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JimR
1046 Posts |
 Posted - 07/04/2012 : 12:52:30 PM
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Judith I am sorry you feel my post was flaming. I personally have gotten emails from people that are pretty shocked that anyone is even having a conversation with him, and agreeing or maybe I should say not disagreeing with him.
I think his post is a lot more flaming of the industry in general than mine is to him.
I have reread his posts and if everyone involved in this thread has not stopped for a second to just ask themselves WHY a person who supposedly no longer has any vested interest in this industry by his own admission(except of course for brokering alpacas) than why is he so intent on ripping everyone for the prices they place on their alpacas.
If I was no longer in the industry to be honest I could care less if they were selling for 5.00 or 500.00. He obviously does care a great deal..Why?
Just out of curiosity Brad, before you "left" the business what prices did you have on your alpacas?
What did you buy them for, and what did you sell them for. and before you ever supposedly got into the business why didn't you ask yourself these questions than instead of comparing alpacas to sheep now?
Susan Rempe
Four Corners Alpacas
Bloomfield NM 87413
505 360-8375
River11524@msn.com
www.AlpacaNation.com/fourcorners.asp
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Judith
3843 Posts |
Posted - 07/04/2012 : 1:22:12 PM
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Susan, I read absolutely nothing in Brad's posts that suggested he was "ripping" people for maintaining prices above $2K. There was absolutely nothing disrespectful in his posts, or the least bit condescending of the industry in general or specific breeders in particular. We respond to questions by people who are not yet in the industry, so why would we refuse to respond to questions by people who have retired from the industry, as long as the questions are respectful and not demeaning? Having turned my own business focus from alpaca sales to fiber use and sales, at least in terms of quick turnaround and profitability, I am probably now more in line with Brad's model of this as a commodity industry than with the models of many (most?) of the other respondents in this thread. As Ian noted above, there are many business models people can choose from, and one's going in one direction should not be deemed a slap in the face to those who follow another. And having chosen one model or another does not preclude anyone from participating in the ongoing dialogue and community of the rest.
Judith Korff
AlpacaNation Forum Co-Moderator
LadySong Farm Bolivian Suri Alpacas
Randolph, NY 14772
Cell: (716) 499-0383
www.alpacanation.com/ladysong.asp |
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bobvicki
2836 Posts |
Posted - 07/04/2012 : 2:39:51 PM
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Judith,
Generally you and I seem to agree along the same lines, but this time I think you are wrong about Susan.
I think all owners and breeders who have alpacas priced $2000 and over have had it implied that they are somewhat dishonest by the statements made several times in Brad's posts and Susan's post only pointed out a possible reason for his questioning of prices.
I have lots of good to excellent alpacas priced well under $2000 and even under $1000 and yes some over that too.
Like Susan I too have received emails supporting my comments on this post.
You (Judith) have alpaca's listed on your farm for both above and below $2000, would you really want anyone leaving your site because they read a post that implied owners trying to sell (have alpacas listed over $2000) alpacas for more than $2000 are dishonest and unrealistic?
I don't think Brad's question bad at all, just the other comments presented with it. If a breeder can sell alpaca's for $8000 and those customers are happy who is to say those alpaca's were over priced. maybe those people were not planning to make a living off the alpaca's but just add variety to the things they were already doing on their farms. All all the alpacas being sold at auctions overpriced? Their prices average pretty much well over $2000!
Bob
Bob & Vicki Blodgett
Suri Land Alpaca Ranch
10371 N 2210 Road
Clinton, Oklahoma 73601
641-831-3576
alpaca@htswireless.com
www.alpacanation.com/suriland.asp |
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Judith
3843 Posts |
Posted - 07/04/2012 : 3:36:34 PM
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In the specific instance of my response to Susan, it is my opinion, from a moderator standpoint, that the following quote crossed the line between critique and rudeness:
quote:
If you are trying to broker which I believe you are from your posts..give it up..your not the right person to sell alpacas, you have zero love for them, and to be successful you have to at least love the product, and believe in that product 100%. You proved by your posts you really don't even like alpacas, or believe in alpaca farming at all. I would suggest you contact sheep farmers as that appears to livestock you truly have enthusiasm for:)
My reading of Brad's initial question is that he was asking WHY people list alpacas over $2K. In other words, what criteria do people use to make those judgments? I think he was trying to get at the logic of how people determine pricing, although it's clear that his own opinion is that lower is better. I don't believe he intended to or was dissing anybody, or that he was implying that there are no alpacas that are worth more than $2K, or that people who price their alpacas higher than $2K are dishonest, nor did he say that at any time. Rather, he was trying to get at the qualities that people analyze to determine the value and the pricing of their stock. His subsequent posts seemed to me to be more a defense of his question rather than an attack on others' positions, especially given the amount of pushback he had received.
Regarding the range of prices in my listings, since it would be pretty evident that I offer both more expensive and less expensive alpacas, I would expect that anybody who was surprised by the higher prices on some to ask what the difference was. At least, that's how I would respond if I came across that situation and was new to the industry (remember when we were new? Prices were all over the place, although the starting point was considerably higher LOL!). It's actually very liberating to follow a business model doesn't rely on selling X alpacas each year, and strangely enough, this has led to an increased number of sales in the past year. I guess it's like going to the bank for a loan: if you really need one, it's really hard to get one, but if you don't really need it, they'll fall all over themselves to do business with you.
Just FWIW....
Judith Korff
AlpacaNation Forum Co-Moderator
LadySong Farm Bolivian Suri Alpacas
Randolph, NY 14772
Cell: (716) 499-0383
www.alpacanation.com/ladysong.asp |
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Littlecreek
37 Posts |
Posted - 07/05/2012 : 08:04:20 AM
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Here's an idea: let's look at some numbers.
An alpaca's financial value can be approximated just like that of any other asset, by comparing its cost to the income stream it produces, and adjusting those numbers for both risk and the the impact of inflation between now and when the particular revenue or cost is incurred. For those of you unfamiliar with adjusting the values of future cash flows for these factors, you can learn more by googling "discount factor formula." If you are already holding your head in your hands from the terminology -- don't! You do this same calculation intuitively all the time. It's the same judgment that produced the old saying "a bird in the hand is worth two in the bush."
Let's look at the expected value of the $2000 female alpaca using the assumptions that follow: 1) she will produce a live cria at the end of 8 of the next 10 years; 2)if the cria is a female it will be worth $2000, if it is a male it will be worth $0, and the odds of either are 50% -- note that assumptions 1 and 2 mean the expected cria value per year is $800; 3) you can realize $50 per year from selling the alpaca's fleece; 4)it costs you $450 a year to care for an alpaca in your herd.
Let's also assume a discount rate of 5%. That means that a dollar you receive a year from now is worth only $0.95 in today's value, and that a dollar that you receive 10 years from now is worth only $0.61 in today's dollars. The cria that you get at the end of the first investment year is worth $800 times 0.95, or $809.52, and the cria you get in year 10 is worth $800 times 0.61, or $521.83 in today's dollars.
If we apply the assumed discount factor to the projected revenue and cost streams of our hypothetical alpaca, we get total revenues in today's dollars of $6563, and total costs (excluding purchase) of $3475, for a difference of $3088. Subtract the cost of purchasing this $2000 animal and you get $1088, add back the value of depreciating it fully in year one, assuming a 35% marginal tax rate as an example, and you get $1788. In other words, our example earned us $1788 over 10 years, in addition to the return of the initial investment.
My point is not that a $2000 alpaca is a "good" investment, but rather that the expected value of the investment can be calculated based on a set of assumptions particular to your farm. This simple example did not include a myriad of other important things, including non-animal costs and benefits of doing business (everything from insurance and marketing expenditures on the cost side to the value of property tax reductions on the "revenue" side.) You may think a 5% discount rate is too high or, more likely given that it takes into account not just inflation but also other risk, too low. If you have a large herd, you can comfortably average vet and mortality costs across all animals, if you have just a few, the occassional large event of this nature will play havoc with that year's results. But -- if you play with the numbers for yourself in a very simple spreadsheet, using the discount formula you can find on-line, you can also discover how sensitive your own valuations are to particular assumptions you make -- this tells you something about where the risks and opportunities lie within your own business structure.
Hopefully this addresses your confusion, efalpacas: You can figure out why people think an alpaca's price is a fair one by learning more about their assumptions. To the extent your assumptions would differ, that may create an interesting opportunity for one or both of you.
Lynn Edens
Little Creek Farm Alpacas
North Salem, NY
www.lcfalpacas.com |
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joeykatp
263 Posts |
Posted - 07/05/2012 : 09:27:12 AM
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I think this discussion is very interesting!
Great example Lynn - just if anybody's going to use the formula there's one tiny mistake, $800 times .95 is $760 not $809.50.
Just be aware, as Lynn said, there are so many other variables to take into consideration so be sure to list as many as you can at the outset. There will be more to add along the way, too. So, there will be adjustments down the line.
Be ready for some tough decisions, too. In case there's a tragedy - i.e. you must decide if you're going to pay for a $6000.00 operation on your most prized animal.
Kathy Paternoster
Our Father's Farm
New Hampton, NY
(845)374-7712 |
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Judith
3843 Posts |
Posted - 07/05/2012 : 10:55:38 AM
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I'll confess to being a math idiot, but if you are using a .95 discount basis, wouldn't you apply a something like 1.05 to your expenses (since if your money is only worth .95 at that time, then your expenses are - what? - .05 higher than what you're using as your base rate (1)? Maybe you did that and I'm just not seeing it. Math makes my head spin.
Judith Korff
AlpacaNation Forum Co-Moderator
LadySong Farm Bolivian Suri Alpacas
Randolph, NY 14772
Cell: (716) 499-0383
www.alpacanation.com/ladysong.asp |
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efalpacas
30 Posts |
Posted - 07/05/2012 : 4:08:28 PM
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Yet again thanks to those that shared their information whether they agree or disagree. Judith hit the nail on the head when she said,
"My reading of Brad's initial question is that he was asking WHY people list alpacas over $2K. In other words, what criteria do people use to make those judgments? I think he was trying to get at the logic of how people determine pricing, although it's clear that his own opinion is that lower is better. I don't believe he intended to or was dissing anybody, or that he was implying that there are no alpacas that are worth more than $2K, or that people who price their alpacas higher than $2K are dishonest, nor did he say that at any time. Rather, he was trying to get at the qualities that people analyze to determine the value and the pricing of their stock."
Judith you completely understand what I was trying to say. So if anyone took the information as anything different misinterpreted my postings. Bob I do however want to clarify your comment... "You (Judith) have alpaca's listed on your farm for both above and below $2000, would you really want anyone leaving your site because they read a post that implied owners trying to sell (have alpacas listed over $2000) alpacas for more than $2000 are dishonest and unrealistic?" Bob you completely missed my point. I don't think that you can't have alpacas for more than $2,000. You can list your animals for a million dollars if you want and that is your business. The reason I said dishonest and unrealistic is average to medicre alpacas listed for more than $2,000. Now here is what my qualifications for a great alpaca include...
1. Sex and Type of alpaca. For example male or female, proven, unproven, suri, etc.
2. Award winnings in a halter show. In my eyes awards don't always mean everything however if a judge can qualify your animals as a stellar example than I think you have a nice animals. Additionally, awards also depend on how many in the class. I don't think an animal that won a second place ribbon out of two alpacas is necessarily phenomenal, however if it placed second out of eleven it is pretty good.
3. Overall conformation.
4. Fleece characteristics.
5. Genetics/Name. Basically does this animals come from good stock, or from a good farm. This area is where I think many people get mislead. Just because an animal comes from good genetics or a good farm does not mean it is always good quality. I have seen many farms in the past pay $3,000 to $5,000 for a breeding to an amazing herdsire and the cria was poor quality. Now the cria may have potential to produce great offspring, however it also could produce duds. Also, some people think that if their animals come from a particular farm with a famous name, that ultimately their animal is better, which is not always the case. Even amazing farms produce poor offspring here and there. Just as some average animals may produce high quality. This is the gamble you take when raising any animal.
6. EXTRA. This could include a niche market. Such as unique colors, animals that are easy to work with, average animals that produce champion crias but they themselves arent great quality, new market prices, etc.
So I use the criteria above to price alpacas. Now their may be other factors that also influence price. This leads me to why I said people are dishonest or unrealistic. If your animals don't perform well on some or all of the critera listed above and you still want $5,000 for it because you think it has "potential" however has never truely proven itself, I don't think you are being honest with the potential owner or with yourself. Now yes this is America (Happy Fourth of July-Sorry I'm late) and you can list them for any amount you want, however in MY OPINION I think that it is dishonest. I don't think a poor quality, mediocre, or average alpaca should continue to go for those prices in this current market. Hope this clarifies things a little better. |
Edited by - efalpacas on 07/05/2012 4:09:29 PM |
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tortkid43
512 Posts |
Posted - 07/05/2012 : 5:14:54 PM
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Well you all obviously have it completely wrong and have confused the masses with the theoretical computations you have parlayed to this complex discussion... Over here in Hicksville we just use these old formulas to figure out who is who and what is what...!! I apologize in advance as I just had to help out those like me who got hit with the dumb stick to understand the original question by Brad...the first one is the simple one and for those of you who obviously more advanced than those of us on the poor side of the tracks the 2nd one might be a bit more challanging..!
Alpaca= ½(x2 – y2)= Alpacas sold in 1st year
(x + y)(x – y) = x2 – y2= something
Mike
Mike and Maggie Carabajal
Rancho De La Luz Alpacas
Elgin, Tx
www.alpacanation.com/ranchodelaluzalpacas.asp |
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Littlecreek
37 Posts |
Posted - 07/05/2012 : 7:17:18 PM
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Oh, good catch on my lousy breakfast-time math, Kathy! Or actually my lousy breakfast-time explaining -- the numbers I wrote were the discounted values of the total of cria plus fleece revenues in those years, not crias alone. And yes, Judith -- you could assume that expenses rise over time, and/or that alpaca values rise or fall over time, or anything else that improves your sense of the accuracy of your estimates. They will be potentially different for everyone, based on each farm's circumstances and beliefs about the future. And of course, the usual rule applies: Garbage in, garbage out. Or as the previous post says, "equals something," ha ha.
My only point in writing my post was to show one hypothetical example where a person selling an average alpaca for $2000 might not be fairly characterized as dishonest, as efalpacas persists in doing for reasons that his posts have not described or supported.
Lynn Edens
Little Creek Farm Alpacas
North Salem, NY
www.lcfalpacas.com |
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rgoss1
663 Posts |
Posted - 07/05/2012 : 9:21:54 PM
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Great discussion all - I think that it’s very important to have an open mind regarding various views. Each of us must analyze what our values are, what our business model is, what our marketing strategy is and how to attain that goal.
As I've mentioned various times, there was an alpaca in Co that was listed for $9500. There were no takers and some individuals offered less than $5000. That SAME alpaca went to the National auction and sold for $35,000. It’s the same alpaca but the venue changed.
Was anyone dishonest? No, it’s called Free Enterprise. (The freedom of private businesses to operate competitively for profit)
As to Ian's point, I too am worried about all the culls and what will become of them. Hopefully the fiber industry and the economy will be stronger in years to come.
thanks
Roxanne Goss
Lands End Alpacas LLC
Vermilion, Ohio
440-225-4138
e-mail:gossr@roadrunner.com
website: www.landsendalpacafarm.com |
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efalpacas
30 Posts |
Posted - 08/01/2012 : 10:15:57 AM
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Hi Everyone,
I'm not sure if anyone is going to post on this discussion because of the multiple private emails sent telling some to not respond. I want to first mention that I was out of the business, and now find myself back in the business. More than a year ago I had a female suri alpaca that unfortunately lost her cria early due to a bitter cold winter. Thankfully the previous owner was nice enough to allow me to return the female for a rebreeding and live birth. So just a week or so ago I now got a call that she delivered a healthy, show quality female cria. While she was staying at the other farm I had listed her for sale, and she never got inquiries. The previous owner did find someone who was interested and thought she had them sold. After each possible sale, the outcome was always the same, can you lower your price. I had her priced at $1,000 for her and her cria. The other farm was even willing to breed back my female for a three alpaca package. I was not willing to be flexible with the price because my alpaca placed second in a large show, she has great conformation, amazing accoyo genetics, dark fawn coloring, and produced a show quality female cria. The sire also has won multiple first places and banners. I am confused and would like to know what my next step should be. Should I continue to list her for a $1,000, should I lower the price, or should I increase her price because she is great quality? I would have to keep her at my parents house as I no longer live in an agriculturally zoned area. I have raised many different animals in the past and if they were priced well and healthy they always sold, however my alpacas always seem to be a difficult sale for me. Most people that purchase my animals are not interested in showing and feel just owning them for the fiber is not worth paying over a thousand dollars. Let me know what you think I should do. I don't want to have to own her for another year before she sells. This is one of the reasons that I think pricing is a bit unusual in the alpaca business. |
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pharnett
70 Posts |
Posted - 08/09/2012 : 1:43:17 PM
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To me it looks like simple supply and demand. We got into this business in 2004 and it was built on: 1. easy credit and 2. discretionary funds. The lure of big and easy profits drove demand and elevated pricing to an unsustainable bubble. AT the end of 2008 the financial market crashed and left too many new alpaca entrepeneurs in debt and in possession of animals that nobody wanted to buy, especially at high prices. NO more retirement fund ranches, no more easy credit from the evil banks. I believe that the alpaca market has now set it's own pricing and it is in line with other livestock. We ignored development of two important components of sustainability: 1. the fleece/product market and 2. a terminal market for animals. The North American Alpaca market will only survive if the true believers can hold out for economic stimulation which is not really in sight at this time.
I think Alpaca prices have bottomed out and will stay here for a while. It will take large scale demand even at these prices to restart the overall market. This time I predict it will start with fleece demand and then progress into a new breeders market. I don't know when or how this will occur. Just my 2 cents.
Paul $ Mickey Harnett
Cherokee Rose Ranch
Sterling, Utah |
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Ian Watt
909 Posts |
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efalpacas
30 Posts |
Posted - 08/09/2012 : 6:22:16 PM
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| Pharnett- I completely agree with your view. What do you think the next step should be for alpaca owners? Also, anyone else can answer this question if they would like. Do you think that their should be a market for meat to cull animals that are not good fiber producers? Or do you think their should be farms just for fiber animals regardless of the quality of fleece to create rugs, etc.? Most livestock business' have an end market of some form, but it doesn't seem to be that way with alpacas. The more alpacas on the market, the lower the prices. Personally, I don't think a meat market would make any sense because it takes entirely too long for an alpaca to reach breeding age, along with a long gestation, and the fact that they deliver a single cria. I like this business, but am tired of the huggable investment, going to make you a lot of money slogans. I would like to hear peoples ideas of how to truely make money with alpacas that is sustainable and not just a few bucks over many, many years. If anyone has any ideas I would appreciate to hear them. I think that opening farms up for tourism and selling products is a great income generator, however you have to have a farm or property that is arranged appropriately for the public. Also, you would need additional insurance to have the public on your property as well. Any ideas on how to sell or make money anymore in this business? |
Edited by - efalpacas on 08/09/2012 6:24:14 PM |
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ALPACA VALUE
