Open Letter from the Chairman
To Shareholders and Growers
I am sure you will have heard by now that the Australian Alpaca Assns. (AAA) has recently completely divested itself of its investment in AAFL.
AAFL is the company established in 2004 by AAA to take over the fleece business of the bankrupt Co-Operative, originally set up by AAA to buy and sell alpaca fleece.
With the benefit of hindsight, it is clear that the original business case of the old Co-Op and later AAFL was flawed. It is simply not feasible to buy fleece from growers at high prices and sell into the world fibre market. Many of you will remember those heady days when the Co-Op would buy your fleece and you received high returns. In reality it took several months for the fleece to be classed and valued, then a further wait of at least 6 months for payment to be made. Then, wait for it, you didn’t have to take payment in cash if you accepted shares in the Co-Op to the value of your fleece. In that way the Co-Op kept the cash from the sale of the fleece to use in the expansion of the Australian fleece business. In the event it didn’t work out and the Co-Op was liquidated. Out of the ashes Australian Alpaca Fleece Ltd was born.
At that time AAFL’s majority shareholder was AAA. Over the years, following further capital raising the AAA’s share fell to 11%.
Notwithstanding a formal agreement for cooperation, the two entities had different views on the future of the Australian alpaca fleece industry and gradually drifted apart. It has come as no surprise to the AAFL board that AAA has taken the decision to sever its relationship with AAFL.
The big question is: what will happen now? In a recent AAA Newsletter it was stated that the AAA would be re-inventing the wheel by establishing Co-Ops to buy fleece from growers and sell it to China to obtain the best possible price for members.
AAFL’s strategy has been consistent in recent years. Having established itself as a leading wholesaler of alpaca products in Australia and it is now opening retail outlets.
AAFL hopes to continue to buy alpaca fleece from Australian growers. Through our association with the Inca Group we have arranged for the manufacture of quality alpaca garments made from 100% Australian alpaca.
An industry based on natural fibres needs high quality end products and a good storyline to be successful and to survive. So, what do you believe is best: selling fleece to China to be blended and mixed with other fibres so that the value added benefits foreign investors – or the route AAFL has chosen: to promote Australian alpaca by producing and marketing high quality garments made from Australian alpaca?
You, the growers, must decide.
Richard C. Bowden
Chairman of Australian Alpaca Fleece Ltd.
9th March 2018