Tuesday, March 1, 2016
The Alpaca Market Then and Now
When we first “discovered” alpacas 12 years ago, we were highly skeptical of the business model. Too easy – just have a baby alpaca, sell it and pay your mortgage. It was a tough sell, especially to our banker in order to take out a business loan. But, we penciled out how we could make it and stuck to it.
After nearly a thousand cold calls, marketing, advertising and showing around the country, we were a profitable business in 9 months. We had the money to pay back our loan, but the bank suggested we keep it and continue to reinvest in our company. And that is what we did. We purchased better males, higher quality females, bought and sold.
We were afraid that this type of market was a house of cards. With so much transition in our economy, I questioned many times if the alpaca industry was still valid, or is it a fleeting fad like many other markets seemed to be- llamas, ostriches, buffalo and all of the others. The problem with the meat-based products (buffalo, ostrich) is that there is only so much room on Safeway's shelf for meat. The cattle lobbyists are one of the strongest lobby groups in the world. If Ted Turner with his 10K buffalo and $7 Billion dollars cannot bust through into the meat market and get shelf space, no one will. Emus can be used for meat and/ or their oil, but they are extremely difficult to raise and you have to kill them, not giving you a lot of product for the cost and risk involved. I spoke with one guy who said they had to kill 30 ostriches a day to break even, so he could not make money. Llamas are meant to be a beast of burden for packing or guarding. (We have 3 llamas that we use for protecting our alpacas.) They were extremely high priced in the 80s and a lot of people got burned, but this was always a house of cards. There are only so many people that need a packing or guarding animal.
The difference with alpaca is that it is hard to argue against extremely soft, warm, high performance clothing. Who doesn't need warm socks or a hat when the weather gets cold? The function of the alpaca is for its fiber. It’s a textile animal that has a viable, in demand product for a large majority of the population. Buying and selling unique livestock looses its novelty in the market after a while, although it seemed strong the first few years of business. After two years of raising alpacas, we were at a country market show where someone asked for yarn. Wow- what a great idea! Utilize the alpaca what is was made for…
So we sent 10 pounds of fleece to a local mill, contacted a local knitter and had two hats made for our niece and nephew.
The more we experienced alpaca products, having some made and trying items from other companies, the more we realized how great this product really was. No wonder it has been used for over 6,000 years. We began to explore and research the fiber itself – biological structure, potential uses, and availability locally and worldwide.
We knew that this was the future for the business – the actual function of the animal. Don’t get me wrong, I still love our alpacas, but this is where we needed to spend our time and money to develop our textile business. And selling our alpacas would finance the research.
Then, 2007 happened. Tough times for everyone, including non-essential markets. Breeders stopped almost all major purchases. Families who wanted alpacas for pets and 4-H suddenly didn’t have the discretionary money that most of us did the year before.
But, our alpaca product sales continued to grow. The consumer market had begun shifting back towards home grown, natural products. During Christmas (our largest sales time of the year), instead of buying many inexpensive gifts for people, we found our buyers were purchasing one or two high quality items – like $30 socks or a great hat that will last for years and years.
To some extent, the alpaca market as a hobby has returned. They are excellent for kids – alpacas are gentle and intuitive, demanding respect in order to cooperate. But, unless you are in the high-end breeding program, which we are not, it is extremely difficult to make your entire living off of breeding, buying and selling alpacas.
I love alpacas. I think everyone should have them. But to make a living off of them you need to have an additional “day job” with outside income or really treat alpacas as a business or some combination of the two. Alpacas themselves are the easy part of my work schedule. They are shorn once a year. We have herd health checks every few months, trimming toes, checking teeth and their weight. I look forward to going out every evening and seeing them contently lying around the pastures.
The work is going to the shows, sitting on the computer, sending fleece to mills, developing and packaging products. It’s a fulltime business. It’s definitely not the same selling a $12,000 animal in a day as selling a couple of pairs of socks. But that market, like many other markets (like real estate at the time) could not hold up. They were a house of cards. But there is still high function and demand for the animal – as a fiber and textile source. Don’t get me wrong – I love each and every one of our 150+ alpacas. I know their names, lineage, family members, when they are not feeling well. I spent a week sleeping in the barn next to a premature pet-quality male cria that couldn’t stand or feed, milking the mom every couple of hours until he was strong enough to drink on his own.
I enjoy every aspect of this unique animal, but be sure that you thoroughly research the market and profitability before trying to make them your sole income. We were fortunate to get into the alpacas when we did, dedicated our business to best utilizing them and giving them a great home. But mortgages and living life is very expensive. Make sure you have a plan before you put all of this on the backs of your alpacas.