Kentucky Equine Receipts Might Stabilize in 2011

Strong cash receipts will likely propel Kentucky's agricultural sector, including equine, forward again in 2011, according to Kenny Burdine, extension specialist in the University of Kentucky's (UK) Department of Agricultural Economics. Burdine made this prediction as he analyzed 2010 cash receipt estimates for Kentucky, released recently by the United States Department of Agriculture (USDA).

Figures for 2010 showed that poultry again supplanted the Bluegrass state's trademark equine industry to notch the No. 1 spot in total farm receipts, at 21% of the $4.4 billion total. The university's Agricultural Economics extension economists, including Burdine, estimated in December that 2010 overall farm receipts would reach $4.5 billion. Their estimates for 2011, if reached, would be a milestone for Kentucky: a projected $5.1 billion.

"Equine led the state's cash receipts for five or six years, reaching a high in 2007 at just over $1.1 billion," Burdine said. "Since then, however, equine receipts have pulled back by roughly 38%."

The 2008 recession hurt the major sales and affected stud fees, both of which weighed heavily on the market and contributed to the equine industry's weakness, according to Burdine. He predicts 2011 will be a relatively strong year for Kentucky's equine sector, indicating it could reach $725 to $750 million, compared with $700 million in 2010 and $780 million in 2009, though he cautions it could fall to third or fourth in Kentucky's farm receipts by percentage.

After the 2008 recession most agricultural sectors in Kentucky recovered quickly, but strength in the equine sector was slow to return. Hay is a promising indicator of equine's recovery. Kentucky saw a 20,000-acre increase in alfalfa hay acres from 2010 to 2011, yet also saw a much larger decrease in total hay acreage.

"The trend of increasing acreage in alfalfa is most likely due to better weather and overall increases in feed costs making quality hay more attractive," Burdine explained. "The decrease in nonalfalfa hay acreage is likely caused by declining cattle numbers and increased competition for ground for row crop production."

Stud fees continue to be a crucial driver for equine receipts. Among sires standing for the highest stud fees (more than $25,000), 100% are based in Kentucky. Conversely, among sires standing for less than $5,000, only 8% stand in Kentucky, according to The Jockey Club report.

"Stud fees in 2011 were most likely steady from 2010," Burdine said. "So, steady stud fees and moderately stronger sales should mean slightly higher receipts in 2011."

The marquee Keeneland September yearling sale was an international benchmark for the entire industry, concluding with a rise in gross, average, and median, despite a decline in the number of horses sold. These are all positive signs of recovery for the Thoroughbred industry.

Karin Pekarchik is an editorial officer in UK's Agricultural Communications Services.

Want more articles like this? Sign up for the Bluegrass Equine Digest e-Newsletter.

More information on Gluck Equine Research Center and UK's Equine Initiative.

Stay on top of the most recent Horse Health news with FREE weekly newsletters from Learn More