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Bubble Bursts On Alpaca Market. Sales Slowed, Hay Costs Doubled

RENEE MONTAGNE, HOST:

With the news that another bubble has burst, the alpaca bubble, for those of you who missed it, a few years ago, those llama-like animals were the next hot thing for hobby farms. People sank tens of thousands of dollars into top-of-the-line breeds hoping to cash in. Then prices tanked. Luke Runyon of member station KUNC has that story.

LUKE RUNYON, BYLINE: One day, about 10 years ago, Terry Holtz and his wife, Dena, came across a photo on the Internet of a cuddly creature with a slender neck and long eyelashes.

TERRY HOLTZ: And she says, oh, they're the most adorable animals. What is it, you mean like a llama? No, they're called alpacas. There's a difference.

RUNYON: Holtz says initially, he was skeptical about alpacas as investments.

HOLTZ: What's the bottom line here? How are they - are they making money? The answer was absolutely.

RUNYON: They decided to put a few alpacas on their 10-acre ranch outside the northern Colorado town of Wellington. At the height of the bubble, some animals were fetching hundreds of thousands of dollars at auction. The couple started breeding them and selling the offspring.

HOLTZ: Wow, all I have to do is sell seven of them. And I'm making more than I am at my regular job, and I only sold seven alpacas. And it wasn't hard to do.

RUNYON: The Holtzes weren't the only ones. Back in the 1980s, you'd really only find alpacas in zoos. Now there are close to 150,000 in the U.S. Their only marketable product is wool, and the high hopes for a U.S. alpaca garment industry never materialized.

HOLTZ: The sales slowed down. The cost of hay doubled.

RUNYON: The value of their herd plummeted. That's why after a decade in the alpaca breeding business, they're selling out. Their Craigslist host calls it a super deal, 30 alpacas for $3,000. That's just a 100 bucks a head.

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UNIDENTIFIED WOMAN #1: Come on, girls.

RUNYON: When alpacas fail to produce enough fiber to cover the cost of their hay, they sometimes wear out their welcome, and some end up here, Linda Hayes's Llama and Alpaca Rescue outside Carbondale, Colo.

LINDA HAYES: Most of my time rather than dealing with animals themselves is dealing with the phone calls and the emails trying to put potential owners with people that want to get rid of them.

RUNYON: Hayes gets phone calls every week.

HAYES: I've had a few that were crying. I mean, it's sad. One lady just didn't have the money. She was being evicted.

RUNYON: Hayes says the alpacas were often pitched to older folks, people looking to retire to a more bucolic lifestyle.

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UNIDENTIFIED WOMAN #2: Wake up to the wonderful world of alpacas.

RUNYON: Even late night TV commercials touted the animal's ability to pad a retiree's income.

(SOUNDBITE OF AD)

UNIDENTIFIED MAN #1: We've been raising alpacas for nine years now. I retired two years ago because of the alpacas, and it's just been a wonderful lifestyle.

RICH SEXTON: And it was absolutely a house of cards.

RUNYON: Rich Sexton is an agricultural economist at the University of California, Davis.

SEXTON: There was never the slightest chance that it could survive and prosper.

RUNYON: Unless alpaca sweaters are the next hot Christmas item, there's little demand for the wool, Sexton says. Plus, Peru already has a huge alpaca fiber industry, where it's produced on a much larger scale than it is here.

HOLTZ: These are all the females.

RUNYON: Alpaca rancher Terry Holtz holds wants to work with the wool even after he sells his herd. He says other breeders can still sell prize-winning animals for a few thousand dollars. But it's not like it was in the heyday.

Looking back, like, 10 years, if you had known what you know now, would you still have bought them?

HOLTZ: Honestly, probably not.

RUNYON: And Holtz says his biggest lesson in this whole thing, take a step back before you decide to follow the herd. For NPR News, I'm Luke Runyon in Fort Collins, Colo.

MONTAGNE: And Luke's story comes to us from Harvest Public Media, a reporting collaboration that focuses on agriculture and food. Transcript provided by NPR, Copyright NPR.

Luke Ruynon
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