Alpacas Are Not a Pyramid

I was at a neighbor’s party and one of their guests heard I had alpacas. He sauntered up and, with a superior air, said, “Alpacas? That’s a pyramid scheme.”

Besides his incredible rudeness in the home of a mutual friend, I found his ignorance and hypocrisy rather offensive. You see, I had talked with his wife previously and she had said they had considered owning alpacas but decided to put the money into their home instead. Not a mention that they deemed it an unsustainable business model. Huh.

So let’s clear this up right now: Alpaca Breeding is not a pyramid scheme. It is also not a MLM ( multi-level marketing).

So what is a pyramid scheme?  According to the Federal Trade Commission:

“They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure. There are two tell-tale signs that a product is simply being used to disguise a pyramid scheme: inventory loading and a lack of retail sales. Inventory loading occurs when a company’s incentive program forces recruits to buy more products than they could ever sell, often at inflated prices. If this occurs throughout the company’s distribution system, the people at the top of the pyramid reap substantial profits, even though little or no product moves to market. The people at the bottom make excessive payments for inventory that simply accumulates in their basements. A lack of retail sales is also a red flag that a pyramid exists. Many pyramid schemes will claim that their product is selling like hot cakes. However, on closer examination, the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public.”

And regarding an MLM:

“Multilevel marketing programs are known as MLM’s, and unlike pyramid or Ponzi schemes, MLM’s have a real product to sell. More importantly, MLM’s actually sell their product to members of the general public, without requiring these consumers to pay anything extra or to join the MLM system. MLM’s may pay commissions to a long string of distributors, but these commission are paid for real retail sales, not for new recruits.”

So let’s take a look at the alpaca business model:

1. Alpaca breeders have something to sell: alpacas, alpaca fiber, fiber products, and services

2. Alpaca breeders do not get a payment for introducing (“recruiting”) new breeders

3. Alpaca breeders to not get  “cut” of any sales that new breeders make

4. Alpaca breeders sell not just to new breeders, but also existing breeders and the general public

It always infuriates me when people rush to label derogatorily when they don’t understand something.  And let’s face it, a lot of people don’t understand why alpacas are worth anything. Yet they don’t question when someone will buy a pureblood horse for $12,000,a rare breed of dog for $1000 or more, or a piece of art for $100,000. I can quantify the practical value of an alpaca much more easily than any of those due to its premium fiber qualities. And like all of the above-mentioned, the market sets the value of an alpaca. In other words, the value of an alpaca at any point in time is what someone is willing to pay for it, regardless of how the seller may price it.

You may or may not be pleased to know that I didn’t respond to the ignorant comment by the other party guest. Although I could feel a dozen blistering retorts hovering on the tip of my tongue, I didn’t want to take the bait and start an argument at what was supposed to be a congenial mingling. I politely suggested that he would find he was wrong if he researched it and walked away. Perhaps this was a disservice to the alpaca community, as it could be viewed as an opportunity to educate and generate awareness. But some people  cannot be convinced and knowing the background he and his wife had in looking into alpacas, I think this stance probably makes him feel better about choosing a renovated house instead of an alpaca business. And the alpaca industry is probably the better off for their decision.

Read Full Post »

Is Breeding Like Baking?

It’s a day for baking. The temperature has dropped twenty degrees from yesterday and the overcast skies seem to support the forecast for rain. I’m on cria watch still and trapped here pretty much all day. It’s also our fourteenth wedding anniversary. Put all that together and that says CAKE to me.

I love to bake. ‘Carb’ is not a four letter word in this house. Butter, sugar, nuts, and chocolate are my four favorite food groups. Today calls for an old favorite, nothing too fancy – I’m making an old-fashioned glazed pound cake. This may seem decidedly unfestive for a special occasion, but there is nothing better than a well-balanced pound cake and it’s trickier than you’d think, especially with the challenges of living at 7,000 ft in altitude.  Pound cakes can often collapse here with their high ratio of butter and sugar to structure-building ingredients of flour and eggs. I’m aiming for a nicely domed and crusty pound cake baked in a bundt form, with a tender but not heavy crumb and just a hint of lemony goodness infused through grated rind and juice.  I also like to seal the whole cake in a glaze brushed on when warm and this one will be based on lemon juice as well. In my mind, I can see it perfectly.

And that’s when it strikes me. Breeding that perfect alpaca cria is a lot like baking.

Okay, hold on and stop the laughing. It’s true. I almost get the same buzz when I’m combining males and females as I do when I tweak a recipe to make it come out the way I want. And the process is similar: Think about the result you want, choose the ingredients, combine, bake, wait, look at the results when done, make changes as needed.  Decorate when ready – in a few hours for a cake, in six to seven months for a cria. Voila! – analogy complete.

The cake is in the oven now. I’ll leave it in there for at least an hour before opening the door to take a peek. It’s hard not to cheat and poke one finger in to gently probe at the top. That could be catastrophic here where structural strength in a leavened cake can be terribly fragile. Meanwhile, my expectant dam is out at the barn. I run up to check on her and there’s no change. I can see that baby moving and the evidence of its activity in the quick rise and fall of her belly.  It would be a very nice anniversary gift if that baby would arrive today – the beautiful fawn girl I’ve pictured in my head for eleven months now. I can’t wait to meet her though am prepared for other outcomes. As long as it arrives healthy and is standing and nursing in good time, I’ll be happy (though that fawn girl would make me even happier). I’m pretty sure the pound cake will be out and glazed before the baby but I have a new vision in my head – of carrying out a piece of freshly baked pound cake to nibble on while I watch the baby stumble around with its first steps.

Read Full Post »

Social Networking for Alpaca Breeders

 I’m of two minds about the pervasive growth of social networking. Does that sound strange coming from someone who blogs, has a couple of websites, and is a member of several social networking sites? Maybe.

Social networking started out as a way to find old friends and make new ones. But with interest groups now possible, it has business value too, especially for geographically-dispersed alpaca breeders.  Now given that lots of people already have websites and advertise on marketing sites like Alpacanation, you may ask what additional value social networking sites may have.

The single value proposition of social networking is, in my humble opinion, to build relationships. It’s not to find another place to insert alpaca sales listings or thinly veiled ads for that herdsire you’re so proud of. I am always turned off when I find a blatant ad couched as forum discussion or a comment.  But real life stories, experience, and sharing really bring depth to the person behind the farm name that you can’t get from flat website content. As I’ve said often enough, the alpaca biz is a relationship industry, not a transactional one. That’s my theory about why so many online auction sites come and go with little interest.  People want to buy from people they feel they can trust. Social networking can help you build that trust or at least open the door.

I enjoy blogging but do not participate in forums. Having said that, a lot of people are extremely successful in reaching a large audience through active forum posting. They can establish themselves as a subject matter expert, an enthusiast, a political commentator, or the voice of reason through the consistency in their responses.  It’s just my personal choice to abstain from these. I’m more than a tad conflict-averse and writing a blog already takes me out of my naturally introverted comfort zone. Besides, I see some people who must be on their computer or mobile device all the time for the frequency of their responses.  Remember I said I was of two minds? Here is the flip side.

To me, social networking is a tool, not a lifestyle.  Don’t you just want to groan when you see a group of people furiously texting away while walking, oblivious to their surroundings? Or when your eating with friends, and one of them can’t seem to stop responding to the latest tweet?  I am still resisting Twitter. Unless your house is on fire, do I really need to know what you’re doing and thinking right now, this instant? Email me instead, please, or I’ll read it on Facebook.

The other hesitation I have about social networking is particular to alpaca breeders. In general, people are not drawn to the alpaca business because they have high tech, plugged in, multi tasking personalities.  I know a lot of breeders who have yet to get broadband and don’t know what a blog is. We’re all fleeing the stimuli-saturated modern world.  Alpacas give us a connection to something real and infinite: birth, growth, nurturing, reproduction, death. And usually, we live in places that reflect that all around us in the pastures, the seasons, the wildlife. So many alpaca breeders are really not the social networking types. I see that personally from my blog. I’ve gotten lots of feedback on my posts, but not through comments that are left – I get emails and comments when I see people at events.  Why don’t people want to leave it on my blog site? I suspect because it’s unfamiliar and also public, and we are still mostly a generation that is not used to letting it all hang out in cyberspace. However, I expect that will change in the next generation of alpaca breeders, whose first toys were not a rubber ball, but a keyboard attached to a PC.

Where can you go if you want to social network? Besides the commonly known forums on Alpacanation.com and Alpacasite, there are alpaca breeders present at all of the below and a ton of others as well.

Myspace.com

 

Facebook.com

linkedin.com

Read Full Post »

Survivor: Alpaca Edition

May is a busy month- besides the final spring shows, ending with Nationals end of May/early June, there is shearing in our part of the country and this year, something new.

For consecutive weekends in May, there have been three different open houses/marketing events south of Denver alone. All of them for the first time. All of them held by several small breeders working together. And breeders are working together in new ways. They are offering package discounts together, a choice of herdsires across all participants regardless of which dam you purchase, in addition to the usual free seminars. Some of this cross-breeder cooperation is specific to the event itself, but some breeders are working together to make these permanent options. The message is: “if you buy from one of us, you buy from all of us with all the benefits”.

I really admire creative ideas and when breeders take the initiative to drive their businesses forward…especially when someone comes up with something that makes me think, “Darn, why didn’t I think of that?”  It’s especially brave to entangle your sales with another’s, but these are tough times and it calls for extra effort.  It really reminds me of Survivor in some ways and I mean that without any derogatory tone at all. After all, the winner of Survivor achieves that distinction through careful choices and one of those choices is the nature of their alliances – who, what, and when.

Nobody gets into the alpaca business to be part of a co op or a complicated set of business relationships that require a team of attorneys. It’s reality that moves us into partnerships and co-sales. We do , however, join the community of alpaca breeders gladly and cherish the friends we make. The alpaca business, more than many other industries, is intensely relationship driven. These are not transactional sales, after all. So alliances in this industry are less about contractual obligations than where your trust lies.

So what do I think about this trend? I think it’s inevitable and promising. Especially if these efforts extend into joint efforts for hay buying, marketing, and fiber products.  For all that breeders have clamored for action from the national association (AOBA), it seems that change in this industry has always been driven from the bottom up, from a consensus of effort from multiple small breeders.

I’m not sure where I fit in this. I recognize that I have a tendency to the quiet and in an increasingly competitive market, it pays to be louder.  Will I drag myself, stumbling and protesting, out of my comfort zone or stick to what I’d prefer it to be and let it stand or fall on those tenets? No answer to that yet. Luckily, unlike Survivor, there can be more than one winner.

Read Full Post »

Hold on that Herdsire Purchase!

I just purchased my first herdsire. Unbelievable as it may sound, I have been breeding alpacas for five years without ever owning a breeding male.  Of those five years, I have spent almost two actively looking for a herdsire.

Many new breeders make the purchase of a breeding male one of their top priorities.  From a cash flow perspective, this makes a lot of sense – you not only save yourself the cost of outside breedings but you also can generate immediate revenue through the sale of stud services. But I’d like to make an argument for the opposite: holding on the purchase of your first herdsire.

When I first started out, it was clear that farms were often known by their herdsire. In other words, a really good male had branded their farm and their breeding program. As one well-known breeder told me, “People come to buy females but it’s the quality of the males that attract their attention.” So from that day on, I knew that a herdsire purchase would be the most important buying decision I could ever make.

With the implications of making a poor decision in this area, as a new breeder I then decided I needed to gain more knowledge before I knew what I wanted in a male and also before I felt I could adequately assess animals. So I spent a lot of time consciously recognizing what I liked and what I didn’t like. What colors? What look? Did I like a particular fiber style? What would I prioritize – size? capacity? bite? fineness of fiber? density? Where was I willing to compromise and where was I not? Some of these have changed in importance to me over time but others have not. Without knowing what I was breeding for though, it didn’t seem that I was in a position to purchase a male that would shape my breeding program in the direction I wanted.

A third reason why I decided to hold off was for a business reason.  Besides feeling the stud would have the breeding value I wanted, I also needed a male that had a lot of market value. That means the right bloodlines that would attract outside breedings, the right heritage, and (although I hesitate to say it) the right show record.  Now I have always derided the people who breed purely on show wins because I refute the misconception that show wins translate directly to breeding value.  Ribbons are important for marketing value, but I’ve seen plenty of champions and blue ribbon winners who I would never breed a dam to. Their qualities do not align with my breeding goals.  Having said that, I do look at show wins and I do show – this is a crucial part of the business to add marketing value. Got that? Breeding vs. marketing value are not always the same thing.

The last reason I held off purchasing a herdsire when I started out was purely practical. Every female I bought came with one or two breedings and I only purchased from people who had herdsires that I knew I wanted to use. So I really didn’t have to pay for any breedings for the first few years. And every time I bought an animal, I always asked for an additional breeding and often got it. Even today, I have a tidy little stockpile of high-value free breedings tucked away for when I need them.

I think I also had a vague niggling idea in my head that I would just breed a beautiful stud myself and therefore save myself the cost. Naive, huh?  Especially with my micro-sized herd. That homegrown showstopper will come someday -in fact,  I think now that I finally have purchased a herdsire, he might just pop up this year.  Alpaca breeding seems to work that way, with a strange sense of humor saturated in irony.

Read Full Post »

How $5 Equals $15,000 in the Alpaca Business

When I was a teenager, I had an allowance of $5 a week. We weren’t allowed to work part time jobs because my parents wanted to be sure we were focused on our schoolwork.  That $5 covered buying gum, candy, ice cream, and going out weekends with friends. That $5 paid for independence and freedom of choice. I would call that a good deal.

In college, I spent a year abroad in Germany on a scholarship. I received my scholarship money of $120 once a month – it seemed like a lot of money, more than enough to meet all my needs for four weeks. But in my first month on my own, I was down to just about the equivalent of $6 in DM with one week to go and wondering how I would eat the last half of the week. Luckily, I was able to get an advance on my next month but it was a shocking reality check.

Once I graduated, I moved into my first ever apartment. The rent was $291/month. The first time I wrote a check for it, I had to include a security deposit so the total was $582. $582! My hand shook when I wrote that first check. It seemed an impossible amount.  I budgeted myself to $40/week in discretionary spending money.  What I had done with $5 a week now cost eight times that amount.

After I got married, my husband and I bought our first house. Suddenly, our single expenditures were all over three digits. It seemed that nothing cost under $100 anymore. As time passed and we moved to houses we liked better and finally to property, those expenditures expanded to 4 digits just to take care of renovations and property maintenance. My monthly credit card charges expanded to almost equal that of the mortgage.

Life seemed to get more expensive as it got more complicated – or was it the other way around?

Nothing, however, makes me think more about that $5 allowance than the transactions that are part of being an alpaca breeder. Even as we bemoan the drop in alpaca prices with the economy, we must realize we are still talking about thousands of dollars. At an auction, these amounts are spent at the drop of a hat or to be more accurate, the raising of one little finger detected under the laser vision of an auctioneer spotter.  Is it crazy for me to think it would be a huge coup to purchase an animal I want at a mere $15,000 this week and then feel crippled the following week by having to pay $3,000 for a new well pump? How did water I need today become less worthy of my hard-earned dollars than an animal that only has a promise of return tomorrow? Why do I grumble over my increased grocery bills but gladly fork over top dollar for beautiful second cutting orchard hay? At what point did the needs of my alpacas supersede my own?

Even though it was thirty odd years ago, I still remember the feeling of receiving that crisp new $5 bill every week. Each bill represented a week of endless possibilities. My puny $5 to be spent purely on things I wanted, free of mandate. Perhaps that’s the unquantifiable value in the transactions that are routine in the alpaca business. We want an animal, we want to provide them with the best, we want to produce the best animals out there, we want to dabble in creation and succeed, we want to declare ourselves as entrepreneurs and subject to no one. I have to have a water pump, I have to buy groceries. Mandated, not desired.

When does $5 equal $15,000? When it gives me the same feeling as buying my own candy bars did years past, with that first toothsome bite of freedom and empowerment. And though I may long for the simplicity of long ago, as an adult I realize the challenges have to come with greater risk and cost to reap the rewards that will yield the same satisfaction as that measly bar of chocolate. After some consideration – it’s still a good deal.

Read Full Post »

Perspective on Auction Price Trends

If you follow my blog at all, you’ll know I love going to a good auction. As an extension of that, I’ve been trending auction prices from 2000 forward, more diligently recording them as of 2008, and searching forums to get prices that aren’t published elsewhere. I’ve been charting specifically the median and averages for huacayas (sorry, suri breeders). I do have the suri data but filter it for huacayas. After all, I am doing this just to satisfy my own curiosity. But I thought I would share the trend info I have to date. It seems to me that it is getting a lot more inspection in the past year. Watch this full screen or it will probably be too small to read. Enjoy and let me know your thoughts on auction pricing!

On Slideshare:

Huacaya Alpaca Auction Price Trends

PDF:

Huacaya Alpaca Auction Price Trends

Read Full Post »

The Value of Being an Auction Addict

I’m leaving for the Futurity auction this Friday. No, I don’t plan to buy and have kept my checking account balance abnormally low just to prevent such a disastrously spontaneous occurrence.  I also don’t plan to show – just to go to the Quechua Benefit auction and the main auction Saturday, then hop on a plane home on Sunday.

So are there valid business reasons to attend auctions if you’re not looking to buy or sell? I like to think so.

First off, let’s dispense with the obvious and trivial. Yes, at a nice auction (and Celebrity Sales always runs a nice event), you do get lots of nice free hors d’oeuvres and the wine and liquor tends to flow freely. They do, after all, want your inhibitions running wild and free and that can sometimes lead to some unplanned entertainment. And yes, it’s an obvious opportunity to network with other breeders.  But first and foremost, auctions can be educational.

If I’m at an auction, I mark all the lots in the auction book that fit the parameters of my breeding program. For example, if I’m only breeding for full Peruvian whites and do not allow linebreeding, I go through all the pedigrees and mark those that fall into that.  I look at each lot and assess it for conformation and fiber characteristics and mark down what I think it is worth and what I like or don’t like about it. I also compare related animals, e.g. animals from the same herdsire or dam, to see what characteristics I see in common for my own knowledge on the parents.  Sometimes I also look at animals that don’t align with what I breed for just out of curiosity and to see if they sell for what I think they should.  This is all part of the enjoyment.

At a combined auction/show event like the Futurity, the other plus of previewing the auction lots is that I can also scour the show pens for animals from the same herdsires to see how consistent they are. If you miss an auction lot with genetics you want, you can sometimes find a related show animal for sale.  A win/win all around.

But let’s return to the original premise – that we’re there just to learn and not buy.  Last but not least, an auction can give you an indication of how the market is trending based on the winning bids. And here I have to say that judging the market based on bids is only valuable if you’ve assessed the animal. After all, an animal that you assess at $30,000 that sells for $22,000 gives you a more pessimistic outlook than an animal you assess at $5000 and sells for $9000.  But you can get the exact opposite idea looking at the sale prices in a vacuum. That’s why I really resist arriving at any conclusions just based on published auction prices.

So that’s how I’ve justified my trip to Louisville this coming weekend. Never mind that auctions can be outright exciting. That without the stress of having animals to take care of and show, they can be a lot of fun. That the mere possibility of seeing an animal I might not be able to resist produces a thrill similar to window shopping in Beverly Hills.

And that regardless of what I plan or don’t plan to do, my checkbook always comes with me to any auction.

Read Full Post »