Anita and I were introduced to the idea of farming alpacas for profit by Anita’s sister and brother-in-law, owners of Accoyo!@DoubleStuff Farm. We had a difficult time figuring out why someone would own such expensive livestock and how in the world they could make money doing it.
After months of researching on the web, visiting other alpaca farms, attending auctions and participating in an Ohio AgriBusiness Association (OABA) event, we finally figured it out and decided that farming alpacas for profit was for us.
After all of the above mentioned research and asking what seemed like an endless stream of questions, the following is what we learned:
While it has been said that alpacas are “the perfect livestock investment”, I prefer to say “alpacas are the perfect livestock business opportunity”. Alpacas are an investment in that entering the alpaca business requires the investment of capital. However, alpacas are not an investment in the same sense as stocks, bonds and mutual funds. Passive investments like stocks and bonds are liquid and can be converted to cash by simply phoning your broker. While it is possible to make a passive investment in alpacas, farming and selling alpacas requires active involvement and marketing effort by the breeder.
That being said, farming alpacas is profitable as long as you love animals, like people, understand the risks and employ some basic business principles. The alpaca industry offers boundless opportunities to improve your lifestyle and make money. But, like any business, there are financial risks. Fortunately, most risks can be minimized and controlled.
If you are interested in becoming an alpaca breeder, you can capitalize on the opportunities and minimize the risks by following a few time-tested fundamentals.
First, do your homework. Read, visit farms and ask questions.
It’s important to take time to understand the industry, how it works and what is recognized as valuable and rewarded by the market before you purchase your first alpacas.
The value of an alpaca is driven by many characteristics not the least of which is the luster, density, handle, crimp character and uniformity of its fiber. Significant market value is placed on the pedigree, physical characteristics and genetic make-up of an alpaca. Buying alpacas is addictive. It is critical that you understand the intricacies of the interplay between these elements in order to avoid making irreversible mistakes in purchasing your breeding stock.
So…what do you do? Do what everyone does...research! It may sound dry, research, but it’s actually a terrific experience. I suggest you do the following:
- Find an Honest, Unbiased Mentor. This should be someone with whom you can communicate and who will put your best interest ahead of selling you alpacas. Ask us! We’re happy to help!
- Go on a Field Trip! Visit as many farms as you can and ask questions. We have found that alpaca ranchers are passionate about the breed, easygoing and very helpful.
- Put Your Hands on as Many Alpacas as Possible! In looking at and touching a large number of alpacas, you will begin to understand fleece characteristics and confirmation. Auctions are a great place to do this. But, be warned, if you are like most people, you’re going to fall in love with these gentle animals.
- Attend Private Farm or Alpaca Owners & Breeders Association Sponsored Events. AOBA
- Surf the Web. There are many wonderful and informative web sites that can help you with every thing from writing your business plan, designing a web site and managing cash flow to breeding and barn design.
- The local and national breed associations have plenty of helpful materials available to assist you in your learning process. Alpaca Registry; AOBA; OABA
Next, decide on a niche. There are as many approaches to the alpaca business as there are breeders and any one can be made to work if it is fundamentally sound. Examples include, Suri or Huacaya, color specialty, all Peruvian, Chilean, Bolivian, Accoyo, stud males, mobile breeding, farms store, etc.
Finally, develop a business plan, set a budget and stick to it. As a financial professional, I’m here to help.
Questions You'll Need to Answer
At what point in the future do I want to begin producing cash flow and what is the amount of investment needed today in order to achieve that goal?
What amount will I spend on insurance, feed, shelter, fencing and marketing and how will it be funded?
The efficient and effective use of your capital will be critical to success. For example, unless you are boarding animals for other ranchers, barns and fencing do not produce cash flow. Alpacas do. When starting out, purchase as high a quality of bred/breeding female you can afford.
Also, marketing is a critical element of any successful business. The approach, cost and timing of your marketing efforts must be considered as well.
The point is you’ll need to consider as many elements of your operation as you can while developing a plan. Of course, your plan won’t cover every possible contingency and it will likely change as your business evolves. But, if you don’t have a map, you won’t know where you are going.
There is no substitute for thoughtful planning when it comes to managing any business. It would be our pleasure to share the things Anita and I have learned. If you have questions, please ask us.