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Thursday 27 April 2017

Be a class act in breeding to make most from sales

Analysis by the Teagasc equine team shows that only the top 20pc of stock will realise a profit so aim to be among the best

This eight-year-old OBOS Quality gelding sold for €15,500 at last year's sale in Cavan
This eight-year-old OBOS Quality gelding sold for €15,500 at last year's sale in Cavan
This Cruising mare sold for €10,500, last year's highest breeding mare sale price at Cavan
While this three-year-old Lux Z gelding made €10,000, the highest price for a 3yo
Caitriona Murphy

Caitriona Murphy

Now is a good time to review the sales results from the past two years to see what lessons can be learned in preparation for next year's sales.

Taking a broad overview of the past 12 months, we can see that less than 20pc of the horses sold at public auction in Cavan and Goresbridge proved profitable within each age category. The only exception to this was the foal category, where just over 20pc of those sold made a profit.

A little more than 75pc of foals sold at public auction last year in Cavan and Goresbridge did not produce a financial return for their breeder.

Viable

It is evident that only those operating in the top 20pc of the market are commercially viable. Breeders and producers must aim for the top to be in with a chance to return a profit. A large proportion of horses presented at the public sales in the past two years had poor conformation, lacked athleticism and were badly prepared for the day of sale.

For this review, profitability was assessed using average costs of production, as calculated by Teagasc. The cost of production of a weanling foal is estimated to be €1,995 (taking a stud fee value of €700).

In 2009, 20pc of sport horse foals sold, and 24pc last year, (excluding Irish Draught and Connemara select sales) made more than €1,995. However, in some cases the stud fee exceeded €700 and, on this basis alone, some of these could indeed be unprofitable.

Breeders need to be aware that another extremely influential contributing cost that can erode profit margins is veterinary costs and mare fertility. Simply put, mares who require greater veterinary input can quickly dilute potential profit margins.

The cost of production of a three-year-old horse is estimated by Teagasc to be almost €3,500. In 2009, just over 25pc sold for more than €3,500 and, last year, this figure dropped to 23pc of those sold.

For four-year-old horses, a minimum of a further €1,000 (conservatively) is added to the cost of production. Looking at the returns for the past two years, around 20pc of those sold in 2009 and close to 15pc of those sold last year made more than €4,500.

Competition

In the five-year-old-and-older age category, we use a minimum cost of €5,500 to this stage -- and this is a conservative estimate for many, especially those with a lot of competition under their belts.

We can see that just over 80 horses (13.5pc) sold in 2009 and just over 100 horses (11pc) of those sold last year made more than €5,000.

Last year, the only sections of the market to see an improvement when compared with 2009 were the foals and two-year-olds. However, it should be noted that the numbers sold in each of these categories was considerably lower last year.

Table 1 shows the returns for the sport horse sales in Cavan and Goresbridge for 2009 and last year. The figures in brackets show the number of animals sold in each age category.

All reports and analysis are written by the Teagasc equine specialist team of Wendy Conlon (Athenry), Declan McArdle (Grange), Ruth Fennell (Dungarvan) and Norman Storey (Kildalton)

Indo Farming