Image: Alpacas
Rick Bowmer  /  AP file
Marcus and Cathryn Whitman tend to a young alpaca at Good Fortune Farms in Parkdale, Ore.  A relative of the llama, alpacas originated in South America and were first introduced to the United States in 1984. They were initially popular in the Northwest, primarily among llama farmers wanting to diversify.
updated 7/31/2006 1:39:00 PM ET 2006-07-31T17:39:00

Standing in the green grass, with Mount Hood's white snowcapped peak on the horizon, it's hard for Marcus and Cathryn Whitman to imagine life any other way: the peace, the quiet — the alpacas.

Like thousands of other Americans, they ditched their former lives for the bucolic experience of raising the easygoing shaggy animals.

A relative of the llama, alpacas originated in South America and were first introduced to the United States in 1984. They were initially popular in the Northwest, primarily among llama farmers wanting to diversify. But the alpaca has since generated a "Green Acres"-like following among nonagricultural types nationwide looking for a tax-friendly business and lower-stress lifestyle.

"For not knowing what an alpaca was six years ago, it's now everything," Cathryn said.

The Whitmans wanted to make a change after weathering a few too many hurricanes working as dive instructors and yacht captains in the U.S. Virgin Islands. At their accountant's suggestion, they looked into farming for the tax breaks.

They picked the alpacas because they "didn't want to raise something that we had to kill, or that would kill us" Cathryn said.

Cathryn works for a diving magazine from her home but Marcus works full-time on the alpaca business. After six years running Good Fortune Farms, they were able to pay off the debt incurred to start it. The Whitmans now have more than 30 alpacas, a shearing business and an alpaca store on their property.

The animals look like a cross between a teddy bear and a llama. Owners say they are easy to care for: their annual food costs rival those of some dogs and they can fit in the back of an SUV. And, they say, the animals are adorable.

The Alpaca Owners and Breeders Association said the animals are an easy entree into an agricultural lifestyle.

Membership in the association spiked after 9/11, when some people opted for a simpler life, and it has continued rising steadily since then. The association now has more than 4,000 members, primarily in Western states. But interest has grown nationwide — the largest presence of alpacas in the nation is in Ohio.

The animals only have one offspring a year. Imports from South America are limited and a national registry used for breeding and lineage tracking are closed to imports, further driving interest in breeding.

The sale of an non-breeding alpaca can be a few hundred dollars but the high-end breeding stock, with top appearance and lineage, can sell for as much as $100,000, according to the Alpaca Owners and Breeders Association.

The alpacas' soft fiber, which resembles cashmere, is sold — but the market is small. There is limited demand and there are no large-scale processing facilities, which prevents the fiber from being readily available.

"We would never tell anybody it's a get rich quick scheme," said Bob Black, who runs Black Acre Alpacas with his wife Val from their home in Beaverton, a Portland suburb.

Both continue to work full-time, he as an information technology manager and she as an attorney. They have 24 animals now and they said they hope to transition into farming full time when they retire.

Attractive tax-breaks
Breeding can be lucrative. The tax rules favor full-time rather than hobby farmers, and include the ability to write off some farming expenses and benefit from depreciation of property.

But most say it was as much a lifestyle as an investment decision.

"I wanted to retire, or semi-retire," said Lorraine Heinauer, who runs Almost Paradise Farms in Forest Grove with her husband, who continues his work as an engineer. "I liked the idea of puttering around a farm."

But the surging interest, and selling prices, for alpacas has some critics saying the industry is showing clear signs of a speculative bubble ready to pop.

Richard Sexton, a professor of agricultural and resource economics at the University of California at Davis, co-authored a study this year that found the pricing of alpacas cannot be justified because of the lack of value of their fiber.

The price of alpacas increased roughly 50 to 80 percent over four years, depending on breed, Sexton's study found. But the market for fiber remains limited. The Alpaca Fiber Cooperative of North America, Inc. is trying to secure an opportunity for large-scale processing to make the fiber more available.

An alpaca produces six to eight pounds of raw fiber a year. According to Sexton, a reputable producer with good contacts could get $44 a pound for high-quality raw fiber but this is only for a limited few breeders.

Many use the cooperative to process their fiber, which provides them a maximum price of $3.80 a pound after processing, Sexton said.

"The commodity (fiber) they produce is worth almost nothing compared to the cost to produce it," Sexton said. "It would be the same thing as if dairy farmers were out there marketing cows, not their products."

Even if the value of fiber rose significantly — at least double-digit percentage growth for an indefinite time — Sexton said the current prices for the animals cannot be sustained.

He said there is an "irrational exuberance" in the industry and advertising on television and radio by alpaca organizations resembles a pyramid scheme to continue demand for breeding.

"You don't have to think back much further than the bubble of internet stocks. Those were smart people, too, who were investing a lot of money," Sexton said.

Alpaca advocates adamantly defend the breed's financial future. Alpaca farming is still news and prices in any livestock industry will change in the long run, said Jerry Miller, spokesman for the Alpaca Owners and Breeders Association.

"This is not a flash in the pan," Miller said. "This is a long steady increase over a number of years."

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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