Tierra Bonita Alpacas

Once reserved for Inca Royalty as treasures, alpacas are indeed the world's finest livestock investment.

They are a commodity that has a strong current demand and an incredible potential demand, along with being 100% insurable and offering numerous tax advantages. Alpacas exhibit many, if not all, of the many traits that make any investment attractive; they are scarce and in high demand. Historically, alpaca values have remained constant and have made major contributions to the national economy of Peru, as well as several other South American countries. Breeding stock has been in the United States since the mid-to-late 80's and prices have remained relatively stable since that time; though prices do vary a great deal with the best of the best commanding top dollar prices. Many of the top herd sires in the country have sold at auctions for six figures.

So what does it take to own alpacas? A desire for a unique personal experience and a financially rewarding lifestyle. Alpacas radiate a calming and relaxing atmosphere and what is better than a healthy and less stressful lifestyle? Individuals interested in investment must have a willingness to take financial risks as does any business start-up. Other important assets include good communication skills and the ability or willingness to learn to market your animals, fiber, and finished products. There are several national and regional associations that assist herd owners with education, marketing, showing, animal registry, membership databases, public relation support, library services, health care and the list goes on.

There is a growing demand for alpaca fiber in textile and fashion centers throughout the world and a drastically limited supply of these aimals outside of their native countries. Alpacas are no longer imported from South America due to the closing of the U.S. registries, along with Peru, Bolivia and Chile having stringent export restrictions on further transportation of their national treasures in order to avoid depletion of their own herds. This means that domestic growth will depend solely on the animals already in North America. And demand is also high in Canada, Europe, New Zealand and Australia. Given the slow reproductive rate and alpacas and the superior quality of their fiber, consumers will continue to want more fleece than what is able to be produced by alpaca farmers. This in turn creates a market where prices paid for alpacas and their fiber remain at a relatively high and stable price. The United States is poised to be a world leader in the alpaca industry with the support and help of the national organization AOBA (Alpaca Owners and Breeders Association), along with regional and state alpaca affiliates.

An alpaca investment offers an excellent opportunity to diversify in your portfolio. Livestock has been a primary investment since the origins of man and typically offers a greater return than most other avenues of investing, especially in these unpredictable roller coaster days of the stock market. No other investment is 100% insurable, which includes mortality and theft. This protection from catastrophic loss of animals and capital is the much the same protection that the FDIC covers your savings at a bank. And with nearly every North American alpaca being DNA blood type registered, theft is extremely rare since the value of an unregistered alpaca would be practically worthless. Probably the most important benefit of investing in alpacas is that the value of the herd compounds tax-free until you realize the actual income from the sale of stock. In this way, it offers many of the benefits that are so valued in IRA investing. The tax advantages from raising alpacas are very attractive as you can see. Another advantage is that purchased stock is generally depreciated over five years. And expenses associated with ownership are deductible from any income received. Tax advantages vary based on whether you are an active (hands-on care) or a passive (agistor) investor and whether or not the farm is operated as a business or a hobby. For example, if you are an active investor and maintain the alpacas on your own land while feeding, providing shelter, giving medications when needed, and performing the requirements needed to sustain a healthy herd, then you can depreciate on the appropriate schedule, everything from equipment, to fencing, to barns and structures, to vehicles, to feed, to veterinary fees and so on. Over 25 established avenues for tax savings are available to an investor in alpacas that owns breeding animals and the infrastructure needed to maintain them. Please refer to IRS Code Section 179, as well as, IRS publication #225, The Farmers Tax Guide, for more information.

Alpaca farmers who have been in business for four or more years routinely report returns on their capital expenditure, which range between 25-60%. Many variables can influence your actual profits, but as an alpaca owner, you are investing your assets in a vehicle with a proven record for profitability and which promises to become even more financially rewarding in the future. As with any investment, it is recommended that you consult an accountant first.

Some important questions to ask yourself prior to purchasing alpacas:

• What are the goals of your farm?
• What is the number of alpacas you envision taking care of on a daily basis?
• Are you purchasing alpacas to take into the showring?
• Are you wanting to purchase a fiber herd, or a breeding/seedstock herd?
• Who is going to be your veterinarian?
• Will you offer any services on your farm?
• Do you plan on agisting your alpacas, or will you be bringing them to your farm?

Example: Ten Year Herd Growth
Herd size beginning of year one - Two males and five pregnant females

The above chart is found in the Alpaca investment brochure produced by the Alpaca Owners and Breeders Association. The herd initially cost $102,500 and grew to a value of more than $1,272,500 in ten years. The net return after deducting all the projected costs is $960,260. This equals a 57.8 percent annual average rate of return, the average amount invested over the ten-year period was $166,200.

You can't find a better investment with such a stable positive return. All this and your investment is totally insurable, can stocks do this?