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The Alpaca as an Investment.
Two Ways to Own: Hands-On Alpaca Ownership There are essentially two ways to own alpacas. The first approach is to simply purchase the animals and begin raising them. The second approach is to purchase the animals and place them in the care of an established breeder. This arrangement for care and boarding of an animal on behalf of another is known as agistment. Under this method you, as owner, would still make the important decisions about care, breeding, sales, etc. This brochure will focus on the owner raised scenario. Many breeders will work with you to develop an analysis designed for your particular situation; however, you are encouraged to independently develop your own financial analysis utilizing professional support, if necessary. Expenditures of funds indicated in this brochure warrant a full assessment of risks and the buyer needs to establish a comfort level that this is the right investment for their lifestyle. Analyzing the feasibility of alpaca ownership requires making a set of assumptions. Determining the costs associated with raising the animals and how much they might sell for in the future are the basic elements used in projecting a return on the investment. The assumptions found in this brochure are estimates based on many breeders' experiences. The hands-on method of raising alpacas, as either a part or full time business, requires that the alpaca breeder own a small farm or acreage. The property would need to be properly fenced and have a small barn or shelter. Many new owners already have outbuildings suitable for alpacas. The alpaca owner is presumed to supply the day-to-day labor. The analysis in this brochure is easily adapted to any size herd, whatever your financial situation and lifestyle may support. Many new buyers start with a breeding pair or with two females (and purchase stud services). The financial returns are similar at different ownership levels, so don't feel that you have to be a large farm to participate. Two different financial analyses have been provided to illustrate this point. The first analysis was selected to reflect a program designed around selling all offspring to provide the shortest payback period to recover the initial outlay. The second analysis blends selling offspring and adds an element of herd growth. Both approaches have been utilized successfully within the industry. You can examine each approach and determine which scenario is most appropriate for your situation. Major Assumptions Of Both Scenarios The sale price of a female offspring (of breeding age) you raise is equal to the original cost per female in your initial herd. Younger offspring that are not of breeding age sell for less than mature animals. In this analysis, five pregnant females were purchased for $22,500 each. There are two herdsire quality males included in your initial purchase at $15,000. The sale prices for the males you produce were assumed to average $5,000 each. This allows for the fact that all males produced and sold would not be of herdsire quality. You insure the herd for full mortality. Smaller herds are often fully insured against all risk, with no deductible, for about 3.25 percent of value. It is assumed that you would have $12,500 in start-up costs for such things as barns, fences and equipment. These improvements should also add value to your real estate and could be depreciated for tax purposes. |