Before investing in any new agricultural venture prospective investors need to be certain that the industry has long-term viability and will not fall victim to the boom/bust cycle so often associated with emerging agricultural industries. The Australian alpaca industry has major differences from most other emerging agricultural industries. The industry has a solid infrastructure and a product that is in international demand with only a very slow increase in production possible.
The Australian Alpaca Association is a strong and dynamic industry body, with significant financial reserves and a commitment to promote alpacas both in Australia and overseas.
There are two dedicated alpaca fibre marketers in Australia, The Alpaca Co-operative Ltd (the Co-op) and Australian Alpaca Fibre Marketing Organisation Pty Ltd. (AAFMO). In addition to this Elite Fibre Australia Pty Ltd based in Geelong Victoria processes speciality fibres including alpaca on a contract basis. Elite has been fully funded from participants in the alpaca industry.
Peru is the major alpaca producer in the world with an estimated 2-5 million animals followed by Bolivia and Chile. Peru is the only country with the numbers to quickly increase the supply of alpaca but is constrained by the lack of suitable land. The altiplano regions of Peru are already severely overgrazed and offer little room for expansion without substantial pasture improvement programs. The Amazon hems in the altiplano on the Pacific side by the rainless Atacama Desert and on the inland side, both unsuitable for alpaca production. Bolivia is in a similar situation with little room for expansion of the alpaca herd. The only countries in South America with the potential to expand numbers are Argentina and Chile. These countries constrained from introducing alpacas from Peru due to their Foot and Mouth free status, which they need to maintain in order to be able to export beef to Japan, North America and Europe.
Therefore any expansion of the world alpaca herd will most likely take place outside South America. Australia and New Zealand will lead this expansion as both countries have large areas of suitable land available at relatively low prices compared to Europe and North America. Due to the small numbers of alpacas outside South America (probably around 45,000) a major increase in the supply of alpaca fibre will take many years. The time taken to breed up numbers will allow marketing of product to keep ahead of the increase in supply well into the 21 st century. Commercial production will not be reached in Australia until approximately 2011 with an estimated herd of 220,000.
The South American herd is currently made up of alpacas of all descriptions from high quality stock bred by the Co-operative and a few dedicated breeders to Huarizo's (llama-alpaca crosses).
Peasant farmers own the majority of the national herd and they do not generally engage in selective breeding and therefore of their herds. Because of this, there is a large amount of inferior fibre produced. Given our low current herd base and the fact that we will be more selective in our breeding in Australia, our average fibre quality will be superior given time. It is essential that all participants in the industry understand, the importance of herd and only using the best available genetics, especially males.
This will allow Australia to promote its own alpaca fibre as being superior to that of South America.
While there are no accurate figures available for the composition of the Peruvian clip, the following figures have been gleaned from talking to the major processors in Peru. Australia should seek to avoid producing the bottom three categories as far as is possible. Also note that the llama one is, in fact, coarse alpaca.
| % of National Clip | Type | Micron Range |
| 0.01% | Baby Suri | <18m |
| 0.02% | Royal Alpaca | <18m |
| 4 - 5% | Suri | 18 - 26m |
| 4 - 5% | Baby Alpaca | 18 - 21m |
| 25% | Fine Alpaca | 21 - 25m |
| 20% | Alpaca | 25 - 28m |
| 20% | Huarizo | >28m |
| 15% | Llama | 30 - 26m |
| 10% | Mixed | >30m |
As with all natural fibres, alpaca has its own unique qualities that are not easily replicated with man-made fibres. The most important quality of alpaca is its soft slippery feel; this allows a 26/27 micron alpaca to handle like superfine wool, and in the finer microns like cashmere.
This attribute is due to the lower profile of the protruding scales on the fibre in comparison to other natural fibres. Desirable handle capable of producing the ohh! response from a potential purchaser is second only to design in determining knitwear sales.
Alpaca also has excellent warmth to weight ratios and higher fibre tensile strength than wool, which allows warm lightweight garments to be produced. Alpaca comes in a range of natural colours that is unmatched in animal fibres. The colours range through all shades of grey, fawn and brown, white and black. While it is expected that in commercial fibre producing situation, perhaps 70% of the national herd would be white, the natural colours are a unique marketing tool. The fact that the colours do not have to be dyed is both a significant cost saving and also has benefits eliminating the discharge of dye waste into the drainage system.
In addition to the above attributes of the fibre, the alpaca as an animal is an extremely effective marketing tool- The image of an alpaca on the label, swing tag or box and the romantic history of the animal makes it very easy to conjure up a highly desirable image in the mind of the prospective purchaser. The fact that the alpaca has the least impact on the ground of any of the introduced farm animal and requires little drenching and no dipping or other chemical input means that an organic production system could be easily introduced offering further marketing advantages.
Perhaps that most important attribute of alpaca fibre is its comparative rarity and the fact that this rarity will be maintained for many years because animal numbers cannot be increased quickly. To put the world supply of alpaca fibre into perspective it is important to note that animal fibres only make up 3% of all fibres used. Total world production of all animal fibres is probably 5 million tomes per annum of this less than 5000 tonnes is alpaca. Further to this point, it can be seen that the better alpaca types make up only a tiny proportion of total world fibre production. Quality alpaca is truly a rare fibre.
Current Australian production is estimated at 70 tonnes per annum, estimated production by 2011 is estimated at 950 tonnes at which time we will have a commercial industry.
The Alpaca Co-op as its name suggests is a grower based Co-operative organisation with each member getting one vote regardless of the number of shares held. It is necessary to become a member of the Co-op to market your fibre through the organisation. The Co-op has a policy of value adding to maximise returns to growers. It currently markets a range of products; this range is being constantly expanded and is marketed through direct sales, to retailers and via joint venture with established wholesalers. The Co-op holds a 20% interest in Elite Fibre Australia, Pty Ltd, a scourer, topmaker and worsted spinner. Elite and the Co-op share offices in Geelong, Victoria
AAFMO is a private company that has been put together by a small group of like-minded alpaca breeders for the purposes of collecting, classing, sorting and marketing Australian Alpaca Fibre. A set cost per kilo is charged for classing and marketing with no joining or membership fee payable. AAFMO receive and class alpaca fibre at their facility in Narrandera NSW, from collection points around the country. At present they market raw fibre but are prepared to value add to various stages depending on market demand.
Both organisations bulk class, that is they receive growers fibre and class it into the various lines to make up a bulk line in order to get enough of one fine for commercial sale and processing, this is normally around 150kg. At the end of classing the grower will be sent a sheet detailing the number of kilos in each line that their clip was classed into. This will become the basis for payment when the fibre has been sold.
| Name | Size | Price |
| Royal Alpaca | under 19 micron | $90/kg (app)* |
| Baby Alpaca | 19 - 21 micron | $45/kg |
| Fine Alpaca | 21 - 25 micron | $36/kg |
| Adult Alpaca | 25 - 30 micron | $25/kg |
| Coarse Alpaca | over 30 micron | $10/kg |
Note:
Higher prices for baby, fine, adult and coarse are based on the most recent Alpaca Co-op Payments. The price for royal alpaca is based on price of US$90 per kilo quoted by the Inca Group of Peru for yarn. When processing yield loss and processing costs are taken into consideration, this would equate to approach AU$90kg.
There is a strong industry infrastructure in place allowing product to be marketed attractive prices.
Alpaca fibre Prices are increasing due to international demand particularly at the quality end from the Italians and Japanese. A recent British report quoted two independent Bradford processors as saying that alpaca prices could increase by 300% in the next few years
In contrast to other emerging agricultural industries the alpaca industry cannot be over produced in the short or medium term. A truly commercial industry in Australia is probably 12 years away as it is impossible to increase numbers more rapidly. With good promotion overproduction could take 40 or 50 years or may never occur.
The alpaca industry has a strong long-term future in Australia and is here to stay.