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.
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