If you have been doing research on the internet, you might have seen that several farm owners are
selling all their alpacas and getting out of the business. These farmers began raising alpacas
as soon as they were first being imported into the United States in the early to mid 1980's and are now ready
to retire. These owners are now selling all their alpacas due to their older ages, and/or perhaps some personal health problems.
Keep in mind that these owners are NOT getting out of the alpaca business due to the current economic times.
More and more individuals are considering reducing their dependency on their rat-race city
jobs by moving to the farm and becoming involved with the alpaca lifestyle, at least on a part time basis.
Some individuals will initially purchase only a couple of alpacas to make sure they can actually take care of them.
The often heard statement, “There’s nothing to it.” is, of course, not quite accurate. All successful alpaca operations
have sound nutrition, breeding, and herd health programs. There is some work involved, but, once the new owners figure
out that
these little animals really are easy to care for, they invariably buy more and begin a breeding herd to become fully involved with
the alpaca lifestyle. Others want to jump right in with both feet,
so they purchase several animals to begin with. They might then agist (board) them at an established farm, learning about the
business by coming to the farm
and working alongside the farm owners to help take care of the animals they have purchased. This allowa the new farmer to
learn on-the-job, by gaining experience and wisdom from the more experienced farm owner.
All the while, the new farmer can be getting their own farm ready for their alpacas to be moved home. Other new owners
are quiet content to continue agisting their alpacas at the established farm and taking advantage of the tax benefits of alpaca
ownership without ever having an actual farm of their own. However, if you use the long-term agistment option, you might not
qualify for all of the tax advantages that you would if you had your own farm, but alpaca ownership still provides a stable,
insurable, investment over what the stock market offers. Again, check Tax publication #225 for the specifics.
It has been suggested that alpaca ownership is not really an investment, but rather it is simply a
business opportunity.
However, I do believe it is an investment. But since the income potential
is determined by what you do with it, it is certainly not a static investment. With investments in gold, silver, or
other more traditional investments, you mainly lose control
of what happens to that investment once you plunk your money down. You've bought it, now it sits there, and whether it turns
out to be a good or bad investment is up to what others do to affect the outcome. Not so with alpaca ownership.
You breed your females to better and better males
each and every time and, therefore, you are actively participating in your investment. You are making a
conscious effort
to affect the outcome of each breeding "transaction". Every new alpaca baby (cria) that is born is a potential
$5,000 to $30,000 increase in your alpaca "portfolio". Since every breeding age female alpaca can have one cria each year,
that dam is
possibly doubling her value every year. As an example - A $20,000 breeding age female will produce a cria in one year
valued at approximately
her same value if she produces a female cria, so the two (dam and cria) will be valued at about $40,000. In another year the dam
and her two crias will be worth about $60,000, etc. This is called "Alpaca Compounding".
Does your current stock market investment return those kinds of dividends? Generally, male crias are not
as valuable as females, and theoretically 50% of the new crias will be males, but even if you have ALL males (which is not likely to
happen), your investment is still
growing at a rate that is much better than your stock market investment is providing now.
You can also purchase mortality insurance to protect your alpaca
investment, which is something you certainly cannot do with your investments in the stock market. Alpaca prices are currently down
a little, but over the past 25 or so years,
they have remained fairly stable and all indications are that they will remain so for the forseeable future. There
has been some porpoising of prices, but there have not been any spikes.
It is our opinion here at Little Hummers Alpaca Farm that
the prices of high-end alpacas will continue to climb, with prices of lower-end alpacas beginning to fall somewhat, recession or
no recession. Shortly after the terrorist
attacks on 9/11/2001 the prices of high-end herdsires first broke the $300,000 price barrier and then during the following recession
of 2002-2003, the $400,000 barrior was breeched. Just to give you an example of how 9/11 affected other businesses, I offer the
following: At that time I was one of the owners of a high-end outdoor outfitter in north Alabama's "silicon valley" area.
We had moved into a new, larger location on 9/01 and had 10 days of the best sales we had since our opening three years earlier.
Then, 9/11 happened and disopsable income dried up, as did our sales. On 9/12 we had one customer. Within 3 months we were out of
business. So you can see that alpaca ownership is virtually recession proof. Realizing that, we made the decision to own alpacas
in early 2004. Recently, during the current 2009-2010 recession, 1/2 interest in another high-end herdsire sold for $750,000,
making that alpaca the first $1,000,000 alpaca. Recession, what recession?
The following is from an article in the Wall Street
Journal on October 3, 2008, by JENNIFER LEVITZ, AP -
Quoting from the article:
"Peggy Parks, a 49-year-old auditor in Johnstown, Pa., turned to an unusual farm animal. "I've lost a fortune in stocks, and my
401(K) is falling through the floor. I feel comfortable in alpacas," she says. She invested $56,000 in a small herd that she
believes has a better outlook than most mutual funds because of the animals' breeding potential.
To watch the CBS Newscast featuring Paggy Parks,
click here.
You do have to ask yourself 4 important questions to see if alpaca farming
is right for you.
Shelia and I have but one regret about our decision to raise alpacas - We didn't do it years earlier.
Don't make the same mistake we made by waiting any longer. The prices for quality alpacas are still holding steady for the
most part and we truly don't believe they will drop appreciably any time in the forseeable future. Sure, you will occasionally find
discounted "Economic Stimulus" sale packages, but if you look closely at those packages, most of them
contain only mid to lower quality animals at those
lower prices. So, the "Economic Stimulus" packages are nothing you couldn't have gotten
for the same price before the term "Economic
Stimulus" was ever coined. Be very careful of "Economic Stimulus" or "fire sale" strategies. As the old adage goes, "If
something sounds too good to be true, it
probably is!". So look around, find an alpaca farmer you can trust and work with, and jump in and get your feet
wet. As Delmar said
in O' Brother Where Art Thou (one of my favorite movies), "Come on in boys, the water's fine!"
Have we at Little Hummers Alpaca Farm been affected by the 2009-2010 recession? Certainly, everybody
has to some extent. But as stated earlier, alpaca ownership is not nearly as affected as are other forms of business. Our sales
are off somewhat, but there are still sales being made. Also, all the while, our herd is growing (remember alpaca compounding
mentioned earlier?). A recent news report stated that US Economists are predicting economic
recovery late in the third quarter or early fourth quarter of 2010. Home sales are showing signs of recovery, car sales are up,
and as our economy begins to climb, so goes the sales of alpacas and their end products. Today is the best day to begin to plan,
prepare, and purchase your alpaca starter herd. Now is absolutely a great time to be getting into the alpaca business. By
purchasing alpacas now, you will be positioning yourself to take full advantage of the recovering economy.
So, as to the question of whether you should buy alpacas during depressed economic times - the
answer is a resounding YES! Raising alpacas
has historically been a recession proof fail-safe alternative to the stock market and the alpaca business is now known for
being "the most stable livestock industry available anywhere"...
You might be asking yourself if buying alpacas during the current depressed economic times is the
right thing to do. To help answer that question, you must also
ask yourself, "What have my Stock Market investments such as a IRA or 401-K been doing lately?"
Chances are your answer is the same as mine. My
401-K has dwindled down to the point where it is barely a 201-K. I recently completely closed out another of my IRA
investments and put
that money into more alpacas. Of course doing that is only reasonable if you are old enough to take the money out of
your IRA without that stupid Government early withdrawal penality (Don't get me started on the Government stealing
our hard earned money). Anyway, if you can get your hands on the money, you can certainly manage it better than the
stock market has been performing recently. Even if you decide not to touch your Stock Market investments and
finance the purchase of several alpacas, the tax advantages of alpaca ownership certainly make that a viable option also.
If you are interested in getting into the alpaca business, you should obtain a copy of the IRS
publication #225, entitled "The Farmer's Tax Guide", which you can obtain from your local IRS office. By using the provisions
allowed by the IRS for alpaca ownership, in a business-like manner, you can breed your alpacas and take advantage of
tax-deferred wealth building. However, you should seek advise from your tax consultant on how the provisions outlined in IRS
publication #225 will affect you in your particular situation.
The national Alpaca Registry,
Inc., in Lincoln, Neb., says registrations are on pace to rise 7% this year and currently stand at 140,297. Ms. Parks says a
female of "medium quality" can fetch $10,000 and that prices have been rising, supporting her hopes that she'll see a profit on
her alpaca portfolio in five years."
If you can answer YES to all of those questions, chances are very good that you can become
one of those special people called "Alpaca Owners".