Alpacas are often represented as "The World's Finest Livestock Investment." For most owners though, alpaca ownership should be thought of more as a business. You seldom have to trim the toenails on your stock portfolio or market your 401K. Alpaca ownership is more active than passive investing, but the results are in your hands and the rewards can be larger as well. (Though alpaca investment strategies, like agisting and co-ownership, are also available.)

Alpacas can be raised profitably on small acrerage. Their high value and low maintenance needs make them ideal for both hobby farmers and full-time breeders. In addition, livestock offer unique benefits in the form of tax advantages, income deferral, and investment compounding. Alpacas are also fully insurable and can be depreciated. Many breeders also capitalize on the business opportunities presented by selling alpaca end products, support products, or services. See the resource list for this section for more information on these important topics.

Alpaca prices have been stable for many years, so the key to profitability currently is in breeding animals and in selling or rebreeding the offspring (rather than simply reselling the original animal). Rebreeding any offspring further compounds your original investment. As the table on the right shows, starting with just 3 bred females could result in a herd size of 20 alpacas in 5 years, assuming half of the offspring are female and half are male. At an average value of, for example, $5,000 for males and $15,000 for females, your original investment of $45,000 would be worth $180,000 in 5 years.

The key to realizing this value is in marketing and selling those animals when you're ready, and it's this aspect that requires alpaca owners to think most like business people. Fortunately, national and regional organizations, like AOBA and GLAA, have been formed to promote awareness of alpacas and to provide resources and venues to help their members market their animals. In addition many established breeders do co-marketing events as a service to their customers.

The fiber market is still being developed in the United States. Currently, there isn't enough alpaca fiber produced domestically to interest most commercial processors. Fiber operations can be profitable if the purchase price of the animals is low and the farm develops a strong market to cottage industry (hand spinners, fiber artists, etc.) or does value-added processing (carding, spinning, weaving, knitting, etc.).

Alpaca ownership can be rewarding on many levels. For owners who approach it as a business it can offer a significant return on investment in addition to the joy of owning these beautiful animals.