Industry Info
Short- and Long-term Effects of COVID-19 Restrictions on Equine Markets
Reprinted with permission from Volume 31 , Issue Number 2 of Equine Disease Quarterly
COVID-19 pandemic-related restrictions produced a recession , which economists typically define as two consecutive quarters of decline in GDP ( gross domestic product ) growth . Like every other business sector across the globe , the equine industry has been affected by COVID-19 related restrictions . We are now only starting to be able to assess short-term impacts , and it will be some time before the long-term impacts are fully understood . While we can look to recoveries from past recessions for insight , the contraction initiated by COVID-19 shutdowns is far different from earlier recessions , rendering historical information less predictive of the recovery path .
Across the globe , restrictions faced by equine industry participants have varied . Some govern- ments mandated the closure of equine facilities to reduce the spread of the virus and minimize risks of injury , while others delegated responsibility to equine enterprise owners and managers . The complete closure of equine facilities has been especially damaging , as these operations bear significant ongoing expenses with no source of revenue .
Staggering early unemployment rates precipitated concerns of an impending equine welfare crisis . However , while some horse owners have certainly struggled to make ends meet due to unexpected job loss , much of this unemployment was temporary , and a large-scale crisis appears to have been avoided . Moreover , some organizations specializing in re-homing horses actually reported an increase in adoptions during the initial shutdown .
A handful of preliminary studies are underway across the U . S . to assess short-term COVID-19 relat- 10 • Walking On
ed impacts . One such study is focused on breeding , boarding / training / lesson , and competition enterprises in Kentucky across all breeds and disciplines . Preliminary results suggest that while not escaping the effects entirely , it appears that breeding and boarding / training / lesson operations were minimally impacted . However , enterprises related to competition , both racing and non-racing , appear to have sustained much greater financial hardship . In addition to direct job loss , the widespread cancellation of local , national , and international competitions has had a ripple effect on regional economies . Events able to operate shouldered increased costs associated with following health guidelines and were required to function with limited or no spectators , which are often a source of revenue .
Some consider commercial sales and breeding activity a bellwether for the health of the industry . In North American Thoroughbred auction markets in 2020 , average prices for weanlings were down 6.2 %, yearlings were down 20.3 %, two-year-olds in training were down 26.7 %, and broodmares were down 1.7 %. Stud fees for North American sires standing for $ 2,500 or more were down 3.7 % overall . While contractions are never welcome , the decline was less drastic than some were anticipating .
The long-term impacts of COVID-19 restrictions will ultimately depend on the shape of the general market ’ s recovery . While GDP growth responded quickly when the economy reopened , the recovery has not been uniform across sectors . Some parts of the economy , most notably service and tourism-related industries , continue to struggle . Any business cycle that affects disposable income will ultimately affect the equine industry as well , since it is centered on what economists consider a “ luxury ” good .
CONTACT : Jill Stowe , PhD jill . stowe @ uky . edu Department of Agricultural Economics University of Kentucky
Lexington , Kentucky