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Keith Kleine, MS Director of Industry Relations CURRENT TRENDS IN THE HORSE INDUSTRY

Mr. Keith Kleine - State of the Equine Industry

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Keith Kleine, MSDirector of Industry Relations

CURRENT TRENDS IN THE HORSE INDUSTRY

The Economy

John Holland, President of Equine Welfare Alliance

AH

G

U

C

Breed Transfer Trends2000–2011

Breed Membership Trends2000–2011

0

50,000

100,000

150,000

200,000

250,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Quarter Horse Paint

Standardbred Arabian

Appaloosa Tennesse Walking

BREED TRANSFER ANDMEMBERSHIP TRENDS

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

AQHA Paint

Arabian Standardbred

Appaloosa Tennessee Walking

AQHA Transfers

-

50,000

100,000

150,000

200,000

250,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Transfers in the Industry

Quarter Horse

Paint

Standardbred *

Arabian

Appaloosa

Tennessee Walking

INDUSTRY COMPARISON

Percentage Percentage Percentage

Decrease from Decrease from Decrease fromBreed 2012 to 2013 2006 to 2013 2000 to 2013

Quarter Horse -11.8% -55.1% -49.2%

Paint 4.6% -65.9% -78.5%

Thoroughbred -2.1% -44.0% -39.1%

Arabian -10.2% -53.3% -66.0%

Appaloosa -11.9% -60.7% -73.7%

Pinto -4.8% -60.0% -58.8%

Membership in the Industry

BREED 2014 2014 vs 2013 Trendchange

Quarter Horse 263,528 -7,185 -2.65%Paint 50,211 -1,082 -2.11%Arabian 22,433 -1,786 -7.37%Standardbred* 17,500 -554 -3.07%Appaloosa 12,096 -780 -6.06%Tennessee Walking 5,912 -1,741 -22.75%Miniature Horse 5,028 -1,021 -16.88%Morgan Horse 6,032 -325 -5.11%Pinto* 7,200 -233 -3.13%Saddlebred 6,562 -401 -5.76%Paso Fino 3,264 -160 -4.67%

Estimate*

Membership in the Industry

Quarter Horse

Paint

Arabian

Standardbred*

Appaloosa

Tennessee Walking

Miniature Horse

Morgan Horse

Pinto*

Saddlebred

Paso FinoEstimate*

STALLION BREEDING REPORTS BY STALLION GROUPS

01,0002,0003,0004,0005,0006,0007,000

Race Stallions

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000

Show Stallions

05,000

10,00015,00020,00025,00030,00035,000

Other Activity Stallions

Horse Registrations Trends

AQHA Registrations

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Registrations in the Industry

BREED 2014 14 vs 13 Trendchange

Quarter Horse 83,146 9,032 12.19%Paint 11,572 -1,837 -13.70%Thoroughbred * 22,000 -1,000 -4.35%Standardbred 7,448 -329 -4.23%Tennessee Walking 2,825 -1,329 -31.99%Arabian 3,489 207 6.31%Appaloosa 2,391 -263 -9.91%Miniature Horse 3,715 -462 -11.06%Anglo & Half Arabian 1,045 36 3.57%Saddlebred 1,241 -295 -19.21%Ponies of America * 450 -30 -6.25%Morgan Horse 1,389 -36 -2.53%Pinto * 1,650 -53 -3.11%Paso Fino 623 134 27.40%

Registrations in the Industry

Quarter HorsePaintThoroughbred *StandardbredTennessee WalkingArabianAppaloosaMiniature HorseAnglo & Half ArabianSaddlebredPonies of America*Morgan Horse

AQHA Registrations by Foaling Year

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

51,296

22,000

1986 2014 Projected

* * * *estimate*

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

36,000

38,000

40,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

37,949

22,000

AHC Breed RoundtableUSEF

2-3% ↑ in membership/ 20% ↑ in show entriesArabians

15% ↑ in small shows/ ↑embryo transfers, exportsTherapeutic Riding Assoc.

7% growth (6,000 horses)NCHA

↑events and pursesPRCA

6.4% ↑ in entriesAQHA

15% ↑ in show entries/ # of horses down

HERITAGE CLOSES WITH 45% JUMP IN AVERAGEOKLAHOMA CITY—When the last horse exited the ring at Heritage Place Saturday, figures showed that the entire offering in the Winter Mixed Sale averaged $12,168 and the median price was $6,500.Preliminary sheets issued by the sale company and TRACK Magazine also showed that a remarkable 90% of the horses that went through the ring in the three day event were listed as “sold.”The $12,168 average was up 45% over the 2013 figure of $8,397. The $6,500 median is a 44% jump over $4,500 figure posted for the 2013 sale.

TB Yearling & Broodmare Sale Prices

U.S. Horse Population

* Combined population of several additional breeds and unregistered horses2005 American Horse Council study Deloitte Consulting

** AQHA 2010 Annual Report

9.2 Million Horsesin the U.S.

By Use• 3.91 million – recreation• 2.72 million – showing• 840,000 – racing• 1.75 million – other*

By Breed• American Quarter Horse – 3.10 million**• Thoroughbred – 1.29 million• Other* – 4.64 million

Texas 1,000,000

California 700,000

Florida 500,000

Oklahoma 326,000

Kentucky 320,000

Ohio 307,000

Missouri 281,000

North Carolina 256,000

Colorado 256,000

Pennsylvania 256,000

States with Largest Horse Populations

1

2

3

4

5

6

7

8

9

1010

Horse Owner Demographics

Estimate there are 1.8 million horse owners* Generally speaking they are:** FemaleAges 45+HH income of $50,000+ Employed full-timeMarried

*AVMA U.S. Pet Ownership & Demographic Sourcebook, 2012

**Brakke Equine Marketing Mega Study, 2014

Horse Owner Demographics*

85% Recreational rider 30% Participate in competitive events 11% Breed horses 10% Manage a horse facility 9% Groom or exercise horses 7% Are professional trainers 2% Own race horses

*Brakke Equine Marketing Mega Study, 2014

Horse Owner Demographics*

24% believe horse economy is improving

24% believe horse economy is getting worse

48% ride Western Style Most often compete in barrel racing,

pleasure & trail events

16% ride English-style Most often compete in hunter and dressage

events

*Brakke Equine Marketing Mega Study, 2014

Current Culture and Attitudes

Horse crazy boomers aging, new generations have multiple other interests

Horse world can seem arrogant to none horse owners

Increased public concern with horse welfare

Major Horse Industry Issues Horse welfare

Federal/ State Pending Legislation

Unacceptable training techniques

Processing of Horses for meat

Emerging diseases

Declining horse ownership

Equine Welfare Issues: Unwanted Horses, Racing, Wild Horses, Show Horse Ethics, TWH Soring & Horse Slaughter

The Public’s concern for horse welfare is at an all time high, while the Public’s knowledge of what constitutes good horse welfare is at an all time low

Welfare

“Animal welfare is fast becoming themajor challenge of the veterinary profession for this century.”Dr. Bernie OsbornDean Emeritus of the University of California Davis School of Veterinary Medicine

Welfare

“The greatest threat to animal agriculture is a misinformed consumer (public).”

Todd AllenFormer President, Kansas Livestock Association

Center for Food Integrity Survey:Most credible source of information on farm animal care according to consumers

16%

12% 12%

6%

0%

10%

20%

30%

HSUS Veterinarians PETA Farmers/Ranchers

Survey of 5th Graders*

What are the most important issues in the world?

1. Welfare of Animals2. Protecting the Environment3. Caring for People

*USAToday 2009 Survey

So…we’re smart people.

How difficult can making recommendations on equine welfare really be?

Animal Use & Care Decisions

How did we get to such different places?

Why the Divergence on What Constitutes Good Welfare?

Our views on animal welfare are conditioned by our personalknowledge base and life experiences.

Unwanted Horse/ Welfare IssuesComplicated by:

Horses as livestock vs. companion animals

Unwanted Horse/ Welfare IssuesComplicated by:

Urbanization

US and Farm Populations: 1900 - 1990

0

50

100

150

200

250

300

1900 1910 1920 1930 1940 1950 1960 197 0 1980 1990

Year

Popu

lati

on (M

illio

ns)

US Population Farm Population

Unwanted Horse/ Welfare IssuesComplicated by:

Processing of horses for human consumption

Unwanted Horse/ Welfare IssuesComplicated by:

Aggressive campaign by animal activist groups

Unwanted Horse/ Welfare IssuesComplicated by:

America’s Most Beloved Animals*

American Public’s love affair with the horse*Kellert, S.R., American Attitudes Toward and Knowledge of Animals: An Update, 1980

Welfare View-Animal Related Businesses

Welfare is important—they care for animals, but………•Production efficiencies•Cost•Competitive pressures•Return on investment•Tradition (habituation)

May view animals as instruments for human use

Often viewed as ‘cold’ or ‘uncaring by the public

Another Viewpoint:Animal Protection Activists

Many not familiar with animal industries and animal care practices

Most driven by genuine desire to make sure animals are used appropriately

Use celebrities and emotion to carry message

But………their organizations need to survive/ raise money

Another Viewpoint:Public Officials

Come from all walks of life/experiences

Most not familiar with animal use industries and animal care

But………they need to be re-elected/appointed

Tremendous potential for stakeholder influence

Another Welfare Viewpoint:The PublicUrbanization

Animals move from utility to companions

Pet “parents” vs. owners

Are moderate animal rights advocates

Vision of animal welfare similar to their own, personal welfare

Want a voice in protecting animals……..but not sure what that means

What Resonates With The Public

What Resonates With The Public

allowed to roam freely fed a vegetarian diet

small, Amish/Mennonite, family farms

eggs gathered by hand

Unwanted Horses

“Horses which are no longer wanted by their current owner because they are old, injured, sick, unmanageable, or fail to meet their owner’s expectations.”*

*AAEP hosted Unwanted Horse meeting, 2005

Unwanted Horse Contributing Factors*

Downturn in the economy Closing of nation’s processing

facilities High cost of euthanasia/ carcass

disposal Indiscriminate breeding

*UHC’s National Assessment Study of Contributing Factors Surrounding the Unwanted Horse Issue, 2009. www.unwantedhorsecoalition.com

Demographics of the“Unwanted” Horse Generally horses:

Old Incurably lame Behavioral problems Dangerous Un-adoptable feral horses (mustangs) Fail to meet owner’s expectations Unattractive Not athletic Unmarketable Wrong color (no color) Cost too much to care for

Normal, healthy horses of various ages and breeds

Unwanted Horse Demographics*

Most likely to be sold Show or competition horse Failed to meet expectations Quarter Horse; Paint; Thoroughbred 3-10 years of age 45% mares; 48% geldings

Most likely to be donated Race horse Failed to meet expectations Thoroughbred; Quarter Horse 6-20 years of age 33% mares; 63% geldings

*UHC’s National Assessment Study of Contributing Factors Surrounding the Unwanted Horse Issue, 2009 www.unwantedhorsecoalition.com

Unwanted Horse Demographics*

Most likely to be euthanized Recreational; riding horse Horse old or terminal

illness/injury Quarter Horse; Thoroughbred;

Arabian 10-21+ years 55% geldings; 42% mares

*UHC’s National Assessment Study of Contributing Factors Surrounding the Unwanted Horse Issue, 2009

Number of “Unwanted” Horses

~44,721 exported to Canada for processing in 2014*

~105,339 exported to Mexico for processing in 2014*

Total = 150,060

Up from 138,845 in 2013

Others?Native American herds?Neglected, abandoned, abused?

*USDA, Veterinary Services

Horse Processing Numbers

Horse Processing Numbers

Recent Years

Canada Mexico TOTAL 2010 - 68,914 52,580 121,494 2011 - 66,254 68,429 134,683 2012 - 57,749 110,202 167,951 2013 - 36,591 102,254 138,845 2014 - 44,721 105,339 150,060

Top Indexing Solutions for Unwanted Horse*

Reopen U.S. processing plants.

Educate owners to breed, purchase, & own responsibly.

Increase ability of private rescue/retirement facilities to care for unwanted horses.

Increase options & resources to euthanize & dispose of unwanted horses.

*UHC’s National Assessment Study of Contributing Factors Surrounding the Unwanted Horse Issue, 2009

Processing of Horses for Human Consumption

* Dallas Crown(Kaufman)

Beltex(Fort Worth) *

Cavel International *(De Kalb)

State laws closed all three U.S. plants in 2007

USDA Transport Requirements

1996 Farm Bill gave USDA responsibility for regulating commercial transport ofhorses to slaughter & ensures:

Each horse is fit for travel Horses provided food, water and rest prior to loading on

vehicles Each horse has enough floor space to avoid injury or

discomfort. Stallions or aggressive horses are completely

segregated Transport documents certify the date, time and place

the equine(s) were loaded on conveyance.

Horse Transportation StudiesTemple Grandin Study (CSU-1999)

63 trailer loads arriving at U.S. processing plants 92% arrived in good condition 7.7% had welfare issues

Poor Body Condition Foot & limb problems Lacerations

Fighting was major cause of injuries during shipment 77% of welfare issues were due to neglect or abuse

by owner

Caroline Stull Study (UC-Davis-1999) 29.9% injury rate in double-decker trailers 8% injury rate in straight trailers

Government Accountability Office (GAO) Report – June 2011

HORSE WELFARE: Action Needed to Address Unintended Consequences from Cessation of Domestic Slaughter

Findings Closing plants reduced price of lower-to-medium

priced horses by 8-21% No affect on higher priced horses Economic downturn reduced prices on all horses

by 4-5% Recommended options for action

Return regulation and inspection of horses for slaughter in the US

Permanently and completely outlaw the use of horses for food animals

Federal Welfare Legislation

1996 Farm Bill amended in 2006 Phased out double deck trailers for transport of slaughter horses Expanded in 2011

Safeguard American Food Exports Act of 2013 (SAFE Act) H.R. 1094—Rep. Pat Meehan (R-PA) 4/2/2013 S. 541 – Sen. Mary Landrieu (D-LA) 3/13/2013

Horse Transportation Safety Act of 2015 H.R. 1282 – Rep. (D-TN-9) 3/4/2015 Prohibits the transport of all horses in a vehicle that contains two or

more levels

2014 Farm Appropriations Bill Restricts processing plant USDA inspections

Racing in the 1970s: a great decade with threeTriple Crown winners, but also…

Seattle Slew

Affirmed

Secretariat

Breakdown of a champion filly during 1975 TV broadcast of match race

Early public awareness of racehorse welfare concerns.

Three more breakdowns seen on TV

1990: Go for Wand2006: Barbaro2008: Eight Belles

Racing in today’s culture*

Reduced popularity Lower # starts, # race

days, handle, attendance Aging fan base

Public concern about medications, breakdowns Questions about drugs in

all sports

*Ann Dwyer. DVM

Medication-General public believes:

Drugs = cheating Drugs = performance

enhancement Drugs = breakdowns

AAEP white papers

http://www.aaep.org/equine_welfare.htm

Medication-The AAEP supports:

Uniform medication rules based on science

Uniform testing procedures RMTC Certified labs

Uniform penalties strict punishment for repeat

offenses or prohibited substances

Allowing Salix on race day therapeutic medication for EIPH

Came Together in 2013

Challenges Many trainers, some

veterinarians, want permissive medication

There are 38 racing jurisdictions

Public cannot differentiate between therapeutic medications and performance enhancing drugs

Challenges

Injuries are multifactorial

Science on ways to reduce them is limited

Breakdowns will NEVER be completely eliminated

Other initiatives

NYRWB Task Force looked at Racehorse Health and Safety at Aqueduct New York Racing Emergency

Rules

California Racing Safety Program Necropsy of all fatalities Track safety program

Research Grayson Jockey Club Numerous university projects

America’s Wild Horses:The BLM Wild Horse and Burro Program

In 1971, Congress passed the Wild Free-Roaming Horses and Burros Act.

Goal (with 4 subsequent amendments) is to ensure that healthy herds thrive on healthy range lands

Program protects, manages and controls our population of wild horses and burros

Management includes reducing wild herd numbers

BLM WH&B Mission is two fold

Healthy Ranges Healthy Horses

Not a simple task!

BLM Herd Management

Herd Management Areas (HMAs) sustainability reviewed by BLM

Herd reduction strategies Fertility management

• PZP vaccine• Gender ratio adjustment

Gathers-planned removals

BLM WH&B Program Today

The BLM Wild Horse and Burro Program began as an adoption program, but has evolved into a welfare program.

BLM Horse & Burro Numbers

16,160 feral horses& burros in BLM adoption pipeline*

$8,152/ horse if adopted

33,608 un-adoptable feral horses & burros in BLM funded sanctuaries*

$45 K lifetime care/horse, if not adopted $46.2/ $72 Mio budget spent each year to house

≈48,726 horses & burros on the range today*

26,700 - estimated range capacity

*Bureau of Land Management, 2014

Wild Horse & Burro Locations

Nearly half (>20,000) reside in Nevada

>4000 in CA, AZ,>3500 in WY, UTSmall #s in OR, MT, NM, ID, CO

Other Feral Horses

≈50,000 horses on non-BLM federal & state land*

Not protected by “Wild Free-Roaming Horse and Burro Act”, 1971

Land Managed by: U.S. Fish & Wildlife U.S. Park Service Department of Defense U.S. Forest Service

*Bureau of Land Management

0

100,000

200,000

900,000

800,000

700,000

600,000

500,000

400,000

300,000

1,000,000

Population Number

AML

80

Population Growth w/o Gathers andPopulation Control Measures

Historical On-Range, Off-Range,Removal & Adoption Numbers

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

On-Range Population 48,624 45,414 38,815 37,186 37,135 31,760 31,206 28,563 33,105 36,940 38,365 38,497 37,294 40,605 48,726Animals Removed 8,631 13,277 12,029 10,081 9,899 11,023 9,926 7,726 5,275 6,413 10,255 8,877 8,522 4,178 623Off-Range Population 6,086 9,807 14,368 17,879 20,474 23,337 27,195 29,247 31,048 31,639 34,979 40,589 46,429 49,088 47,942Animals Adopted

81

6,192 7,630 7,746 6,165 6,644 5,701 5,172 4,772 3,706 3,474 3,074 2,844 2,583 2,671 731

0

50,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

Some Older Horses Are Trained

A few of the mature horses (6-11 years) go to Prison Programs.

Receive 4 months training with an experienced trainer

Inmates taught horsemanship

Auction at end

One of The Most Successful Programs

Some go to the “Extreme Mustang Makeover”

Run by the Mustang Heritage Foundation

Trained by prominent trainers for a season

Over 2000 sold or adopted from program since 2007

BLM Fertility Reduction Efforts

Porcine Zona Pellucida vaccines to prevent pregnancy

$250/mare, Must capture, vaccinate and releaseNOT 100% effective. Blocks conception up to 2 years

Gender ratio adjustmentRelease more males than females

Alternative Fertility Control Castrate stallions > 6 years of age Spay mares > 6 years of age Return to the range Requirements by activist groups Not influence social behavior Have no debilitating side effects on the health of the

horse Effects are reversible

Soring of Tennessee Walking Horses

Brief History of the Big Lick

1940’s-50’s—TW surged in popularity, esp. in South

“Big Lick”—everyone wanted it!

1950’s-60’s—Short cuts developed >> Soring

Shoes, weights, padsChainsCaustic chemicals

Shortcuts = SORING

Application, insertion or injection of any substance or material on or into a limb, or manipulation of the limb that causes pain, distress, inflammation or lameness.

Can be done with chemicals, shoes, pads, chains, or other hardware alone or in combination.

Can also be done with hoof shaping.

Signs of soring

Standing with feet close, shifting weight to hind legs

Irritated, scarred or dark skin on pasterns

Resistance of hoof handling or pastern palpation

Lying down a lot, reluctance to rise

Difficulty walking, “praying mantis” gait

“Performance Packages”

Pads, “stacks”, bolts, or heel springs affixed to hoof Pads up to 4” at heel, 2”

at toe Often weighted Strapped on by metal

bands

Currently (2015) unregulated

Chemical Irritants Caustic chemicals applied

to pastern; chains increase pain. Pain causes

exaggerated gait rewarded in show ring

Kerosene, diesel. mustard or croton oil, hand cleaner, WD 40, etc.

Illegal, but in widespread use

“Action Devices”

Chains or rollers Steel, aluminum, wood Circle front pasterns Cause pain when very

heavy or if skin is inflamed

Currently (2015) one per limb allowed Must be < 6 ounces

Physical soring

Trimming down to sensitive sole or removing supporting hoof wall

Inducing laminitis Adding weight to pads,

or inserting hard objects between pad and sole

Over tightening of bands holding “packages”

Horse Protection Act (HPA)

1970: Horse Protection Act Soring ILLEGAL, fines set Soring not allowed in shows,

sales or exhibits

1976: HPA amendment DQP program USDA oversight of DQPs DQPs licensed by HIO (horse

industry orgs)

More history…

2006: Swabbing begins -high # positives found.

2008: AAEP white paper on “Ending Soring”*

2010: USDA Office of Atty G. reports HPA oversight inadequate.

Faults DQP “self policing” program.

2012: Video of abuse goes viral Escalates public concern Big fines, criminal indictment of

trainer

* AAEP Paper: http://www.aaep.org/equine_welfare.htm

Current SituationA sored gait is still rewarded in the show ring. 8-9% of all horses at 2011 &

2012 Celebrations cited Industry has failed to

police itself. Uncooperative with USDA

enforcement efforts

Strong effort across horse industry/veterinary community to stop it

April 2013: “PAST” ACT—HR 1518”Prevent All Soring Tactics”

If passed, HR 1518 would amend the HPA to:

BAN “Performance packages” (weighted shoes, wedges, hoof bands)

BAN “Action devices”

Rules would apply only to Tennessee Walkers, Spotted Saddle horses and Racking horses

Other Pending Federal Legislation Veterinary Medicine Mobility Act of 2013 H.R. 1528—Rep. Kurt Schrader (D-OR) S. 1171 – Sen. Jerry Moran (R-KS) Signed into Law – July 2014

Prevent All Soring Tactics Act of 2013 (PAST act) H.R. 1518 – Rep. Ed Whitfield (R-KY) S. 1406 – Sen. Kelly Ayotte (R-NH)

Horseracing Integrity and Safety Act of 2013 H.R. 2012 – Rep. Joseph Pitts (R-PA) S. 973 – Sen. Tom Udall (R-NM)

GovTrack.us

Show Ring Ethics &Unacceptable Training Techniques

AQHA Welfare Commission Created

Definition of Abuse: Any excessive and/or repetitive action to cause obvious distress or discomfort to a horse.

Structure for Fines and Penalties to address abuse and unsportsmanlike conduct

Detrimental Genetic DiseasesWill we eliminate them?

Arabians: LFS (CCDL), Cerebral Arbiotrophy (CA), SCID (17% Carriers)

American Paints: HYPP, PSSM 1&2, HERDA, GBED, OLWS (21.3% Carriers)

Belgians: PSSM 1&2, Junctional epidermolysis bullosa (JEB), “Shivers”

Thoroughbreds Recurrent Exertional Rhabdomyosis (REB)

Saddlebreds JEB

Quarter Horses HYPP, PSSM 1 & 2, GBED, HERDA, MH, OLWS

Horse Owner DemographicsThe proportion of horse owners 18-34 has declined 15% from2009 to 2013

18-34 Year olds (11%) 34% Western 25% English 39% Both

35-54 Year olds (42%) 47% Western 16% English 29% Both

55 Years plus (47%) 53% Western 14% English 24% Both *Brakke Equine Marketing Mega Study, 2014

Declining Horse Owner Numbers

Declining horse ownership Declining Youth participation So………….how do we revitalize the industry

and attract new owners?

DISCUSSION & QUESTIONS

CURRENT TRENDS IN THE HORSE INDUSTRY