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When the American Alpaca Bubble Burst
by KindMeal.my, 12 December 2015
When the American Alpaca Bubble Burst

Alpacas are great. They’re soft, gentle, furry giants. Hugging one is like wrapping your arms around the foot-long neck of a warm, endearingly smelly cloud.

In addition to all their positive attributes, over the past decade alpacas have been the financial ruin of Americans across the nation. Not long ago, alpaca farming was a booming industry, with the top breeding alpacas selling for hundreds of thousands of dollars. Nowadays, the few remaining alpaca farmers struggle to stay afloat. Alpaca rescues have cropped up to save the animals who have outlived their economic utility.

“Some owners have found they can’t give the animals away for free,” Modern Farmer reported in 2014. How did this happen? The alpaca industry experienced a major speculative bubble. And, as bubbles tend to do, that bubble burst.

The American alpaca industry was born in 1984 when the first alpacas were brought to the United States from South America. After a few years, the industry quickly started to boom. In 1991, there were around 2,000 alpacas officially registered in the United States. By 2006, there were over 86,000.

As livestock, alpacas are primarily valued for their “fiber” -- the industry term for wool. Because it was so new to the country, the domestic infrastructure to efficiently process alpaca fiber was relatively poor. Even at the industry’s peak, farmers and fiber co-ops had to outsource a lot of their processing to Peruvian facilities, which significantly cut into their margins. In 2005, even the highest-grade raw alpaca fiber only went for $5 a pound at volume.

The real money was in breeding: raising alpacas to produce more alpacas. Female alpacas can give birth about every 18 months, and average 7 offspring over a lifetime. Those offspring, depending on their gender and the quality of their wool, could sell for a lot of money. Breeding stock alpacas went for an average of over $25,000, and as much as $750,000 at auction, it didn’t take long for a breeding operation to turn a profit.

Part of the reason alpaca breeding was so profitable in the United States was because imports of live animals are heavily regulated. This is particularly true when it comes to countries like Peru -- the country with the largest alpaca population in the world. Peru was a known location of foot and mouth disease, a disease that plagues livestock. Imports of ruminants -- alpacas included -- were banned. Supply was limited. The other thing that made breeding so profitable was that everybody wanted in on the alpaca business. Demand for alpacas, in order to raise them, was skyrocketing.

Year by year, more and more people wanted to raise alpacas, partially because the alpaca industry advertised the benefits of alpaca farming. The associations that sponsored these ads say they wanted to promote breeding to improve the genetic diversity and quality of the American alpaca population. They took out television ads, and late-night television ads, promising an easy out from the urban rat race, calling alpacas, “the investment you can hug.”

“It’s such a great feeling to wake up in the morning, know I can step out of bed, drink my cup of coffee, look out the window: There are my alpacas,” a nurse-turned-alpaca-farmer says to the camera. “And I step out the front door and I’m at work. I don’t have to put on a suit or a uniform. It’s a wonderful business.”

If it all sounds too good to be true, that’s because it was. Farmers like the Silvers, a retirement-aged couple in Oregon, got into the business. The couple sank their “life savings” (about $750,000) into a growing herd and building a barn. From an article in the Seattle Times: “[Silver] says the theory was that if a $7,500 female alpaca [...] gave birth to a female baby, that baby would sell for $7,500. We never were able to sell any,” says Silver.

An adult alpaca produces 6-8 pounds of fiber per year. A women’s alpaca sweater on Amazon weighs about 1.1 pound. How much are you willing to pay for that sweater, and how many of those sweaters do you need per year?

The thing about livestock bubbles is they very quickly start to look like pyramid schemes: people keep selling alpacas to people who want to use them to make more alpacas to sell to people who want to use them to make more alpacas. The only way for that to work is if, someone, somewhere down the chain really, really wants alpaca wool (or a steady supply of alpaca burgers, or alpaca rides). And there either have to be a lot of those people, or they want/need the product so much they’re willing to pay a lot for it.

When the alpaca bubble burst, people and alpacas suffered. Alpacas cost money to house, feed, and maintain. When their value plummeted, they stopped paying their own bills, and farmers struggled, often resulting in tragedy.

Nothing illustrates this better than the Silvers in Washington, who had sunk their life savings into a farm. From Modern Farmer:
“Last winter, the Polk County Sheriff’s Department raided the 21-acre ranch, located in the rolling foothills of Oregon’s Coastal Range. There, deputies found 16 dead animals and evacuated about 175 more. Many were so skeletal that their backbones stuck out from their once-fluffy backs.” The Silvers were not an isolated case. “The recession has caused a lot of problems and a lot of desperation,” the head of an alpaca rescue organization told the Seattle Times in March of 2014. “People are quietly putting them in their freezers if they can’t get the hay and water. They feel it’s more humane that way. It’s a really, really heart-wrenching reality.”

When we look at animals as money-making commodities, suffering ensues. Animals are not objects, not put here for our financial profits. At http://KindMeal.my, we believe that we, as humans, need to regard other species -- and all of them, not just the cute, fuzzy ones -- with greater reverence and respect. Not as market trends, and not as dinner. If you agree, check out our latest promotions on compassionate and meat-free meals throughout Malaysia!

Source: http://goo.gl/cv8KCo « Back To Articles