Buying Bad

No offense intended to Breaking Bad but in the Alpaca business buying bad can be just as dangerous as well as expensive.

A friend of mine recently contacted me to tell me that she was planning a move to Oregon and wanted to buy some alpacas. The phrase that caught my eye was her grand children thought they were so "cute".

I've known more than one alpaca farmer that bought on emotion rather than on good common horse sense or should I say "Alpaca Sense".

Buying on emotion is almost always a sure case for disaster. I'm not saying that emotion shouldn't enter into the transaction. Let's face it, emotion enters into almost every transaction we are involved in whether it's buying a new car, a house, a diamond ring, art work, you name it. Emotion is always in the mix.

But you wouldn't buy a diamond ring with a huge flaw simply because you fell in love with the cut or the size or the color. You wouldn't buy a house with a defective plumbing system simply because you loved the neighborhood or the front yard or the old claw foot tub in the bathroom. And if you did buy these things you would surely be looking for a steep discount off the asking price. Maybe no one would notice the flaw in the diamond and maybe you could spend ten thousand or so to fix the plumbing system but it's a little different when you are buying alpacas or for that matter any livestock.

My wife and I were fortunate in that we came from an agriculture background and both of us had lots of experience working with animals. The first key to buying any animal is conformation. For those of you new to livestock, conformation, very simply, is what the animal looks like. A horse with a sway back isn't a good buy. If an animals ribs show prominently that isn't a good buy. If there is mucus running out of the eye or nose that is not a good buy. These are fairly easy to detect but conformation extends beyond what is readily visible. With Alpacas we look for how the animal stands and walks. We feel the animals bone structure (this requires some experience with alpacas since their "cute" fleece can hide bone defects), check their eyes, particularly the white of the eyes. Look at their teeth and mouth, check their fecal matter (another matter that requires some experience), and if possible any health records the seller has available. Some buyers even go to the expense of having a vet check the animal for problems (something I recommend unless you and the seller have a long standing relationship).

The second key to buying an animal is what do you plan to do with the animal. Are you going to show the animal in halter classes, show their fleece, breed them to animals in your herd only or offer breeding to other farmers? Or are they just going to be a hobby and provide fun and delight for you and your family?

Each one of these plans will require a certain amount of due diligence on your part to make sure the animal you are buying is suited to the task. One of the first animals we bought was an old neutered male. We weren't going to show him and he doesn't have the best fleece but he has a personality and we thought he might make a good PR animal. He's pretty good with people so we thought he might be a good one to take to farmers markets to let the kids pet and feed. We knew in advance what we wanted to do with Paladin (above) and that figured into the negotiations.

However, I've seen alpaca farmers buy on emotion and what the seller (horse trader) told them without seemingly any investigation at all. As an example, early on in our alpaca venture, even before we had purchased any alpacas, we attended a show to get an idea about what alpaca shows were all about. My wife was visiting with a well known and respected alpaca breeder when the breeder was asked to come look at an animal a farmer had just purchased a few weeks before the show. Apparently he had been told that he had a "show quality" animal and was very dismayed since the alpaca had not even placed in the event he entered it in. I was wandering around the show and happened to come upon my wife and the breeder examining the animal. I was probably fifty or sixty feet away when I first noticed them and my first thought was "Oh, I wonder what's wrong with that poor little Alpaca?" Even from that distance I could immediately tell that the animal was extremely small, looked somewhat ragged and just generally didn't have the "conformation" of a healthy animal. Later, the breeder confirmed that this farmer had unfortunately been the victim of an unscrupulous seller and had bought the proverbial "pig in a poke". They bought the sellers pitch hook, line and sinker. Having an experienced breeder examine the animal after the fact only added to the misery when the farmer was told what he didn't want to hear.

So what's the take-away here. Do your homework. Examine the animal. Take what the seller says with a grain of salt. Get an expert in to examine the alpaca BEFORE you spend that hard earned money.

Alpaca Shows

One of the highlights of owning alpacas is the opportunity to show them. There are hundreds of shows across the country where you can show your alpacas and their fleece. Two of the best are celebrated right here in Virginia each year.

The first and one of the earliest each year is the Virginia Classic Llama and Alpaca show held for the past several years at the Virginia Horse Center in Lexington, VA. The show is usually held in early March which can mean some cold and sometimes unpredictable weather. This year was to be their twenty-first annual show but they had to cancel the show at the very last minute due to the nasty storm that hit Virginia late last week. It looks like they will probably re-schedule the show but no one is sure right now. We have attended and shown animals at this show and it is one of the best run shows around. The show is a Level II alpaca show. This means that you can expect somewhere between 100 and 299 animals being shown. As indicated by the name it is a joint Llama and Alpaca show.  So not only will there be a couple hundred alpacas attending but you also get to see and experience several hundred Llamas.

The other show we have attended and shown alpacas at is the annual VAOBA Alpaca EXPO. VAOBA is the acronym for the Virginia Alpaca Owners and Breeders Association. VAOBA was formed in 2005 to assist the hundreds of Alpaca farms in the state of Virginia with marketing and education about all things alpaca. They held their ninth annual show in December 2014 at a new location, The Meadow Event Park in Doswell, VA. We showed two of our yearling males and came away with several ribbons for fleece and halter classes.

Winning ribbons isn’t the only benefit you derive from showing your animals. We were excited and happy to have come away with some ribbons. But we got so much more out of the show just observing the judging, listening to the judge’s comments after each class, meeting and talking with other alpaca owners and breeders, and attending some of the seminars that are available. It’s really amazing what you can learn from one of these shows. For anyone considering owning and raising alpacas I would emphatically recommend that they attend at least one alpaca show before diving in and starting your farm. Attendance at almost every Alpaca show is free to the general public. In addition to meeting Alpaca owners and farmers you can also meet many alpaca product vendors, such as spinners, knitters, and farm product vendors. All of them will be more than happy to answer any and all of your questions. And I suggest you ask a lot of questions. An alpaca show brings together hundreds of people with a vast range of experience. Most of them have had the opportunity of learning by doing so they can relate the mistakes and errors they made before you go out and make them yourself.

Showing alpacas can be a fairly expensive proposition. In addition to the entry fee (Halter Fee) there are generally fees for stalls and fees to enter the fleece also. Besides the show fees you will probably incur expenses for vet fees for providing a CVI (Certificate of Veterinary Inspection) health certificate, hay and feed, transportation, motel/hotel, dining out, and assorted costs you would incur on any trip. The cost for a trailer to haul alpacas in is something you will have to consider before you even begin to show. Some folks will tell you that you can transport an alpaca in a utility van or regular passenger van. And I’ve actually met folks that did that. But it was usually a situation where they absolutely had to move the animal from point A to point B and had no other means of moving them. You would be hard pressed to bring a couple of Alpacas along with all their feed and tack to a show in a Dodge or Chrysler Town & Country passenger van.

Why Alpacas

Good Question!

Why Alpacas?

There are probably hundreds of reasons. They're cute. Their fiber has many wonderful qualities. They're relatively easy to care for. You can make big money.

You can make big money? Well that depends. Yes, there are breeders out there that make big money. But like any thing else you have to work real hard.

When we began looking into Alpacas a lot of the sellers we talked to at the time were touting the fantastic tax benefits and the huge market for Alpacas. And of course they all had animals for sale and at some pretty astonishing prices. But if you are getting into the Alpaca industry because you believe there is big money to be made quickly you are in for a real big disappointment.

To make the big money you have to spend some big money. Unless you are a high earner in the mid six figure range or you've just won the lottery you won't be making big money anytime soon. What you will be doing is spending some money. I'm not going to say it's big money but you have to be prepared to "invest" in the business. The old saw "It takes money to make money" is very applicable when it comes to Alpaca farming or any other venture for that matter. If you don't invest the money and time ( I'll write more about the time you will have to invest later) you won't make any money.

Now that's fine for some folks. For them Alpaca farming is more of a hobby. And the IRS will treat it like a hobby if you cannot prove that you actively participate in the operation of your farm (more on that later too). But if you want to become a viable Alpaca farming operation it is going to take a fairly large investment to become operational.

When we began we had a plan (a business plan is essential to any venture including Alpaca farming) but as most everyone knows the best laid plans of mice and men... Anyway, our plan has changed several times over the few years we have been Alpaca farmers. But the plan should include a reasonable estimate of the expenses you will incur owning and operating an Alpaca farm.

Before you even consider purchasing alpacas you should invest in many things. First and foremost would be property. You can raise alpacas in your back yard if the zoning allowed it but an alpaca generally needs at least one tenth to one fifth of an acre. Given that, you can raise a herd of five to ten alpacas on one acre of land. In our area of Virginia that acre would cost you around $10,000. Most farms are at least four acres so with a house and four acres now you're looking at between $140,000 and $200,000 in this part of Virginia.

Then you will need to have a fence. The material cost for fencing on our four acres ran a little over $6,500. That probably seems a bit high but you are not just fencing the perimeter of the property. You need separate areas for your females and males. You'll need another fenced area for your new mothers and their crias until they are weaned. And it wouldn't hurt to have a quarantine area fenced off for when you bring a new alpaca to the farm and want to make sure they are healthy before introducing them to the herd. A short word about the fencing before I go on; the fence isn't really to keep the alpacas in, they are by nature herd animals and if one gets outside of the fence they rarely if ever wander away. The fence, especially the perimeter, is to protect the Alpacas from predators, in particular, canines. Dogs are the alpacas most natural predator and you need a sturdy and, I recommend, electrified perimeter fence to prevent predators gaining entry.

Your next expense would be for shelter. Alpacas require approximately twenty to thirty square feet of space in their shelter. A simple three sided run in or lean-to will suffice but you will need at least one per pasture so your males, females and mothers and crias all have shelter. You will also need some kind of a building/barn for storing tack, your scale (it's important to have an adequate scale for weighing your alpacas), veterinary supplies and feed. A shelter/hay barn is also recommended but in a pinch you can jerry-rig some pallets and a large tarp to protect the hay. Shelters can be pre-fabricated or site built and be as simple as one of those steel frame carports (modified of course) or as elaborate as you can afford.

So where are we on the expenses so far. Lets take a look. I'll be optimistic and err on the conservative side because that is what most folks will do anyway.

Property: House on four acres $140,000
Fence material: $6,500
Fence labor: I can do it myself (yeah, sure you can)
Shelter: Three Shelter Logic Vinyl Run-ins @ $280 = $840
Tack Room: Pre-fab metal shed 8' x 10' $429
Hay Barn: Jerry-rigged pallets and tarp $200
Alpacas: That all depends on negotiations

OK you already own the property. You still need almost $8,000 before you even buy your first Alpaca. And this doesn't even cover things like feed pails, water buckets, hay feeders, Alpaca poop rakes, (yes they do make Alpaca poop rakes), a scale, halters, leads, vet supplies, and a host of other incidentals you will discover you need.

I'm not trying to discourage people from entering the Alpaca farming business. What I'm trying to do is present as realistic a picture as I can about the necessary (and I do mean necessary) expenses involved in getting an alpaca farm up and running. Alpaca farming is like any other business. It's hard work and it can be expensive, especially the initial outlay. As I mentioned in my first blog, the only real return on investment for an Alpaca farmer is the alpaca fiber. Yes, money can be made from breeding and selling Alpacas but that doesn't build a viable model. The very nature of farming is to produce a product. In Alpaca farming the product is fiber. Anything else is just a big Ponzi scheme because the breeding and sales of alpacas relies on a continuing supply of people willing to purchase alpacas. Eventually the market hits a peak as it did in the middle of the first decade of the 2000's and the customer base dries up. What's left is the true alpaca farmer trying to develop the breed to produce a quality product that can be sold world-wide and is in constant demand.