Beachwood Creek News

Greetings from Beachwood Creek Farm. Well, it looks like summer is beyond us now and the season I dread to see coming has finally arrived. Gone are the long hours of daylight and warm temperatures, the sound of the crickets in the evening and the smell of a freshly mown hay field.

But…I always look for the bright side and it comforts me to know that the days start to get longer on December 21st(by the reverse, they get shorter beginning in June but I choose not to think about that).

As you all know by now and as Al mentioned in his comments below, the world is experiencing unprecedented times economically. Being in the banking industry, I have been actively involved in the process of managing through the pressures that have constricted the availability of precious capital, which is so essential to economic vitality. 

With the drop in equity and real estate values, and the partial nationalization of our domestic banking system, the level of fear and uncertainty in the market is palpable.

In light of the current cycle, it would be unrealistic to expect the alpaca industry to plod along unscathed by it all.

So, the burning question is; “what does the future hold?” If I could answer that question, I wouldn’t be raking alpaca poop in the dark. I am heavily invested in the alpaca industry and I remain very optimistic. I feel the same way about our economy and the stock market. I know that over time, the market/values will stabilize; investment and the flow of cash will resume.

Here is an example of why I remain optimistic; I attended the Magical Breeder’s Choice auction this month and was extremely encouraged by the attitude of existing breeders in their willingness to continue investing in their breeding programs. This tells me that those with experience have confidence in the long-term viability of the industry. It’s only natural for those with no experience to sit on the side-lines during a period of general economic uncertainty. The high selling male was in excess of $90k and overall prices averaged $24k.

Among other things, branding is important to the success of a breeding program in creating demand for genetics. Magical is a brand and through our breeding program, we are creating a brand as well. This doesn’t happen over night but progress is being made. Last year, we had out first huacaya place high in the national standings and this year’s crop of cria are looking very good for the most part…I also like the higher female cria number this year. As we grow our show string and continue to produce a store of good quality females, we will be well equipped to respond to any pent-up demand when this downward cycle ends.

As we move forward, I believe prices for low to mid-quality alpacas will decline. How low is anyone’s guess at this point. I see this as a good thing because lower prices expand the market…there are more people out there who can afford a $10,000 alpaca than $100,000.

We continue to market our seminars and have changed the format from a two-day program to one-day.

We are doing a number of additional things to increase our visibility.

Last month we participated in the National Alpaca Farm Days event and welcomed about 100 new visitors to our farm. In so doing, I invited WKBN/WYTV to the farm. I was then invited to sit for a live in-studio Live-at-5 interview the following Monday. We also advertised the event on WYSU and WKSU radio. I was amazed at the number of emails and farm visits we received as a result.

Finally, I will be one of the guest lecturers at the AOBA Mid-Winter Conference in Las Vegas in January. It’s a ton of additional work but I look forward to expanding our network in that way.

Best wishes

Tim

News from Pucara

Crikeys! What a summer. Who would have ever guessed?

We've experienced a long warm summer here by our Aussie standards ( the locals swore we had heat wave after heat wave...you can spot the locals here because as soon as it hits 55F the sun roofs come down ) with very little rain. Jude and I think the best summers we have ever experienced are here in Oregon. Low humidity, temps around 85F, rarely touching 100F, cool breezes and it lasts a long time.

It has impacted our pasture. We've had to be extra careful rotating paddocks and grazing our gelding quality alpacas along the creek to spare pasture but all in all the farm has done well. Unlike the economy!!!

We had a great show season but at the same time its this time of year that we love to be here on the farm. The paddocks are full of young cria which we are liking the quality of, the grass is growing now we've had a sprinkle of rain and the weather is an absolute pleasure to be in....well it is for everyone except Jude and I who get to watch it all from the office window! We don't get out there near as much as we would like.

One thing that has caused us great merriment is Tim's good fortune. If you know him well you know he is one of the hardest working most ethical people we have met. He chose to leave the bank he was with. To his good fortune ( and ours ) he was head hunted by another bank which has resulted in a much better situation for him. I laughed hard when he told me that the last words of his boss where a question, " now where have we gone wrong....?".

Our good friend Laura Hall a local alpaca breeder showing off our National Champion Pucara Hanapepe.

The Show Ring

I guess you could tell we were pretty pumped up about our short show season. It has paid some reward for us. Because most alpaca breeders in the industry do not have much livestock breeding history they rely heavily on show results to judge a breeding program. Jude and I swore we would not show alpacas here in the US when we considered moving over from Australia. We considered it a conflict of interest with Jude judging as many shows as she was ( and still is!!!). But mate, did we get that one wrong.

Whilst all the alpacas on any farm are not show quality the show ring is one main area where you have to develop a profile to attract people to the farm. Remember its just one area but an area we underestimated for a couple of years. We soon saw ourselves going hell for leather in the bigger shows against all the alpaca breeders. We managed to do very well and thereby have attracted attention, especially for the suri herd we have. Judging by the improvement we have seen in our own huacaya and the huacaya owned by the barns we should not be too far behind with them.

Showing is a huge consumer of time and money. We entered our alpacas in just three shows last year. The transport alone cost us $25,000. Add entry fees, plane fares, hotels, sponsorships, conference fees.......you get the picture. Oh, there is a very important consideration. EGO! I watch judges with far less experience than me get it totally wrong.....well, that's only when I don't get the first place ribbon....seriously however its a draining experience but necessary.

It certainly does not harm our cause when breeders see Pucara win lots of ribbons and championships because they are used to having Jude judge their animals and she has amazingly maintained a very high respect amongst exhibitors. In fact Jude never handles the alpacas in the show ring when we show because of what might be perceived as an unfair advantage. But we had the ultimate compliment this year after our success at the Nationals. One of our "opposition" was heard to mutter a number of times that Judges like Anderson should not be allowed to enter their alpacas in shows because they know what wins!!!!!!

C'est la vie!

State of the Industry

In the last three months I have heard many times from breeders the doom and gloom scenario. The industry they say is in decline. Over supply and no demand. Prices are wicked, if you can sell them. But I also hear, "wait it out ...don't lower the prices...hang in there...the prices will be back".

You may not want to know that I do not proclaim to have much expertise in making a call on what will happen. This is true for all alpaca breeders. But Jude and I have the advantage of seeing the maturation of the industry in Australia over the past decade and more. Both the above scenarios are wrong in many elements. Even now in Australia where we have just 20 million people the prices of the elite animals hold at high levels. The average and lower prices sink.While some may see lower prices as a negative, we see it as a postive because lower prices can bring more people into the industry because now they can afford them. I know these are very different times with the squeeze on everywhere but our good friends at Magical Farm in Ohio got an average of about $24,000 for over 70 lots at their auction last weekend ( they are seen as elite breeders)...some alpacas went higher than $100,000. We had similar results with our privately owned alpacas at the Extreme Progeny Sale and the Private Collection Sale. In fact our suri herdsire Pucara Kahuna won the Suri herdsire of the Year at the Extreme because his progeny maintained the highest average.

So what do we learn from this. We think, breeding and branding are king! The barn animals this year have produced well. We are happy with the progress. Some look very good. Once the daughters of the foundation dams have cria we just may have very good alpacas to market the worth of their parents. I am hoping like hell that coupled with a new flavor of seminar, our consultancy business and our continued participation in the industry will bring clients.

This last 12 months have been the slowest I have seen in alpca sales. But I am not discouraged about the industry. The economy will struggle then get better. Sales will pick up. So our theory is if we breed better than our neighbors we will succeed. And believe me we are!There will be some soul searching for all of us in the barns about price levels but with lots more female cria being born this year we'll have numbers on our side to cover lower prices if that's the route we take.

On the Pucara farm

This truly is the time of year that we love being on the farm. The tasks sometimes seem endless and getting everything ready for winter is often more a mind shift than a physical burden. It is the time of year that we will apply fertilizer depending on soil tests. Apply lime depending on ph tests. We have re-sown several paddocks. Have fenced even more. We are building one or two more barns and have laid about one mile of rock to our laneways that connect the barns.

One of the most exciting tasks happens next week with luck. That is evaluating the crop of cria and any weaners we missed from the last birthing season. We will forward onto each barn our ratings of each animal born to the group this year and perhaps last year. We always assess cria before rebreeding the dams and we will often sort through a group of animals and assess the outcome randomly but this is the time of year when we get it all down in writing for due consideration.

We are hoping like anything that we get a little more rain before the chill sets in. We want the new grass to bloom and the existing to get a good spurt of growth for our winter feed. Applying fertilizer will help.

Its also the time of machinery maintenance. I spent all of yesterday hunting down oil filters, air filters, fuel filters, spark plugs,engine oil for the diesel motors and another sort for the gas motors, hydraulic oil and grease nipples for two tractors, a bobcat, a truck, the dozer, two ATV's, the ride ons and an RTV...plus stuff for all the hand machinery like augers, chain saw, mowers, blowers, pressure washer, weed whackers etc. Then translated directions for their use into Hispanic!

Next job is freeing all our culverts, grading drains and lanes plus maybe laying some tile to very wet pasture areas to stimulate production. Phew, but I love it. Today I sit here informing you of all the fun and then I will draw up our marketing and sales plan for the next 12 months!

The marketing plan is causing me a lot of rethinking and going back to basics. The essence is to spend as little as possible to get as much exposure as we can. My guiding light right now is "Guerilla Marketing" written by Jay Conrad Levinson. It's a great read and this is about my fifth read. We are currently contracting a PR rep that is a local journalist to get as many press releases out there as we can. She is just a reporter from a local paper who wrote a great article on us and loves the industry. She gets paid for performance which she demanded!

We're also starting up "Alpaca Kids" club, which is a 4H type deal to train and educate all the local farmer kids in the world of alpacas. Not only educating the breeders of the future but also making an outlet for many gelding male alpacas hopefully! We are also revamping our seminars to make them easy to attend and cheaper. We think people are traveling less so we hope through Tim's place, our own and maybe two or three other farms around the US we will run one day events that are more accessible. We do notice an imbalance of where sales are coming from and its mostly East Coast. We are are trying to get to where the buyers are.

Tim Jude and myself are also speaking at many conferences for the first time to lift profile. We've been asked many many times but have managed to avoid them. We are also making a big push in our consultancy business " The Thrive Program" to help other breeders with their own herd development. It is interesting to see the amount of leads going into our national AOBA office. I bought these leads this week for our enmail marketing campaigns and it was a list of 2150 people who contacted the office wanting info on alpacas from May 1 to August 30..... still a good number but half of previous lists.

Meanwhile Jude continues to judge a lot...the next three weekends in fact!!! She also sits on a myriad of AOBA committees that she is drastically reducing this month to concentrate on Pucara stuff.

I think I am going to have to finish here because all this is making me feel like I'm going to be too busy!

Barn considerations

We are very mindful of your loyalty to date. We've been thinking about ways to try and lighten your load and one thought was to help you on the agistment of male cria born. We are offering for all male cria born this year and from here on out to be traded to us. Therefore you save on agistment, vet  and shearing costs. We will take ownership of anything except those good enough to be shown and then maybe sold. That saves you a year's agistment fees prorata on that cria. The male cria you retain we will bring along as we do now in the hope they become herdsire quality and therefore saleable.

We are delighted to tell you of another consideration which is a discount on breeding fees. We have been successful in negotiating an additional discount for this breeding season from $3500 to $3000..almost 15% discount from the already discounted rate.

Here is a little more controversial cost savings idea. Some barn members have not yet reimbursed Tim for their share of the 2007-2008 mortality insurance premiums. Now perhaps they live in false hope that all these animals will survive but as our vet in Australia always says, " If you have live animals you have dead animals". Unfortunately Tim has been left to bear the cost of this because he paid the premium to maintain the rate and avoid any lapse in coverage. Unless we hear objections from barn members we are proposing that you individually take up the insurance on the foundation females you have purchased or are purchasing. If you contact us we will send you a couple of options of insurance companies that cover alpacas but everyone please be aware unless we hear your objections you will be liable to pay for and carry your own insurance.

Jude and I both believe that each barn now has enough female births to act as an insurance of its own. You could not insure at all. Yes, you may loose a female here and there but there have been plenty of replacements. This would be another substantial savings to those above although a little more risky.

Fiber

At last I thought I had managed to find a buyer for all our fleece. . I thought I could get $1-2 per oz, maybe a tad less. The buyer offered to put us onto a joint partnership where we could make a whole lot more but that sounded too risky to me especially with so many owners of barn alpacas involved. The price was low but it would have helped with your costs?

But alas the buyer disappeared. But what its done has made me determined to sell the fiber to other sources. Its time I concentrated on it. And I am! I have calls out to many fiber houses and mills. They love to deal in quantity and we have it. This phantom buyer cost us about a week of our managers time so I am roused now to get a deal done elsewhere!!!

Jude and I sincerely hope you are all weathering the storm. Hopefully in the next newsletter I can extend better news, like a bunch of sales!

Al and Jude