As prices of fuel, feed and bedding rise simultaneously, stable owners in Pennsylvania are grappling with what might be called a perfect storm—a combination of events that is demolishing profits and wreaking havoc with business plans.
Fuel prices have tripled over the past three years. Grain prices are rising. Hay prices are rising. Bedding prices are rising. It might seem that fuel costs are the common denominator; but a closer look reveals another culprit that could bring even worse conditions for horse farms and those who depend on them.
Fuel prices are rising as supplies are shrinking. And worldwide demand for diminishing supplies of oil will likely continue pushing prices higher. Renewable energy sources are gaining traction because they seem to represent viable alternatives to oil and because people see them as less harmful to the environment. Whether so-called biofuels are actually more efficient and less polluting remains an open question. One thing is clear, though -- The effort to replace oil with biofuels is generating its own unanticipated crisis.
Thousands of acres of Midwest farmland are being converted from producing grain for food to producing grain for fuel. And that fact will radically alter the future for the equine industry here and elsewhere. According to Lester Brown of the Earth Policy Institute, "the food and energy economies, historically separate, are now merging. In this new economy, if the fuel value of grain exceeds its food value, the market will move it into the fuel economy. As the price of fuel climbs, so will the price of food." And so will the cost of feeding horses.
"We raised the rates (for boarders) the beginning of the year," says Cindy Gilbert of Harvest View Stables in Manheim, Lancaster County. Harvest View is a lesson and boarding facility with about 20 horses. She didn't have much choice about raising her monthly board, and believes that her boarders saw it coming. "I have a good group that understands I can't subsidize the cost of taking care of their horses." Gilbert says that she's confronting cost increases everywhere she looks.
Feed, hay and bedding costs have increased 10 percent since last year, she says. She put new fencing in to make the turnout situation more efficient, and she's converted to round bales of hay to save money. But she recognizes that she's at the narrow end of the funnel, and is forced to contend with the increased costs of several different suppliers of products and services. And each of those suppliers is wrestling with similar demons.
"Are we in trouble? Yes! We are in trouble," says Charles Jones, whose company supplies sawdust and shavings to farms in Pennsylvania. He also provides manure removal services. "Costs have skyrocketed. They're now turning sawdust into pellets and it's going for fuel," he says. "It's unbelievable. I'm paying more now for it than I used to sell it for. Biofuels are using up all the things you need to keep animals."
Jones says he feels awful when he has to keep raising prices, but he doesn't have any choice. "We've called customers and told them it's beyond our control. We've had jumps of 100 percent or better overnight and then another 100 percent," he says about the price he pays for shavings.
Jones says that drought in hay-producing regions is compounding pressure on local horse farms, as more and more locally-grown hay is going to buyers from other states, leading to the same supply versus demand pricing that is affecting fuel.
"The drought is going to hurt all of us," he says. Hay supplies last spring were already at record lows in many states, and the summer drought and record heat made the situation worse. He says that many of his customers are having major problems. "I've got people that owe me money that never owed me money before; and they owe me a lot of money."
Gilbert, of Harvest View Stables, says that she's sympathetic to the problems her suppliers are facing, even though that doesn't improve her situation. She says she's been fortunate to have a good hay dealer close by. "The cost of making the hay has gone up just to fuel their tractors. Plus there's the labor. They're at the mercy of the elements."
Diane Wentz operates Wentz Stables in Lehigh County, a large training and showing facility. She says that their hay costs are rising at an alarming pace. "Our hay prices have gone up every month since August," she says. But hay is not the only commodity causing problems. "Shavings have gone up 25 percent. A lot of sawdust companies are selling to the home heating industry. There's not one area that has not increased," she says. "Every time I think we're going to level out somewhere, it goes up higher. It's scary."
She says that they had no alternative but to pass increases along to their customers, just as Gilbert and Jones did. "We tried to absorb some of it. We were noticing increases of about $1,000 a month in our costs. Those are not increases you can absorb easily."
Wentz says that the national United Professional Horsemen's Association (UPHA) meeting in January opened her eyes to how widespread these problems are. People from all over the country reported that costs were rising for the basic products they need to take care of horses. And then there is the lifeblood of many farm operations, diesel fuel, which costs a dollar a gallon more today than it did a year ago.
Is this an issue that has little relevance to the broader population? Wentz, Gilbert and Jones all recognize that owning horses is a luxury. But in Pennsylvania's economy, the horse owner plays a vital role.
The equine industry is a diverse web of producers and consumers contributing billions of dollars every year to the state's economy. To many people the equine industry begins and ends at the state's new slots-endowed racetracks. But even before slots legislation changed the landscape in Pennsylvania, the equine industry was a powerful—if often invisible—player. Veterinarians, grain dealers, stables, blacksmiths, trainers, tack shops, haulers, hay dealers, truck and trailer sales, horse shows—dozens of entrepreneurs contribute to and depend on the equine industry.
Wentz says that they normally have about 50 horses on their property. Today they have 45. "We've not been at 45 horses in five years. I think the situation is critical," she says, referring to the broader industry, "and I'm seeing it at the horse shows as well."
Added to rising costs is the outlook for a slowing economy, which can mean less discretionary money for horse owners to spend. If the individual horse owner decides that his or her horse has crossed that invisible threshold and become a liability instead of a luxury, the problems will spread even further.
Already horse rescue facilities are finding themselves hit twice. Horse owners who can no longer afford to pay higher food and hay costs are turning their horses over to rescue agencies; but the agencies themselves are struggling to pay for hay, bedding and food for their existing populations. Within the last month, two horse rescues in Colorado have been accused of animal cruelty and had their starving horses seized when an influx of horses overwhelmed their ability to care for them.
Converting our nation's farms into producers of biofuels may be a Faustian bargain, if we wind up with fuel for our cars but no bread for our tables. The reality is that even if we were to use every acre of farmland to produce biofuels, we would still not have enough energy.
So we're left with a dilemma of staggering proportions—one
that goes far beyond the boundaries of the equine industry. The equine
industry's current struggle is a microcosm of what the rest of our nation's
population will soon encounter, especially if food prices rise in tandem
with fuel prices. Solutions, though elusive, will not come without effective
national leadership and a clear understanding of how a weak dollar, the cost
of energy and the explosive growth of foreign economies ripple through our
own economy, affecting every consumer. How are rising prices and a slowing economy affecting you?
What are you doing to cope? Email us at
PAEquest@aol.com and let us know --
we will share your comments in a future article.
WE WANT TO HEAR FROM YOU!
How are rising prices and a slowing economy affecting you? What are you doing to cope? Email us at PAEquest@aol.com and let us know -- we will share your comments in a future article.