Looking Ahead to Economic Recovery in the Horse Industry

Take advantage of the impending economic recovery in the horse industry by planning for the future.

Let’s face it: The horse industry is in a world of hurt. Sales are way down (as are most prices). Trainers have lost clients. Show entries are anemic. The natural reaction? Retraction–a lot of breeders have stopped breeding.

My advice: Take a deep breath and look ahead. The horse biz is like any other. It’s a matter of supply and demand. If there aren’t enough horses to support the market, prices will go up. Too many, and prices will go down.

We’re currently going through a correction due to the latter. The trend until recent years had been for breeders in our industry to breed “litters.” They’d pull embryos and use surrogate mares to ensure multiple offspring from a stallion and mare with trendy bloodlines.

Plus, way too many mediocre stallions (again, with trendy bloodlines) were left intact and bred. The resulting oversupply paired with a grim economic downturn to create “The Perfect Storm” for the horse market. It flooded at precisely the time buyer numbers were shriveling.

An Opportunity
The flood was a result of breeding decisions made two or more years ago. That’s right–when you breed, you need to be looking several years ahead. A mare that foals in 2010 will be feeding the buyer’s market in 2012, and the futurities of 2013.

Since breeding numbers are down for 2008 and 2009, that means there will be fewer horses available in the next few years. And that, to me, spells o-p-p-o-r-t-u-n-i-t-y.

People who are breeding their horses now will be poised to benefit. But there’s a caveat: You’ll have to breed quality. The good ones are still selling, and will always sell. Sure, they may be selling for less now, but I think that’s because some of them were overpriced back in the day.

When the economy was booming, buyers were throwing money around and overpaying in what was kind of a feeding frenzy, much like what was happening during the real estate bubble. I don’t think we’ll get back to that, at least anytime soon. As the recovery unfolds, people will be more cautious with their money.

That means, for example, you won’t be able to breed your halter stallion to a reiner broodmare and expect to sell the offspring for big bucks. (Believe me, this was happening during the anything-goes boom.) You’ll need to study and breed what choosey buyers are looking for.

My Crystal Ball
And that, quite frankly, means some breeders (and trainers) won’t survive in the industry. If you can’t provide what buyers (and clients) want, they’ll go to someone who can. Mediocre won’t cut it.

As a result, I think the industry will end up with fewer beeders, trainers, shows and horses, but with an overall boost in quality. Watch, too, for an increase in service from smart professionals and show managers, who realize one of the keys to survival will be giving folks something they can’t get elsewhere.

Prices will remain adjusted downward for some time to come, which will be hard for some people to accept. Others will see it as another opportunity. For instance, I’ve bought four top broodmares in the last year for about half of what they’d have sold for a few years back. And yes, they’re bred. I’m looking ahead.

Savvy trainer friends are currently buying top-quality weanlings, which they’ll “warehouse” until the recovery kicks in. Shoot, now’s a great time to buy a good horse of any age. When the horse market strengthens (and it will), you may be able to sell the horse for a profit. In the meantime, you can enjoy him.

I hope the low prices will also entice some new blood to our industry. “Bubble” prices locked out a lot of folks. The new reality means the door to horsedom is not only wide open, but also has a “welcome!” mat at the threshold. That’s a good thing.

It’s been my experience that the horse industry is at the tail end of the whip when it comes to the economy: We’re usually the last to feel a downturn, and the last to experience a recovery. But recover, we will. And we’ll be stronger for it.

A multiple AQHA world champion in a variety of events, Bob Avila’s other wins include three NRCHA Snaffle Bit Futurities, the NRHA Futurity, and two World’s Greatest Horseman titles. He was the first recipient of the prestigious AQHA Professional Horseman of the Year honor in 1995. His Avila Training Stables, Inc., is in Temecula, Calif.

This article originally appeared in the October 2009 issue of Horse & Rider magazine.

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