|
Over Supply, Under Demand
By Brad Woodruff,
Aztlan Farms
The slump in
the horse market in general and for Tennessee Walking Horses in
particular is a complex dilemma. I’m not an economist and from sales
loses over the years, I am not a particularly good businessman either.
But, I do consider myself a skilled breeder, and a pretty good
forecaster of economic trends and human nature.
What happened to the market?
The macro economic picture of the U.S. economy is the first place to
look. Over speculation and over valuation of stocks in the red hot
technology sector as a result of the internet .com craze led to the
bursting of the bubble and almost overnight 4 trillion dollars of paper
wealth disappearing…middle class people who thought they were getting
wealthy with their 401K type retirement program took a big, big hit….
Then the Enron debacle and the bankruptcy of several other high profile
pension funds and the big one… the 9-11 attack on the World Trade
Center…these three catastrophic economic events caused all of us as
consumers a loss of confidence in the future and the need to re-examine
the vulnerability of our own financial well being. How would we be able
to pay for our inflated mortgages and shinny new SUV or Pick-up and/or
plans for security in retirement if our own livelihood was suddenly
taken away?
What was the fall out to the Walking Horse Industry?
A similar period of “irrational exuberance” paralled the larger economy,
speculation drove real ( or imagined) valuations of good walking horses
to new record highs-Jose Jose “sold” for 1.5 million and common cremello
pleasure colts sold for $10,000! “Thar’s Gold in them thar hills” an off
we went as an industry trying to stake our claim. The macro economy
drove the fall of interest rates to record lows and correspondingly the
rise of credit indebtedness to record highs. The result of this for the
industry is it overbought, oversold and over produced causing a glut of
horses in every market division as demand softened and then became
saturated. The sheer costs of maintenance of this saturation removed
money from the marketplace to buy and sell as required for healthy
commerce.. The overhead maintenance pressures owners face forces them to
sell in a down market, furthering the oversupply under demand and
collapsing valuations. A classic “Boom and Bust” cycle of the equine
variety.
What can we do to get out of the mess we are in?
1. Invest in expanding the market for all divisions of Tennessee Walking
Horses…for the sake of discussion, lets assume 99% of the horse market
wants a pleasure horse not a padded performance horse-but 99% of the
TWHBEA market strategy is geared to the 1% Padded division. It’s the
inverse of what it should be: That is, bring new horse people from the
trotting breeds to the table by showcasing and extolling the TWH virtues
of natural gait, smooth ride, versatility, pleasant disposition, beauty
and easy keeper qualities First, …Then let them discover specializations
and niches that fit their lifestyle and that they can enjoy with their
horse.
2. Take a greater responsibility for the industry as individual owners
and exert some leadership or support the efforts of people who will,
that can bring “new blood” and new perspectives to the decision making
process of the TWHBEA board. The Board is Shelbyville centric and lop-sidedly
Padded enthusiast.
3. Raise Stud fees to discourage breeding mediocre and poor mares and
allow the marketplace to determine which stallions should perpetuate
their genes for future generations and which should be gelded and used
for other equine pursuits. It is a sad statement on the condition of the
industry at the bottom levels when we see $150.00 stud fees advertised
in the Voice. If stud fees started at $1,000 and up, fewer sub par mares
would be bred and fewer foals would be marketed at give away prices.
4. Raise Foal Prices to insure a fair return on your investment and set
an expectation of quality in relation to valuation. Let the marketplace
work, If your foals don’t sell at first, add value, i.e. age, training,
etc. until they do. Don’t dump foals on the market at sacrifice and
continue the spiral depressed prices. Don’t over inventory, get one crop
substantially sold before breeding replacements or substantially
expanding production.
5. Apply some self restraint and don’t breed all your mares, take a time
out to let the market recover. Be more selective. Strive to produce the
best possible foal for your division. Collectively we flood the market
and collectively we suffer for it.
6. Stop soring in its tracks. No rationalization can justify torturing a
horse to perform in a showring. The fiasco at the 2006 Celebration only
exacerbates an already bad problem. This image has permeated our breed
for 40 years and is a generalized perception among horse enthusiasts of
other breeds THAT WON’T GO AWAY , that makes overcoming this perception
and expanding our market share doubly difficult. As a consequence
breeders are competing for a larger share of an existing and perhaps
shrinking TWH owner market-which as stated above has become saturated.
Admittedly, this is tough medicine to take, but if we as an industry
could reform we can come out of the down market and once again prosper.
The greatest advocate for our breed is The Tennessee Walking Horse
itself, natural, elegant, sound and free moving as the founders bred
him. In the end quality sells.
Brad
Woodruff
18875 Atterberry Street
Petersburg, IL 62675
217-632-2096 |
