I predicted this recession, the foreclosure crisis and the fall of the real estate market well before it materialized last year. Within my circle of friends I am considered Nostradamus when it comes to the financial markets. So when people ask me about the Alpaca Market today and in the future, I thought I would do some research and pondering and come up with my predictions for the future of the industry.
Many nay-sayers would tell you that the alpaca market is a speculative bubble. A "speculative bubble" is defined by Webster's as "A rapid but often short-lived run-up in prices that is caused by irrational exuberance, rather than the basic underlying fundamentals of the market." Tulips in the 1630s and internet stocks in the 1990s are examples of this. Both these events were short lived and prices went up rapidly and when the bubble burst prices came down even more rapidly.
Let's break down this definition into two parts:
- A rapid but often short-lived run-up in prices: Alpaca prices have been stable for 15+ years in the United States and only recently have seen a decrease in price. There was never a run-up in prices and the decrease has been gradual and not rapid by any means. I attribute this both to the economic downturn as well as panic selling by smaller breeders who were not well capitalized from the start.
- Caused by irrational exuberance, rather than the basic underlying fundamentals of the market: Exuberance is what all alpaca breeders feel every time a cria is born! However, irrational exuberance would not describe me or any of my fellow quality breeders. There is a solid underlying fundamental in the alpaca market in the form of fiber. My fiber and yarn sales account for a large portion of my overall income and even more so in this economy. If alpaca breeding for investment and livelihood was irrational, then so is every livestock and agricultural model in the country.
- Prices will continue to stabilize in 2Q and 3Q 2010 and will be more realistic for the average consumer.
- Sales of breeding stock will increase in 2010 year over year
- Sales of breeding stock will increase in 2011 and eclipse 2009 and prior years due to lower entry points and more "average" folks getting involved
- Local and regional organizations will find creative ways to make showing more affordable for the smaller farm or risk not getting the participation enjoyed in the past
- Newer breeders coming into the business in 2010 and 2011 will treat it as a business and make the industry stronger for that
- Breeders will come together in more cooperatives in order to propel the fiber industry forward. There is gold in that fleece and we need to mine it!
- Auctions will no longer feature the best of the industry and will become a clearing house for lower quality animals
Please let me know your thoughts!!!