It is no surprise to anybody that has anything to do with horses that the horse market is heading downhill. It seems that anytime horse people get together, the conversation goes toward the poor quality of the horse market, focusing on the price of gas, the economy in general, bad marketing, etc… No matter what the reasoning, it is obvious that ‘the future ain’t what it used to be.’
According to Juli S. Thorson, contributing editor to Western Horseman magazine, there are several precautions horse owners and industry professionals can take now to help protect themselves in the future. Thorson has been critically observing, analyzing and writing about the horse industry for over 30 years. In addition to her positions as contributing editor and monthly columnist for Western Horseman, she has also served as the editor-in-chief for Horse & Rider magazine, the Appaloosa Journal, Ride With Bob Avila and several other equine periodicals.
Thanks to Thorson’s extensive experience with equine publications and journalism, she has a vast knowledge of trends within the horse industry. Even if the general economy was booming and the price of fuel dropped drastically, Thorson believes the horse market would still drop. “The horse world does not operate in a bubble,” Thorson remarked. “This industry is affected by everything, including lots of different sociological changes that are affecting the entire country.”
One of these sociological changes is taking the United States by storm; the demographic change. Demography is the study of vital statistics of human populations. Demographic studies depict a population’s average size, age, education, income level, and so forth, and are often used to predict consumer markets.
The massive demographic change the United States is experiencing has been caused by the aging of the ‘Baby Boom’ generation, allowing ‘Generation X’ to become primary spenders. The Baby Boom generation was the largest in the United States’ history, containing almost 80 million members. These ‘Baby Boomers’ are now between the ages of 45 and 60, approximately. As these horsemen and women enter into the retirement era of their lives, they become less likely to spend the amount of money in the horse market as they did in their thirties. Generation X, with only half the members as the Baby Boom generation, is becoming the bulk of the horse industry, greatly reducing the number of potential horse owners.
Although it may seem like the market has headed downhill very recently, in reality it has been a gradual change. The generations have been going through a ‘changing of the guard’ for years, causing small changes in the market each year. In the past, however, horse owners have adapted to the changes without realizing the cumulative effect. The wool has now been pulled from their eyes and the reality of the market is in full view.
“I don’t think we’re at the bottom out point in the horse market,” Thorson said. “I think we’re just at the tip of the iceberg. This is not to say the horse market is going to go away, but it is going to change. My goal isn’t to scare people from staying involved in the horse market, my goal is to be able to give people some forecasting tools to allow them to make necessary adjustments to their programs without being naïve.
“It is not a matter of whether the glass is half empty or half full anymore; it’s a matter of realizing that there is a completely different glass and we all need to adapt our programs to match.”
The first adaptation Thorson recommends is to cut back breeding. The American Quarter Horse Association (AQHA) produces more horses than any other known breed entity, according to Thorson. In a recent American Horse Council (AHC) census, AQHA new horse registrations were up 54 percent between 1995 and 2005. AQHA transfers of ownership, on the other hand, were only up seven percent. There is an abundance of horses being bred into an industry that lacks a market to purchase them. The AHC census also showed that while the number of horses being produced since 1996 has increased by 2.3 million horses, the number of horse owners has only increased by 100,000.
Thorson recommends that breeders produce fewer horses each year and invest more time in the training of the horses they do produce. “There is a glut of young, unbroke horses at a time where the marketplace is demanding the broke, steady horse,” Thorson said. The changing of demographics has caused the older, larger generation to typically desire a finished horse they can have fun with.
Unfortunately, Thorson pointed out that today’s professional horsemen are living with a tax system that favors horse breeders, not trainers. Money that is spent for breeding purposes is rewarded back at a much higher percentage than money spent on training. Americans do not get nearly as much of a tax advantage when they buy a two-year-old, then train it and sell it as they would if they bred a broodmare and sold the baby, remarked Thorson.
Although breeders may get more of a tax advantage, Thorson does not recommend the continued amount of breeding the horse market has experienced in the past. In fact, Thorson recommends downsizing now. “If people are looking to downsize their herd in the future, this is the time to do it! The longer they wait, the worse it’s going to get. I see the prices continuing to go down,” Thorson said.
Along with the physical change of numbers from the Baby Boom era to Generation X, Thorson pointed out that ‘Generation Xers’ generally have become known for living for themselves more than the Baby Boomers. The majority of today’s up-and-coming horse owners want a ‘brand name’ baby. The Baby Boomers began breeding horses in a time where bloodlines were localized due to common breeding practices. Many of today’s formative stallions were just becoming popular when the Baby Boomers were getting started and were confined to a specific area of the country. This forced horse owners to look at the individual first, bloodlines second.
Thanks to innovations in breeding and reproduction, the number of foals on the ground each year by World and National Champion stallions is astonishing. Potential horse owners can find hundreds of horses for sale out of a specific bloodline with fairly little effort. With the advertising of these ‘famous’ stallions, it is not difficult to understand Generation X’s drive to own horses that have descended from only the best bloodlines. These advertising plans have allowed a flood of well-bred, talented individuals to overwhelm the horse market.
Another reason the horse market has been allowed to increase 2.3 million horses over the past ten years is the psychographic changes that have occurred in the United States throughout the same time period. Psychography is the study of attitudes, beliefs and opinions within a population. Thorson pointed out a drastic psychographic point in the horse world: equine slaughter.
Equine slaughter was once accepted and regarded as a fact of agricultural life. Most people overlooked the issue as ‘something that doesn’t affect me.’ Slaughter has recently and increasingly become viewed as an unacceptable practice, not just by non-horse people, but by horse owners as well.
The number of horses now staying in the horse market has drastically altered the supply and demand ratio. Thorson pointed out that in the early 1990s, the number of horses being slaughtered was up to approximately 360,000 per year. Now, the number has dwindled to around 50,000 horses annually. Although slaughter was a fact of life in the past, the fact is that most Americans today do not want equine slaughter.
The reduction in equine slaughter has caused a radical increase in the number of horses that are given away for free or sold at very low prices. Even Equine.com, a popular equine classifieds website, has added a ‘free horses’ section. In the first four days of existence, this section had nearly 400 horses offered for free on a permanent or lease basis.
The option of the free horse is a form of competition that the horse market has not had to deal with in this capacity before. Thorson predicts that the horse rescue and adoption facilities will soon be overwhelmed with horses. “I see these facilities turning into something like a Goodwill for horses. This is where families will go to get pets, companion animals or their very first horse. Instead of buying it ‘retail,’ they will be able to get a horse for extremely cheap or free,” Thorson predicted.
Another psychographic change has been caused, in part, by a scientific change. Over the past few decades, the horse industry has gone from identifying breeds by phenotype (looks) to identifying by genotype (breeding). With the scientific changes in the breeding world (embryo transfer, frozen semen, cooled transported semen), there has been an amazing increase in the number of foals born and registered each year. This increase in horses has also increased the number of horses that do not fit into the ‘look’ that is specified for a certain breed. There was no overo or cremello Quarter Horse until the past few years. Now, partially due to the massive number of horses that do not fit into their breed’s phenotypic characteristics and partially due to the psychographic changes of horse owners to allow horses into a breed based purely on their genotype, breed registries are accepting horses that previously did not fit their standards.
“AQHA has essentially become the new color breed by allowing horses to be registered with excessive white,” Thorson commented. “There has been an increasing amount of pressure on breed associations to give horses full registration status on the basis of their parents’ registry.”
With that precedent, genotype now determines what rights a horse should have, not phenotype. With this model, and with a younger generation coming into the industry, the color associations such as the Appaloosa Horse Club (ApHC) and the American Paint Horse Association (APHA) are going to have a harder and harder time with their individual rulings on solid versus colored horse issues. The psychographical changes, along with the rule changes in AQHA, are pressuring these clubs to give full rights to horses who may not meet their color specifications (meaning, solid Paint and Appaloosa bred horses,) Thorson remarked.
Not only have the actual people and horses affected today’s horse industry, technology also has had a large impact.
Thorson identifies the term ‘technography’ to identify the level at which people accept, adopt and practice new technologies. “It’s not just the geeks living in their parents’ basements who use email to communicate with each other — it’s everyone who doesn’t want to be left behind,” Thorson pointed out. “It’s not just CIA operatives who carry cell phones, it’s everyone from grade-school children to their grannies. Technographic changes have reached a critical-mass participation level and they can’t be avoided.”
Technographic changes come into play in the horse industry with innovations like cooled transported semen, frozen semen, embryo transfer and the escalated importance of online databases. These changes have leveled the information and gene-pool playing fields, completely changing the game of the horse market.
“It’s not a matter of society resolving its issues with these changes in technology, it’s a matter of each individual accepting the changes. Once a technological advancement has been made, there is no going back. Either you adapt to it or you get left behind.”
A prime example is shipped semen. Shipped semen has taken the equine breeding world by storm, and the market will never go back. The same thing has happened with embryo transfer. These technological changes are providing ways for breeders to attempt to produce the best individual possible. It would be impossible to turn a blind eye and take a step backward.
Although these changes have made a huge impact on the horse market, there are two technographic changes that are pushing the industry forward the most. Communication technology and database technology have changed the horse world forever.
“There are a number of people that now buy off the computer screen only. The first time they see their new horse will be when it backs off the shipper’s trailer at their house,” Thorson said. “The same thing goes with breeding. The Internet is like a stallion shopping catalog.
“This makes it even more important to have your information available online. If it’s not, most of the people in the horse world aren’t going to know you exist and they may not go to the trouble of finding you when they can find millions of other horses on the Internet.”
It is now possible for potential buyers to learn more about a horse for sale or breeding than the owner may know. With nearly every breed association’s databases available online, like AQHA.com and APHA.com, Internet perusers can find out how a horse is bred, how many points the horse has earned and the show record of parents and grandparents, as well as virtually anything else they desire to know, immediately. Bidders now bring their laptops to auctions and horse sales, giving them the ability to verify catalog information with a simple click of the keyboard.
“This has raised buyers’ expectations and demands in the areas of pedigrees and accomplishments,” Thorson said. “If your horse doesn’t compare well, you won’t ever get the chance to sell to potential buyers. Thanks to online horse shopping malls, buyers can now see how many horses are available across the country, and compare them with no trouble at all.
“This is bringing horse prices down, just like eBay® has brought down the prices on tons of antiques and other items. If you’re not limited to the breeders in your area, if your economy is global, then you have a buyer’s market.”
Unfortunately, these changes are not only affecting the horse market. Other areas, such as automobile and real estate sales are also being hit by the generation change. Thorson has predicted that the rate of people spending money in general in the United States is going to head downhill drastically. The infrastructure of the entire country for the past 20 years has been built on meeting the needs of almost 80 million Baby Boomers. Soon, there will be 44 million people swimming in an infrastructure that is too large. Those who are prepared will be able to float.