Upper Hunter Region Equine Profile
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This will give you an overview of where we are and where we are at. I will add more detail later about the economic impact of the thoroughbred industry in particular. I hope this works!
The Hunter Valley Research Foundation
ABN 91 257 269 334
The Upper Hunter
Thoroughbred Industry, 2006
HVRF Working Paper No: 1/06
The equine cluster in the Upper Hunter Region of NSW is a major component of the local economy. After strong economic growth in the Region during 2005, a general slowing in conditions has occurred in the Upper Hunter in 2006. However, activity in the thoroughbred industry and associated employment has continued to expand. With a national and international reputation for the breeding of quality horses, the Upper Hunter is acknowledged as one of the three major thoroughbred nurseries in the world. The area also hosts the richest Country Cup meeting in Australia as part of the Scone and Upper Hunter Horse Festival held each autumn. The local industry benefits from world-class infrastructure including modern training and racing complexes, the Hunter Valley Equine Research Centre (HVERC) at Scone and equine related education facilities with TAFE NSW. As the key equine region in Australia, the Upper Hunter area provides at least $100 million in yearling sales annually. This represents approximately half of the total sales Australia-wide1. Support and investment continues from private investors and breeders, with funding for infrastructure and services provided by local, State and Commonwealth Governments.
This publication provides estimates of the basic component parts, and associated employment, of the thoroughbred industry in the Upper Hunter Region and identifies changes in the industry since 2000.
The Hunter Valley Research Foundation (HVRF) surveyed owners and managers of horse studs in the Upper Hunter from June to August 2006 to identify current economic characteristics of the local thoroughbred industry. This was the fourth biennial equine survey conducted by the HVRF since 2000.
The HVRF’s database of Upper Hunter studs was initially created using listings from local publications and the telephone directory. In the current survey, the HVERC provided assistance in finalising the questionnaire and in updating the contact database. Studs were sent an introductory letter explaining the objective of the survey, and a copy of the questionnaire to assist with the subsequent interview. The studs were contacted by telephone to conduct the survey, with the questionnaire administered using the HVRF’s Computer Aided Telephone Interviewing (CATI) system.
From a total of 77 Upper Hunter studs identified in the current survey, 68 provided at least some information about their operations. This represents a response rate of 88.3 per cent.
Estimates for the whole local industry are calculated on the basis of averages obtained from the survey data. These estimates provide a reasonable indication of the current dimensions of the Upper Hunter thoroughbred industry; however it is thought that the 2000 figures (based on 65 studs identified at that time) may have erred on the side of underestimation.
Several limitations inherent in the survey program have been identified since its inception in 2000. These include the seasonal nature of the equine industry and the movement of animals in and out of the local area. In the past two surveys interviews have been conducted mid-year to limit bias caused by the time of year. The number and value of horses reported could also be affected by ownership from outside the area and the way in which participants have included these animals in their responses. To reduce this problem, the wording used to assess capital value of horses was modified in 2006 to include “owned or majority owned”. A further limitation arises because of the variability between operations. Businesses in the Upper Hunter equine industry range from small family properties to large scale commercial entities. This variability affects the mean values calculated from the survey data and the subsequent estimates for the whole of the industry.
Location of Studs in the Upper Hunter
The current research findings reflect an increase in the number of studs since the initial survey conducted in 2000. Both the number of studs contacted and the number of studs participating has grown, with the majority of the increase being located in the Upper Hunter Shire. In 2006 almost 80 per cent of the studs that participated in the survey program were located in the Upper Hunter Local Government Area (LGA). This is in line with Scone being seen as the centre of the equine cluster in the Hunter. However, the location of studs extends beyond the Scone district, with Muswellbrook also a focus. One of the factors affecting the location of studs is access to water. On average, properties reported being licensed to access 378 megalitres of water per annum.
Horse farming is recognised as one of the four major industries employing people in the Upper Hunter2. Results from the 2006 HVRF survey, shown in Figure 1, indicate that more than 900 full-time, part-time and casual positions were being filled, a considerable increase in employment since 2000. Full-time employment estimates rose from 325 persons in 2000 to 738 persons in 2006. There has also been a moderate rise in the number of casual positions in the main breeding season, with an estimated 147 additional positions being available.
Figure 1 Employment on Upper Hunter studs
Approximately 60 per cent of full-time employees and 14 per cent of part-time or casual employees lived on the properties on which they work. One-fifth of additional casual employees during breeding season were also identified as living on the property during their employment.
Characteristics of the Equine Population
Survey results indicate that the number of horses on properties in the Upper Hunter has increased significantly over recent years. In 2000 approximately 31 per cent of thoroughbred studs in the Upper Hunter stood stallions, with the number of stallions estimated at 65. In 2006 an estimated 99 stallions were standing on 28 per cent of studs.
The largest increases in animal numbers were recorded for the number of mares owned or agisted on studs. As shown in Figure 2, the quantity of mares on Upper Hunter studs has more than doubled over the past six years. The number of mares owned by the studs rose from 1,294 in 2000 to 3,273 mares owned or partly owned in 2006. Some of this increase may be due to the wording change in 2006 to include animals which are part owned. The number of mares permanently agisted on the studs rose from 2,067 in 2000 to 4,865 in 2006, while those agisted for breeding only are estimated to have increased from 2,139 in 2000 to 4,246 in 2006.
Figure 2 Number of mares on Upper Hunter studs
To assess the contribution of the thoroughbred industry to the Upper Hunter economy, estimates of the value of capital items, income and expenditure were sought. While these figures provide an indication of the general trend, their determination is complicated by both the complexity and commercial nature of the industry.
Figure 3 provides the estimated value of capital items and horses owned in 2006 by Upper Hunter studs. The average value of property and improvements is estimated to have increased from $3.7 million in 2000 to $5.9 million in 2006. In the current survey, respondents were also asked to provide the value of motor vehicles and farm machinery which, on average, is estimated at an additional $0.4 million. Taking into account the value of property, improvements, machinery and horses owned or majority owned by the studs, the average capital investment is estimated at $16.1 million.
Figure 3 Value of capital items and horses owned by the Upper Hunter studs
Overall, as the regional industry has expanded, the estimated value of horses owned or partly owned by Upper Hunter thoroughbred studs has increased significantly. For the industry in total, the value of mares and foals owned or majority owned has doubled over the past six years to approximately $331.7 million. This increase reflects the doubling in the number of mares owned by the studs. In addition, the estimated value of stallions owned by Upper Hunter studs increased to $190.7 million, while the value of yearlings and weanlings was calculated to be $132.6 million. The value of racehorses owned or majority owned by the studs has increased dramatically from $14.3 million in 2000 to an estimated $102.8 million in 2006.
The value of horses on Upper Hunter studs owned or majority owned by other interests also increased in 2006. As indicated in Figure 4, the value of stallions owned by other interests was approximately $261.5 million while the value of horses, other than stallions, on the properties during the survey period was estimated to be $297.0 million. During the last breeding season, the value of horses booked to the property (not owned by the property) was estimated at $336.3 million.
Figure 4 Value of horses owned by other interests
The reported increase in income from the studs was less marked than the rises in components of capital expenditure. Average annual income increased by approximately 37 per cent, from $67.6 million in 2000 to $92.7 million in 2006. Income is derived from stud services, mare sales, other horse sales, agistment, sales preparation and racehorse spelling. Since the industry as a whole continues to experience substantial growth, the 2006 income results may be an underestimate caused by the reluctance or inability of larger entities to provide estimates of annual revenue.
The average annual expenditure by Upper Hunter thoroughbred studs increased from $59.1 million in 2000 to $270.4 million in 2006. As shown in Figure 5, expenditure in 2006 rose on all items, however the most noticeable increase was for expenditure on service fees.
It is estimated that expenditure on service fees in 2006 was $198.1 million, a significant increase on $28.9 million recorded in 2000. This item currently accounts for more than 70 per cent of annual expenditure made by Upper Hunter studs. Other noticeable increases in expenditure were on veterinary costs, feed and wages. Higher levels of employment on local studs have resulted in annual expenditure on wages to be estimated at $25.8 million. A small amount of the overall increase was also due to the inclusion of expenditure on fertilisers and fuel for vehicles estimated in 2006.
Figure 5 Value of annual expenditure by Upper
* Note the break in the value scale
Apart from “other expenses”, in 2006 at least 90 per cent of expenditure was paid to organisations within the Upper Hunter. This finding equates to an estimated $246.2 million spent in the Upper Hunter in the previous 12 months compared with $51.6 million recorded in 2000.
Sales and Exports
In 2006 around 85 per cent of studs had sold horses. While a sightly higher percentage had made sales within NSW, over 60 per cent had sold horses to overseas buyers.
Figure 6 Studs selling horses within Australia
and overseas, 2006
Most of these sales were to buyers from New Zealand, South Africa and throughout Asia. A quarter of studs currently selling to overseas buyers reported providing more than 10 horses each to the international market.
Three-quarters of participating studs who were not currently providing horses to overseas buyers indicated that they would consider the possibility in the future. Forty per cent of these properties were either very interested or already planning to export in the near future.
As noted above, reliably assessing the equine industry and its contribution to the Upper Hunter economy is a difficult task. One of the complications is the seasonal nature of the industry with varying levels of activity throughout the year. Employment and, presumably, expenditure is primarily focused during the breeding season. Other complications include horse owners who are out of the local area and the movement of animals for agistment and breeding. In addition, while the figures presented are based upon averages, there is substantial variability between operations and their willingness to participate in the survey program. For example, even though approximately 70 per cent of studs do not stand stallions, in 2006 one stud stood 14 stallions. Similarly, while eight studs did not own or partly own any mares, two studs owned almost 400 mares.
Continued research into the Upper Hunter equine cluster will provide a basis for understanding the future directions and needs of this major local industry. Owners and managers participating in the 2006 survey identified the standard of the roads, management of water, access to skilled workers and the need for ongoing support and promotion of the local thoroughbred industry as the key needs or issues to be addressed in the short-term.
Due to the continuing growth of properties in the area, future research will need to be based on a well maintained register of local thoroughbred studs. Key variables to be understood and monitored are horse numbers and the movement of animals. These variables impact on growth in employment and on the value of capital items and expenditure. Currently, the movement of horses and the impact on the local economy is difficult to measure. At a broader level, more research could be undertaken to identify and quantify the various sectors other than thoroughbred breeding and racing that contribute to this multi-faceted industry.
na = not asked in the survey period specified
- The Scone Advocate, Upper Hunter Horse, 2006.
- Australian Bureau of Statistics, Population Census, 2001 (unpublished data).
The Hunter Valley Research Foundation
(ABN 91 257 269 334)
PO Box 3023, Hamilton DC NSW 2303, Australia
T (02) 4969 4566 F (02) 4961 4981
E firstname.lastname@example.org W http://www.hvrf.com.au
The information herein is believed to be reliable and accurate. However, no responsibility or liability for the contents, or any consequence of its use, will be accepted by the Hunter Valley Research Foundation or by the staff involved in its preparation.
© The HVRF 2006: Apart from any use as permitted under the Copyright Act no part may be reproduced by any process without the permission of the publishers.