For love or profit, breeding contributes $1.6 billion to the economy annually

Cover image courtesy of Magic Millions

The Agrifutures Thoroughbred Breeding Size and Scope report for the 2022/23 season released this week, and outlines the details behind the $1.68 billion contribution to the economy by our breeding industry, of which $1.43 billion is direct expenditure.

It's not all profit with 15 per cent funded externally

Buried in the report is that approximately 15 per cent of the $1.43 billion of direct expenditure is funded from outside the breeding industry – by breeders spending money that they haven’t gained from selling or racing horses.

“It is to be noted that approximately 15 per cent of this breeding expenditure is subsidised by non-breeding activities as it was observed that in many instances the revenue generated by some breeders was insufficient to cover the costs associated with their breeding operations leading to additional capital being invested on an annual basis,” said the report.

This report is different to the earlier ones in that it included surveys of participants to help understand the different financial situations of participants, and this provided a valuable change in the underlying assumptions for this study compared to earlier years. In previous size and scope reports, it was assumed that all breeders were profitable, but the survey section found this wasn’t necessarily accurate.

“I sink or swim on what I can sell, that’s how we make our living,” said Thoroughbred Breeders Australia President Basil Nolan who also runs Raheen Stud in Queensland.

“There also people who do it for a hobby and have another means of income, and just love to be in the industry, and if that’s what they want to do with their money it’s great for everyone. I love breeding horses, and there’s a lot of people like me, and it’s been very good to me over the years too.”

The 15 per cent figure comes from a survey of 100 breeding industry participants, but the study didn’t outline the balance of those surveyed for how many were commercial farms vs hands-off investors, or any other combination of breeding participant.

“Obviously a lot of people are struggling at the moment with wages going through the roof and the cost of living crisis has a big impact, but at the end of the day we have to come out and make a profit to keep going.”

The type of participant has been expanded for this year’s report to account for four expenditure categories in the cost of raising a yearling; commercial farms preparing horses for sale, commercial farms keeping horses to race, private farms preparing horses for sale, and private farms keeping horses to race. Under this system, the report used the term commercial farm to represent farms who kept horses for clients and themselves, and private farms who only kept their own horses.

The bigger picture

The breeding industry contributes $1.43 billion in direct expenditure to the Australian economy, growing to $1.68 billion in overall economic contribution.

Table: Total direct spending in the Thoroughbred breeding industry

“We contribute more than $1.6 billion to the economy, support thousands of jobs, and sustain local communities across the country. This industry is built on passion but powered by people, investment, and long-term vision,” said Nolan.

“There are a lot of regions who employ a lot of people to support our industry, not just the staff on the farms, but also transport, feed merchants, farriers, and veterinarians too. Our hands-off investors are equally as important as they are earning money in the cities and spending it in the regions which is very important to a lot of smaller towns and regions.

“This research gives us the facts we need to advocate confidently in our future, for funding, infrastructure, and recognition of the vital role breeding plays in Australia’s racing ecosystem and rural prosperity.

“We can use this study to generate discussions with governments, be it local, state or federal and remind them of what we bring to the table. We don’t want governments to lose sight of our contribution.”

Cost of owning broodmares

Maintaining over 20,000 broodmares and their resultant foals was a direct cost of $781.6 million in 2022/23, according to the Size and Scope report, and a further $380 million was spent on service fees.

In the same year, the Racing Australia Fact Book reported yearling sale receipts were $568 million for 3960 horses sold (approximately one third of the foal crop of 12561), and the Size and Scope report found that these horses equated to a profit of $188 million.

Another $33.5 million was spent on weanlings, and $23.5 million on 2-year-olds, while over $52 million was spent on broodmares at public auction in 2023, with proven mares transferring between owners, and maiden mares being purchased from their racing owners.

Private sales figures are not in the Fact Book or the Size and Scope report, but given the discrepancy here, there appears to be an unstated gap between the profits of commercial breeders and the cost of production of the home-bred foals who don’t go through an auction and most likely represent the 15 per cent loss mentioned by the Size and Scope report.

“Participants are mostly motivated to breed by a love of thoroughbreds or to be involved in a champion thoroughbred racehorse. A secondary motivation for many is to pursue breeding as a hobby or to make a living as their primary source of income,” said the report.

Table: Motivations to be involved with breeding horses

This table asked each participant in the survey of 880 people to answer each motivation with a 1-5 answer, and it collates those who answered 5 (highly motivated) against the other answers, so each type of motivation should add to 100 per cent.

Jobs vs Roles

Over 33,000 people are involved in the Australian breeding industry including over 10,200 full time breeding staff and 6,000 breeders (being broodmare owners), with some overlap between those categories as many breeders work their own farms.

From an economic point of view, the Australian breeding industry is directly responsible for 4273 full time equivalent jobs, and this rises to 9268 full time equivalent jobs (1 job being 38 hours of work a week) when all the flow-on employment, such as media, veterinarians, administration, feed production, transport, and tourism is added.

There are 33,400 roles in the breeding industry, of which about 1/3 are volunteers, and many are part time. When crunched down it equates to 9268 full time equivalent jobs, but in a slightly confusing section, the report also calculated that there were 10,200 full time jobs in the sector.

“Essentially the most important figure is the 9,268 full-time equivalent (FTE) jobs as this is based on the economic contribution of the industry,” said Ingrid Lee-Scott when asked for clarification.

“The 10,200 is calculated as part of our roles occupied analysis and based on claimed data through the breeder profiling survey we conducted. This is extrapolated out across all breeders nationwide and would likely include roles in a breeding business that may not be directly related to breeding activities, for example employees preparing older thoroughbreds for racing.”

Overall, the report calculated that, however you split the figures, there is a resulting $814 million spent on wages and salaries across the breeding industry.

Concerning age of people

A survey of 880 people, which amounts to 14 per cent of breeders, asked industry participants about their background and type of investment. This survey found that almost 56 per cent of participants are aged over 60 and only 4 per cent are under 30.

Table 2: Age of breeding participants based on survey data

When splitting this into hands-on and hands-off, the differences became even more stark with 32 per cent of hands-on participants being under 50 compared to only 12 per cent of hands-off participants.

More women are involved in the practical work, being 42 per cent of hands-on participants, than are involved as investors, being only 17.5 per cent of hands-off participants.

“It’s definitely a concern going forward (that half the participants surveyed were over 50). We need to look after the next generation coming through. With TBA we’ve had the Fast Track program which has been very successful and we’ve started going into schools to grow the youth participation,” said Nolan.

“At the Stud and Stable Awards nights we had six newcomers which we invited to the function, and those sort of things are so important to foster and encourage young people into industry careers. And not just working on studs, there are so many different avenues and many people are crying out for staff.”

Distribution by state

NSW had the largest contribution with $935.6 million (62.4 per cent), followed by Victoria with $308 million (20.5 per cent) and Queensland with $161.9 million (10.8 oer cent). Of the other states and territories, WA $58.7 million, SA $19.3 million and Tasmania with 16.8 million. ACT and NT were negligible on that scale.

This adds to $1.5 billion and increases to $1.68 billion when the flow between states is considered. Of the Full Time Equivalent jobs – 60.7 per cent are in NSW (lower than their economic contribution percentage), 22.1 per cent in Victoria and 11.1 per cent in Queensland.

Providing growth to other industries

The breeding industry contributes to other industries through expenditure on goods and services. “A functioning and thriving breeding industry provides those suppliers with the opportunity to also prosper. Additionally, there are a large number of companies and individuals who supply goods and services to the thoroughbred breeding sector (among other industries). For these suppliers, diversification means that their success or failure is not completely tied to the fortunes of thoroughbred breeding,” said the report.

Through feed production and animal care, the breeding industry contributes 27 per cent of all income generated for the agricultural, forestry and fishing industry.

Veterinary and laboratory services (such as DNA testing) contribute 22 per cent of all income generated by the Professional and Scientific Services industry.

Agistment, land rent, and machinery costs were attributed against the Property Services industry and Thoroughbred breeding contributed 15 per cent of this industry’s economic value.

Moving breeding stock around the nation contributed nearly 9 per cent to the Transport industry.

Funding and data sources

“The AgriFutures Thoroughbred Horses Program is funded by statutory levies paid by industry participants and industry contributions. Eligible expenditure is matched 50 cents per dollar by the Australian Government, subject to the availability of Commonwealth matching funding,” said the report.

The study, completed by IER, used data from Racing Australia, Thoroughbred Breeders Australia, 100 breeders who completed financial surveys, 880 people involved in the breeding industry who completed personal profile surveys, and export information was supplied by Racing Australia and analysed with help from Inglis, Magic Millions, and several bloodstock agents.