The Alpaca is unlocked by reaching rank D with Westown. After which it can be purchased from Westown.
An alpaca should be either let out or given fodder in the bin daily so that they may graze, however do not let them out when it rains. Aside from that the alpaca should be pet and brushed daily.
An adult healthy alpaca may be sheared every few days, it's wool increasing in value depending on various things. Including health, personality, friendship with the player, and various treats it can be fed.
There are five possible personalities for an animal, each having its own advantages.