Pucara Farm News  

Do you know how you tell if a driver is Oregonian? If the hood is down on the convertible at 55F you're an Oregonian! Well the mercury has been up to 110F here and they have all dug holes and are in summer hibernation. The good thing is we don't get the humidity. We burn a lot of power having fans on the animals but at least we are not sludging through two feet of snow and have electricity! Its a bit of a secret but summer in oregon is wonderful....low humidity, does not rain and fairly moderate temps...as a past governor once said..."You're welcome to visit but you have to leave"!!!      

We are coming into a very busy birthing time here so its nice the temp. has retreated a little and the late term moms do not suffer as much. Jude and I are proud as punch with some of the farm cria,especially those out of our huacaya herdsire Snowmass Star Quest. We are intending to use him and Royal Promise a lot with barn animals. We also have a couple of new suri boys we are excited about as well, Pucara Herradurra, a Pucara Kahuna son and also Pucara Taj who is out of Kahuna's mother. Their genetics are impeccable.      

We're also excited because we get to go home to Australia for 3 weeks...leaving this Wednsday Aug 19, returning Sept.14 We have not been home for two years. Our E2 Visa has to be renewed and guess what, you have to leave the country to renew. Also we have sold our farm in Australia so we ae heading off to move out fifteen years of junk into storage! Now that means you know we want to come back, despite the glum financial state of the nation...oh yeah, and if our visas get renewed!!!! We have spent two weeks 8 hours a day doing the application and conversing with our Immigration attorney...fingers crossed.      

Jude asked me to apologise on her behalf about the latest lag in information getting to you in form of the herd statistics. We changed over to a new herd database which screwed our records for a while. It may/will be interactive with our website if all goes well which will save us heaps of time. It's a great management tool and we are sorry we did not warn you there may be delay. You would have gotten copies by now. It took Jude and Sharon weeks to work out some vagaries with the software company but hey what can I say, it was made in New Zealand. They are hopeless at rugby too!!!

Oh, and a really important update. We have another farm helper. It's Bailey, the Australian cattle dog, Heelers as we call them at home. What a treasure she is. Thirteenth in a litter, bottle fed, tiny! She was inherited by a friend's son who is off to his second tour of duty in Iraq. Pucara International is now Bailey's home for good. She had serious attachment problems but now is the farm boss. Smart as a whip, tough as nails, gentle to command. We love her!!!

We've worked on a savings for barn members as well. Usually we use a vet for doing ultrasounds at about $45 each. Jude and I purchased a state of the art ultrasound machine and will be doing them for half the cost. Through Jude being involved in a lot of embryo transfer work and repro. work she is more than proficient. Having this machine handy will also mean saving time in diagnosing any repro problems at hand.

The Industry      

Well, these alpaca breeders keep having auctions and getting poor results except for the top end stuff that seems to hold worthwhile prices. No suprise because the auction houses make about $2000 per animal and have 80 animals in the auction, then add commission on top! But it adds to our demise because there are few buyers out there. Money has dried up!       Jude, Tim and I have tried to be resilient and have not advertised big drops in price. We think that helps. But now we ramping up lower prices to try and get some action from what seems like a little movement in the market and lower prices. It makes sense if we can achieve some sales at these prices as long as we do not sell down the herds. If we can get some capital back until some energy returns it would be good for all of us. To that end Jude and I right now are investigating putting on a full time sales person...a good friend with years of experience in the industry and who has sold a lot of animals in the past. We should be clear on detail how that will work once we get back from Australia.       In the last three weeks we have seen a bit of activity but its been like watching grass grow for a long time. Seminar numbers are way down, outside breedings are slow. Every week we see fire sales and herd liquidations. The positive about all of this is when it turns, and it will, the industry will have been filtered and a lot of negativity will be cleansed out. I'm not sure prices will come soaring back, but the good farms like us will see a premium and will see sales. I am also initiating (attempting is possibly a better word) a marketing co-operative that will inject $500,000 into marketing amongst a few farms. I have about 33% commitment now and will work very hard on that once I get this sales assistant set up. Not enough hours in the day.    

 Beachwood Creek Farm

Summer time has come in spades to NE Ohio with sizzling hot days and warm nights. It was a good summer for hay making with lots of clear hot days to cut, dry and bale. We should be in good shape for hay supplies to carry us through the winter.

We are in the process of clearing and installing an additional 8 acres of pasture. This is an expensive and time consuming process but necessary due to the size of the herd. I anticipate the work will be complete by mid-October.

Since the last newsletter, we attended the PAOBA and National Shows in Harrisburg and Cleveland respectively. At the PAOBA show, each of our huacayas took ribbons in respective classes. We took one ribbon at the Nationals. Given the level of competition, I was pretty happy to have placed. They were shorn following the Nationals and since then, their fiber is coming in nicely so we may show the team again at the Columbus Ohio Alpaca Fest show in November.

Snowmass White Lightning and Snowmass Royal Accent were recently returned to Al and Jude’s in Oregon and have been replaced by four new boys from the Snowmass Program. They are Snowmass Nova’s Ghirardelli (Bay Black); Snowmass Royal Sun (Fawn); Snowmass Premier Gold (Beige); and Snowmass Sacred Heart (White). These boys all have great pedigrees including Hemingway and Drambuie. Good breeding management dictates that we promote line breeding while avoiding in-breeding. By introducing the four new boys, we accomplish this while working to achieve desired results. You can see them on my web site at http://www.bcfalpacas.com/Herdsires.htm.

We will be hosting a New Buyer’s Guide seminar and Herdsire Open House September 19 &20 at our client and friend’s farm Butler Tennessee. Two-three of the boys will travel with me to Tennessee in September.

As for marketing, the alpaca industry is still in the grip of this crappy economy and sale prices have been impacted by the increase in the number of consignment auctions. I used to be able to confidently say that the auction activity is not an indication of animal sale prices because auction attendance can not be predictably managed. In a growth economy, auction prices are helped by having at least two bidders competing for an animal. If attendance is down, prices will also be depressed. With the current trend of deleveraging and risk aversion, all of the consignment auctions and shows have been poorly attended this year resulting low prices. Most of the low auction prices are actually “no-bids” where the consigner didn’t get their desired sale price and therefore takes the alpaca home rather than sell it for $5,000 to $7,500. However, the problem is the impression that prices are lower today that they were December 2008. I believe prices have also been impacted by a number of breeders who are perhaps highly leveraged and who in an attempt to reduce debt have dropped prices.

So what do we do?

First, I personally believe that the long term economic viability of the industry has not changed for those who are willing to do what it takes to compete. Gone are the days when alpacas can be sold simply for their color, pedigree, big eyes, long eyelashes and gentle demeanor…unless you are well branded like Snowmass or Pacific Crest. When the economic clouds part, empirical, measurable qualitative statistics (EPD’s) will be required in order to attract discerning buyers. By driving some of the best genetic bloodlines into our herds, we are laying the building blocks but we need to do more. For this reason, Al, Jude and I are collecting the data we need in order to build such a data base. As you can imagine, this takes time as the predictability of the EBV information improves with each successive generation.

Since it will take time for the economy to recover and for confident, new buyers to enter the market, we need to do more to reduce carrying costs so we can weather this period.

I recommend that we consider reducing prices below cost on selected foundation females in order to reduce debt and stem the increase in agistment costs. Candidates would be females that have given us one or two female cria and who do not have the

genetic “steam” to take us to the next level. The prices will likely range from $5,000 to $7,500.

The preference will be to sell for cash vs. payments since the distributions on say 50% of a $5,000 sale price will be so small.

Al and I will prepare a list of the candidates and send them to you.

Once you receive the list, I would appreciate your comments and concurrence with this proposal.