Improving economic efficiency of equestrian stud farms and businesses

The REFErences Network, created in 2006, is a technical and economic references research plan, and is based on several areas of the horse sector : breeding of sport horses and ponies, leisure horses and draught horses, equestrian establishments (riding schools, livery yards, horse farms). The network highlights economic data collected every year from different equestrian establishments from all over the country (130 establishments followed in 2017). These companies are chosen according to different criteria : number of years of activity,  economic viability, peer acknowledgement, and willingness to share experience on the part of the company director.

AGRICULTURAL REVENU = RESULTS  - OVERHEADS

Turnover

Sale of horses

In the stud farms followed bt the network, it was noted that some horses were sold later on, as 6 year olds, at prices which were not much higher than 3 year olds with a higher potential. The selling price for a horse also depends on the level of training. A trained horse will fetch a better price. However, the horses put into training should be targeted so that the investment involved in training matches the animal’s potential, so that the sale price becomes economically attractive, and that the return on investment is worthwhile.

A low productivity rate per mare

In the stud farms monitored by the network, it can be noted that a very low number of foals are sold compared to the number of brood mares covered. This low productivity rate is a zootechnical criteria which needs to be optimized, as it has a direct impact on the stud’s revenue. The choice of stallionsand the covering techniques used should be reasoned through to maximise gestation rate. Renewal of low fertility mares should also be considered without delay. Surveillance of foalings, and of the first days after foaling, also enable to lower the mortality rate, which is quite high in draught horse and donkey breeding studs, where foaling is often conducted entirely in the field.

Diversifying activities (services), once a market study has been conducted, and also the commercial circuits used, can also help product growth.

Grants and subsidies received

Finally, the business’s revenue also includes grants and subsidies received. Equine studs can be elegible for certain European agricultural subsidies under the rulings of the CAP 2014-2020. The Basic payment scheme (BPS), and some second pillar subsidies, such as measures to « support investments », are accessible to equine stud farms, depending on the type of activity and the geographical location.

In farms monitored by the network, extremely variable overheads were noted between businesses in the same sector of activity. The second possible lever to improve economic result is therefore to analyse and optimize the different items in the overheads, operational overheads as well as structural overheads. The idea is to align the overheads with the expected revenue and to avoid increasing overheads without getting a return on investment.

Number of horses consistent with the activity

The first thing noted is based on the size of the herd managed, which is not always consistent with the economic aim. An excess number of animals is costly, even in terms of care (labour costs). In a riding school for example, the criteria number of hours sold per horse, is extemely variable depending on the establishment. The productivity of the horses is a major criteria in profitability, due to the annual upkeep cost for each animal present. Reducing the number of horses is not an easy task to implement. It means getting rid of unproductive animals : low fertility mares, unsold horses, horses suffering from frequent injury or illness, horses retired from stud or other older animals… Selling these horses at a very low price, or even giving them away is often the solution adopted to save on the cost of their upkeep, they are rarely slaughtered.

Feed, the most costly item

Among the different operational overheads, one of the most costly is feed for the animals, which can represent up to half the total expenses. A good strategy in using the grazing areas can cover a large part of the animal’s feed requirements :

• Maximise the use of grass by using rotational grazing
• Base the grazing on complementarity of species (if there is another agricultural activity on the farm)
• Diversify techniques for harvesting forage (haylage)

Well thought through sanitary management

Selecting and characterisation of horses going into training

Management of breeding is based on selecting stallions and brood mares adapted to the economic production target (market targeted) as there are great differences in the price of male genetics (price of covering). The condition of stallions’ and brood mares’ joints should also be taken into account to avoid producing animals with musculoskeletal problems, unfavorable for an early sale, or requiring costly veterinary interventions.

Improving labour productivity

This means aligning an increase in work productivity and the level of investment. A stud farm can for example, manage their herd in lots at certain stages of their lives, or invest in economical buildings and equipment to allow a gain of time thanks to  more mechanization and automation (drinking troughs, mucking out stables, feed dstribution, use of automatic horse-walkers….).