Alpacas
were a cherished treasure of the ancient Incan
civilization and played a central role in
the Incan culture that was located on the
high Andean Plateau and mountains of South
America. Alpacas have been domesticated for
over 5000 years.
History of Alpaca
Fiber
Alpacas
produce one of the world’s finest and
most luxurious national fibers it is clipped
from the animal without causing it injury.
Soft as cashmere and warmer, lighter and stronger
than wool, it comes in more colors than any
other fiber producing animal. Spinners and
weavers around the world now enjoy this cashmere-like
fleece, once reserved for Incan royalty.
Alpacas
The
lifespan of the alpaca is about 20 years and
gestation is 11 months. Alpacas eat grasses
and chew a cud. Manure cleanup is easy since
alpacas deposit in only a few places in the
paddock. They are about 36” tall at
the withers and weigh around 150 pounds. They
are gentle and easy to handle.
Creating a Herd
Referenced from Alpacas Financial aspects
of Alpaca ownership. AOBA Copyright 2001
Before you can begin purchasing your alpacas,
stop and think about your goals for alpaca
ownership. What do I want to achieve? Is
this going to be a full time business or
hobby farm? What ever these answers turn
out to be, they must be right for you!
Once you’ve decided on your goals,
the path to alpaca ownership will be more
easily defined. Maybe you’ve decided
to start a small herd and let it grow over
time before retiring and living off the
income the herd produces. Or, if you are
interested in acquiring a producing alpaca
herd with immediate sales, you may want
to consider a larger initial investment.
However you choose to be involved, there
is an “Alpaca Approach” suitable
for you. The industry is very young and
represents a ground floor opportunity. Very
few investments have the potential to reproduce
themselves every year as an alpaca does.
Today’s smaller breeder can choose
to be almost any size in the future. An
owner who likes the return alpacas offer,
or the lifestyle they provide, can choose
any level of investment.
Don’t be misled by the term investment.
Being an Alpaca Rancher not only requires
a financial investment, but also is a business
and will require your time and efforts to
be successful.
Herd Growth
A
major investment benefit of owning alpacas
is based on the concept of compounding. Savings
accounts earn interest, which if left in the
account, adds to the principal. The increased
principal earns additional interest, thereby
compounding the investor’s return. Alpacas
reproduce almost every year, and about one-half
of their babies are females. When you retain
the offspring in your herd, they begin producing
babies. This is “Alpaca compounding.”
Tax-deferred wealth building is another “Alpaca
advantage.” As your herd grows, you
postpone paying income tax on its increasing
value until such times as you begin selling
the offspring.
Owning a small herd of alpacas yields impressive
financial returns. Alpacas can provide a
satisfying addition to one’s investment
portfolio and encourages a healthy lifestyle.
Starting with a herd of seven animals (5
pregnant females and 2 males) you can expect
to end your first year with 11 animals,
end of year 2 with 15, end of year 3 with
20. It is easy to see why alpacas have become
a stress-free investment you will love to
hug
Who Buys Alpacas?
Anyone
can become a breeder, for some, the alpacas
are a source of income, for others a source
of pleasure. Young couples with children might
own several alpacas and enjoy caring for them.
Retired couples, which have raised their kids,
sold their business and retire to the country,
are often owners. Many herds are owned by
families where one spouse has a job and the
other manages the alpaca business. Others
are looking to get out of the rat race of
Corporate America and are looking for a career
change to a slower life style. Yet others,
decide to board their alpacas and enjoy the
financial security of an additional income
in addition to their current jobs. Ultimately
we enjoy social aspects of showing and meeting
new friends and “The Alpaca Lifestyle”.
Supply and Demand
The
market for alpacas has been restricted by
lack of supply. Demand for alpacas has increased
dramatically every year since their introduction
outside of South America.
Alpacas offer an outstanding choice as
a livestock investment. They have long been
known as the aristocrat of all ranch animals.
But most of all, alpacas are easy keepers,
the have a charismatic manner, they do very
well on small acreage, and they produce
a luxury product which is in high demand.
So, What do I
do with all the fleece?
A
small breeder on small acreage can expect
to harvest his animals fleece and sell their
offspring profitably. The value of the alpaca
fleece is the economic underpinning of the
future market for alpacas. A breeder can join
organized Co-ops for the commercial processing
of the fleece or process their own. Fiber
is often sold to cottage industries that revolve
around hand spinning and weaving. Each animal
will produce around five to ten pounds of
fleece a year. Most alpaca breeders sell their
fleece for $2 to $4 an ounce to artisans,
with a growing commerce in Internet fiber
sales.
What should I
expect to pay for breeding quality alpacas?
The
range of value for females is currently between
$12,500. and $40,000. Females with unique
attributes have sold for more than $40,000.
Young, unproven high quality stud prospects
routinely sell for between $7,500 and $25,000.
and the highest quality males with unique
characteristics or exceptional offspring on
the ground have sold in excess of $100,000
or higher.
Tax Consequences
of Owning Alpacas
Raising
alpacas at your own farm, in the hands-on
approach, can offer some very attractive tax
advantages. If Alpacas are actively raised
for profit, all the expenses attributable
to the endeavor can be written off against
your income. Expenses would include feed,
fertilizer, veterinarian care, etc., but also
the depreciation of such tangible property
as breeding stock, barns, and fences. These
expenses can also shelter current cash flow
from tax.
The less active owner using the agisted
ownership approach may not enjoy all of
the tax benefits discussed here but many
of the advantages apply. For instance, the
passive alpaca owner can depreciate his
breeding stock and expense the direct cost
of maintaining the animals.
The main difference between a hands-on
or active rancher and a passive owner involves
the passive owner’s ability to deduct
his investment losses against his other
income. The passive investor may only be
able to deduct losses from his investment
against gain from the sale of animals and
fleece. The active rancher can take the
losses against his other income.
Contact your certified tax specialist to
discuss the advantages you could receive
for your individual tax situation. If you
do not have an accountant knowledgeable
in agriculture and you live in the New Jersey/Pennsylvania
area contact us and we can put you in touch
with our accountant.
