Horse Breeders - 2011 Outlook

2011 will be a mixed bag for breeders. Breeders with proven blood lines, especially targeting English disciplines, will see sales and price improvements likely in the 1% - 2% range.

Breeds commonly used in western disciplines will have another rough year; especially those breeders whose bloodlines are marginal. Why? Two fold. The meat industry, as buyers of last resort, has always set the lowest price that horses sell for. The horse slaughtering ban in USA will continue to depress prices for prospects for years to come. Also, sheer numbers work against western breeders with the glut of quarter/paint horses available and back yard breeder continue to pump out foals without much thought.

While many of your fellow breeders did not survive the Great Recession, not enough left the industry to make a much of a difference; just too many prospects for the number of riders.

We expect the western prospect prices will remain depressed for the better part of the decade.

As for stud fees…they will continue to be depressed through 2011...fee increases will be hard to achieve; this is true for both high-end and middle of the road bloodline breeders as the demand is just not there.

Horse Trainers - 2011 Outlook

Horse trainers will see a better year; more first time horse owners will need lots of training as well as experienced riders will be spending more to improve their skills and their horse's skills.

Demand for well trained horses is picking up and so are the prices people are willing to pay.

Equine Magazines & Publications - 2011 Outlook

Mixed bag in 2011. Advertising revenues up 3-5% as businesses spend more on advertising; again those publications centered on English disciplines doing the best.

But subscriptions will be slow. Those publications moving aggressively to adapt to online subscriptions will be much better off than those who remain strictly in print form. Tablets like the Apple iPad have changed the publication world for good as well as the amount of free quality information available on the web.

2011 Credit Outlook

Banks are beginning to lend again; especially in the USA. Approvals for small business loans are getting easier. This is good news for those who equine businesses is in serious need of investment.

We see small horse businesses increasing their spending by catching up on needed repairs, upgrading their computers, websites, etc.

Consumer credit is improving in the States and people are beginning to use their cards again for purchases. Consumer credit in Canada will be tighter in 2011 as the government copes with record levels of consumer debt.

All-in-all; increased credit availability means good things for all horse businesses and supporting businesses.

Technology Impacts on Equine Businesses

Horse owners tend to be very technically savvy. Most customers use the internet in some way when making decisions on what to buy and who to buy it from.

Just take a look around the next time you are at your stables or event and see how many of your colleagues are engaged with their smart phones. Remember these same people are your potential customers.

Successful retailers are even installing kiosks for customer to use for comparison shopping; turns out people do want to compare prices, but if they can do it in your store you stand a way better chance of buying from you even if your prices are a bit higher…saves them time and makes you more sales. It is way more important to keep them in the store than letting them leave to do their comparisons. It’s a cheap investment for you that will pay for itself in a few months.

Exchange Rates

The USA dollar and Loony will continue to trade about par most of the year before the Loony begins to fall. This is a mix bag for Canadian businesses; makes products imported from the USA cheaper but makes selling to USA consumers harder.

For USA businesses, we suspect this will improve sales as more Canadians take advantage of the cheap US dollar; we also expect USA based events to see some benefit from this in 2011.

Equine Events and Shows

With fuel prices heading higher in 2011 people will continue to curtail the number of shows and events they attend. We also think that people will continue to stay closer to home when they do head out.

Fuel Prices

Fuel prices have a major impact on horse business of all sorts. The price at the pump is definitely headed higher in 2011 with regular gasoline heading to over $$ a gallon this summer in the USA and in Canada heading another 20% higher as well. Diesel: will top $4 as well in the USA and increasing 20-25%/liter in Canada.

Heating your riding area is going to cost more too. Also heading higher…your utility bills edging up about 3% in 2011.

2011 Feed Prices for your Horses

While regional variances will continue to be wide, overall the average person will be paying more for feed in 2011. The main reason is food prices are rising as the global economy recovers. More farmers will be converting their fields to higher margin crops like wheat and other grains…spells less hay being produced which will drive prices higher.

Plus...high cattle prices means more competition for hay with beef ranchers. All said most people will see their hay prices going up more than 5% in 2011.

Home, Ranch and Real Estate Values: Implications for Horse Business Owners

For most of us the nothing hurt more than the drop in the value of our homes over the past 3 years. And, for most horse business owners the value of our homes still represents the greatest source of personal wealth as well as collateral for business loans…

For USA: Signs point that the housing crisis has finally hit bottom and sales are finally picking up although this is not true for all regions…the northeast sales are still declining while the west is showing the best signs of life. Home prices...seems the bottom is near in the fall of home prices as well and prices should begin to inch higher by second half of 2011.

There are many homes still in some point of the foreclosures process as well as more than 3 million foreclosures still on the market. Until these foreclosures get sold, the value of your home will not begin to appreciate again…likely mid-2012 before you begin to feel like things are improving.

Good news for those who own land that is suitable for farming…great demand in food prices is having a good impact on farm land values with selling prices for farmable land increasing about 5% in 2011.

For Canada: Fortunately Canadian housing prices made a quick recovery from the blow of the recession…to be sure Canada was one best places in the world to own a home during these extraordinary hard times. Home prices in Canada sizzled in 2010, but have since cooled.

Prices will continue to appreciate in 2011, but slowing to about 2% growth this year.

Personal Investing in 2011

For those of you planning for the future...stocks will trend higher over the coming 2 to 3 years.

USA will pass pre-recessions record levels within 2 years. Amazingly, the USA stock market has gained 100% in the last two years; the fastest 100% rise in history. Canada stock market is already in striking distance to regain all losses that happened during the recession.

Lots of good values still available; it is never too late to start saving for retirement and now is an excellent opportunity. If you never invested in stocks, you should learn more...all horse business owners should take time to plan for retirement as well as future needs.

Risks still abound and there will be ups and downs; but the overall trend is upward; expect about 9% annual returns. With banks paying basically nothing for interest; stock yields have never been more attractive.

Just remember to hold tight during bad times; those who held onto their stocks during the stock market dive in 2008 have been handsomely rewarded and are better off than those who sold or those who kept their money in the bank.

What could go Wrong in 2011? Risks that could Impact Horse Businesses

Most of the things that could derail the recovery in both USA and Canada come from faraway places…

Oil prices top the list of what could go wrong. Protests in the Middle East could worsen and further drive oil prices up. If oil goes high enough, it will derail the recovery and customers willing to spend more on their horse hobbies will think twice or spend the money they would have on their horses on fuel.

Are there other things? Sure there are…but we see other things as far less likely to happen then oil supply and price problems.

And Finally...

We wish you all the best of luck in 2011 and beyond. You worked hard, you survived the hardest part...you deserve the better times ahead.

Drop us an email and let us know how your business is doing and what you think about 2011 and beyond.