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Crescent Moon's Chadwick
Remington, 1 hour old, trying to figure
out what to do with those long legs
Bella
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Why Invest in Alpacas?
First, let’s talk a minute about investing in general. Whether your money is invested in equity, bonds, real estate, precious metals, race horses or Alpacas, there is always risk. Understanding your risk associated with any investment choice and having the necessary information to make an informed decision as to compatibility of that investment with your long term goals is always a prudent step.
There is a great deal of credible information available as to the benefits of breeding and raising Alpacas. A large number of those benefits are in the form of tax savings and appreciation of your property. As you operate an agricultural business, the majority of the expenses associated with animal care are deductible. Expenses associated with feeding, veterinary care, fencing, electrical consumption, maintenance cost, breeding fees, transportation of animals and many other items (depending on the advice of a CPA) are deductible. Large capital items, such as the cost of land, barns, machinery, equipment, shelters, water wells and the animals may be depreciated. As permanent improvements are depreciated, those same improvements add value to your property. In recent years, with the enactment of legislation providing for the 100% depreciation of capital (Section 179), many items such as the cost of the animals can be deducted from a tax burden in their entirety. Consult a tax advisor for specifics as how Section 179 may relate to you. As a herd grows through purchases of new animals and reproduction, the capital gains associated with the growth and increasing asset value will be deferred until the animal is actually sold. So the wealth that is measured in the size and quality of your herd accumulates until a transaction occurs. Compared to other livestock, Alpacas are relatively inexpensive to maintain. Aside from the initial investment (which is depreciated) the cost to maintain these hardy animals is minimal. Alpacas are very easy on the pasture land because of their padded feet and toes, which unlike hoven animals, do not destroy the grass and dig into the soil. The Alpaca needs are few, a shelter, protective perimeter fencing to guard against predators, adequate space to roam freely with other herd members, small amounts of grain and a good quality hay and water is sufficient. Veterinary care from time to time should also be considered in your business plan. Once you have Alpacas you will soon find that they return far more than the effort and cost to care for them.
How to buy Alpacas
Now that you’re committed to launch a new business, how do find and buy your first herd members. Through the process of investigating the opportunity and gathering information, either visits to a local farm or two have occurred or visits to many websites have started the decision process. Continue that activity, visit as many farms as possible, visit the AOBA, Alpaca Registry and Alpaca websites, and visit any number of other farm websites that provide an abundance of information. Learn about fleece and all its characteristics, learn what wins in the show ring, go to Alpaca shows and watch the judging, visit the booths of winning farms, put your hands on the winning animals and always ask questions. Learning what to buy and what not to buy will come quickly as well as who to buy from. The objective is to reach a comfort level with the animal and the knowledge required to be a good Shepherd. These animals are your charges and they depend on you for their every need. When the purchase decision has been reached and animals are beginning selected, one thing that is never, never done is buy one animal and remove the animal from the herd to live in isolation. Alpacas are herd animals and they require the socialization of the herd to thrive. Many breeders offer agistment (boarding) for purchased animals and if a hands-on operation is not possible, agistment will be the best option until you have sufficient fencing and shelters prepared. A start up Alpaca business can begin with an investment of as little as $5,000 and up. However, experience is a wonderful thing and the one thing it has taught many of us is to purchase the best animals we can. Not all Alpacas are the same and genetics are a dominate force in breeding to improve the next generation. The lower the quality of the animal that is purchased, the longer the process to achieve the quality desired. Always purchase the best animal possible and breed to the best genetics. The potential of birthing a better animal will be improved. Diversity in blood lines is a great asset, when offering individual animals for sale. In many cases, buyers have expressed an interest in the purchase of a breeding pair, with little thought of quality and characteristics of future generations. To improve the quality, one must breed to quality genetics and often that is outside the boundaries of your farm. Consistently breeding the same two animals will in most cases reproduce the quality of those two animals. Diversity is necessary and desirable. As your herd grows, so will the overall value. For example if a pregnant female or two is purchased, herd growth will increase with the birth of the offspring compounding the effect of growth through reproduction. The Alpaca Owners and Breeders Association website (www.alpacainfo.com) has more information on compound for review. We encourage you to contact us to discuss growing of the herd, expectations and how alpacas will fit into your life.
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