Barn 2 auction hopeful CocoHO

Barn 3 auction hopeful Pipeline

Another Barn 3 hopeful, Javier.

Summer seems so long ago!

A bit of what we have today! This was 2007 but its raining like heck right now and this is what we expect to wake up to tomorrow morning. This is normally our front paddock, not our front lake! We just laid $30,000 worth of tile drain in this area so its getting its value tested out toady.

Well, well, what a year it’s been! But I went to the movies last night with Jude and we saw "Invictus", part of the story of Nelson Mandela based on a book written about his part in the Rugby World Cup in 1995 just after he was elected president. That was after he was released from 27 years in prison in a 6x8 cell!  You probably know a lot of that story. Anyway it’s inspiring. Made me think how lucky we are even when it seems like the last 18 months of farming was a little hard. The last two lines of the poem that he kept reciting to himself in prison when all seemed beyond hope was:

I am the master of my fate:

I am the captain of my soul.

So let’s get on with it then!

Winter is here. We’ve had unseasonably cold weather for a week. On getting to the barn at 6.30am it’s been 8-10F. Highs around 25-30F. Too bloody cold for this Aussie. Our poor farm hands bore the brunt of it. 10 hour days in clear skies but freezing temps. Dealing with frozen water troughs three times a day. Frozen faucets. Power circuits getting overloaded by heaters and trough warmers. Tractors refusing to start. Frozen finger tips raking alpaca dung for most of the day. We bought them down lined Carhartt tops and leggings, insulated boots and waterproof insulated gloves…about $500 in the end for each of six field workers. They are my heroes of the month. On the animal front all is well, although I do get concerned the boys might bolt back to Mexico! The pacas handled it well although consumed copious amounts of hay and grain. At least so far we have not had the repeat of three foot deep snow and no power for six days like last Christmas.

Breeding has stopped for the year and will not start again until late next March.

It’s all been doom and gloom and I know Barn members are really antsy about sales. Well I have broad shoulders but not broad enough to take responsibility for a terrible economy. But it appears there is some relief. We have seen some reflection of this in the alpaca market. For the past six to eight weeks I have been advertising and marketing a range of “Buyer Incentives” trying to whip up some business at the bottom end to see what I could make of it. When the farm overheads range from about $30-40,000 a month you do what you have to do. My idea was to get these bottom feeders in to try and build relationships, continue the business and gauge if it is something that the Barns could profit by. Please remember the Barns are a VERY BIG part of our business and the herds are a major part of our farm population. We never stop thinking about how we can get them to be successful. I think the Barns may profit from a similar push based on the results we have had so far. If however we had not bred the barn females it would never have worked. I’ll explain.

At the Barn meetings last April which most owners attended we agreed to breed the girls. This led to the increase in female population of the herds. In essence it reduced the overall amount we have in each female thereby meaning there was less money to recover on the sale of each female. Yes, I know, no sales yet. We agreed also then and in subsequent emails to lower the price a little on each girl we had for sale. Which we did but still no luck. The recession was booming. I was beside myself trying to create sales in a market that just was not there for those prices. Anyway I researched AlpacaNation, a pivotal member-based website that offers mini websites for all its members. I was seeing a large visitation and also a lot of sales at the bottom end, meaning low quality animals priced cheaply. So I spent $3000 on a months advertising of banner ads with AN in prime position. After about ten days things started to tick. But this was for animals at $2,000 to $4,000. There was also interest in leasing of females in the $2,000 to $4,000 per year range. (These are better quality girls not unlike the Barn alpacas.) With leasing the client gets to keep the cria, male or female, and has to return the dam after the weaning of the cria. We make sure the females are re-bred to our males because we could otherwise end up with sub par breedings resulting in terrible cria for the following year. I am also trying trade-ins, a free female for every five sold (from the Pucara herd), free transport and lots of other stuff. You can see the push under "Buyer Incentives" on our website.This is such a contrast to two years ago and before. But as Paul Hogan said, “ Ya never never know, if ya never ever go!” ???

The interesting thing is that about two weeks ago inquiry lifted that was not related to this promotional campaign. And it was not about the end of the financial year and tax considerations. Whilst closing any of the second part of this inquiry is going to take time it is at least heartening. Right now I have about ten serious leads. Two of those are closed. A package of dirt cheap females. One package of leased females. It looks like I have two others closing on purchase of dirt cheap females. These have not been Barn animals. Sooooo, now what for the barns. I think I have established we can create interest at the bottom end and for leasing. I personally am dead against you wholesaling the females we own because things will get better and are getting better and the fact that we have more females now gives us some opportunity. I am suggesting we lease some packages of females. If I manage to do that it means we cover some expense for the year plus you will not have to pay for any agistment or care for that animal until its cria is weaned…that could be 12 months or more. I will in the same time keep actively pursuing sales at better levels for barn animals. I have had two serious inquiries at better prices. Fingers crossed. I have to remind you perhaps that this is the only way Jude and I make a living. The last 18 months has seriously impacted our financial resources. So we are working our butts off to get this to work!

During 2009 Jude and I were that despondent with the turn ups for our seminars that in  the end we cancelled three of them. People in the recession are not travelling as much. But when we spoke at engagements elsewhere we were received with great acclaim!!! In October I did a two day seminar in Maine for the Cas Cad Nac  and Tripping Gnome Farms and I got standing ovations. That also happened at the Nationals in Cleveland where besides showing 30 alpacas I had four speaking engagments and Jude had two. Again standing ovations. So what we are saying is they like us because we confront all the bs niche marketing that happens and we tell people how to breed well. There has been a trickle of business from these for us but the farms where we are hosted have been getting some business as a result. The trick. To get them to Oregon or Ohio where we host our own seminars. To address this I am using  SurveyMonkey.com to establish what people want in an effort to get them to travel. Believe me we know what they need but its their perception that counts. By example at Northwest Alpacas (alpacas.com) where I used work as a partner from 2001 to 2004 they have rejuvenated their seminar series and this last weekend hosted 16 attendees, the most they have had for quite some time.

Another thing I am doing I had mentioned in an earlier email. We are getting the help of one of the best alpaca breeders in the US for our sales. Jack Armstrong formerly of Latah Creek Alpacas ( suri breeders) could sell ice to eskimos! He is immensely respected as a breeder in the industry. He and his wife Kelly dominated the suri show ring for many years. Jack has sat on the National registry board, the ARI, and many AOBA committees. He knows alpacas and the market. He knows how to sell. He has energy plus. He has participated in one of the most successful auction productions, "The Parade of Champions", here in Oregon. Jack ran a highly successful pharmaceutical company that he sold before he did alpacas full time. He sold his alpaca herd early last year at a rumored $2,000,000 plus price tag. We are good friends and share a group of elite suris together. Jack has at last indicated he is keen to help. We will discuss how next week. I can’t tell  you enough how this will help me and you. Someone who can work the phones, emails, shows and internet who knows what they are doing and can be focused. More to come on that front.

Now, on another note. Another venture I have begun with another respected and successful breeder from Michigan is an alpaca library. I have been feebly trying to get this started for four years but never had the right people to help. We’re calling it pacapedia.com…if we can get the name. We know and understand after reading all the yearly membership surveys that alpaca breeders are starved of good education and information that is unbiased and fresh. Josh and Tonya Wuerful from Stonebrook Farm Alpacas are tech gurus who own a software making business, and are helping me in this pursuit. I know from research that we conducted when we got www.alpacas.com started at Northwest Alpacas that people visiting websites want information. Not repetitive blah blahs but good reliable info. So they will get it. We will assemble top quality articles across all alpaca subjects from husbandry to genetics, end product and marketing from all over the world. Even articles from other livestock and end product industry that relate well wil be offered. Breeders will come. Josh is clever. He has developed a format that wil list the articles as text copy, not pDF's which means it will after several months of tweaking rank very high on the search engines. Anyone searching alpacas will see the site. Everyone in the industry will be told constantly about it by Josh's email campaign soft ware program that he has developed. We will have our farm name and logo on every page along with Stonebrook farm.

Josh is a nuclear physicist!! (Tonya is a design wiz kid.) Josh has assembled a report called the Black Book which rates all the major herdsires and dams in the US by show results of their progeny. It involves incredibly complicated formula to work it out. He has protected the formula and copyright. So every year after show season he is besieged by those in the know to get a copy of the book. The only way to get it now will be by subscribing to it through pacapedia.com This venture will bring business or I am moving to an Indonesian island and will eat rice and surf until I get eaten by the locals!

Now, probably in the greatest leap of faith we have ever taken in our lives, apart from coming to live in the US, is that we have committed to hosting an annual on farm event Sept. 3-5, 2010. It is the Pucara Premium Reserve Auction and Reserve Pen Sale. The leading farms quality wise in the US each host a similar event.  Pucara International especially in the suri show world has established itself as if not the best at least in the very best alpaca breeders in the US. We have a tight alliance with Snowmass Alpacas who are by far and away the best huacaya breeders in the US. We are branded. We have also established some strategic alliances with other top breeders that will make discerning alpaca breeders want to come to this event. One of those breeders is Stonebrook Farm. Between us we dominated the 2009 Nationals. We are running this event differently to other auctions. Essentially it will be a traditional auction of about 25 lots of the very best we can offer. Show winners, champions, relatives or well performed herdsires perhaps. There maybe a couple of barn animals in there because we had some success with them this year in the show ring like Coco Ho from Barn Two and Pipeline from Barn 3. If they can get some ribbons in 2010 they will be on the auction block. Most importantly for barn members will be the Reserve Pen Sale. Here we will have 40 to 50 lots of alpacas open to the public in pens for two hours, that will be held right after the traditional auction.  A minimum reserve is posted on the pen, say $5000 and buyers have two hours to post bids. I am hoping at least 20-25 Barn animals are in these lots. There will be a variation of minimum reserves to attract buyers at all levels of financial where with all. Probably at the lowest a reserve might be $4000 and it will go up to perhaps $15,000 or $20,000. It will depend on the market and the quality we have. It’s imperative we have a really good offering this first time around. Pucara of course will have some of these lots and the remaining lots will be available to our other clients who have purchased breedings or alpacas (not many of them in the last two years!). We are billing it as a client appreciation sale because that is seen as a big plus in the industry. Those other alpaca breeders that have their dedicated auction/sale events mainly sell their own alpacas. There are several other consignor auctions that never perform nearly as well. We have faith that the brand we have built will bring people along. In fact we are flying in and accommodating all the well known auction players to try and breed success. This leap of faith looks like costing us upwards of $100,000 to run. Yikes! Now that’s a leap!

You'll notice Tim's usual entry is conspicuously absent from this news letter.

That's because Tim has agreed to pull together some financial information and analysis for you and I didn't want to hold-up this issue. It’s ok, the last I checked he is still in the country! You'll recall that we discussed some information during last April's meetings regarding the herd count as compared to total costs projected through December 2009 to arrive at a break even value for each female.

Tim is in the process of updating this information and we'll get it to you along with explanatory notes in a separate news letter before December 31.

Jude wanted you to know that she was concerned about how the breedings were billed. It appeared that it was all billed all  at once. She wants you to know that was not by design. Its just they way the breeding cycle has evolved. You see it can take sometimes 6-8 weeks to get a girl pregnant, then we confirm by ultrasound after a minimum of 30 days and then we bill every month which maybe at the end of the month that they were confirmed pregnant. That process at worst could take 3-4  months. Now because many of the alpacas had births in the middle or later in the breeding season you can see how this stacks up the bills toward the end of the breeding season. We have told some barn members and we reiterate it here, we don’t mind if you stagger the payments, but please let us know.

So that’s enough waffle. I have to go and get it done!

Al