It is often said around the world that alpacas are “The world’s finest livestock investment”.
The worldwide demand for alpacas and their fiber has been strong and has
continued to steadily increase as the word gets out on these wonderful
creatures and their natural treasure. The alpaca supply is extremely
limited. After being introduced into this country in 1984, there are
now only around 25,500 alpacas in the United States owned by approximately
2,200 people (Jan ‘00 data). The population growth rate is extremely
slow; a female has only one offspring per year. The population
growth rate in this country was previously driven by the import of alpacas
from the Andes mountains of South America (the native home of the alpaca).
These imports effectively ceased in March of 1999. On this date, the
Alpaca Registry, Inc. (ARI) restricted its registration process to only
those offspring of alpacas already in the ARI database. Imported
alpacas from South America have lineage outside of the database, so this
closure means alpacas imported after March 1999 could not be ARI
registered. ARI is the only nationally recognized registry for
alpacas in this country. Non-ARI registered alpacas have very little
value in the market therefore the economics driving the importation of
alpacas was removed and imports have been effectively eliminated.
This closing of the registry has served to substantially limit the alpaca
supply. Prices have been very stable for at least the last 10 years
with female crias selling for around $10,000, weanlings for about $15,000
and pregnant females running from $15,000 to over $30,000 for superior
quality show animals. The Registry closing has added additional
stability to the alpaca market and prices have responded accordingly.
High demand, coupled with such a severely restricted
supply, warrants the high prices commanded by these animals. It is common for the female offspring of an alpaca to sell for the
same price or more than an investor or breeder paid for the dam. Imagine another asset which increases in value at such a pace!
A.L. Paca’s Farms has enjoyed annual returns of 30 to well
over 100 percent on our alpacas over the years. Tax advantages have served to make our investment even more
lucrative (please refer to the section on taxes).
Of course, prices will not stay at their current levels
indefinitely. Currently, we
have a breeders market as the total fiber yield remains well below the
supply requirements of a commercial fiber market. Perhaps ten years from now, the transition from a breeders market
to a fiber market will begin to seriously evolve. During this decade or so, the alpaca industry will continue to work
towards creation of a large scale demand for this highly valued fiber.
Through this effort, future economics can remain nearly as
attractive as we are experiencing today.
(For specific information on tax issues consult a tax
advisor familiar with the treatment of livestock used for breeding
Many individuals have stated the tremendous tax
benefits derived from alpaca ownership is one of the main incentives which
drew them into the alpaca business. A
typical alpaca breeder depreciates (takes off of their earned income) a
male or female alpaca used for breeding purposes (considered a capital
asset) over a five year time span. Moreover,
Section 179, Expense Treatment of a Capital Asset, can allow for a maximum
of $19,500 of the asset’s value to be depreciated as a business expense
item in the first year the capital asset is acquired. Income obtained from the sale of an alpaca used for breeding
purposes can fall under the eligible rules for capital gains income.
Income derived from the sale of capital assets is subjected to a
lower tax rate than regular earnings. Feed, veterinary care, and most other costs incurred in the raising
of alpacas, although minimal, can be deducted as either an expense or
capital item. The beneficial
tax treatments extended to the owner of an alpaca herd serves to further
increase the overall attractiveness of these animals.
insurance is available for alpacas! This means your investment in alpacas can be insured
for a reasonable
yearly premium. Insurance is available from several insurance underwriters. We currently use Wilkins as our insurance provider. You will need to call them to get exact rates, however, last year
we paid 3.25 percent of the insured value of the alpaca as a yearly
premium. There was no
deductible at this rate. For
alpacas which were less than 90 days old, higher rates took effect. Significantly lower rates are often available for larger herd
sizes. Check with your
selected insurance provider for current rate information.
If you plan on
boarding your alpacas, you can estimate the cost be about two to three
dollars per day. A.L. Paca’s
Farms charges a nominal fee of three dollars and fifty cents per day for the first alpaca
boarded then two dollars and seventy five cents per day for every one thereafter. There is no minimum boarding period; an alpaca can be boarded
by the day. Discounts are
given for alpacas which will be here on the farm for awhile.
Veterinary care is usually minimal. Every month an alpaca is
de-wormed (around one dollar) and once a year an immunization shot is
given (about three dollars). Pregnant females are tested monthly or
so in the first three to four months of pregnancy, then bimonthly, for
progesterone level; an indicator of continued pregnancy (approximately
An occasional ultrasound might be given as further assurance of
pregnancy. Toenails need
trimmed every six months to one year or so; a relatively easy and painless
process. Sometimes teeth need
yearly maintenance. Nearly
all of this work can easily be done without the need of a vet. A.L. Paca’s Farms offers free, unlimited training to our
customers. We will gladly
show you how to care for and train these beautiful and gentle animals.