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The American Alpaca Market: Ship of Fools? I Don't Think So!

By Mike Safley

The graphic that illustrated the "Ship of Fools" article in Alpaca World magazine is reproduced here, with permission, to give you the flavor of the article. The graphic was designed by Bright Friday Media.

The Spring 2004, Alpaca World magazine, published in England, carried an article by an American author, entitled, "Ship of Fools." The large print, pull quote, in the center of the two-page spread captured my attention by proclaiming:

"To me, participation in the closed US alpaca market is analogous to being on a cruise ship that has left dock with giddy passengers who have been promised unbelievable lottery prizes. But when they awake and take a good sober look at what's going on they find the crew is tyrannical and on a course known only to them."

I was wide-awake and sober when I read the offering and I began to wonder, was the author's analogy of the American alpaca market a rational, clear-minded analysis based in reality or a narcissistic vision sailing forth on hyperbolic breath force?

The Alpaca Registry (ARI) closed to imported alpacas in 1998 (effective 1999), and it occurred to me that the truth or fallacy of the article's predicate, that closure was bad for the U.S. market, could be determined by calm and diligent mathematical analysis. The author justified his conclusion, that the market was as good before closure as it was after closure by saying:

"For the sake of perspective it needs to be noted that there have been plenty of multi-million dollar sales of alpacas in the United States both before and after closure…"

The article also questioned the wisdom of the ARI closure on the basis, that the 1998 ARI board majority's counter proposal to leave the registry open to 300 imports annually was the superior alternative to complete closure and finally, that the U.S. market lacked a sufficiently diverse gene pool when it closed.

Both of the arguments, the size of the gene pool and the attempt to leave the Registry open on a limited basis, were rejected by the ARI membership when they voted for the closure initiative and even the "Ship of Fools" author says he doubts that the membership would consider reopening the Registry. Even so, I think it is important for the thousands of people who have joined the American market since closure to understand the truth of the matter: That complete closure was the best choice and that the size of the gene pool was perfectly adequate to sustain maximum improvement in the national herd. It is doubly important that we all understand this in view of a recent initiative by some alpaca and llama breeders to create a second registry for imported suris and llamas.

Llama Banner, an American magazine, recently published two multi-page advertising inserts, in successive issues, that sounded a similar theme to the one struck by the "Ship of Fools" author; that the U.S. gene pool, post closure, does not contain sufficient genetics for improvement. The group that placed the ad, Collectable Llamas Inc., included long time alpaca breeders and former alpaca judges, Mary Reed, Anthony Stachowski and Susan Tellez. They have formed a new registry and created an alternative show system for suris, llamas and suri llamas (llamas bred to suris) to address what they see as the problem of insufficient genetics and variety in the llama and suri population. Their motto is "We tell it like it is" and they published the following in information about their new association.

"Establishing and growing a registry, that supports the development of seed stock for suri, select and traditional collectable llamas."

"The PLIGHT of owners today is the lack of options and alignment of these genetic materials into narrow confines. This plight is exacerbated by the restrictions placed by small controlling groups desirous of limiting the future for imported genetic material."

"MANAGEMENT POINTS

  • Crossbreeds: No more than 10 F1's in a year (IF ANY AT ALL!)
  • Imports: No more than 30 in a year. (IF ANY AT ALL!)
  • Strict Suri Llama Classification System and Breed Standard.
  • Three Registry Divisions: Suri, Select and Traditional."

"If all the above sounds too good to be true, make no mistake that it is not."

The Llama Banner insert goes on at great length about the expertise and credentials of Reed, Stachowski and Tellez. Nowhere does it mention that they were suspended by the Alpaca Llama Show Association (ALSA) from judging llamas and alpacas or that they lost their registration privileges at the International Lama Registry (ILR) for submitting false documentation in the registration of llamas, nor do they disclose that the ARI sued Reed to remove her from the ARI Board of Directors. The trio also touts their experience as AOBA judges, never mentioning that they are no longer allowed to judge alpaca shows. Maybe instead of using, "we tell it like it is" as their motto they should consider, "anything goes".

Eric Hoffman authored the "Ship of Fools" article. Eric was the President of the ARI during the closure debate when he, together with Tilly Dorsey and Robbie Guidry, called themselves the ARI Board Majority. Phil Switzer was on the board at the same time but he recused himself from voting on closure matters because he was paid as an ARI screener at the time and felt he had a conflict of interest that precluded him from participating in the debate. I was also on the board but I authored the closure resolution and was therefore not a part of the majority opposing it. Both Stachowski and Tellez were importers at the time. Tellez has continued to import llamas since. This explains the CLI group's economic interest in starting their new registry.

I believe that closure is a fundamental part of the strong alpaca market we enjoy today. Eric has written often about his belief that closure was a mistake. He has also consumed a considerable amount of print space criticizing the current leadership of AOBA and ARI for their handling of the marketplace, alpaca shows and the Registry. All of this criticism and the new registry will have no effect on the marketplace so long as the current membership of AOBA and ARI are familiar with the history, science and facts of these issues, which are at odds with what Eric has had to say. With that in mind, I would like to revisit the issues presented by the "Ship of Fools" and Collectable Llamas, Inc.

ALPACA PRICES AND REGISTRY CLOSURE

Alpaca prices in the United States have always been fairly stable with an upward bias. When my dad and I purchased our first five alpaca in 1984, we paid $50,000 for four females and one male. For years, alpacas were sold in pairs. We purchased ten pair of alpacas from Phil Mizrahie in 1986 for $16,000 per pair.

After reading Eric Hoffman's article, I decided to research the history of alpaca prices in the United States to determine what effect, if any, closure had on the alpaca price structure. I wanted to know if Eric's representation, that the market was essentially the same before and after closure was true. To establish the historic prices I used old classified ads from Alpacas! import sale prices, Alpacas Magazine and average prices at the annual auctions conducted by Celebrity Sales. The following graph plots the result of my research for the annual prices of female alpacas.

It is interesting to note that after the initial imports in 1984, the price rose. This coincided with the fact that South America was closed to exports between 1985 and 1989. The prices peaked in 1990, and in 1991, when the first Bolivian alpacas were imported, they started down. Before closure, which was effective in 1999, the prices of females appreciated at an annual rate of .88%. After closure, between 1999 and 2004, prices for females appreciated at 6.1% per year. It is obvious that the market for females was better after closure than before.

The prices for stud quality males above were calculated from early sales, prices for imported males in the early 1990's and the high selling individual males at auction beginning in 1994. The impact of closure on the price of elite herdsire males is even more dramatic than for females; prior to closure in 1999, male alpacas appreciated at an annual rate of 8.7%; post closure, from 1999 onwards, stud males appreciated at an annual rate of 41.1%. Another win for closure.

These graphs demonstrate the impact of closure on alpaca prices. The wisdom of industry's decision to completely close the registry is further documented by the following statistics: 1) The population of alpacas in the United States grew at an overall annual compound rate of 32.3% between 1989 and 2004; 2) The population of alpacas grew at the rate of 36.8% between 1989 and 1999 while the registry was open and; 3) The population of alpacas grew at the much slower rate of 17.6% beginning in 1999, when the registry closed and admitted its last imported (mostly females) alpacas.

The importance of the rate of population growth before and after closure is even more evident when you consider the following graph, which documents the rate of AOBA's membership growth.

AOBA membership grew at an overall annual rate of 30% from 1986 to 2004. These numbers demonstrate that the population of alpacas grew at a greater rate (36.8%) than the population of alpaca breeders (30%) before closure and at a lesser rate (17.6%) after closure. The alpaca industry will most likely enjoy a "sellers" market so long as the population of breeders grows at a faster rate than the population of alpacas.

The alpaca industry has been well managed, well promoted and has benefited from an enlightened import policy that initially focused on increasing the quality of the foundation animals that were imported from South America and then moved to close the Registry once the foundation herd contained adequate genetics for continued improvement from within the registered population. The rate of improvement, in the quality of American alpacas, accelerated dramatically once the Registry closed. The proof of the wisdom of these collective decisions by AOBA and ARI is evident in the quality and market demand for the national herd.

THE ARI BOARD MAJORITY ALTERNATIVE

The ARI board majority reacted to the petition to close the registry with a fierce defense of the status quo: Screen and register the imports. The closure initiative was a contentious industry issue and AOBA decided to sponsor a debate between those for and against closure. This debate was held in Denver and became known as the "Denver Importation Forum". The Forum was organized to present both sides of the closure argument. The ARI controlled ½ of the agenda and the advocates of closure controlled the other half. Each session offered the opportunity for a designated spokesperson to make their case about a particular issue, with a response presented by someone on the other side of the issue.

Laura Hudson, the AOBA President, opened the Forum and was the chief moderator. Dr. Dail Neugarten was hired as an unbiased facilitator to keep the sessions moving and prevent too much rancor from slipping into the question and answer sessions. The ballroom where the event was being held reminded me of a high school dance; the girls congregate on one side of the floor and the boys on the other, except in this case the respective cliques were closure and anti-closure. Tension ran high.

The initial sessions did not go well for the ARI Board majority. In Laura Hudson's concluding remarks on the first day, she observed, "…that there did not seem to be much support for the status quo." Immediately after the public session ended the ARI Board majority went into a meeting with the importers in the hotel bar. The group grew to include closure advocates Jerry Forstner, Dr. Michael Anthony, Linda Livengood and myself.

Phil Mizrahie, an importer, realized that closure was gaining ground and he proposed an alternative to closure. His proposal became known as "The ARI One Year Plan", which was presented to the forum the next day by Eric Hoffman who told the audience that he had worked late into the night with the importers to come up with an alternative to closure, one, which they would agree to and liked. Phil Mizrahie spoke in favor of this proposal. The exact proposal that Eric advocated is as follows (this proposal was passed out to the audience).

"ARI BOD ALTERNATIVE TO CLOSURE"

  1. Maximum of 300 inbound animals. [Per year.]
  2. Enhance strength and compliance to a single registry.
  3. Allows for new genetic material to enter the gene pool.
  4. Discourages a competitive second registry.
  5. Importers included in community and participating in single registry.
  6. Mechanics to be worked out by June ballot.

A breeder from the audience asked Eric Hoffman why, "he was so intent on making the importers happy." Eric's basic reply was that he thought that the Registry would be better off playing ball with the importers. Tilly Dorsey added, "That importers were also ARI members."

The ARI Board Majority maintained that allowing 300 alpacas per year would barely affect the supply of alpacas on the market. To test this assumption I assumed that 285 females and 15 males were added to the Registry population beginning in 1999. I further assumed that they would produce 95% live births and reproduce every 13 months. Based on these assumptions there would have been an additional 5,151 alpacas on the market by 2004, and 45,378 by 2009. The annual compound rate on the national herd would have increased from 17.6% to 20.2%.

The last point contained in the ARI One Year Plan: Mechanics to be worked out by the June ballot would prove to be very controversial. The forum adjourned and the balloting was about to begin: But the controversy was not about to end. The new "Alternative to Closure" scheme was proposed late in the debate and the board had legal difficulties getting it properly put on the ballot. It was ultimately put forward as a nonbinding poll question for membership vote. The membership voted overwhelmingly against the scheme cooked up by Eric and the importers and they voted overwhelmingly for closing the registry completely.

IS THE ALPACA GENE POOL IN THE UNITED STATES OF SUFFICIENT SIZE TO SUSTAIN IMPROVEMENT?

During the closure debate, the ARI board majority worked hard to maintain the argument that the gene pool was too small for the registry to close. The "Ship of Fools" article and the Collectable Llama promotional materials, both suggest that closure of the registry was detrimental to the gene pool by arguing that what we need, to sustain improvement, is more genetics, i.e., imports. This argument was advanced by Eric Hoffman, in his position as ARI president during the closure debate, as justification for leaving the registry open. The ARI never presented any credible evidence to support their position. They could not find one population geneticist to support their claim that the gene pool, at the time the registry closed, was insufficient in any respect. On the other hand, the proponents of closure had no trouble-finding experts to support their contention that the gene pool was indeed adequate to sustain the continued improvement of the breed. Here is what some of the experts had to say, at the time of the closure debate, about the adequacy of the alpaca gene pool.

Charles G. Sattler, who was the Genetic Programs Administrator for the National Association of Animal Breeders, pointed out that the entire Brown Swiss Dairy breed was established in the United States from one importation of 135 head of cattle from Switzerland. He went on to say that the American herd of their Brown Swiss was considered "a viable breed with strong international demand for Brown Swiss genetics." Sattler also recounted the history of the Holstein breed in North America, which was established from 10,000 cows imported from the Netherlands over a twenty-year period beginning in 1860. The Holstein Registry was closed in the early 1900s. The American Brahma breed was established from 266 bulls and 22 cows, which were imported from India through Brazil. The breed has prospered. At the time of the proposed closure of the Alpaca Registry, there were 12,813 alpacas in the ARI Registry.

Charles Sattler completed the opinion he offered, to the alpaca industry, on the adequacy of the American alpaca gene pool with the following statement.

"My conclusion from all this is that your imports, to date, of approximately 7,000 alpacas from various herds, regions and countries is probably as diverse as any breed of cattle that has been established in North America. It seems to me, based on the history of cattle, that your current population has a broad enough base to be viable and successful. More importantly than starting from a broad base are the qualities of the identification and generic programs that your association carries forward. The qualities of the animals and how you develop these qualities in the animals that are here will be a major part of whether there is interest in purchasing these animals in the future…"

The following quotes are from a paper by Dr. Duffield, which was presented at the Denver Import Symposium. The comments are excerpted from Dr. Duffield's report on the subject of population genetics. Dr. Duffield's resume included five pages, single-spaced, of scientific articles that she has written on the subject of population genetics. Dr. Duffield does population-oriented genetic studies with captive breeding populations. In most of her work, the populations have 300 or less "founders" and they have not observed gene pool problems. Included in her work is a population of bottle-nosed dolphins with only 100 founders. She also works with the Tobiano spotted horse population, helping members determine homozygosity using genetic markers. She felt that the U.S. alpaca gene pool should be in very good shape for the following reasons.

  1. "Founding stock has come from a wide variety of geographic locations (Chile, Bolivia, and Peru)."
  2. "A fairly large proportion of the founding stock has been used for breeding due to the large proportion of females imported relative to males. This gives us a larger effective gene pool size."
  3. "Gene pool narrowing activities such as artificial insemination and embryo transplant are not used and a fairly large percentage of the males are actually used for breeding. Additionally, many of the males used are not original founders but products of breedings with founders and other females, thus greater genetic mixing in the population."

Dr. Duffield further stated that a gene pool size of 1000 individuals should be very adequate and that how we manage the gene pool is the more important ingredient for success.

I recently found the following statistics in a book by Colin Tudge entitled, In Mendel's Footnotes. The author asked the question, "How many African elephants in a breeding herd are required to preserve all of the alles (genes) in 90% of the wild African elephant herd in Africa, for 200 years?" Answer: 35. Dr. Tudge is a conservation geneticist. The bottom line is that the arguments by the ARI board majority at the time of closure and the Collectable Llama Inc., today, that we need more genetics, are not scientifically sound.

The falsity of the argument that the gene pool was inadequate at closure is easy to see in retrospect. I judge alpaca shows across the United States and Canada, I inspect thousands of alpacas every year in places like Peru, Australia, New Zealand and England, I know from close observation that American alpacas are some of the best in the world. Anyone who looks at the annual improvement in their alpacas knows that we are rapidly increasing the quality of our national herd. When the Registry closed, there were no Huacayas with bundling fleeces of the same softness and weight as we see today. The lock structure, fleece weight, and luster of Suris have improved in remarkable fashion. I don't think anyone would argue that the quality of the American herd has declined since closure. In fact, the quality of our national herd has improved year in and year out: Dramatically.

The alpaca market today is stronger than it has ever been in its twenty-year history. The current AOBA Board of Directors, led by Amy McCroskie, has reformed the show system, installed a comprehensive set of ethics rules for alpaca judges, and managed an alpaca-marketing program that is a model of success for all alpaca breeding nations. The "Ship of Fools" conjured up in Eric's imagination is an illusion, the alpaca skies are blue and the alpaca community is enjoying smooth sailing.

 
     
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