Hi Barb in the land of Ashford
. Good to have you aboard.
I haven't worked with alpaca much at all, but of course it doesn't have the hooks on the fibres that wool does, so for your baby quilts you might be best to mix in wool from your sheep, to make the filling stay together and not clump. Here we have places such as Wingham Wook Work where you can take along your fibre and use their big felting machine for making giant felted batts. I agree that doing it all by hand would not be cost effective, but maybe you have somewhere similar in NZ. You could try needle felting by hand as you can control how much felting you do, so you get just enough to hold it together without making it too heavy.
Start a thread in the 'Crafts' section where the crafty folk live, as they may not see this intro.