 250,000. to 500,000. animals in Canada to produce enough fiber to supply mills with the quantities necessary to be successful. Until we get to that level every breeding animal is valuable.
