This overview of trends is based on my industry experience and understanding, and my experience as an economist.

The llama and alpaca industry is comprised of the following sub-industries.

There are sub-industries for each of the uses of llamas and alpacas; namely, for their garment fibre, as packing animals, as meat, and as pets. Before leaving the topic of usages, I should add that for many of us who care for these animals, it is emotionally impossible to consider llamas and alpacas as meat. At the same time, we know that this use will eventually develop.

There is also a sub-industry of breeding llamas and alpacas for breeding stock to sell to others. This sub-industry is a viable long term business only if the other sub-industries exist.

The industry as a whole started with a collection of farms concentrating on the sub-industry of breeding stock with very little activity in the usage sub-industries. As the industry matures, a number of changes occur, including the following.

1. More activity will be directed towards the usage sub-industries. In fact, until there is a large availability of stock, created by the breeding sub-industry, the usage sub-industries cannot develop.
2. The value of breeding stock may decline, as the national herd size increases. This process can occur in an orderly, gradual, and harmless way, if left to natural economic forces. In contrast, if excessive importations occur, driving supply well ahead of demand, as happened in Canada during the mid 1990's, the price adjustments are disruptive and damaging and take some time to settle down.
3. The value of the fibre may increase, as consumer knowledge is increased.
4. The fibre sub-industry will grow from cottage based usage to industrial/commercial usage. As this transition is made, if farmers whose herds are producing fibre receive only the fibre value, as sheared from the animal, their returns will be much lower than if the farmers can participate in the profits associated with taking that fibre to an end product. Contrast the desirability of this result with the situation in South America. There, the natives who raise and care for the herds are paid a very small amount for the fibre by the fibre cartels, and the fibre cartels then make large profits as the fibre moves to a finished product. We hope this will not happen in North America. Instead we hope that the farmers caring for the herds will organize themselves in a manner which involves them in the profits of an end product. Such a pattern of organization seems to be emerging with the farmers and herds in Australia.

The Canadian industry is very young. Most of the attention is given to the breeding sub-industry. The fibre sub-industry is mostly cottage level, although there are some farms, like ours, who create and sell final products from the fibre. The meat, packing, and pet sub-industries are very small.

Anyone considering participation in this industry should understand that some of their revenues will come from the breeding stock sub-industry, that some will come from the usages sub-industries, and that this mixture will change over time. How these factors will play out financial will vary with each individual.