The Alpaca Bubble Has Finally Burst

While you might not have noticed, for the last decade there have been a growing number of people who became convinced that the way to drug-lord like riches was through the seemingly unlikely route of alpaca-breeding. But the market for camelid hair wasn’t what it was cracked up to be, and not only are investors realizing they will never get their money back, there a large number of alpacas being neglected or killed as a result.

Like a lot of recent investment trends, the alpaca craze began during the height of the housing boom in the early and mid-2000s.

“The biggest marketing pushes were calling them a huggable investment and attracting people who just thought they were gorgeous little lawn ornaments,” one alpaca farmer and broker tells Modern Farmer. “We got people who weren’t really animal people, who weren’t really farmers, or even business people.”

He says the mindset of these buyers was “We’ll be able to hang out at home and retire, and people will knock on our doors and pay us all these thousands of dollars and this will be easy.”

At the time, a trade group called Alpaca Owners and Breeders Association (now the Alpaca Owners Association) ran a marketing campaign calling alpacas the perfect “phased retirement opportunity” for empty nesters and urbanites looking for an easy way to make money in the country.

The trade group openly pushed breeding of the animals, but did little to create a market for alpaca fiber.

And so alpaca prices began to sink and have continued to drop, leaving investors in the red, trying to sell their animals on sites like Openherd or Craigslist.

Without any buyers, farmers are sometimes giving alpacas away just be done with the expense of caring for the animals, while others are resorting to more desperate ways of thinning their herds.

The above-quoted farmer, who is starting an alpaca-rescue operation, says that some desperate alpaca owners who can’t afford to feed their animals are placing them in large freezers, slowly killing the animals by inducing hypothermia.

“They feel it’s more humane that way. It’s a really, really heart-wrenching reality,” he tells Modern Farmer.

While it’s common to sell alpacas for meat in their native South America, that isn’t as much of an option to farmers here in the U.S.

But much like the collapse of the real estate market and the surfeit of cheap homes has resulted in a new crop of investors buying cheap with the hope of eventually selling for a reasonable price, so has the bursting of the alpaca bubble created unlikely farmers out of people who obtained animals either through rescue operations or through bottom-dollar sales.

Last year, one Missouri woman who has been rescuing animals for three decades arranged an intervention with an alpaca breeding ranch that had allowed its large herd to become severely neglected. On a freezing cold January morning, she and a group of five volunteers herded 200 starving and sick alpacas into a barn for shelter and shots and then packed them into trailers for taking away to farms that could tend to the animals properly.

That’s how she and her family ended up caring for 60 of the alpacas and created a fiber processing mill in their basement.

“Since then,” she says, “we haven’t lost a single alpaca.”

A longtime board member of the Alpaca Owners Association defends the group’s earlier drive to increase investment in alpaca breeding.

“I think the marketing was appropriate,” he tells Modern Farmer. “I would always ask somebody that’s not very satisfied, ‘How much energy did you put into it?’ When I talk to somebody, I tell them, ‘This is a business, and if you’re not prepared to show up and work every day on your business, why in the world would you think it would be successful?’”

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