SIC 0272
HORSES AND OTHER EQUINES

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

NAICS Code(s)

112920 (Horse and Other Equine Production)

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 to 3 million, as horses were no longer needed to pull military cannons, plow fields, or haul freight. The horse raising industry has been a resilient one, however. By 1996 the number of horses in the United States had risen back to 7 million head; however, the number had declined to 5.32 million by 1999, and it continued to fall in the early 2000s. The U.S. equine industry was valued at $112.1 billion in 2002.

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 2000s 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 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 early 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 is the largest producer and exporter of horse meat, with 15 horse slaughter plants. As of the 1990s, roughly 90 percent of processed horse meat was exported to other countries, with the remaining ten percent going into fertilizer and dog food. Nearly 75 percent of U.S. overseas horse meat sales went to France, Belgium, and the Netherlands. Mexico and Canada are the second- and third-largest U.S. took 11 percent, and Japan buys 3 percent; some of the horse meat also finds its way to Southeast Asia and South America. A growing contingent of animal rights groups have targeted the practice, hoping to see it outlawed entirely or regulated out of business.

Types of Horses Bred. The American quarter horse is the most popular and the largest equine breed registry membership, with more than 288,000 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. Their popularity has grown rapidly among amateur competitors in all fields and Arabian interest by young competitors has grown by 88 percent since 1988, due partly to the fact that in 1992 there was more than $300,000 in prize money awarded in Arabian horse shows.

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 1998, Arabian Horse America was founded to support the industry of Arabian horse breeding in America, another sign of the breed's growing popularity. Arabian racing was also a growing sport: between 1996 and 1997, the number of horses racing went up nearly 8 percent, with purses totaling $4.5 million.

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. International registrations recently surged 65 percent in just one year, and in 1992 there were 526,000 registered Appaloosas in existence throughout the world. Very few of these horses, however, were actually purebred Appaloosas—less than 3,000.

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" in order to help the pure breed survive.

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, the Standard bred, Tennessee Walking Horse, and several breeds of draft horses, including Percheron, Belgian, and Clydesdale. The sport of draft horse pulling experienced significant growth in the early 1990s, with contests and demonstrations held at numerous county and state fairs.

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. Of the nearly 78,000 miniature horses registered worldwide, more than 13 percent were in Texas. Over half of these horses sold were exported.

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 year-lings. The growth of this market created new opportunities for investors, who purchased yearlings and trained them for resale, sometimes reaping returns of more than 2000 percent from their initial investment.

Current Conditions

The market for horses had increased steadily throughout the late 1990s. Estimates in the late 1990s maintained a count of more than 7 million horses in America, representing a growth rate of 20 percent over the past decade. However, by 2003 this number had fallen to 5.2 million. The decline was due in large part to the recessionary economic conditions experienced in the United States in the early 2000s. The thoroughbred year-ling 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.

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 31,874 in 1995, compared to 51,296 in 1986, the U.S. foal count rebounded to 32,800 in 1998, to 33,265 in 1999, and to 33,360 in 2000. However, by 2002 this number had declined to 32,927.

The number of equine sold in the early 2000s totaled roughly 560,000 annually; these were valued at $1.8 billion. Throughout the 1990s and early 2000s, the U.S. equine breeding industry became increasingly concentrated in a handful of states. As of 2002, the state of Kentucky accounted for five percent of total equine sold and 37 percent of the total value of these sales. It also housed nearly 30 percent all registered foals in the United States. Florida was home to another 12.6 percent of registered foals, while California produced 10.9 percent.

Arabian horse breeding continued to growing in popularity in the early 2000s. Compared to 82,000 in the early 1990s, the number of purebred Arabian horses registered in the United States, Canada, and Mexico in the early 2000s totaled 237,000. The number of Arabian horse owners in North America grew from 28,019 to more than 100,000 over the same time period. The state of Florida saw significant growth Arabian horse breeding in the early 2000s as two leading Florida-based breeders, Lasma Corp. and Rohara Arabians, expanded operations. By 2003, Florida had become the eleventh-largest U.S. breeder of Arabian horses, and Lasma had become the largest Arabian breeding operation in the United States with roughly 450 horses. In terms of registered purebred Arabians, California was the top state with 42,404, while Texas came in second with 12,856.

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. Along with the extended reach afforded by the Internet, this increase in sales was due to a recovering U.S. economy.

Industry Leaders

Most operations in this industry are small and privately owned. Of the largest organizations with the highest revenues, most are breeders and sellers of thoroughbred racehorses. By revenue, the largest operation is Keeneland Association of Lexington, Kentucky, with operating revenues of roughly $20 million. Others include Lasma Corp., based in Ocala, Florida, as well as Jonabell Farm Inc. and Calumet Farm Inc., both of Lexington, Kentucky.

America and the World

Exports in horses increased steadily from the mid-1980s. Main importers of U.S. horses in the early 2000s included Japan, the United Kingdom, Canada, Ireland, and France. Popular breeds for export included American Quarter Horses, thoroughbreds used for racing, and Tennessee Walking Horses, which are used for English riding.

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 other 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 2002, more than 15,257 cases of the virus had been recorded in 43 states. A vaccine for West Nile, made commercially available in August of 2001, was licensed by the U.S. Department of Agriculture in February of 2003. The vaccine was considered 95 percent effective for horses.

Further Reading

Curry, Kerry. "Miniature Horses Can Be Lucrative for Owners." Dallas Business Journal, 14 May 1999.

The Jockey Club. The Jockey Club 2000 Fact Book. Available from http://home.jockeyclub.com/factbook/index.html .

Kaiser, Dave. "Arabian Horses Flourish in Florida." Florida Publishing: 2002. Available from http://www.floridapublishing.com/articles/arabianhorses.html .

Kline, K.H. "Horse Health & Nutrition: Horse Feeds and Feeding." Feedstuffs, 17 September 2003.

"The Lawn-Ornament Trade: Horses in the West." The Economist, 23 May 1998.

McGeever, Christine. "Keeneland Races to the Web Block; Auctions Broadcast Via Streaming." Computerworld, 22 November 1999.

U.S. Department of Agriculture. U.S. Equine Populations. Washington, DC: 2002. Available from http://www.igha.org/equids02.html .

U.S. Department of Agriculture Animal and Plant Health Inspection Service. "2003 Equine WNV Outlook for the United States." Fort Collins, CO: June 2003. Available from http://www.aphis.usda.gov/vs/ceah/cahm .