Business considerations

Alpaca farming as a business

q       Alpacas are rare in Great Britain and even more rare in Ireland.  We were lucky enough to import some top quality animals from both Chile and Peru via careful breeding programs       

q       The animals available to you, through us are among the best in the world and have excellent promise for immediate returns. 

q       Initial profits will come from breeding and selling the offspring.  This situation is likely to last for at least a couple of decades, as it has in the U.S.  to date.  It is worth keeping in mind that there are very few alpacas in the world, approximately 3 million at the moment  This compares to approximately 8 million sheep in Ireland alone.  And alpacas breed slowly, a maximum of one off-spring a year and half of them male.  So it will take a long time for the numbers to build up.

q       Currently the fleece can be sold via the British Alpaca Fiber Co-op.  This revenue stream will increase markedly as the herd sizes increase both here and in Great Britain and sufficient quantities are available for a viable large-scale textile industry.  You can also have it spun for you and either use it or sell it.

Why are alpacas so valuable?

          As with all animals, poor quality individuals can be obtained at relatively low cost.  However the British Alpacas Society has set screening standards for the importation and registration of alpacas to the UK so that high a quality of animals, with good conformation, fine fibre and dense fleece is maintained in this new and growing industry.   It is hoped that we will soon have such an organisation in Ireland

The total number of alpacas worldwide was severely reduced when they were driven up to the Altiplano Even now, top quality Alpacas are relatively rare, even in South America and they command a high price there.  They then have to be transported to and maintained in quarantine stations for many months and subjected to a variety of tests and procedures before they can be imported (usually by air) to their final destination.

We have been fortunate in being able to start with these high standards which will rapidly lead to an excellent industry both in breeding for future generations and in fleece production.

How do I make my investment pay?

  There are several options, no matter what your resources

Ø      Breeding and selling on the new animals.

Ø      Breeding and increasing your herd size until you have a large number of animals to sell

Ø      Selling the fiber, either as fleece or yarn

Ø      Providing stud and agistment services for other owners.

  They offer other financial advantages

      Ø      Alpacas are fully insurable.

Ø      They offer tax advantage including expenses and depreciation.

Ø      They have been called the “world’s most productive animal” for small (or large) farms

Ø      You can expect (provided you buy wisely)

ü      a secure and pleasurable business

ü      a profitable sale of offspring and fleece

ü      excellent capital growth

  No other farm animal can match the alpacas ability to offer such consist and high returns on investment and time from a small acreage.  

Breeding 

          There are currently around 7,000 alpacas in the British Isles and a few  hundred in Ireland.  This means that alpaca farming is going to be focused on breeding for many years to come.

            Importation of these animals is controlled by the appropriate government bodies.  Further, inclusion in the BAS pedigree registry depends on each imported animal passing stringent screening requirements as to the physical standards of the animal and the quality of the fibre.  The aim is to prevent the importation of substandard animals and to maintain the high standards currently set by the industry.

It is expensive to bring these animals out of South America and, since they only have one cria a year, their numbers will build up only slowly.   This can lead to sound and ongoing profits, particularly for those involved in careful and selective breeding programs and producing top quality animals.

            Breeding programs have been in place in Australia and America for over ten years, animal numbers have risen to more than 30,000 in each country in that time and the value of good animals has in general remained constant or increased.  The slow reproductive rate ensures a slow growth in the animal numbers, a controlled market for the animals and stable prices for many years to come.

Alpaca compounding

            You can save money in the bank, leave the interest to accumulate, thus compounding your investment.  You can do the same thing with alpacas.  The following table shows the results, over a ten year period, assuming that you start with one adult and pregnant female with a female cria at foot.  You would also need a gelding for company but he is not included in the table for obvious reasons.  

  Inevitably, if you can start with a large investment the compounding becomes more significant as this next examples shows with a starting herd of four pregnant females with two female cria at foot.  

            The total number of females (not shown) is 99 + 36 = 135.

Not many investments increase at this rate.  There are of course costs, feeding, vaccinations and so forth, but there is also the return on the fleece. 

              Although these numbers are arithmetically correct you will almost certainly find you decide to sell some animals, buy in more or otherwise change the structure of you’re herd.  However these numbers do highlight the possibilities open to a new breeder.

Fibre production

            Ultimately it is fibre sales that will be the underpinning of the alpaca industry and fibre sales already form a second income stream from rearing these animals. 

            Fibre is currently bringing in around €30 to €75 a Kg depending on the colour, quality and amount sold.  The local fibre industry is in its infancy.  Some of the fleece is sold to the UK Fibre co-op; some is sold to cottage industries and individual spinners and weavers.   It can be sold “at the farm gate” or by mail order to individuals.  It can also be spun into yarn which can then be used or sold.

It is estimated that 100,000 animals are needed to produce the economies of scale required for large-scale successful commercial processing and thus to ensure a maximum return to the growers.  These numbers highlight the fact that it will be a long time before the breeding and sale of new animals loses any of its importance or value.

As the number of animals increases it will enable the price per Kg to increase and reflect the added value that can be achieved by processing the fibre into cloth and then into a number of desirable end products.

The market place for these end products is generally the top end of the fashion industry.

Balance

          This means that at present and, judging by the experience of other countries such as Australia, the United States and Great Britain, for many years to come the major income source will continue to be from the breeding and sale of live animals. 

The current fibre prices help to cover the costs of maintaining the animals. 

In the decades ahead, as the numbers of animals increase, there will continue to be high prices paid for top animals.  For other animals there may be a slight softening in the live animal market but it expected to be slow and manageable and the value of the fleeces is expected to increase. 

Are there regulations I will have to observe?

          Alpacas are not sold or used for meat.  In Ireland they are not registered as livestock.  As a result there are very few regulations of the type that cover the keeping and movement of other farm animals. 

            There may be restrictions in the movement of animals across borders and you should check locally for details.

            In the British Isles there are two professional bodies involved in the registration and importation of the animals and the marketing of the fibre end-product  

a)     The British Alpaca Society (BAS)

b)    The Fibre co-operative

It is envisaged that in time there will either be a registry set up in Ireland or we will become part of a (proposed) European registration body.