Unlike many other livestock markets we know for dogs, or horses,
or cattle the Alpaca
market in the UK is still in an infant state. These other markets
have been around for a couple of hundred years or more, so buyers and
sellers already have an established infrastructure supporting the market.
Supply and demand is pretty transparent, and the basis for pricing and
quality assessment is fully documented.
Most important of all, the economic case supporting the underlying price
structure in these markets is well established and understood. Another
word for this is confidence. You can see the importance of this in a number
of markets on a daily basis the Stock Market being a prime example.
So what is the economic case for an Alpaca?
Perhaps it would be more useful to ask Why
should you buy an Alpaca? We can quickly rule out pets or food
as a serious reason for buying Alpacas. Recreational activities dont
figure either, unlike its cousin the Llama. Ive heard Alpacas
described as an Investment but this is rather circular
its only an investment if people are willing to buy the animals.
So as you might expect, we arrive at the obvious conclusion the
Alpaca is a fibre
Slightly less obvious and less welcome - is the fact that the in
the current market we cant make an economic case for
based on fibre
production. Of course, some people just want a few geldings for hand-spinning
and knitting garments for sale as a hobby-business, and dont
care about the strict economics of the case. This is true, but it will
hardly generate the level of demand required to sustain a healthy price
structure as the industry and the national herd size grows.
Several factors need to change to make a UK fibre
industry viable. Basic fibre statistics of the national herd such
as yield, fineness, and quality must be greatly improved. The fibre price
also needs to rise. This will happen as volume increases, and yarn and
garment manufacturers gain confidence in the quality and security of supply
from a British Alpaca herd. Most importantly, we need to establish a clear
brand identity for the UK
But why should todays prospective buyer worry about the state of
market several years down the line? The reason is simple. The current
price structure of the market is effectively underpinned by the expectation
of a viable UK
fibre industry at some point in the future. If the market loses confidence
in this outcome, then this will undermine the price that todays
buyer of breeding stock can sell offspring at in the future.
On the other hand, if we have convincing economic case showing why buying
Alpacas makes good business sense, we will improve our chances of
sustaining prices available to breeders at a sensible level. But we need
to do more. As members of this infant industry, we need to work together
to help it grow up and from a motive of pure self-interest, not
altruism. And to work together effectively, we need to understand how
the market will develop.
Fortunately, we dont have to speculate too much on this subject.
Others have gone before us, and we can learn from their experience. In
North America and Australia, the Alpaca
market is several years ahead of the UK. It is comforting to note that
the prices for animals have been remarkably stable in both these markets.
Growth rates have been encouraging too around 30% p.a. compounded
over the last few years. US fibre production is around 40 tonnes, Australian
over 60 tonnes. This compares with an estimated 10 tonnes for the UK,
so we still have some way to go.
Some common features stand out in the rapid growth of both these markets.
These include a very significant increase in fibre quality in recent years,
major investment by the breed associations in the development of their
national market, and most importantly, the great efforts of the respective
fibre co-operative organisations to grow the commercial fibre
The Alpaca Fiber Co-operative of North America (AFCNA) is continuing to build a successful business. Here, at least, the infant is starting
to walk. It is market structures such as these that build confidence supporting
price levels not yet seen in the UK studs selling at auction in
the US for up to $250,000, for example.
New buyers entering the Alpaca
market will be looking for their own route to commercial viability
after all, they may have their own hopes of selling
Alpacas some day. If we are to judge from the experience of other
countries, one of the key factors in market success will be the speed
at which the fibre
quality and yield can be improved. So top quality genetics will be at
may also be a significant factor. Peru is by far the worlds largest
producer with 3500 tonnes, but nearly all of it is white. This makes good
sense in the primary market they serve, the fashion industry, which will
dye the fibre
according to the (ever-changing) requirements of the leading designers.
It will be a long time if ever before the UK can compete
in terms of volume with Peru. However, a range of natural
colours, available from a local and sustainable source, could very
well provide an important point of differentiation for UK fibre when competing
with the Peruvians. The conclusion here is that it may be advantageous
for the small breeder to specialise in one part of the available colour
range black, for example thus providing a strong point of
differentiation in a market where natural colours
are being promoted.
This brings us to another level of market organisation the need
for breeders to co-operate, particularly in local associations. This is
happening already, of course, with regional groups such as the South West
Alpaca Group (SWAG), who provide a valuable forum for Alpaca
owners to meet and exchange information.
There seems to be less cooperation on sales and marketing matters, at
present. This can be as simple as referring a prospective buyer to another
breeder, if they have a requirement you cannot satisfy for example,
you specialise in black, and they want a fawn. What goes around comes
around, and you might expect to have the favour returned some day.
Another possibility is to share a stand at a county or breed show. This
reduces the cost of the exercise, and makes it easier to keep someone
on the stand throughout the event. A joint web site, promotional literature
and mail-shot could also be worth considering, if you find the relationship
In a mature market, the problems of competition and conflict of interest
tend to preclude such arrangements. In our own infant market, however,
the problem is to grow the market as fast as possible, so that everyone
will gain, rather than worry too much about competitive issues.
In short, we all need to promote the industry as well as our Alpacas.
to top of page
August 27, 2008