Why Alpacas – Lifestyle, Investment or Business
by Steve Marshall P. O. Box 195, Inglewood, South Australia, 5133 08 883 805 965
This article has been republished in - Alpaca World Magazine Winter 2007/08
There are a myriad of reasons for people to become involved with alpacas. Are you currently considering entering the alpaca industry? Are you an alpaca breeder evaluating your position within the industry? What initially attracted you to alpacas? Some people are simply fascinated and attracted to alpacas because they are so unique. Others turn to alpacas as the environmentally friendly livestock. Some are drawn to alpacas by the possible financial gains. Owning alpacas meets the needs and desires of a vast range of people in a wide variety of circumstances. Although the reasons people become involved in alpacas are quite diverse I believe there are three main foundational categories being lifestyle, investment and business.
Alpacas for lifestyle
Perhaps the most common reason people become involved with alpacas is because they are such enchanting animals. The idyllic situation of a small herd of alpacas gently grazing hillsides providing a picturesque view from the front verandah is attractive. It could be just a few wethers to mow the paddock and showing a beautiful range of natural colours. Or possibly a small herd of breeding females and the excitement of a new born cria every few months. The endearing and intelligent nature of alpacas draws some people while others are attracted to the luxurious fine fleece. Alpacas are possibly the most environmentally friendly livestock, with soft padded feet and don’t need mulesing or crutching. Not susceptible to foot rot and flystrike alpacas are a common choice for busy people seeking relatively maintenance free livestock. Gentle on fences, the ability to be halter trained and even kept as pets, it is understandable why alpacas are so popular.
Alpacas for Investment
Possibly the poorest reason to become involved in alpacas is as an investment. Stocks and shares, gold, antiques and fine art work may be reasonable investments as they involve no maintenance and little business expertise. It is quite common for someone to invest in an object of value and perhaps rarity and expect that one day it will be worth more than the initial cost. An investment shouldn’t require constant attention or work to increase its value. Although, real estate, gold or shares, may provide good financial returns some investors are attracted to alpacas because they want to be part of an exciting, growing industry. There is also the enjoyment of touching and seeing your investment (the alpacas) grow and breed. However, to purchase alpacas simply as an investment, put them in a paddock to breed and expect a financial return is a huge risk. This approach is ultimately likely to lead to disillusioned alpaca breeders that have failed to achieve their goal. Who is responsible for tracking market trends? Who is making wise management and marketing decisions? Keeping in touch with industry directions and making good decisions about management is vital for success and requires some effort. On the other hand one could successfully invest in alpacas if they were managed by an experienced alpaca breeder with good management techniques and a sound business plan. Alpacas may be owned outright or in a syndicate and agisted with a reputable breeder. In this situation the investor may choose to relinquish control over livestock management decisions and is charged for the services of the expert alpaca breeder. For an owner of just a few alpacas this approach may be more cost effective, taking advantage of the expertise, marketing and reputation of an established, experienced breeder.
Alpacas for business
There are a growing number of people involved in alpacas running highly successful and profitable businesses. There is now a world wide community of successful alpaca businesses trading within their own country but also internationally. A business differs from a simple investment in that it requires a plan and constant attention to be successful. However, satisfaction that comes from a successful alpaca business is both financially and personally rewarding. The key ingredients to owning and operating a successful business are common across a wide range of businesses. To own and run an alpaca business requires;
(a) Research market opportunities and sustainability – Alpacas have been run in Australia since 1988 and although their value, in general has declined slowly over a long period the industry is well established and sustainable. In fact the lower average price has made it possible for more people to become involved in the industry which is growing. Although the average price per alpaca is considerably less than in 1988, individual elite alpacas are commanding record prices.
(b) Research stock quality – Depending on the goals and objectives of the business the type, number and quality of initial alpacas purchased may be quite different in various business situations. Embryo transfer technology has enabled owners of very low quality females to access and purchase top quality genetics in the form of embryos. Initial stock quality and quantity to some extent determines a breeder’s role in the industry.
(c) Development of a business plan with projected costs and income – There are numerous courses and opportunities available to learn about business management. If the intent is to make money, the farm must be run in a business fashion with management of a budget that is realistic and achievable.
(d) Development of a breeding plan – Understand your market and construct a plan to breed alpacas that are sought after. Knowing how to recognize and breed top quality alpacas is critical to gain recognition and therefore reputation within the industry. Market trend may change over time. However, a good breeding plan should be flexible to a certain degree, but also adaptable and stable enough to cope with changes without starting at the beginning with each new idea.
(e) Development of a marketing strategy or plan – Perhaps identify a niche market that suits your position. Maybe a particular colour or type of alpaca that assists you in standing out from the crowd. Often marketing includes attending and competing in shows. It certainly involves some sort of advertising to your target market. The development of a marketing plan goes hand in hand with a business plan. There is no financial gain to be made breeding the world’s best alpacas if no one knows about them.
Joanne with our display at a marketing event
(f) The desire to succeed – There is no doubt about the fact that to be successful in business requires some risks, a lot of effort and plenty of hard work. There are often hiccups and obstacles along the way that require research, perseverance and determination to work through and achieve success.
The person that invests in alpacas as a business should do so after considerable research and approach the industry with a business plan. Armed with a carefully developed business plan, the odds of gaining good financial return are considerably improved.
People have become involved in the alpaca industry for more reasons than I could list or even think of. Is there a right or wrong reason? I doubt it really matters what attracts anyone to alpacas in the first place. For some it is simply lifestyle and the pure enjoyment of owning and perhaps breeding alpacas. Some might treat alpacas strictly as an investment, while others may be building and growing a highly successful business. If a person is aware of the reasons for the initial interest they are more likely to make wise decisions about their level of involvement and enjoy the alpaca experience.