Consistent Strong Value Upheld by Solid Worth

For more than 20 years since alpacas were first imported in the 1980's, prices have remained consistently strong. Alpaca values are upheld by the protection of the national registry against new imports, the underlying value of the fleece they produce, and the low supply compared to the high demand for these unique and exotic animals.

Alpaca Registry, Inc. (ARI) is the national registry for alpacas. All new alpacas added to the registry have their parentage verified through DNA matching. No new imports are allowed into the registry. This process has protected the US market from international imports.

Alpacas produce valuable fleece that can be used for a huge range of end products: everything from the most expensive world fashion exclusives to wool manna for hand-spinners to yarn, hats, coats, gloves, rugs, fire-resistant sleepwear and even top-notch insulation. This provides a solid ongoing foundation to uphold the value of these exotic, sweet and magical creatures.

There are slightly more than 100,000 registered alpacas in the US as of December, 2006, according to figures released by ARI. While the supply is low, demand for these alpacas is high due to their strong value and the desire that many Americans have to live a profitable farming lifestyle. Alpacas are scarce, unique, and the textiles produced from their fleeces are known in the fashion centers of New York, Paris, Milan, and Tokyo.

Alpaca Investment Potential

If your producing female valued at $16,000 has one female cria every year, you have the potential to double your profits annually if you sell the female crias. But if you keep the female cria, and beginning in her third year, she has one cria every year, you can see that herd growth can be exponential!

The current alpaca industry is based on the sales of quality breeding stock, which commands premium prices. Female alpacas usually begin breeding at between 15 months and 18 months of age, while most males can successfully impregnate (or "settle") a female at about three years. The females produce one baby per year (twins are uncommon) during a reproductive life about 10-12 years.
Factors that influence individual alpaca prices include color, conformation, fleece quality and quantity, age, and gender. Females sell for more money on average than males, but herd sire quality males have historically commanded the highest individual prices. In addition to color, fleece, density, uniformity, fineness, luster and staple length will also affect value. Well-conformed alpacas with superior fleece characteristics sell for higher prices.

Alpacas normally have a relatively long and trouble-free reproductive life span, and they can be fully insured against lost.

Tax Advantages

The major tax advantages of alpaca ownership include the depreciation of farm assets, capital gains treatment, and if you are an active hands-on owner, the benefit of offsetting your ordinary income from other sources with the expenses from your ranching business.

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 help shelter current cash flow from tax.

Tax-deferred wealth building is another possible advantage to raising alpacas. As your herd grows, you postpone paying income tax on its increasing value until such time as you begin selling the offspring.

Be sure to look up IRS publication, #225, entitled The Farmer's Tax Guide; it can be obtained from your local IRS office. Those considering entering the alpaca industry should engage an accountant for advice in setting up your books and determining the proper use of the concepts discussed here.

Conclusion

For an additional detailed analysis of all areas of financial consideration, visit the financial pages of the national Alpaca Owners and Breeders Association at www.alpacainfo.com/invest/index.asp