Alpaca, Alpaca Breeders, Flowerdale Estate Alpacas, Alpaca farming and alpaca investment opportunities

Investing in Alpaca

The Alpaca Industry Overview

From a small beginning of a few animals, in 1988, the Australian alpca herd has increased through importation and selective breeding programs to more than 60,000 alpaca. Alpacas thrive in Australia.

Whilst the largest herds are in South America, Australia has the largest pedigreed herd in the world. The pedigree register is held at the University of New England, Armidale, NSW. For a young alpaca industry, these records are of prime importance for the on going success of its genetic improvement program.

There is strong demand for quality alpaca livestock from other stud breeders, hobby farmers, life-style seekers and investors. Alpaca fleece is a highly prized fibre and there is great demand from all levels of the fashion industry.

A vibrant industry already exists within Australia. There are currently over 1800 breeders, across the country, registered with the Australian Alpaca Association. The challenge to be taken up by the alpaca industry is to participate in the development of an exciting new fibre industry. The first part is being met - the breeding of high quality animals. The second - the production of high quality alpaca product (value adding) - has just begun. For the foreseeable future, breeding quality animals will remain the primary focus. Good returns can be made on the sale of quality animals. In the longer term, there are sound reasons for optimism.

Future Industry Prospects.

We have a view of the future.  We can predict:

• The valuable Pedigree Register of all Australian alpacas will continue to be maintained, providing a reliable breeding resource.
• Selective breeding will produce a healthier alpaca with improved fibre and conformation.
• Quality management practices coming into the industry will lead to rapid rates of genetic improvement.  The Across Herd Genetic Evaluation Service and SRS® breed selection practices will accelerate these gains.
• Export of Australian quality breeding stock, already underway, will continue grow as countries such as the UK, NZ, South Africa, Italy and Germany come to appreciate the value of Australia's quality bloodlines.
• Quality breeding stock prices will remain high in the foreseeable future.  North American alpaca prices are significantly higher than here in Australia .  Overseas breeders of quality stock see Australia as their opportunity to acquire the best bloodlines at competitive prices.
• Our fashion industry has recognized the importance and value of alpaca cloth.  Alpaca fibre will again become a prized material for textile manufacturers and fashion designers.
• The percentage of the Australian herd made up of white and light fawn alpacas will continue to grow as a world-wide, commercial manufacturing industry, increases demand for fleece that can by dyed into every imaginable fashion colour.  White will be the choice of breeders of the large commercial herds of the future.
• Colored alpacas, that have so far been the largest percentage of the Australian herd, will continue to be popular with smaller breeders and people wanting non-dyed natural fabrics.
• Our Industry Association and its regional chapters is well founded and will continue to drive the promotion of alpacas and the alpaca lifestyle to new potential investors and breeders.

Who invests in Alpacas?

• Professionals looking for tax advantages.
• Retirees unwilling to sit down and grow old.
• Families looking for a lifestyle that's healthy and appealing to children and adults.
• Farmers wanting to diversify.
• People moving into farming and looking for a new and exciting industry.
• Young people who want to become involved with livestock that earns money but doesn't damage the environment.
• Fibre growers who can see great long term potential in establishing a new Australian fibre industry.

Why invest in Alpacas?

We suggest you ask these questions:

1. What other investment will give you the opportunity to increase your capital four fold in five years? (See example below).
2. What other investment provides the possibility of returning your capital in one year? (Buy a pregnant female, have a good quality cria and sell it for a price usually the same or better than the dam).
3. What other investment gives you (approved ATO) deferred tax benefits of up to 7 years?
4. Can you depreciate other investments such as shares, like you can with alpacas? (We don't think so).
5. Can you insure against calamity, such as with the One Tel or Ansett share collapse? (You can with alpacas).
6. Does the alternative investment improve your lifestyle?

Then consider these further benefits:

• Alpacas are viable even on small acreages or are easily accommodated as a farming diversification.
• Alpacas are scarce, quality animals that bring excellent returns on sale.
• Alpaca fibre is in high demand on world markets.
• Australia is strategically placed to export to the world's largest consumer of alpaca fibre (ie Japan).
• Australia's superior expertise in producing supreme quality fleeced stock makes us a world leader in alpaca breeding.
  
  Investment in Alpacas has a lot to offer with a very bright future.

Where do you start?

There is a basic choice you need to make. Use your land and build up your breeding and animal handling and management expertise as you go. Or, buy a few animals and agist them with an experienced breeder, working with the breeder to build up your experetise. In time you may choose to move your agisted herd to your own farm. At Flowerdale Estate we are happy to work with you, either way.

What are the investment returns like?

Let's look at the potential revenue to begin with over say a 5-year period. You start with 2 females of reasonable quality, at say an average price of $5,000 each in year one. You mate the 2 females to a quality male and at the end of the year you have 2 new cria. The females are re-mated and at the end of the second year they have 2 more cria and so on. Then, the first cria should be ready to mate at around one year old producing its first cria at the end of the third year.

The results could look like this:

* There are many variations on this scenario. For example, this does not allow for any losses through deaths, disease or injury.

So in 5 years this example shows how you could expect to turn your 2 animals into 13 animals. You would also expect to generate $42,000 from your $10,000 investment.

You could expect to breed 50% males and 50% females. Sales of your wether quality males (non breeders) may bring $400 and your average females may bring improved prices (say $6000) over their mothers, due to the improvement gained from breeding to higher quality males.

You need to understand that there are variations to this scenario with many opportunities to do better than the above example. Equally there are some possible pitfalls that you need to be aware of. However for the purposes of this demonstration the above example is fair and reasonable.

Opportunities to do better

Breeding a higher % of female cria. Increases breeding numbers.
Breeding a show champion. Some males have sold for $A300,000.
Breeding a stud quality male providing a new stream of income.
Stud fees can be as high as $2000.

Possible Pitfalls

Possibility of breeding a higher % of male cria with lower sale prices for wether quality.
Possibility of infertility and even animal losses.

In terms of risk it should be acknowledged that all alpacas can be fully insured.

Some costs to consider.

Expenses will in part be determined by whether you have land and choose to use it actively participating in the management of your growing herd. Or, whether you choose to work with an existing breeder and have your animals agisted. With this approach you will be able to visit your animals and should be able to participate in their care, handling and breeding.

Some costs to consider.

We can help with:

• Selecting alpacas for your breeding herd.
• Advice on setting up your farm.
• Selection of sires for your breeding program.
• Agistment
• All animal husbandry such as shearing, drenching, innoculations and toenail clipping.
• Showing your show quality animals.
• Alpaca transport.
• Marketing and sale of your stock.
• Assistance with time payment and finance.