Monday, December 27, 2010

Uncle Sam Will Help Buy You an Alpaca

Congressmen say our government should "support and strengthen family-based agriculture." Abstractly, supporting family-based agriculture sounds good. Government policies often harm small farms by favoring corporate agribusinesses. Government could help family farms by ending the subsidies that mostly go to the big guys. But that doesn't interest the politicians. They prefer to do things like creating tax breaks to encourage livestock breeding. The tax breaks have led to a boom in alpaca breeding. Twenty-five years ago, there were 150 alpacas in America. Now, there are 150,000. One website even advertises: "Have Uncle Sam Help You Buy Your Alpacas." Yes, alpacas are cute. They are also valued for the fiber made from their fleece. But selling the fleece doesn't explain the growth in alpaca raising. At auctions, prices have gotten absurdly high. Half-ownership of one male alpaca sold for $750,000. This is not necessarily a good thing. Economists at the University of California, Davis warn that the industry is in a speculative bubble. "Alpacas sold today as breeding stock have values wildly in excess of even the most optimistic scenarios based upon current fiber prices and production costs," Tina L. Saitone and Richard J. Sexton write...more

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