There's no going back
There’s no going back.
Because of AlpacaStreet, I probably talk to as many or more breeders in the course of a year than anyone. This contact with breeders is one of the true benefits of my job. Who wouldn’t love to “talk alpaca” several times a day? Often I am asked, “When is the alpaca industry going to go back to the way it was?” My answer is, “There’s no going back.” The alpaca business is headed into a new future. This future is one that we can passively allow to unfold before us, or one that we can actively engage, and thereby help shape.
The New Reality
Like everyone else in the country, alpaca breeders have been on a wild ride for the past couple years. This economy has presented considerable challenges for which few breeders were prepared. It is imperative we see the situation around us the way it really is, and not the way we hope it will be. It is only with a clear vision that we will be able to shape the future of the alpaca industry.
The New Customer
There are three main reasons for the current stagnation within the alpaca industry.
1. Home equity loans, the vehicle that provided many the cash needed to enter the business, have all but vanished because the equity position of most homeowners has greatly diminished or disappeared all together.
2. Tax incentives that can be so attractive are a non-issue if people are not making income to write them off against.
3. Concern about the future may keep those otherwise willing to enter the alpaca business out of it. When people aren’t sure if they will have a job a year from now, they may see investing in the alpaca business as imprudent.
As you plan your 2012 sales efforts, you need to consider the above points in an effort to know and address the concerns facing your prospective clients.
The New Market
Eventually, the economy will get better. The housing industry will become strong again, and as it does, the alpaca industry will, too. However, not all boats will rise on the next tide. Barring an amazing and immediate rebound in the housing industry, the alpaca market will have a permanent low-end entry level. This entry level market will be supplied by breeders of lower quality alpacas as well as herd liquidations. The greater the supply of alpacas from these two sources, the lower the entry level will be. Dealing with this basic example of supply and demand is one of the main challenges facing this industry.
As the alpaca industry rebounds, there will even more importance placed on genetics, show records, and quantifiable quality characteristics. These will be the features that will separate the alpacas that appreciate in value from those that wont. I am not going to stand on a soap box extolling the virtues of any of these aspects for evaluating alpacas. I will only say that you must differentiate your alpaca from the rest. Just being an alpaca isn’t good enough.
The New Potential for Fiber
The silver lining that is coming out of the current down-turn is the focus on alpaca fiber as a revenue stream by a growing number of breeders. The time has come to make alpaca fiber a legitimate source of income. Groups like the Cottage Industry Alpaca Breeders Association and The North American Alpaca Fiber Produceers are enthusiastically pursuing the development of the American alpaca fiber market. Alpaca United is another group whose members are from all sectors of the alpaca industry who have joined in a collaborative effort to create and grow a market for American alpaca fiber. The success of these groups, and others like them, will make our lives as alpaca breeders easier by providing added revenue as well as the ability to show prospective clients the end products that make this truly a viable industry.
Never say “Never”
One thing we should learn from this current financial challenge, is to never say “never”. In the late 70’s, mortgage rates were flirting with 20%. We were told interest rates would never drop to the single digits again. They did. In the late 90’s, an exhubarent friend who just experienced a 5% increase in one month in his stock portfolio said his broker assured him there was no reason to believe the growth would end. It did. What goes up eventually comes down. And what goes down, can come back up. The key to bringing up the alpaca industry is for those in it for the long-term to engage its full potential.
And that’s the bottom line.