Cinebar Star Ranch - Alpacas as a Business

Alpacas as a Business		Curious about the business aspects of raising alpacas? So were we! You're doing the right thing - gather all the information and opinions you can find on the web, at alpaca shows, and from visits to alpaca ranches. Then sit down and go through the numbers as they apply to your particular life situation and see if the alpaca business is right for you. In the meantime, here's some of the information we gleaned in our research, as well as some of the thoughts we had as we made our decision to board the alpaca train... First, it's important to understand your own goals. If what you want is to have a few alpacas as pets, then you'll have a tough time convincing the IRS that you're running a business. On the other hand, if you decide you want to focus on raising and selling alpacas to people who are looking for alpacas as pets, then that CAN be a legitimate business. You might just want to purchase alpacas and resell them at a higher price, and that too can be a business.
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	Or, you might like to do what most of us do, which is to own some breeding animals and raise and sell the offspring. Even this avenue can be implemented in many ways. Some people own alpacas and keep them at ranches owned by others. (Yes, you can be an alpaca owner and breeder and live in an apartment!) This allows you to concentrate on making the best purchase, breeding, and sales decisions while leaving the day-to-day issues of keeping the animals fed and healthy to someone else. If you don't own acreage, or if you prefer a traveling lifestyle, then this might be the best option for you. If you do own land and enjoy being around alpacas and taking care of them, but you don't have the capital to purchase breeding animals or you simply prefer not to own your own animals, then you might consider agisting, i.e. keeping animals owned by others on your property and tending to their daily needs. Or, you might prefer to join the majority of alpaca owner/breeders and keep your own animals on your own ranch. This requires the most in terms of resources, knowledge, and work because you have to manage not only the business of buying and selling alpacas, but you also have to manage the ranch itself, keep the animals fed and healthy, make breeding and veterinary decisions, etc. Yeah, it's more work. But in our opinion, it's also the most rewarding. Obviously, there are lots of ways to be in the alpaca business, and which one is right for you is something only you can decide. Pick the type of involvement that seems the most consistent with your goals and lifestyle, give it some serious thought, develop a plan of action, and go for it! The next step? Write a business plan! A business plan is nothing more than a written copy of your plans for your business. It describes how you plan to make your business profitable. It doesn't have to be formal, and it isn't cast in stone. In fact, it can and should change from time to time as your situation, the economy, or the market changes. It should be a living document. The greatest value of the business plan is the process of writing it. It will help you understand the issues you'll face in making your business profitable. Because nobody has the same life circumstances or goals as you, nobody else's business plan will be exactly like yours. But there is some information that is common to many business plans, and some of that information is here. The market for alpacas has been moderated by the effects of relatively slow herd growth. As of early 2004, the total population of registered alpacas in North America accounts for about 50,000 in the United States and about 15,000 in Canada. Supply will continue to be limited in the near future for a number of reasons: Alpacas reproduce slowly. A female generally breeds for the first time between 18-24 months of age, is pregnant for 11-12 months, and almost always only has one cria per year. Many breeders retain their offspring to build their herds The limited size of the national herds in each country outside of South America will restrain growth to a small degree. The U.S. alpaca registry is closed to further importation to protect our national herd, which will further moderate U.S. herd growth. Meanwhile, demand for alpacas has increased dramatically every year since their introduction outside of South America (1984). Not only are there more breeders entering the alpaca market each year in established countries such as Canada, New Zealand, Australia and the U.S., but there are more countries worldwide also actively establishing alpaca herds. This growth is sure to continue as the alpaca gains international recognition. Alpacas offer an outstanding choice for livestock ownership. They have long been known as the aristocrat of all ranch animals. Most of all, alpacas have a charismatic manner, they do very well on small acreage, and they produce a luxury product which is high in demand. The range of value for females has remained fairly consistent during the two decades that alpacas have been available to the public in North America: generally between $12,000 and $25,000. Females with unique attributes have been known to sell for $50,000 or more. Proven, top-quality herd sires typically sell for $20,000-$50,000, and the highest quality males with unique characteristics or exceptional offspring on the ground have sold in excess of $150,000. (The current world record, set at auction in 2002, is $265,000). Alpacas are also fully insurable against theft and mortality. Insurance can be purchased for your stock regardless of age. Average insurance rates are 3.25% of the value of the animal, or $325 for every $10,000 of insurance. Many alpaca owners who have been involved in the alpaca lifestyle have found it both personally and financially rewarding. Please recognize, however, that owning alpacas involves significant financial risks, as does any business start-up. Your ultimate success will be determined by your own ability to market your animals: your fiber and finished goods: your employment of available resources within the alpaca industry: your communication skills: and your ability and willingness to provide top-notch customer service that results in a good reputation. Although this article discusses techniques that many people have used to make alpaca breeding a profitable business venture, it is, of course, impossible to guarantee the ultimate success of any business.
©2007, Cinebar Star Ranch, 4274 State Route 508, Cinebar, WA 98533 - Send Email to CSR - Call us at 360-985-7467

Alpacas as a Business

Curious about the business aspects of raising alpacas? So were we! You're doing the right thing - gather all the information and opinions you can find on the web, at alpaca shows, and from visits to alpaca ranches. Then sit down and go through the numbers as they apply to your particular life situation and see if the alpaca business is right for you. In the meantime, here's some of the information we gleaned in our research, as well as some of the thoughts we had as we made our decision to board the alpaca train...

First, it's important to understand your own goals. If what you want is to have a few alpacas as pets, then you'll have a tough time convincing the IRS that you're running a business. On the other hand, if you decide you want to focus on raising and selling alpacas to people who are looking for alpacas as pets, then that CAN be a legitimate business. You might just want to purchase alpacas and resell them at a higher price, and that too can be a business.

Or, you might like to do what most of us do, which is to own some breeding animals and raise and sell the offspring. Even this avenue can be implemented in many ways. Some people own alpacas and keep them at ranches owned by others. (Yes, you can be an alpaca owner and breeder and live in an apartment!) This allows you to concentrate on making the best purchase, breeding, and sales decisions while leaving the day-to-day issues of keeping the animals fed and healthy to someone else. If you don't own acreage, or if you prefer a traveling lifestyle, then this might be the best option for you. If you do own land and enjoy being around alpacas and taking care of them, but you don't have the capital to purchase breeding animals or you simply prefer not to own your own animals, then you might consider agisting, i.e. keeping animals owned by others on your property and tending to their daily needs. Or, you might prefer to join the majority of alpaca owner/breeders and keep your own animals on your own ranch. This requires the most in terms of resources, knowledge, and work because you have to manage not only the business of buying and selling alpacas, but you also have to manage the ranch itself, keep the animals fed and healthy, make breeding and veterinary decisions, etc. Yeah, it's more work. But in our opinion, it's also the most rewarding. Obviously, there are lots of ways to be in the alpaca business, and which one is right for you is something only you can decide. Pick the type of involvement that seems the most consistent with your goals and lifestyle, give it some serious thought, develop a plan of action, and go for it!

The next step? Write a business plan! A business plan is nothing more than a written copy of your plans for your business. It describes how you plan to make your business profitable. It doesn't have to be formal, and it isn't cast in stone. In fact, it can and should change from time to time as your situation, the economy, or the market changes. It should be a living document. The greatest value of the business plan is the process of writing it. It will help you understand the issues you'll face in making your business profitable. Because nobody has the same life circumstances or goals as you, nobody else's business plan will be exactly like yours. But there is some information that is common to many business plans, and some of that information is here.

The market for alpacas has been moderated by the effects of relatively slow herd growth. As of early 2004, the total population of registered alpacas in North America accounts for about 50,000 in the United States and about 15,000 in Canada.

Supply will continue to be limited in the near future for a number of reasons:

Alpacas reproduce slowly. A female generally breeds for the first time between 18-24 months of age, is pregnant for 11-12 months, and almost always only has one cria per year.
Many breeders retain their offspring to build their herds
The limited size of the national herds in each country outside of South America will restrain growth to a small degree.
The U.S. alpaca registry is closed to further importation to protect our national herd, which will further moderate U.S. herd growth.

Meanwhile, demand for alpacas has increased dramatically every year since their introduction outside of South America (1984). Not only are there more breeders entering the alpaca market each year in established countries such as Canada, New Zealand, Australia and the U.S., but there are more countries worldwide also actively establishing alpaca herds. This growth is sure to continue as the alpaca gains international recognition.

Alpacas offer an outstanding choice for livestock ownership. They have long been known as the aristocrat of all ranch animals. Most of all, alpacas have a charismatic manner, they do very well on small acreage, and they produce a luxury product which is high in demand.

The range of value for females has remained fairly consistent during the two decades that alpacas have been available to the public in North America: generally between $12,000 and $25,000. Females with unique attributes have been known to sell for $50,000 or more. Proven, top-quality herd sires typically sell for $20,000-$50,000, and the highest quality males with unique characteristics or exceptional offspring on the ground have sold in excess of $150,000. (The current world record, set at auction in 2002, is $265,000).

Alpacas are also fully insurable against theft and mortality. Insurance can be purchased for your stock regardless of age. Average insurance rates are 3.25% of the value of the animal, or $325 for every $10,000 of insurance.

Many alpaca owners who have been involved in the alpaca lifestyle have found it both personally and financially rewarding. Please recognize, however, that owning alpacas involves significant financial risks, as does any business start-up. Your ultimate success will be determined by your own ability to market your animals: your fiber and finished goods: your employment of available resources within the alpaca industry: your communication skills: and your ability and willingness to provide top-notch customer service that results in a good reputation. Although this article discusses techniques that many people have used to make alpaca breeding a profitable business venture, it is, of course, impossible to guarantee the ultimate success of any business.