Horses and Other Equines

SIC 0272

Companies in this industry

Industry report:

This classification covers establishments primarily engaged in the production of horses and other equines such as burros, donkeys, and mules.

Industry Snapshot

In 1908, when Henry Ford rolled out his first car, there were more than 21 million horses in the United States. That number eventually shrank, as horses were no longer needed to pull military cannons, plow fields, or haul freight. In the late years of the first decade of the 2000s and early 2010s, the horse industry was struggling through a recession that had reduced consumers' disposable income, commonly used to maintain horses, which are often considered a "luxury" item. Also, the closure of the country's last three horse slaughter houses in 2007 led to a glut of horses in the market and to severely depressed prices. In addition, animal welfare and rescue agencies were under stress to address a growing population of abandoned horses from owners who could not find buyers or could not afford to euthanize but could no longer afford to maintain their animals. Finally, the debate raged over whether the United States should ban further exports of horses to Canada and Mexico for slaughter.

Horses have long done America's hard work. Horses are still used on ranches and feedlots. Occasionally, helicopters or motorcycles are used to gather and check cattle, but the horse is still the preferred method of transportation for the modern-day cowboy. Horses and mules are also still used as pack animals and carriage animals. Primarily, however, most horses in the United States in the early 2010s were used for pleasure. While rodeo, recreational riding, and horse shows increased in popularity, horse racing was in decline--although exports of horses used for racing did increase, especially during the economic boom years at the turn of the twenty-first century. As a result, although yearling Thoroughbred sales took by far the most money, the most growth was seen in other breeds, including unfamiliar breeds such as miniature horses.

Organization and Structure

Horse breeding establishments usually specialize in one breed of horse for a particular usage. For example, a Quarter Horse breeder may produce horses to be used solely for herding, cutting cattle, or Quarter Horse racing, whereas a Paint breeder may raise horses to show at halter in a show ring, or vice versa. Whatever the purpose, the breeder depends on the reproductive capacity of the stallion and the brood mare band.

Successfully breeding domesticated horses is one of the more difficult tasks in raising livestock. A stallion that is capable of achieving a conception rate of 75 percent is regarded as acceptable, compared with a conception rate of 90 percent for a stallion in the wild, who would run with 30 to 40 mares.

Well-grown fillies (young female horses) can be bred when they are two years old so they will first foal when they are three years of age. Many breeders think it best to wait until the filly is three before breeding her for the first time. If she is properly cared for, a mare will reproduce up to 15 years of age, and even longer in many cases. Mares can be pasture bred, hand bred (a method where the stallion is brought to the mare), or artificially inseminated, a growing practice. Some breed associations, though, do not allow a foal to be registered if it was conceived through the use of artificial insemination. The Jockey Club, the main registrar of Thoroughbred horses, is one of the last breed organizations that will not allow this method.

Stud farm establishments provide standing exceptional stallions, enabling horse owners to bring their mares to get bred to an animal they could not otherwise afford. The owner of an exceptional stud horse may own his/her own band of mares or only breed outside mares belonging to other people for a stud fee. Most horse farms and ranches have a combination of the two.

Foals that have just been weaned from their mother's milk in auction sales or through what is called "private treaty" can be sold as weanlings or retained on the farm and broken (the practice of training a horse to accept a saddle, a bit, and a rider) for riding. This training usually begins when the foal is about 18 months old.

Horses that show promise can be campaigned at horse shows, endurance races, ropings, rodeos, polo matches, or numerous other activities. A firm that is in the business of breeding horses may sell the offspring once a year at a production sale or consign them to an auction. There are literally hundreds of auctions around the country where such animals are consigned and sold to prospective buyers. These auctions usually feature one breed of horse.

Background and Development

The horse, humankind's primary method of transportation until relatively recent times, was of vital importance to America's development. Horses pulled the heavy Conestoga wagons between the Ohio and Mississippi Rivers and were the main tools of working farmers. In eighteenth- and nineteenth-century America, the horse was held in such high esteem that theft of such an animal was commonly held to be a hanging offense. In addition to its important role in commerce and transportation, the horse was an important military supply.

When horses became unnecessary as central vehicles for transportation, their numbers dwindled. Dozens of breed associations, however, launched attempts to preserve many breeds of horses and the traits for which those horses were best known. These breed registries maintained studbooks, kept track of pedigrees, published their own magazines, and sponsored shows for their breed. In the mid-years of the first decade of the 2000s, more than 150 breed organizations operated in the United States, generating nearly one-quarter of total industry revenues. However, the revenue generated by the horse industry does not lie in breeding alone. Horse shows, rodeos, and racetrack wagering also generate sales.

Even the federal government is in the horse business. On vast acreage owned by the Bureau of Land Management (BLM), wild horses and burros still run free. Due to the overpopulation of such equines, the government regularly gathers up the horses and maintains them in a horse feedlot, or offers them for adoption to the general public for a small fee. Between 1981 and 1984, more than 11,000 of these animals were rounded up and removed from the Naval Air Weapons Station, which works with the BLM in managing these wild herds.

Tax law changes in 1986 dealt a devastating blow to the horse industry. Prior to that time, horses could be depreciated rapidly and their owners received a 10 percent investment tax credit just for the pleasure of owning a horse. The sudden excess of horses triggered a dramatic increase in the number of animals slaughtered for human consumption abroad. Despite half-hearted attempts to market horse meat in the United States, consuming the flesh of an equine is still considered taboo in this country, even though it is legal.

Residents of France, Belgium, Japan and many other parts of the world include horse meat in their diet. The United States had been the largest producer and exporter of horse meat, formerly with 15 horse slaughter plants. As of the 1990s, roughly 90 percent of processed horse meat was exported to other countries, with the remaining 10 percent going into fertilizer and dog food. Nearly 75 percent of U.S. overseas horse meat sales went to France, Belgium, and the Netherlands. A growing contingent of animal rights groups had targeted the practice, hoping to see it outlawed entirely or regulated out of business. In 2007 a court ruling ordered the closure of the three remaining active horse slaughterhouses in Texas. In the first quarter of 2008, though, about 14,000 American horses were shipped to Mexico to be slaughtered while 12,000 more were delivered to Canada, according to a May 2008 article in the Houston Chronicle.

Types of Horses Bred.
The American Quarter Horse is the most popular and the largest equine breed registry membership, with more than 312,000 horse breeding members in 77 countries around the world. The Quarter Horse was developed in this country and derives its name from the fact that it is the fastest horse in the world in running the quarter mile.

The Thoroughbred is the most popular horse used for racing in this country and is quite commonly bred to horses of other breeds to add speed and versatility. The number of Thoroughbred breeding operations is the highest in Kentucky, with Florida second and California third.

A rapidly growing breed is the American Paint Horse. These are beautifully colored horses with much the same athletic ability as the Quarter Horse. Pinto horses are colored like the Paints but have their own breed registry.

Arabian horses have been the breed of choice for entertainers and celebrities seeking tax write-offs. Historically, the Arabian is the oldest major pure breed of horse. They are unexcelled in endurance races and, because of their beauty, are popular with people who show horses at halter. The popularity of Arabian horses led to problems with determining the purity or integrity of a horse's breeding, particularly with South American breeders. In 1997, the Arabian Horse Registry of America was expelled from the World Arabian Horse Organization for refusing to register horses it considered impure. In 1987 the Arabian Jockey Club was formed to promote the breed and educate the public on the racing of Arabian horses.

One of the most distinctly marked breeds of horse is the Appaloosa, the breed with spots on its rump. The Appaloosa Horse Club is responsible for maintaining the purity of this breed, which first achieved fame as the horse ridden by the Nez Perce Indians of Idaho. As the history of the Wild West continues to be of interest in Europe, so too has the popularity of the Appaloosa grown abroad. The purity of Appaloosas also became an issue as the breed became more popular in the 1990s. In 1997, a movement was started to find and breed "Foundation Appaloosas" to help the pure breed survive. This resulted in the founding of the Foundation Appaloosa Horse Registry (FAHR).

The American Morgan was the first and the oldest recognized American breed, and was developed entirely in this country. In the 200 years of its existence in America, 125,000 purebred Morgans have been registered.

There are dozens of other breeds of horses, including the Missouri Fox Trotter, Peruvian Paso, American Indian horse, Palomino, American Mustang, Paso Fino, Icelandic, Standardbred, Tennessee Walking Horse, and several breeds of draft horses, including Percheron, Belgian, and Clydesdale.

According to a 1998 article in The Economist, rapid industry growth in the late 1990s reflected a fad for the horse as a status symbol: "What the new owners will do with their purchases varies, but not many will work them or even ride them. The horse trade has become a metaphor for what is happening to the West. Horses, like the ranch land from which they spring, are being bought for their looks, not their usefulness." A 1998 study from the U.S. Department of Agriculture also suggested that most horses were maintained for personal use. Over two-thirds of horse owners kept them primarily for pleasure; only 15 percent used them primarily for farm or ranch work. In the states surveyed, more than 45 percent of horse owners owned only one or two horses.

For many horse owners, the animals were also considered an investment. This has long been true with Thoroughbred racehorses, but a less obvious choice that became more common in the late 1990s was miniature horses. Linda Brown, a Texas breeder of miniature horses, told the Dallas Business Journal in 1999 that "A miniature horse has a possibility of making your initial investment back for you almost every year." In 1999, a high quality miniature horse could sell for as high as $42,000, and even more for a show champion--over $100,000. More commonly, the horses sell for $1,500 to $10,000. While the most common way for breeders to profit was through selling offspring, some owners of miniature horses made money by using the ponies for children's parties, school programs, and private lessons. In 1990, 5,760 miniature horses were registered in the United States which increased to 8,662 in 2000, then to 9,238 in 2005. However, by 2007 the number had dropped to 8,089.

The use of horses for logging also increased in the late 1990s. According to the North American Horse and Mule Loggers Association, membership went up by a sizeable 440 percent between 1991 and 1997. Horse logging, using breeds including Percherons and Belgians, has the advantage of being much kinder to the environment, although it is also more expensive than mechanized alternatives. The method is best suited to thinning existing stands of trees or clearing small lots or home sites, making large-scale growth for horse sales in this market unlikely.

In the racehorse market, as Thoroughbred prices edged higher in the late 1990s, other groups of horses became popular with less wealthy consumers. A Quarter Horse yearling cost up to $10,000 less than a Thoroughbred, and because it could begin racing sooner, an owner could begin making money from the horse more quickly. Quarter Horses made up 39.5 percent of horses by breed. Sales of two-year-old horses also increased as more horses from that age group began to win big-money races. Some industry observers suggest that an excess of top-quality yearlings helped to create the market, which was popular with buyers looking to start racing sooner than they could with yearlings. The growth of this market created new opportunities for investors, who purchased yearlings and trained them for resale, sometimes reaping returns of more than 2,000 percent from their initial investment.

The Thoroughbred yearling and broodmare markets, which had experienced significant growth in the economic boom of the late 1990s, were particularly hard hit by the recession. Public auction horse sales declined 22 percent in 2001, from $1.07 billion to $835 million. The September 11 terrorist attacks further depressed the U.S. economy, which impacted sales in 2002 as well.

Per the American Horse Council, a total of 9.2 million horses comprised the market in 2005 with 3.9 million used in recreational activities, 2.7 million horses for showing, 1.75 million for other purposes (farm and ranch work, rodeo, carriage horses, polo, police work, informal competitions, etc), and nearly 845,000 for racing. About 4.6 million people had some type of interest in the industry, with 2 million owners, 1.1 million in other activities, 702,000 employees, 481,000 in competing, and 238,000 in breeding. The direct economic effect of the industry totaled nearly $39 billion with $11.8 billion for recreation, $10.8 billion for showing, $10.6 billion tied to racing, and $5.5 billion for other purposes.

Another common standard for measuring the growth of the industry is the Thoroughbred foal count, which had increased sizably every decade since 1910, until beginning to fall in the late 1980s. The different standards for growth reflect the decreasing popularity of horse racing in America and increasing interest in horses for other purposes. By this standard, the industry was still in a slump at the beginning of the twenty-first century, despite modest gains in the late 1990s. After reaching a low of 31,884 in 1995, compared to 40,333 in 1990, the U.S. foal count rebounded to 34,724 in 2000, to 34,891 in 2005, although it dropped slightly to 34,350 in 2007.

The number of equine sold in 2007 according to The Jockey Club was 21,215 horses, including 10,160 yearlings, 4,565 broodmares, 3,122 two-year-olds, 1,954 weanlings, 1,332 horses of racing age and broodmare prospects, and 82 stallions and stallion shares or seasons. The combined sales totaled more than $1.2 billion. All categories experienced declines except for broodmares which rose by nearly 15 percent from the previous year. Overall, total sales decreased by 2.5 percent from the previous year. The total number of registered breeds equaled 247,276 with 135,787 Quarter Horses, 37,500 Thoroughbreds, and 30,639 Paints.

Throughout the 1990s and early 2000s, the U.S. equine breeding industry became increasingly concentrated in a handful of states. As of 2006, the state of Kentucky housed 30.5 percent of all registered foals in the United States. Florida was home to another 12.8 percent of registered foals, while California produced 9.6 percent. Meanwhile, Kentucky also led in the category of U.S. distribution of active stallions and mares bred with 21,529 mares bred and 356 stallions. Florida was in second with 6,348 mares bred, although Louisiana was second with 292 stallions.

In 1999, horse sellers had started taking advantage of a new tool for boosting sales: the Internet. Industry leader Keeneland held auctions using live audio and video, and the results were unprecedented. Computerworld reported record-breaking sales: "A one-day record was set on November 8 when sales totaled $99.3 million. The 1999 September yearling sale was the largest in Keeneland's history. It sold nearly 3,500 horses--about 10 percent of the 1998 U.S. foal crop. It ended the 11-day auction with gross sales of $233 million, a 38 percent increase from last year." Keeneland's January 2004 sale of 1,258 horses during its Horses of All Ages auction garnered $49.3 million, the fourth-largest amount in the auction's history.

Current Conditions

In 2010 the American Quarter Horse Association (AQHA) was working with the World Conformation Horse Association to institute new standards for halter classes as well as new rules that would limit the use of intravenous fluids in barns during the AQHA national championships to improve public perception of the care and well-being of the horses being shown. In a statement released in May 2010, the AQHA noted, "The collective goal is that people leave with a long-lasting, positive memory of horses that are healthy, well-cared for and perfectly capable of competing at the event. The group believed that IV bags hanging in stalls did not give this impression." Other suggested changes included the development of a specialized halter judge training program. Because halter showing judges a horse based on fundamentals such as balance, movement, structure, and response, judging is critical to the outcome of the competition.

In 2010 the issue of unwanted horses was still being debated between the horse community and the animal rights community. Although the horse processing plants have remained closed, animal rights activists were still working toward the goal of stopping the exportation of some 100,000 unwanted horses to Mexico and Canada for processing. For their part, some within the horse community, such as the Animal Welfare Council and the AQHA, opposed the ban on exporting unwanted horses, claiming that such a ban would, in fact, cause more harm and suffering to these horses, who would be abandoned or neglected at much higher rates.

According to a 2009 Animal Welfare Council survey, over half of the 93 government-sponsored animal control centers surveyed had no horse rescue facilities in their area and 83 percent acknowledged that they could not house or care for horses. Another study, conducted by the Unwanted Horse Coalition, found that the 90 percent of rescue facilities, sheriff's departments, and county governments surveyed reported an increase in abandoned and neglected horses. In addition, the number of equine cruelty investigations in Colorado increased 60 percent from 2005 to 2009. The Animal Welfare Council also suggested a link between the closure of the plants and a deep decline in horse prices, which, in 2010, were 40 percent of their 2005 prices.

Others, however, argued that the increase in animal cruelty and neglect could be linked much more closely to the deep recession of the late years of the first decade of the 2000s, not the closure of the plants. In addition, the Humane Society of the United States (HSUS), which advocates for a ban on horse exports for slaughter, cites undercover video of inhumane treatment at facilities in Canada. In addition, HSUS noted that often the horses purchased for slaughter are transported long distances without food, water, or rest. In 2010 there was some interest in attempting to revive horse slaughtering in the United States in an effort to revive the horse market, but to do so in a more humane manner than sending the horses to Canada or Mexico. However, there was little hope that such a movement could make it past the animal rights lobby. The issue remained at the forefront of the horse industry in mid-2010.

The closure of the plants glutted the market with mid- to low-grade horses. In addition, the economy bottomed out as the recession of the late years of the first decade of the 2000s caused consumers to have less disposable income. As a result, horse prices fell dramatically in the last years of the decade and remained low in 2010. For example, at the 2010 Mile High Select Sale, a prestigious sale of top Quarter Horses held in Denver, the average price was $3,521, down from $4,800 in 2009. The top seller brought $12,500, down from $30,000 the previous year. "There's no bottom to the horse market any more," said Scot Dutcher, chief of the Colorado Department of Agriculture's Bureau of Animal Protection, told the Denver Post.

Given the recession, Quarter Horse racing in the United States fared relatively well during 2009. The number raced totaled 9,113 in 2009, down from 9,152 in 2008. Loss of races at Les Bois Park, Blue Ribbon Downs, Mount Pleasant Meadows, and Retama Park were offset by an increase in races at Fair Grounds, Sam Houston Race Park, and Hialeah Park. The number of starters increased from 16,911 in 2008 to 17,180 in 2009, despite the lower number of races. Total purses increased by nearly 2 percent to $127.6 million in 2009, up from $125.5 million in 2008. The average purse for starters was $7,428 overall; for two-year-olds, $8,262; for three-year-olds, $7,776; and for aged starters, $6,404.

There were 49,368 Thoroughbred races in 2009 in the United States alone. Including Canada and Puerto Rico, the total increases to 55,984. Generally speaking, the number of Thoroughbred races declined throughout the 1990s and 2000s, from a high of 81,279 races in 1990. Total purses in 2009 were $1.23 billion, down from $1.31 billion in 2008. The average purse per race in 2009 was $22,245.

Research and Technology

The main threat against horse breeders in this country were various diseases that can affect the breeding stock, as well as the general horse population. Vaccinations are the main prevention against disease, as well as cleanliness in the breeding facility; however, outbreaks occasionally occur, and for some diseases there are no vaccines yet available. Equine viral arteritis has been prevalent throughout the world and in many different breeds, and causes abortion and respiratory disease. There is no vaccine for this virus and it is especially dangerous to breeding stock because infected stallions may show no clinical signs of the disease, therefore passing it to mares. Leptospirosis is another cause of abortion and stillbirth. This disease can be carried by wildlife, in their feces. Other dangerous diseases include the equine herpes virus, equine influenza, and rotavirus, which can cause death in foals. Many universities with veterinary medical programs are studying these diseases in hopes of eliminating them altogether.

The highly publicized West Nile Virus, spread mainly by mosquitoes, had been on the rise in the United States since 1999. In fact, by 2005, more than 22,600 cases of the virus had been recorded in all 48 Continental states. A vaccine for West Nile, made commercially available in August 2001, was licensed by the U.S. Department of Agriculture in February 2003. The vaccine was considered 95 percent effective for horses.

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