Bluegrass Blues

By Ray Paulick -- When breeders first began assessing the damage inflicted by Kentucky's mare reproductive loss syndrome in the spring of 2001, they knew the economic pain would be spread over several years.

The first wave of losses came from the approximately 500 Kentucky foals of 2001 that died at birth in those devastating weeks of April and May. Result: live foal stud fees that weren't paid and weanlings and yearlings that weren't sold. The economic impact didn't end there, however. Those 500 foals would have been raised by human labor and cared for by licensed veterinarians; they would have become consumers of hay, grain, and other products, and go on to racing careers that would start another economic cycle of goods and services.

The most significant losses didn't occur until 2002, when Kentucky's foal crop was cut by approximately 2,000 foals--roughly 20%--because of the early fetal losses caused by MRLS the previous spring. That's 2,000 fewer live foal stud fees paid to Kentucky's breeding farms. Reduce that same number of foals from the eligible pool of horses to be sold as weanlings of 2002 or yearlings of 2003. Add on all the other ancillary goods and services, from the foaling barn to the vanning companies and then on to the racetrack, and the losses become even more substantial.

An economic impact study conducted by the University of Louisville estimated the losses from MRLS at $300 million.

The reduction in the 2002 foal crop--tilted heavily toward foals that would have been born in January, February, or March--has made it extremely difficult for Keeneland and Fasig-Tipton to recruit early-developing foals for the summer yearling sales in July and August. Keeneland, in fact, may very well cancel its July select yearling sale this year because of the shortage of Kentucky foals that meet its selection criteria.

MRLS will have more than a three-year economic cycle from 2001 to 2003. Owners of mares that aborted late-term or slipped early-term pregnancies in 2002 lost cash flow from the foal if they were intending to sell it. The vast majority of these breeders operate small, family-owned farms that do not have deep pools of resources to carry them through a financial crisis.

The owners of those small farms have limited choices. They either can significantly cut back their operations, investing less in stud fees and other expenses and thus lowering their potential for profit, or they simply can go out of business. Some owners have taken the latter option.

The farmers who breed Thoroughbred horses, Kentucky's number one agricultural product, clearly are suffering. MRLS, which returned to a lesser degree during the 2002 foaling and breeding season, coincided with a stock market crash and a slump in the national and international economies that help fuel the pocketbooks of people who invest in Kentucky's famed Thoroughbreds.

Aside from enormous economic contributions to the state, Thoroughbred racing and breeding comprise Kentucky's signature industry, which is the undisputed international leader for breeding excellence.

But that leadership role may be slipping. Kentucky racing, which enjoyed a surge during the 1990s, is now going in the wrong direction. Neighboring states with riverboat casinos or slot machines are taking gambling dollars out of Kentucky, many of which would have been wagered on the state's pari-mutuel races. Still other states are improving their own Thoroughbred breeding programs by diverting a portion of revenue from racetrack slot machines into purses for horse owners and into a fund for breeders.

Too many of Kentucky's legislators fail to understand the importance of the state's Thoroughbred industry, how it works, and who it represents. For the sake of the industry's continued success, let's hope someone can give them a quick lesson.