[Alpacasite] You should resign as a Director of the Alpaca Fiber Cooperative

You don't believe in the industry. You don't believe in
the "vision". You don't have vision.

Please stick with "old style" llamas,

Sorry,
Greystone Manor
Gary Epp

--- In Alpacasite@yahoogroups.com, "gatewayfarm" <johnwmerrell@e...>
wrote:
>
> Gary, there are a number of errors in your figures, errors that
are
> unfortunately freely promulgated through the alpaca industry.
>
> It is extremely difficult to get accurate prices for alpaca in th
> global market. That said, if we look here:
>
> http://www.gschneider.com/brochure/specialfibresalpacatrend.php
>
> we can see that baby alpaca has held a pretty consistant $15 a
kilo
> for the past several years. That is about $7 a pound.
>
> If we compare this with Mohair, then we can go here:
>
> http://www.mohairusa.com/
>
> and find that in October of this year it was going for a little
over
> $8 a pound.
>
> While the value of alpaca is many thimes that of wool, it hardly
> stands above other specialty animal fibers.
>
> This is something that all producers should be aware of.
>
> I am not sure where your figures of 12-15 sweaters comes from. I
think
> that currently we should use a conservative estimate of 5 pounds
of
> prime fleece per animal. We should also figure greater than 10%
waste
> in processing.
>
> So, we are probably looking at no more than 4.5 pounds of finished
> yarn per animal per year. With waste from the manufacturing
process, I
> would guess no more than 3-5 sweaters per animal.
>
> That would produce a gross income of perhaps $400-500 annually.
But,
> we have yet to subtract the costs of keeping the animals, shearing
the
> animals, or shipping off the fiber for processing.
>
> In large quantities it is probably realistic to have raw fiber
> processed to yarn for $10-12 a pound, including scouring,
spinning,
> shipping, packaging, etc.
>
> So, for argument, let's assume that it costs $50 to keep each
animal a
> year (feed, vet, infrastructure, etc.), $20 to shear each animal,
$1
> pound to ship the fiber off, and $10 a pound to spin th fiber into
> yarn. I am sure that most would agree these are conservative
figures.
>
> 50+20+(1*5)+(10*5)=$125 annual cost
>
> Let's assume the yarn is worth $20 pound at the distributor level
>
> $20*5 = $100
>
> Do you begin to see some problems emerging?
>
> So, let's process that yarn into sweaters. Let's assume we can
get
> sweaters made for $25 a unit (including labeling and packaging),
and
> we get 3 out of each animal. So now our costs are
>
> 125+(3*25)=$200
>
> We can sell these sweaters for $150 each retail, but as we all
know
> retail is twice wholesale, which is twice what the distributor
gets.
> As primary producers, let's assume we are at the distributor
level So
>
> 150/2=75/2= $37.50 a unit
>
> 37.5*3=$122.50
>
> Oops, we are now losing over $75 an animal each year producing
> sweaters that will retail for $150 each.
>
> We can of course try to vertically integrate at a higher level.
We
> could become wholesalers, or even retailers. The problems there
have
> to do with exponentially increasing expenses, since we now need to
> maintain inventory and pay warehouse staff, sales staff,
accountants,
> managers, etc.
>
> I can assure you, the hoped for margins will evaporate quickly.
>
> Why this exercise in number crunching? We need to get realistic.
>
> I think that it is reasonable to look towards a time when we can
see
> actual returns of $15-20 a pound to the fiber producer. This, of
> course, does not take into account the producers costs, meaning
that
> it will be incumbent on the producer to reduce their production
costs
> to a level that maintains profitablity. That means the end of $25
a
> head shearing, Igg testing on every animal, expensive veterinary
> interventions, routine chemical parasite controls, etc.
>
> In short, it means transitioning into a true livestock industry.
>
> Can this be done? Of course, but only with foresight, planning,
and a
> realistic appreciation of the task at hand.
>
> Further, it will be through this transition that a market will be
> maintained for high end animals. Without a SUSTAINABLE foundation
(i.
> e. livestock industry) the whole house will collapse. Continuing
the
> myth of $5 an ounce fiber does no one any favors at this point in
> time. it was good marketing 10 years ago. Now is the time to get
> real!
>
> It is good to keep in mind that we will have in excess of one
million
> alpacas within the next 15 years. It is also important to
understand
> that the figures I share above assume collective efforts to
harvest
> and process the fleece our animals produce.
>
> As a Director of the Alpaca Fiber Cooperative I have spent many
hours
> agonizing over these numbers. It might be easier if we were not
> involved in a global economy, but such is not the case. We must be
> prepared to compete with low priced goods from Asia and South
America.
>
> I assure you, experienced livestock producers shake their heads in
> disbelief when they see figures like what you have shared below.
>
> John Merrell
> Gateway Farm Alpacas
> http://www.gateway-alpacas.com
> Alpaca, a natural elegance...
>
> --- In Alpacasite@yahoogroups.com, "gepp1" <alpacas@g...> wrote:
> >
> > This is refering to:
> >
> > http://finance.groups.yahoo.com/group/Alpacasite/message/105021?
> > threaded=1
> >
> > Hi Susan Gawarecki,
> >
> > The big difference in pricing between alpacas and llamas is the
base
> > value of the fleece. People have been buying cashmere for
hundreds
> > of years at a 5 - 20 times price premium over wool. Low micron
count
> > camilids fiber should always command a price premium similar to
> > cashmere. There are llama breeders that have been successful in
> > breeding llamas with fine fleece in reasonable shearing weights
and
> > they are still getting good prices. I know two that have waiting
> > lists for every cria. The older style llamas produced smaller
> > amounts of high micron fleece than an average alpaca. By the
way,
> > when we are considering an alpaca breed standard we should
consider
> > this lesson.
> >
> > An alpaca that yields 6-8 pounds per year of mid to low 20
micron
> > fleece is producing a renewable product worth more than $2000
gross
> > (12-15 sweaters) annually. At the same time a young breeding dam
in
> > good reproductive health will produce a minimum of 3 breed able
> > female and 3 fleece quality male cria. Therefore a young
breeding
> > quality female will be responsible for 42 – 56 pounds of fleece
in
> > her 10th year. That works out to $14,000 to 16,000 per year if
you
> > kept and bred that dam. How much do you think the investment
> > community values a stock whose gross revenue increases by a
factor
> > of 6 in ten years, that's a 40+% compound growth rate.
> >
> > If that dam is for sale NOW as a stock, the investment community
> > would value the stock at least 5 times current revenue ($2000 X
5 =
> > $10,000) plus about 50% expected 2 year appreciation (50% X
$11,000
> > = $5,500). You might ask where that $11,000 comes from. It's the
> > base price of one breed able female ($10,000) and one fleece
quality
> > male cria ($1000).
> >
> > The above example uses VERY conservative numbers and assumptions
but
> > clearly establishes a base value for a reproductively sound
maiden
> > in the $10,000 to $20,000 range. Where things get tricky is when
> > people pay $20,000 to $100,000 for females. The buyer is paying
> > a "premium" on speculation that the females genetics combined
with
> > an appropriate stud will produce offspring that improve on the
$2000
> > annual gross figure and the base value of the cria she will
produce.
> >
> > It gets even trickier when breeders pay over $100,000 for studs.
> > Let's say that a $200,000 stud has 100 cria, forget stud fees
and
> > taxes for a moment, part of the value question becomes, "has
that
> > stud increased the base value of its 100 cria by an average of
$2000
> > each"? If so the stud fees and tax breaks are gravy.
> >
> > Just some thoughts on alpaca value,
> > Greystone Manor
> > Gary Epp
> >
>

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