Money-Growing: 30 Horse-Power Business

Horses in Russia

Traditionally stud farms in Russia were run by the rich who spent enormous amounts on the breeding, keeping and selection of horses for the love of this four-legged miracle of nature. The most famous Russian horse-lover was Count Aleksei Orlov-Chesmensky, a prominent statesman and military leader during the reign of Catherine the Great. Count Orlov produced a breed of a riding horse that later was named after him.

These days there are some 20 breeds of Russian horse, but developing most of them is anything but profitable. This is what makes Russia uncommonly similar to the West, where “horse breeding unions survive on donations from stud farm owners and the government,” notes Vadim Parfyonov, head of the chair of horse breeding at the Moscow Agricultural Academy.

A serious blow to domestic horse breeding, according to Parfyonov, was dealt by Nikita Khrushchev, the first secretary of the CPSU Central Committee.

“By implementing his initiatives in agriculture he scrapped horse-breeding as an industry the country did not need, which resulted in far-reaching consequences,” he says. Ever since numerous efforts have been made to rehabilitate horse-breeding but most of them were futile due to insufficient financing, and a lack of thought-out breeding programs and publicity.

In the West horses are used for a great variety of purposes, unknown to the Russian horseman.

“In the 1970s and 1980s, as the standard of living in the developed countries of Europe and the U.S. improved, practicing equestrian sports for entertainment again became popular, along with the development of horse-racing and classic equestrian sports,” notes Valery Kalashnikov, a member of the Russian Academy of Agricultural Sciences, and head of the All-Russian Research Institute for Horse Breeding.

“For example, there was equestrian tourism, races, national festivals with horses, etc. Besides, new equestrian sports emerged, such as driving (a sport of using horses to pull a variety of carriages over a pre-designated course). The same period saw the emergence and development of amateur horse breeding, because quite often a horse would become simply a domestic animal, a friend for a ride, one’s pride and joy.”

Special attention is attached to development of children’s equestrian sports where children learn to communicate with horses – it was not without reason that by the early 1980s Shetland ponies had become the most popular breed in the world.

Meanwhile, horse breeding in the Soviet Union, launched in the 1960s, proceeded without modern breeding and selection techniques being applied, resulting in Russia falling behind European standards. “Our athletes, and stud farmers, too, have been increasingly active in buying foreign horses, thus reducing the significance of domestic half-blooded breeds to practically zero,” says Vadim Parfyonov.

A particular problem of doing business in Russia is the lack of economic transparency. That problem, however, first emerged not in the post-perestroika era but decades ago as intricate schemes of writing off expenses and distorting accounts were widely practiced during Soviet times.

“We still remember how the cost of horse-breeding was deliberately overestimated, while expenses on other cattle-breeding sectors were written off against horse-breeding for the purpose of artificially reducing the cost of their products. This was very important if you wanted to present positive reports,” says Vadim Parfyonov. “But today, too, we see prosperous farms report losses or meager profits from horse-breeding.”

To change the situation in domestic horse-breeding considerable cash injections and sound breeding programs are necessary, the experts believe.

“For us it is still hard to grasp that horse-breeding is an occupation for the rich, for rich profit-making farms,” notes Vadim Parfyonov. “Without maximum financing and appropriate manning, the sector will remain confined to breeding poor-quality hobby horses. Only by working towards high quality and competitiveness can horse-breeding farms become efficient and make profits. Apparently, this requires taking the painful yet necessary measures of concentrating forces and means on the development of promising farms and closing down those lacking any prospects whatsoever.”

Experts have long discussed the problem of the profitability of horse-breeding. There are, in fact, examples of profitable stud farms. Yevgeny Matuzov, general director of the Avanpost horse-breeding farm, graduated from the Timiryazev Agricultural Academy where he wrote a dissertation on the development of horse-breeding farms in the Moscow Region. “But in real life things proved different from the theory on paper,” he admits.

Costly Business

While domestic horse breeders seek a solution to the problems the sector faces, individuals build stables, purchase horses and try to grind out a profit. The overwhelming majority of horse breeding clubs survive thanks to the enthusiasm of their founders and their passion for horses.

Investments are required to cover the cost of leasing or purchasing land, building and equipping stables, buying and keeping horses, recruitment and paying salaries to staff, and, if needed, hiring security guards.

As regards the lease of land, there exist a variety of solutions. Some breeders rent land plots from collective farms for a small sum and in exchange allow local children to experience the joys of horse riding. Others are offered assistance by well-to-do horse-lovers for a minimum payment.

Some clubs occupy plots that belong to their founders. In particular, the Horse Riding Club ResMa at Bitsa, in the Yasenevo District of Moscow, is situated on land that belongs to a state-owned enterprise – the research and production firm Resma. The Mytishchi stud farm is a subsidiary of a stud farm operating at the Losiny Ostrov (‘Moose Island’) national park, and is situated on the territory of the Mytishchi forest.

Building and equipping a stable also requires considerable cash injections comparable to the construction of a country house. The construction and equipping of a stable for 15 horses, along with a riding hall, a training ground, and a levada would cost the best part of $50,000. Such a farm would require some 7,200 square meters of land. Sometimes instead of building new facilities club owners re-equip old ones, for instance, Soviet-era farms. To reduce the cost several horses, mostly ponies, are often placed in one stable.

Prices for horses vary greatly – starting at nothing and running up to millions of dollars. The cheapest are the animals discarded by farms or belonging to a stable that is being closed down. Sometimes they are sold at the price of meat. Altogether, the price of a horse depends on a variety of factors, such as age, health, pedigree, participation in contests, etc. A price for an adult horse of a hobby class varies within the range of several thousand dollars; a foal can cost several hundred dollars.

Horses for sport are considerably more expensive. A trained adult horse can cost tens, or even hundreds of thousands of dollars depending on the status of an event. The most expensive horses can be seen at the races. In Turkmenistan prices for Akhaltekin stallions can reach up to several million dollars.

Some clubs ‘inherit’ animals. In particular, the Mytishchi horse breeding farm purchases horses via the Losiny Ostrov national park or receives them from other subsidiaries of the park’s stud farm. Another method of increasing the stock is reproduction.

Keeping horses costs huge amounts, with wages to the staff being the largest expense item – some 60 per cent, according to Svetlana Tikhonenko, director general of the Slobodino horse riding club in Bronnitsy. The second-largest expense item is forage (40 per cent), the price of which is constantly growing.

The payroll includes wages to grooms of $10 to $15 per horse, $500 or more – to the head of the stables (per month), $200 and upwards for a riding master.

Regular veterinary check-ups cost $300, while an emergency visit is 1,500 rubles. Cleaning a horse’s hooves costs some $10. Blacksmiths charge from $30 for an ordinary shoeing. All these figures are approximate and depend on the type of stable and the skills of the staff. Costs can be reduced if the owner knows something about veterinary medicine, as the case is at the Horse Riding Club Vivat, where the owners are able to shoe their horses themselves, while children from the neighborhood help them groom the beasts.

A horse ‘consumes’ a minimum of $50 per month. This amount covers the cost of oats, hay, bran and carrots. Quite often clubs spend more on forage. “The calculation is approximately as follows,” Yevgeny Matuzov explains, “14 kilo of hay per day – the standard is 10 to 12 kilograms but we take 14 as some hay is trampled down anyway – which means some 500 kilos per month, or 1,500 rubles; oats – 6 kilos per day or 200 kilos a month, that is 600 rubles, plus additions – another 300 rubles. All in all, it comes to 2,000 rubles a month. Summer is an exception, but keeping horses on grass alone is only possible if they do not work.”

Some stud farms are offered assistance by their curators. For instance, the Mytishchi farm receives forage from the forestry that stocks hay during the summer months. Part of the money – some $300, depending on availability and the proximity of utilities – is used to cover operational costs. Admittedly, in some farms stables remain barely heated and horses’ coats become overgrown, which makes them look less athletic, but fluffy and very cute.

Riding High

There is a great variety of ways of making money with the help of horses, such as hiring out, training, billeting, equestrian tourism, equine games, and the sale of horses, but few of them bring any real profit to their owners.

The pleasure of riding a horse costs 250 to 800 rubles per hour or 45 minutes depending on the class of a riding club, its proximity to the city and accessibility. Horses are busiest in summer and on weekends; in the evening hours and on weekdays horse-rides are possible in daylight hours only. The demand drops as colder weather and rain sets in. “But by hire alone it is impossible to survive,” says Svetlana Tikhonenko. “There must be something else, in addition to hiring horses out.”

Letting horses out is an option most favored by their owners, as a lessee pays for the grooming of a horse and, as a rule, cares more about it. The most rewarding service is providing stables for privately-owned horses. Prices range from $180 per month, as is the case with Horse Riding Club Slobodino, to $800 (Izmailovo). The closer a stable is to Moscow and the better it is equipped, the more it is.

Thus, the Otradnoye Horse Riding Club in north-west Moscow charges $1000 per month for billeting a horse. At a club of such a high standard the charge often covers such services as riding lessons in a heated riding hall, dry cleaning, round-the-clock security, as well as board and lodging. The range of services supplied and prices vary from club to club. Some stables – for instance, the Zolotaya Podkova (Golden Horseshoe) in Kuzminki – do not hire out horses at all.

Billeting is not available at every club, either. “Billeting of private horses in Losiny Ostrov is prohibited,” says Aleksei Fomenko, an instructor at the Mytishchi horse farm.

Nonetheless, the horse riding club is self-sufficient. It earns its money by arranging horseback tours around the Losiny Ostrov national park and promoting environmental education, which, in particular, includes horse riding lessons. “How else can we let a person enter the forest?” says Aleksei Fomenko.

Many horse riding clubs are self-sustaining. Some owners even manage to make a profit. Ever since the Slobodino club was established seven years ago, its owners have received a payback on their initial investments and achieved profitability. “Of course, we have not yet earned enough for [a trip to] the Canaries, but we do make some profit,” says Svetlana Tikhonenko.

Other variants are possible too. The Horse Riding Club Vivat near the town of Zheleznodorozhny was founded ten years ago. “At best we make just as much as is needed to cover the costs,” notes one of Vivat’s founders. “We have still not recouped our initial investments.”

Stables are financed at the expense of sponsors and charitable donations. “I have two businesses,” says a stud farm owner, who runs two stables. “And all the money that I can take out of my other business is all here, in these two stables. I can easily answer the question ‘Where is all my money hidden?’”

The Avanpost farm is financed by the membership fees of the regional adventure tourism organization Bez Povoda, says Avanpost director Yevgeny Matuzov. Bez Povoda unites some 1,000 members; the fee is not fixed and varies depending on Avanpost’s requirements.

Yevgeny Matuzov’s Avanpost offers a wide variety of equestrian entertainment, such as fox hunting, role-playing games, etc., so as to give enjoyment both to the members – the sponsors of the club and all their guests. Charges are calculated to cover the cost of the event, i.e. the service is offered on a not-for-profit basis.

Another point of importance is the number of horses. Making a profit from a farm that has only 3-5 animals is impossible. The optimal quantity is about 20 to 30 horses.

Some of them will be hired out, others will be leased. Mares are not always available for active work; sires, given their hot temper, are not right for all horsemen; young horses are often too worn out being trained for hire or sports; sometimes horses fall ill, damage their legs, etc. That is why horse riding clubs tend to gradually increase their livestock, breeding horses for a variety of purposes – recreation, sports, etc.

To keep afloat, horse-breeders also develop secondary businesses. For instance the Slobodino club runs an entertainment complex that includes the horse riding club proper, a hotel and a sauna. A new riding hall is being built to enable club members to indulge in any weather.

The breeding and sale of horses is another possible source of income. Russian Trakens and Budyonnovets horses are in high demand in Europe, where they take part in equestrian sports, such as show jumping. The fact that some farms specialize in breeding them proves the profitability of that aspect of the business.

Potential horse-breeders whose business brings little profits or who have no rich relatives should think twice before launching their own horse business, especially if they have borrowed funds for the project. Just as it was centuries ago, horse breeding is rarely a cheap or profitable business.

As has always been the case, this is a business for enthusiasts. “I was married four times, and of course, I loved them all,” says a businessman involved in horse-breeding. “But I only remained faithful to horses.”