The value chain of alpaca fiber in Peru, an economic analysis

This study aimed at making an economic analysis of the value chain of alpaca fiber in Peru. To get the information necessary for the analysis, the available literature has been studied. Furthermore, a trip to Peru where expert interviews were conducted was made. During the interviews at the production places, the information found in literature was verified by observations.

The analysis is based on the following theories: the value chain analysis, the New Institutional Economics and the opportunity cost theory. In the New Institutional Economics, a focus is laid on the property rights, the agent theory and the transaction cost approach.

Alpacas are South-American cameldis that have been bred for fiber purposes since pre-Inca times. They are resistant animals, able to live under the extreme climatic conditions and with the scarce resources of the Andean highlands.

The alpacas are mainly hold by small farmers that manage their animals according to traditional practices. The socio-economic conditions of these farmers are poor. Intermediaries recollect the alpaca fiber, many of it of low quality. Through a long and intransparent intermediary chain the alpaca fiber gets to the modern, oligopsonistic processing industry.

The concept of multi-functionality applied in the Swiss Alps seems to be a concept worthwhile to check. Its payments for public goods may offer a possibility to modernize the alpaca sector without losing the cultural, social and traditional values.