Kentucky Home Alpacas

INVESTMENT

We started into the alpaca business with the plan to spend $30,000 on two pregnant females. Our information was that pregnant females cost about $15,000 each and we just happened to have an extra $30,000 at the time. As it turns out, the price range is $12,500 to $40,000 and up depending on the quality of the pregnant female and the herdsire to which she is bred. Included in the price are usually a live cria guarantee and a free breeding.

The return on the investment works something like this. A pregnant female has a 50/50 chance of having a female baby. Fourteen to eighteen months later the female offspring herself becomes pregnant and assuming equal quality of the females and the herdsires to which they are bred, the investment doubles. Male cria tend to be worth less unless Mom and Dad are top-notch animals themselves, in which case the male cria has an excellent chance of being herdsire quality. Such males are worth as much as their mothers or more, depending on age. Herdsire quality males at a young age can be bought for $10,000 and up. The record price for a proven herdsire is $226,000.

One can deduct from the above numbers that under ideal circumstances; one’s investment would double in 18 months if two pregnant females have female crias, which become pregnant 14 months later. There are of course a number of factors that prevent the ideal from happening. After some fail to conceive every year (gestation period 350 days) and after some pregnancies reabsorb, the live cria rate is thought to be around 80%. However all things considered, the return on the investment tends to be quite good because of alpaca "compounding", or the tendency of a herd of alpacas to increase in size and therefore value over time as female babies are kept in the herd, and not sold, for breeding purposes. Below is the chart used in alpaca literature to demonstrate the growth of a typical herd after purchasing 5 pregnant females and two herdsire quality males, based on a number of assumptions.

Alpacas are commonly referred to as "The World’s Finest Livestock Investment". Magical Farms, Inc., in a recent publication, compares the "Wall Street Stock market to the Alpaca Livestock market. Both alpacas and stocks are subject to capital gains taxes if you hold them the required amount of time. Alpacas and stocks can both be traded as tax-free exchanges. Alpacas are tax depreciable over a five-year period, stocks are not. Alpacas make you eligible for a section 179 deduction, this year $20,000, which is a small business deduction for capital assets, stocks are not. If you raise alpacas, your land is usually taxed… much less as a farm than it would be ordinarily, stocks don’t help. In the stock market, when a stock splits, you have more stock that is worth the same amount of money as before. When an alpaca has a cria, you have two alpacas that can be worth twice as much. There is nothing that you can do to make a stock go up in value. You have everything to do with the value of your offspring. Are you getting the picture here?"

Alpaca farming can be done on very small acreage. Since alpacas are very efficient eaters, five to ten animals can be kept on one acre. We know a farm manager who keeps two alpacas in his small back yard and feeds them in his garage. So the average 5-acre lot with a suburban home could be the perfect spot to enjoy the alpaca lifestyle.