Alpaca farmers can weather ups and downs in market by keeping ag in mind
June 7, 2016
Trends in livestock are not new to the U.S. agricultural scene. Remember the fervor over Chinchillas, Ostriches and Emu? All those trends, which people bet the farm on, so to speak, faded away.
The latest animal gaining popularity is the alpaca. The American alpaca industry began in 1984 when the first alpacas were imported from South America. The fledgling industry began to take off and by 1991, there were around 2,000 alpacas registered in the U.S. By 2006 that number had grown to over 86,000 and the number of registered alpacas has continued to grow.
Alpacas were, and still are, classified as livestock by the federal government, so owners got a nice tax break. As livestock, alpacas are primarily valued for their fiber. However, at that time, commercial processing of alpaca fiber was limited domestically and there was no import quota on the fiber from the three million alpacas in South America. The real value of alpacas in the United States at that time was in breeding.
The Alpaca Registry closed its book to imported alpacas in 1998 and prices of registered alpacas took off. Alpacas were touted as cuddly tax breaks and sold on late night TV infomercials. The ads targeted middle aged couples that wanted a rural lifestyle and a producing asset that they could raise in a limited amount of space.
Unfortunately, few of the buyers had any livestock or agribusiness experience. A news story that aired on CBS in 2008 featured a woman from Pennsylvania who invested her savings of $56,000 into seven alpacas. She proudly told the interviewer about the recent birth of two babies which her original seven had produced.
"As you can see, with a male and a female [baby alpaca], I have made at least $15,000 in the first year. That's a nice return," she said.
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But according to Saitone and Sexton of the University of California, auction prices were already in full decline from their highs of 2004 and fell several thousand dollars each year between 2005 through 2011.
But there were some alpaca farmers that understood the livestock business and, even though they started early when the speculation on the animal was rampant, they saw the potential in alpacas. One of these people is Chris Powers of Wellington, Colo.
Powers has been breeding alpacas for 13 years. He started small and selectively built up his herd.
"We started with three animals and now have 125. It's been a combination of breeding up as well as buying in," Powers said. "Alpacas are an easy animal to keep and maintain. You have to shear them once a year, take care of their teeth and give a couple of shots. Lots of people got into it maybe ten or fifteen years ago and thought that they were going to get rich because alpacas were selling for an ungodly amount of money at that time.
"It's a livestock industry. You talk to anyone in the livestock industry and they will tell you that it is not a get-rich-quick scheme. At a point in time good, but basic, alpacas were selling for $15,000. Price now depends a great deal on the quality of the animal. We sold one here for greater than $10,000 last year, but I also sell animals for a hundred bucks. So it really depends on the quality and what is the genetic potential of an animal that we can prove out in show," he said.
This was how early investors ended up losing a lot of money. They thought people were going to buy every alpaca they had without the investors having to do any work. The livestock industry does not work that way.
"We are in this from a livestock perspective," Powers said. "We are in it to drive breeding and to drive generational improvements on breeding. The only way that you can do that is you have to breed and we breed everybody. That means that last year I had thirty babies on the ground, this year I will have forty on the ground, and next year I already know I will have sixty.."
All of Powers' alpacas are registered and their breeding is planned and monitored. Detailed records are kept and annual samples of their fiber are scientifically tested. The fiber sample data is compared against a national herd using a standard measure called Estimated Progeny Difference. Powers currently has 80 females and 45 males. Cria (babies) produced by Artificial Insemination are not accepted as a registered animal, only cria that are conceived by live cover are registered. All males on the farm are intact but separated from females. Sixth Day Farms has only three breeding sires which were selected based on their Estimated Progeny Differences.
"A couple of years ago, I went into partnership with a guy on the East Coast and we are all now Sixth Day Farms. We simply focus on white animals. White has the greater utility value. You can dye it any color under the sun that you want." he said.
There is money to be made on the sale of top quality alpacas and there is a growing market in some areas for alpaca meat, but the principal product from alpacas is fiber.
Alpaca fleece is a soft, durable, luxurious and silky natural fiber. It is similar to sheep's wool but warmer, not prickly, naturally water-repellent and has no lanolin, which makes it hypoallergenic. The breed that Sixth Day Farms raises is Huacaya, an alpaca that grows soft spongy fiber which has natural crimp, thus making a naturally elastic yarn well-suited for knitting.
Paul Smith has been shearing alpacas for more than 20 years. Each year, he brings his crew to the U.S. for a three-month trip to shear alpacas.
"I used to shear sheep many years ago, but now only do alpacas," Smith said. "Alpacas are a lot easier on the body. Sheep have to be held while you work. Alpacas are stretched out on the ground and held with the pulley. Sheep are a lot more physical to work with. There is a lot of skill to shearing alpaca. The prime cut blankets are very valuable and have to be cut out in a single piece. It takes seven to eight years to really be good at shearing alpaca."
"I'll sell raw fleece at farmers markets. I'll take it and have it processed here in Colorado into yarn or rovings, which are the intermediate stage between raw fiber and yarn," Powers said. "Last year was 500 to 600 pounds. We have a few more animals this year so I'm looking at 700 pounds.
"Price depends on grade, which is determined by the fiber samples. Certain buyers will buy only certain grades of fiber and a lot of it goes to a co-op that I belong to. The highest grade will go for about $3.25 per ounce and the lowest grade will be about a dollar a pound or lower."
The valuable alpaca fleece is the primary product of Sixth Day Farms, but in any livestock operation, culling of the herd is a necessary part of the operation. Animals to be harvested are sent to Minnesota, where the nutritious and tasty meat is processed and USDA inspected. Powers sells alpaca jerky at local farmers markets under the brand name Many Pastures.
For Powers and his company, the future is bright. ❖