Wall Street Journal Alpaca Report Leads Down the Wrong Path
By Ingrid Wood
On April 4, 2007, an article entitled Tax Breaks Spur Alpaca Market appeared in the Wall Street Journal. The reporter interviewed and quoted several breeders. Their stories and comments presented an astonishingly skewed view of the alpaca industry to Wall Street Journal readers.
One breeder reported that the $60,000 he had invested in a mill to process alpaca fiber “went bust”. I am curious as to why it failed. Did the owner produce quality products? Did he market to the right customer base? There are many small mills processing specialty fiber all over the North American continent. They are thriving and often have more business than they can handle. Turn around time for processing alpaca fiber is often six months or more due to strong customer demand.
In another WSJ paragraph, two breeders discuss the high prices they paid for breeding males. One fellow shelled out $750,000 for half a share on a single stud. What the article’s author doesn’t clarify sufficiently is that such prices are the rare exception. They certainly do not remotely reflect the average selling price of a male alpaca. With patience and knowledge, alpaca farmers with modest incomes can find quality males for a tiny fraction of the prices quoted in the Wall Street Journal.
It is true that a minority of buyers are willing to pay higher prices for alpacas grazing in the pastures of the rich and famous. The purchaser’s objective is then primarily not quality but merely the name of the prominent breeder attached to the animal. What’s new about that? Buyers of sheep, cattle, dairy cows, and horses engaged in such follies long before the first alpaca stepped on North American soil. Allen Fraser (The Bull, 1972) and the authors of the British Agricultural Bulletin (1950) had quite a few things to say regarding that subject. Why single out alpaca breeders for this behavior? Hero worshippers do not represent the majority of alpaca buyers, although I readily admit that they exist.
What the reporter could have legitimately questioned is why high priced studs often are widely advertised without a histogram or pedigree. But then, of course, we can’t expect a Wall Street Journal reporter to understand the finer points of alpaca breeding.
Astute buyers know that they can demand tangible proof for fiber qualities advertised by a breeder. A fiber histogram, easily obtained, gives scientific measurements of micron count (fineness), curvature (crimp), and other fleece properties. Of course, breeding alpacas is not as simple as merely selecting for fine fiber. Additionally, a histogram is also only as valid as the honesty of the breeder who sent it to the testing service.
What about the claim by one breeder quoted in the Wall Street Journal that “it’s not worth the energy” to try and sell the fiber? Unfortunately, the WSJ reporter never attempted to find out just how much of a slap in the face this is to those of us who sell every ounce of our fiber. Alpacas are shorn once a year. Fleeces can be sold raw or made into rovings, yarn, and felt. I am in awe of the products talented fiber artists create with alpaca and feel satisfaction in providing them with the raw materials. Spinners, knitters, and felters can now add alpaca to their stock of sheep, goat, and rabbit fiber. I can’t imagine myself purchasing alpacas from a farmer who doesn’t think it’s worth the energy to sell the end product his animals produce. With the hundreds of experienced breeders who can speak intelligently about alpaca fiber, why was this person the only one quoted on the subject?
The Wall Street Journal may wish to explore the many ways in which alpaca farms create wealth in the general economy. Alpaca breeders employ builders, veterinarians, farm managers, and professionals who build and maintain websites. We buy hay, straw, feed, tractors, and many other farm implements. Individually and as groups we donate generously to pay for research conducted at universities. We rent fire halls, community centers, and hotel meeting rooms to host our seminars. Our farm dollars are spent on caterers for alpaca events, fairground rentals, and the purchase of ribbons and trophies for our shows. We need seed for pastures and stall mats for barns. Each spring, many of us employ shearers to harvest our alpacas’ fleeces. Our marketing dollars pay for the salaries of editors and printers. High school kids earn spending money on our farms while gaining husbandry knowledge and skills. The list could easily continue, but I think you get the point.
Many alpaca breeders are livestock farmers in the true sense of the word. Our children and grandchildren participate in 4-H and FFA. Our backs ache after shearing, and we leave warm beds in the middle of the night to check on new babies or expecting moms. We stack hay, collect manure, and spend the greatest part of the summer sweaty and dirty. We celebrate our triumphs but also suffer the disappointments of breeding decisions gone bad or genetic defects surfacing in our herds.
Yes, our industry has armchair “farmers” who push pencils instead of manure forks. Don’t try to tell me that other livestock groups don’t have individuals like that because I know that they do.
The Wall Street Journal focused on tax breaks enjoyed by alpaca breeders. This is news? The exact same tax breaks are allowed for any agricultural business. Maybe the reporter’s focus should have been on government subsidies paid to other agricultural producers, some of whom would not survive without them. Alpaca breeders do not qualify for subsidies. I found it interesting that the WSJ reporter chose to exclude this financial component in her article.
Overall, financial rewards and challenges mirror those found in many agricultural areas. A small segment of alpaca farmers has earned millions of dollars, most realize a modest income, and some have failed miserably. What are the reasons for the latter group’s poor performance? The same you find for entrepreneurs in other agricultural fields. Some cannot meet the physical demands of caring for livestock. Others buckle under the emotional stress of dealing with illness and death in their herds. Some are lazy or refuse to take advice. A gullible or naïve few never considered the necessity of marketing. Some discovered that they simply could not part with animals raised and loved by their families. And, of course, there are the unfortunate individuals who fall prey to dishonest marketers. Different from other livestock producers? Talk to the sheep breeder whose entire flock had to be destroyed because it was infected with scrapie. Talk to the dairy man whose newly purchased breeding stock brought Johne’s into his herd. Alpaca farmers who succeed work hard, never stop learning, love what they do, and contribute in meaningful ways to the larger community of breeders. Many of us network in cooperative organizations such as Alpaca Heritage Events (www.AlpacaHeritageEvents.com).
Raising alpacas will not make the majority of small producers rich. That is true of farming in general. Few people in this country seem to know or care that dairy producers are surviving on income that in no way fairly compensates them for their tremendous labor. Does that make the sale of genetically superior, high priced heifers a “pyramid scheme”? Hardly. Apparently though, if alpaca breeders don’t become instant millionaires, the industry must be a “classic pyramid scheme”. This label as applied to the alpaca livestock business by Dr. Richard Sexton is patently absurd.
For example, the owners of Serenity Alpacas in New Jersey, who sold us our first two animals, in no way continue to accrue financial benefits from our farm’s sales. On the contrary, they continue to support and assist us in various ways and without compensation a decade after the initial purchase. We work hard to extend the same service to our own customers. Any of our buyers has the opportunity to surpass us in sales and overall financial success. A former customer of ours recently sold seven alpacas. I will not see a dime of that tidy sum, nor should I. How does this fit the format of a pyramid scheme? Is that unflattering label applied to folks who sell sheep, goats, cattle, and chickens? Why to alpacas? Alpaca farmers with realistic expectations fully realize that prices will fall as alpacas become more numerous. That hardly describes a pyramid scheme.
Dr. Sexton apparently worries that profits will not be there for all the people who invest in the alpaca business. A few days ago, a sentence about profits earned by corn producers caught my attention.
The Alternative Energy supplemental section of Lancaster Farming (April 7, 2007) tells us that “for the first time in nearly 30 years, corn farmers are profitable. Markets, not government subsidies, are driving their profitability” (David Morris). So, let me get this straight. Corn farmers who have been subsidized by our government for thirty years are the salt of the earth. On the other hand, alpaca farmers, who have never been subsidized, are, according to Sexton, a professor of agricultural economics, basing their business on “lies”.
The esteemed professor thinks that alpacas should sell for $200 each. Where have you been, Professor Sexton? You’re way behind the curve on alpaca prices. Some alpacas do sell for $200. The structure of alpaca pricing parallels that of other livestock industries where superior breeding stock and breeding stock in general command higher prices than individuals of average quality and production animals. The latter, especially males with minor defects or inferior fleeces, are often sold cheaply or sometimes even added to a sales package at no extra cost to the buyer. Alpaca breeders, like other livestock producers, know that not all their breeding decisions result in super stars.
Finally, we have, lest we forget, another moronic comparison with the ostrich industry. Was the Wall Street Journal reporter and her editor in attendance when the difference between mammals and birds was explained to them by their science teachers? Would they tell a breeder of livestock guardian dogs that he may fail to sell any puppies because the parrot breeder down the road went bankrupt? Ostriches produce meat and eggs. Alpacas produce fiber which is widely used by fashion producers. Would you warn a sheep breeder to get out of business because the chicken farmer in the next town lost his customers? Jeanne, can you say “species”? If the alpaca industry fails down the road, it will not do so because of what happened in the ostrich industry.
I did not expect an article in the Wall Street Journal to discuss the intangible rewards of raising alpacas. Naturally, such a publication would not feature the children who learn responsibility while caring for their animals. Nor would it describe the satisfaction felt after a day spent in fresh air surrounded by beautiful creatures. It would not mention the happiness over the birth of a baby, and the sense of contentment and peace we experience as we watch our alpacas play and pronk as dusk descends on the farm. Menopause? Sorry, I was too busy to realize I was in it. Empty nest syndrome? Don’t think so! The nest is buzzing with activity. The nestling that flew out has to make appointments to see me. No, I did not expect an outsider to appreciate value that cannot be counted in dollars and cents.
What I can demand from a professional publication such as the Wall Street Journal and its editor is unbiased reporting, certainly not the distorted and outright mean spirited view expressed by its reporter.
If you are interested in raising alpacas, I extend an invitation. Visit my small family farm or one of many others owned by small farmers all over the North American continent. You will not be introduced to a male worth $750,000. (I tell my studs each day that they’re each worth at least a million dollars. They believe me and perform their duties with great enthusiasm). Instead, you will meet a new wave of livestock producers who passionately love their work. Contrary to the breeder quoted in the Wall Street Journal, we believe that the end product from our animals is worthy of our time and efforts.
Small breeders are the true representatives of alpaca farming. You will discover that many breeders cannot live solely on their alpaca income. That fact also puts alpaca farms in sync with the many other small family farms in this country. Except for huge corporate factory farms, few farmers can support their families exclusively from farm profits. Many, if not most, have at least one spouse employed on the “outside” or derive income from other farm related activities. None of my small producer friends claim that raising alpacas is a path to financial wealth. My husband and I do not expect to get rich from our efforts. We do, however, enjoy what not many people in this world are able to experience: although we continuously strive to improve our herd, we are content with what we have.
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