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Measuring Kentucky’s equine industry

By Anne Charles Doolin

It was some two decades in the making, but the United States Dressage Championships are finally a reality and will showcase top dressage horses and riders from all over the United States at the Kentucky Horse Park in Lexington Nov. 7-12.

Jill Stowe, Director of Ag Equine Programs, University of Kentucky
Jill Stowe is Director of Ag Equine Programs at the University of Kentucky.

Some 300 horses and riders, plus their respective entourages and fans, are expected for the event.

“It’s been a long time coming,” said George Williams, United States Dressage Federation president. “The concept was developed 15 or 20 years ago. We have nine regional championships and wanted that to be well established, plus we were waiting for the economic climate to be right.”

The dressage championship is just one of many new events the Horse Park has hosted in the last few years. The park underwent major infrastructure improvements and added new arenas and buildings leading up the 2010 Alltech World Equestrian Games, which attracted competitors and fans from all over the globe.

“There have been so many improvements at the Horse Park, and we have our headquarters there, so holding this championship in Lexington was basically a no-brainer,” Williams said.

Those improvements, and the business they have helped generate, have paid off in spades, said John Nicholson, the park’s executive director.

“The Kentucky Horse Park contributes $200 million annually in economic impact to the state,” Nicholson said. “That translates to an estimated $15 to $20 million in direct taxes to the (state) general fund. Considering the park only receives $2.4 million from the general fund, the Horse Park is a huge bargain.”

The Kentucky Horse Park, while the epicenter for national and international events in the state, is just one segment of the equine industry and the satellite industries that feed it in regard to the impact on the state’s bottom line.

It’s been widely accepted that the commonwealth’s equine industry is a major contributor to the state’s economy. Just how great an impact now can be measured, after results from an extensive study were released in early September.

$3 billion annual economic kick

The study, spearheaded by the University of Kentucky’s Ag Equine Program, was the first of its kind in the state. The study showed the equine industry in Kentucky had a $3 billion economic impact, and generated 40,665 jobs in 2012. Over 32,000 of those jobs were directly attributed to equine operations, with the remainder an indirect result of the equine industry. The breeding industry accounted for the largest number of jobs, with more than 16,000 people employed.

inventory_mapAdditionally, the contribution in taxes by the industry was approximately $134 million for the year.

“Every segment of the equine industry is important to the Kentucky economy,” said Jill  Stowe, director of Ag Equine Programs at the University of Kentucky. “Whether from a business or a hobby standpoint, the equine industry collectively makes a significant impact on the state economy.”

operations_mapStowe, who was the lead on the study, said the total economic impact is measured by the output effect and is an estimate of revenues earned by the sale of goods and services related to the equine industry and its supporting industries.

The U.S. Department of Agriculture’s National Agricultural Statistics Service and the Kentucky Horse Council were also involved in the study.

The Kentucky Horse Council is already putting the data to good use, said KHC Executive Director Susan Schneider.

“The study showed that the “golden triangle” with the densest horse population is between Northern Kentucky, Louisville and Lexington,” Schneider said. “I’d always felt that, but it was conjecture. We needed to see it concretely for strategic planning.”

The Horse Council has already held two regional caucuses “to ask our equine community members what their needs are and what we can do to help them,” she said. More are planned for next year.

There was a study conducted in 1977 to gauge Kentucky’s horse population, but “it was an inventory study, and a 35-year difference makes it difficult to compare,” said Stowe. “I really didn’t have many expectations of what we’d find with this one.”

The majority of horses in Kentucky, the UK study uncovered, are used for trail and pleasure riding with 79,500 falling into that category (see chart). Broodmares, 38,000 of them, account for the second largest segment of the equine population, followed by 33,000 horses listed as idle/not working. Competition and show horses are the next largest group at 24,500; then foals, weanlings and yearlings (23,000). There were 15,000 race horses and 12,500 in the work/transportation category, followed by 3,900 breeding stallions. The study categorized another 13,000 equine under “other activities.”

“One thing that did surprise me was that horses used in the competition industry are getting close to the numbers used for breeding,” Stowe said. “But we do have a lot of national and international competitions here. That also brings out-of-state and out-of-country visitors and money to the state that we wouldn’t have otherwise.”

Some of those visitors have decided to move their operations to Kentucky.

“Our facilities have attracted new and vital segments to the equine industry,” Nicholson said. “Organization headquarters, new farms, trainers and riders have decided to move here permanently, and they are infusing a lot of capital here.

Equine assets top $23 billion

“In 2008, the year before the major improvements were made at the Horse Park, we hosted 63 major events,” he said. “This year we are approaching 90.”

A mare and her foal are shown on the Overbrook horse farm in Lexington in this file photo.
A mare and her foal are shown on the Overbrook horse farm in Lexington in this file photo.

The first phase of the study was a survey of equine operations, and it found there are approximately 35,000 farms, arenas and other facilities in the state, with 1.1 million acres devoted to equine pursuits. An equine operation was defined as property where at least one equine was kept, and ranged from the backyard pleasure horse to large facilities housing hundreds of horses such as racetracks and breeding farms.

The total value of the 242,400 equine and equine-related assets was estimated at $23.4 billion, and income for equine operations and equine-related sales in 2011 was some $1.1 billion.

Expenditures that year totaled about $1.2 billion. Capital expenditures were $338 million of the total and operation expenditures (excluding labor), totaled $839 million, with 77 percent of operating expenses staying in state.

Phase two of the study was analysis. The output effect due to the presence of the equine industry was measured at roughly $3 billion for 2012. The value added effect (new income, profits and dividends) was calculated at $1.4 billion.

The output figures did not include banking, legal, accounting or tourism impacts related to the equine study, nor did they include pari-mutuel wagering at Kentucky’s racetracks. Racing’s sector, even sans wagering, was estimated at $1.28 billion. The breeding sector had the second-largest slice of the pie, at $710 million, followed by $635 attributed to competitions, $166 million from recreation, and $194 from all other sectors.

“We learned what the entire equine industry looks like across the state, and we learned what a significant impact it has,” said Stowe. “We broke it down into sectors, from the very large groups like the breeding sector, to people like me, the backyard horse owner who has one or two horses.

“Those of us in my group don’t earn any income from our horses, but we spend money – a lot of money – on feed, tack, fencing and more. The aggregate shows we are also an important part of the industry.”

Anne Charles Doolin is a correspondent for The Lane Report. She can be reached at [email protected].