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| An alpaca rancher with a small herd on small acreage can
expect to harvest his animals' fleece and sell their offspring
profitably. The value of alpaca fleece is the economic underpinning of
the future market for alpacas. Breeders outside of South America are
beginning to organize fiber cooperatives for the commercial processing
of the fleece. Domestic fiber is often sold to cottage industries which
revolve around handspinning and weaving. Most alpaca ranchers readily
sell their fleece for $2 to $5 an ounce to local artisans. Each animal
will produce five to eight pounds of fleece a year. The Alpaca Fiber
Cooperative of North America (AFCNA), endorsed by the Alpaca Owners and
Breeders Association (AOBA), is in its formative stages and very soon
will provide a commercial outlet for all breeders.
The current alpaca industry is based on the sale of quality breeding stock, which demands premium prices. The factors which influence individual alpaca prices include color, conformation, fleece quality and quantity, age, and sex. Breeders often prefer one alpaca color to another. However, the parents' color does not necessarily guarantee a cria of the same color. Correct, well-conformed alpacas sell for higher prices. Fleece density, uniformity and fineness also affect the animal's price. Alpaca CompoundingA major investment benefit of owning alpacas is based on the concept of compounding. Savings accounts earn interest, which if left in the account, adds to principal. The increased principal earns additional interest, thereby compounding the investor's return. Tax-deferred wealth building is another Alpaca advantage. As your herd grows, you postpone paying income tax on its increasing value until such time as you begin selling the offspring. Tax Consequences of Owning AlpacasRaising alpacas at your own ranch, in the hands-on fashion, can offer the farmer some very attractive tax advantages. If alpacas are actively raised for profit, all the expenses attributable to the endeavor can be written off against your income. Expenses would include not only feed, fertilizer, veterinarian care, etc., but depreciation of such tangible property as breeding stock, barns and fences. These expenses can also help shelter current cash flow from tax. The tax ramifications are great. Jack is a CPA and will help you design a bankable financial plan and give you the finite detail of the tax aspects.
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