Horse Agribusiness in Rio de Janeiro , Brazil : trade and economic aspects of Mangalarga Marchador farm production

This study aimed to assess the economic and commercial performance of the Mangalarga Marchador horse breeding, and production costs in the Rio de Janeiro. Data was collected from the ABCCMM archives and from associated breeders, selected through stratified sampling by the mesoregions of the State of Rio de Janeiro. The main means of marketing the animals is selling on the farm. The average of horse’s sale per stud farm in the Rio de Janeiro is 14.92/year with the average of R$16,628.46/horse, generating an estimated sale at the farms of around R$192,026,783.88/year. The sale of mating (8.77 mating/year) and weaned foals (5.44 foals/year) contributed to the largest volume of sales at the stud farms. Donor mares (R$57,318,908.50) and mares (R$42,958,357.20) represented the highest in terms of market value throughout the Rio de Janeiro. The Coastal Lowlands mesoregion had the highest average of animals sold per stud farm/year (40.57 animals) and the Central Fluminense mesoregion had the lowest average (25.39 animals). The average commercialization per farm/year corresponds to R$385,667.90 and the average total value traded in the Rio de Janeiro is R$465,880,252.32/year. The average is 6.52 hired employees, which is equivalent to an average monthly labor gross cost of R$11,286.00. Rio de Janeiro employs around 5,584 people directly, the greatest numbers in the Metropolitan mesoregion (1,833 employees), and the lowest concentration in the Northern Fluminense mesoregion (530 employees). Together with the production costs, Mangalarga Marchador horse’s business turns over more than R$650 million per year in the Rio de Janeiro.


Introduction
The evolution of production systems and the emergence of modern industrial parks that supply goods and inputs to the countryside are the so-called "pre-gate" activities or upstream industries for the farm, and the formation of storage, transportation, processing, industrialization and distribution are the so-called "post-gate" activities or downstream industries for the farm. These activities have narrowed the relationships between industry, services, and agriculture (Lima et al., 2006). Thus, studies of the productive structures began to be made based on an interconnected system of production, processing, and commercialization of the products of agricultural and livestock origin, going on to study the Complex of Agribusiness.
According to Lima et al. (2015), unlike many agricultural activities, the horse agribusiness does not fit into the standard structure of the linear productive chain, but there are a series of intertwined chains, forming what is denominated agricultural complex. Given these specific characteristics of the horse agribusiness, the authors chose not to follow the traditional sequence: upstream industry, agriculture, and downstream industry. Instead, the authors began with the upstream industry and, from then on, the various activities are divided based on the functional aspects of the horse, and not exactly on livestock and industrial activities. The income generated in the Horse Agribusiness Complex in Brazil, in values of April 2015, totaled R$16.15 billion, and employed 607,329 people directly. Since each direct employment creates four other indirect jobs, then one can estimate that there were also 2,429,316 indirect jobs. Thus, the Complex is responsible, directly, and indirectly, for the employment of 3 million people (Brazil, 2016).
Data reported by the work entitled Horse Agribusiness Complex, requested by the National Confederation of Agriculture (CNA) and carried out by Lima et al. (2006), which was updated in 2016, showed that in 2006 the gross annual revenue was R$7.5 billion and in 2015 this value reached R$16 billion. Guerra e Medeiros (2006) pointed out that the work segment turned over around R$4.0 billion per year and generated more than 500,000 direct jobs on rural properties, 85.0% of them formal. Lima et al. (2015) estimated that the labor segment employed 433,333 workers per year and was responsible for handling R$8.58 billion annually within the Horse Agribusiness Complex. Lima et al. (2006) estimated that the feed market had an annual turnover of R$53.44 million and was concentrated on the breeding and sports segments in the Southeastern mesoregion (58%). The market for saddlery and accessories had a turnover of about R$174.6 Development, v. 9, n. 11, e4319119938, 2020 (CC BY 4.0) | ISSN 2525-3409 | DOI: http://dx.doi.org/10.33448/rsd-v9i11.9938 5 million/year and saddles corresponded to 50% of the billing. The other operations, such as hoof trimming and shoeing, transportation of equines, advertising, and publications, together had an annual turnover of around R$240.04 million. With the updating of the horse agribusiness study, Brazil (2016) verified that, despite the strong and recent world crisis, which started in 2008, the veterinary drug industry presented a growth in recent years in Brazil. Even correcting for inflation for the period (deflated by the IGP-DI of the FVG), there was a real growth of 3.7% per annum (9.5% pa in nominal values) in the period between 2008 and 2013, when billing was estimated at R$197.8 million for veterinary drugs for horses. The updated value of the revenues in the segment, in the year 2015, totaled R$220.5 million. The same study revealed that, in the segment for sports and leisure, total food expenses (forage + concentrate + supplement), totaled R$959 million in 2015, corresponding to 16.4% of the total cost of the horse breeding.
According to Lima et al. (2006) within the downstream activities of the farm, virtual auctions became very popular, and were broadcasted on agribusiness-related TV channels, due to the lower costs and the ability to reach a much larger number of consumers throughout the country. The number of animals, coverages and embryos auctioned increased by 123% from 1995 to 2004, and the financial volume recorded grew even stronger, reaching 430% in the same period, jumping from R$22.5 million to R$111.4 million, and at the same time the average value of the business more than doubled, from R$4,827.23 to R$11,500.43. In that same period, the volume of Brazilian exports of live horses increased considerably, going from around US$260,000 in 1996 to over US$2 million in 2005, presenting a growth of 692%, at an approximate average rate of 26% per year. Brazil ranked 31 st in both world exports (0.11% of the market) and world imports (0.06% of the market).
The Brazilian Association of Mangalarga Marchador Horse Breeders -ABCCMM is the largest breeders association of horses of the same breed in Latin America, with approximately 15,000 members and about 600,000 registered animals, the state of Rio de Janeiro is the second largest producer (ABCCMM, 2016).
The objective of this study was to assess the economic and commercial performance of the Mangalarga Marchador horse agribusiness in trading, income generation and employment in the state of Rio de Janeiro. Development, v. 9, n. 11, e4319119938, 2020 (CC BY 4.0) | ISSN 2525-3409 | DOI: http://dx.doi.org/10.33448/rsd-v9i11.9938 6

Methodology
The methodology used in this exploratory and descriptive study was divided into two stages: 1 -Consultation with the Brazilian Association of Breeders of Mangalarga Marchador Horses (ABCCMM) in order to collect the number of associated breeders and the means to contact them. 2 -Field research, through a questionnaire to conduct structured and specific interviews related to the agribusiness complex of Mangalarga Marchador horse in the state of Rio de Janeiro, with the objective of collecting data concerning the commercial and financial aspects of the production system in the State. The research was approved by the Research  (21), Metropolitan (85) and Southern Fluminense (29). The sample size was defined according to the level of precision desired, which was a 95% confidence interval (CI95%), for the estimation of some parameters of interest at different levels of geographical disaggregation and specific population groups (Souza -Junior et al., 2015). To determine the sample size, based on the estimate of the population proportion, for a finite population, the following equation was used: Z/2 = critical value that corresponds to the desired degree of confidence. pˆ = population proportion of individuals belonging to the category of interest. qˆ = population proportion of individuals not belonging to the category of interest (q = 1-p). E = margin of error or Maximum Error of Estimation. Identify the maximum difference between the sample proportion and the true population proportion. Research, Society and Development, v. 9, n. 11, e4319119938, 2020 (CC BY 4.0) | ISSN 2525-3409 | DOI: http://dx.doi.org/10.33448/rsd-v9i11.9938 7 When using the confidence level of 0.95, Z/2 corresponds to 1.96. For "p" and "q" the value of 0.5 was adopted when these were unknown, according to Levine (2000). The questionnaire was developed based on the questionnaires used by Lima et al (2006), Oliveira (2012 and Oliveira (2013), and was developed using Google Drive; a tool that is available on the internet at www.google.com. A link was generated, through which the breeder or the interviewee could access with a computer or smartphone and answer the questions "online".
On finalizing the answers, the data were immediately transferred to a MS-Excel spread sheet.
Before starting the data collection, a pre-test was performed using a priori questionnaire to evaluate the research tool. The interviews were timed to detect facilities and difficulties in answering the questions and noting the most frequent doubts as well as considering any questions of relevance that had not been included in the questionnaire. This pre-test enabled the questionnaire to be adapted to minimize data collection failures, if needed. According to Hulley et al. (2008), pre-tests should be conducted to clarify, refine, and measure the duration of the whole procedure. The interviews were carried out from July 2017 to June 2018. The average time of each interview was 30 to 40 minutes; however, some of them exceeded 60 minutes. A total of 202 breeders, managers and/or advisors were interviewed, whether men or women, in the different mesoregions of the State. Many equestrian events were used to contact the breeders, with emphasis on regional exhibitions and on-site horse auctions. The official data, provided by the ABCCMM, were collected directly at their headquarters in Belo Horizonte, Minas Gerais, with the authorization of the competent management. The results obtained from the Association along with the questionnaires applied to the breeders were analyzed by descriptive statistics processed in the Statistical Package for Social Science (SPSS), version 24.0.

Results
The average number of animals traded in live auctions per stud farm in the state of Rio de Janeiro is 4.28 (± 9.037) animals, with an average value of R$35,314.35 (± 28,815.76 In virtual auctions, the averages range from 1.76 to 7.93 animals traded per year in the Research, Society and Development, v. 9, n. 11, e4319119938, 2020 (CC BY 4. The virtual auctions turnover an estimated total amount of R$31,035,288.96 per year in the state of Rio de Janeiro (Table 2) Figure 1 shows, in percentages, the total number of sales and the total value of sales within each marketing category.
The sale of live mating (8.52 mating/year) and weaned foals (5.35 foals/year) contribute the highest volume of sales at the stud farms (Table 3). The categories of donor mare and stallion represent the highest values of unit sales, with averages throughout the State of R$90,124.00 and R$67,658.00, respectively (Table 4).
The state average of contracted employees (permanent and temporary), including Veterinarians, Animal Scientist, Veterinary technicians, Agronomists and Agricultural Technicians, per farm is 6.52 and the total amount of expenses for labor per month is R$11,286.00. (Table 7). Research, Society and Development, v. 9, n. 11, e4319119938, 2020 (CC BY 4.0) | ISSN 2525-3409 | DOI: http://dx.doi.org/10.33448/rsd-v9i11.9938     The value of sales and some operational costs in the Mangalarga Marchador stud farms in the state of Rio de Janeiro and in each mesoregion can be evaluated separately (Table   12). The Metropolitan mesoregion showed the highest amount both in the sale of the animals and in the operational costs, followed by the Northwestern, Southern, Central, Coastal Only 14.9% of the stud farms were setup based on a technical project, and of these, 30.8% of the projects were made by Veterinarians, another 30.8% by the owners themselves and the remainder by Equine veterinary technicians, Agronomists, Architects and others.
About 70.4% of the breeders carry out a financial analysis of the breeding, and of these 56% declared that they had already obtained a financial return while 44% declared that they had not obtained a financial return yet.
When asked what was the greatest obstacle to the growth of the horse breeding in Brazil, 87.9% of the answers considered that the lack of skilled labor was the main reason, while 40.5% replied that the lack of technical and scientific knowledge was of importance, and the lack of government support came in 35.1% of the responses, which was followed by the inefficiency of the state, federal and international health aspects and by the lack of investments by private institutions, with 20.3 and 5.1% respectively.

Discussion
The main way to sell the animals throughout the State and in the mesoregions is on the farm, followed of the virtual, live, and online auctions, respectively. In the live auction category, the auction takes place in the same place as the animals and the buyers, the bids are received and made in real-time. In the virtual auction category, the trading session takes place via a TV channel, the lots are previously filmed, and the videos are transmitted at the time of the trading session, the bids are received and executed in real time. In the online auction category, the videos of the lots are exposed for a predetermined period on the website and the bids are received on the site, but the purchase is only made at the end of the auction period.
In relation to the costs of these auctions, the live auctions are more expensive than the virtual ones, which in turn have a higher cost than the online auctions. Therefore, the animals traded in the live auctions tend to have a higher value than those of virtual auctions, which, to a lesser extent, may have higher prices than the animals marketed in the online auctions.
Therefore, it is normal for live auctions to have higher gross revenues than the other auction categories. Some breeders are joining a new way to sell on the farm called "shopping" or "animal fair" or "business day". The breeder sets up a 'socializing event' on the farm, showing the animals destined for sale. There is no bidding, but there are brokers or business advisors who intermediate the sales. It is a cheaper form of marketing than the auctions because it eliminates the expenses with auctioneers, inscriptions, recording, transportation of animals, sales charge, and other expenses. The brokers receive a commission from the seller, Development, v. 9, n. 11, e4319119938, 2020 (CC BY 4.0) | ISSN 2525-3409 | DOI: http://dx.doi.org/10.33448/rsd-v9i11.9938 22 but it does not reach the percentage of 8.5% of the sale value of the animal, charged not only to the seller, but also the buyer, in traditional auctions. For the buyer it is also cheaper because it frees him from paying the buying commission. On the other hand, the auctions, mainly the virtual auctions, give greater visibility to the production and trading can reach a much greater number of participants in Brazil and even from abroad.
Online auctions take in the lowest amount among marketing categories, despite selling more animals than the live auctions and direct sales at events that sell less than half in the number of animals but bring in almost double that of the online auctions (Figure 1). Online auctions have lower costs, so they sell fewer valuable animals, including discarded animals.
While the direct sale at events is based on the interest of the buyer for some animal that has done well at an exhibition, therefore a superior animal. Usually more embryos/ovules or mating are sold of the animals that are competing. In the case of animals of high commercial value, it is common to sell quotas of the animal, where the buyer becomes a partner of the seller with quotas of 50, 33 or 25%. According to Vieira et al. (2015), the average number of horses marketed per farm was 17.4 animals per year, with the average value was R$11,500.00 per animal sold at auctions and R$4,500.00 at the farm. The authors reported that in the years 2008 and 2009, Minas Gerais took in over R$19,295,240.00 and R$16,953,720.00, respectively at horse auctions.
The categories of donor mare and stallion represent the highest values of unit sales. In many situations, stallions are traded in quotas, forming societies of 50, 33, 25 or even 5% of the quotas of the animal. Therefore, the average sales value of stallions may be influenced by this division, which was not accounted for in the survey. In the categories of young animals (foals and fillies), the sale of males is higher in number, both in the State average and in the mesoregions, but the values for females are much higher. This is mainly since there is greater selection pressure from the breeders for the males since they are being chosen for future stallions. The foals that do not pass in the selection are quickly sold to reduce the costs of production. That is why the demand for weaned foals, by dealers who resell animals, is great, since the market for saddle horses, for horseback riding, eventing tests etc ... is very heated. In addition, it occurs that foals that are not classified in the selection of large stud farms may become stallions of smaller breeders. Therefore, the search for foals by small and medium breeders is common and they can be rebranded and become their breeding stock. It is a way to buy a future stallion at an affordable price when still a foal.
The mean value of the recipients varies little between the mesoregions, with a low standard deviation or even zero. However, in the Coastal Lowland and Metropolitan mesoregions, the sales volume in this category is high. This may be due to the fact that in these regions there is a lot of trade between small breeders, mainly with a profile for recreational activities, and these mares end up being marketed as a saddle animal and not as recipients. The Metropolitan mesoregion has the largest sales volume, since it has the largest number of farms. However, it is important to note that the Northwestern Fluminense mesoregion, which has the second largest sales volume in terms of numbers of animals, has the highest average sales per breed per year, reaching almost double the metropolitan region.
In addition to having large stud farms, this mesoregion benefits from the proximity to municipalities in the Zona da Mata of Minas Gerais State, where the Mangalarga Marchador breeding tradition is very strong. The Coastal Lowlands mesoregion has a high average for the total number of animals marketed per stud farm but does not have a high number of stud farms as in the Metropolitan and Northwestern Fluminense mesoregions, so the total sales value is lower.
The total amounts paid to the employees mentioned in this paper do not include labor costs, holidays, and 13th salary. Therefore, by including these items in the calculation, the amount paid would be higher. It should be noted that there is little variability between the average values of wages paid, within the categories, by mesoregions. The average total cost of employees varies between the mesoregions in line with the variation in the average number of employees per farm. Therefore, the cost increases as the number of employees increases. It is important to remember that more than 60% of the contracts of professionals providing technical advice (Veterinarians, Agronomists etc ...) are temporary, which allows them to work at more than one stud farm and even in other activities. Therefore, the mean salary described for these professionals is equivalent to the income in each contract, that is, in each stud farm for which they aid.
Brazil (2016) estimated that the category of sport and leisure horse generated around 125,700 direct jobs. According to Vieira et al. (2015) the activities involving the breeding of horses in Minas Gerais employed around 86,000 people and the average salary was around 1.5 ± 0.51 minimum wages. Vieira (2011) estimated that approximately 514,000 horses consumed commercial concentrate in the state of Minas Gerais, at an annual cost of R$171,979,882.00. In addition, the annual financial turnover for the consumption of salt in the State is around R$22,447,692.00. Brazil (2016) estimated that horse breeding consumes, annually, the equivalent of R$96 million in oats, R$45 million in alfalfa and R$83 million in mineral salt and supplements, and furthermore the formulated feed in the stud farms presents an estimated value of R$220 million per year and hay (except for alfalfa) corresponding to R$193 million. In addition, it is estimated that the value of the equine feed market is around R$780.8 million/year. According to the interviewees, the labor force is expensive and does not have the expertise to work in a sector with high investment costs such as horse breeding. In addition, the breeders complain that there is no better transfer of knowledge from surveys to guide production of the stud farmers. According to the interviewees, there are no public or private investment schemes to encourage horse breeding, such as lower interest rates for financing materials and inputs, as exists for other agribusiness sectors. Also, among the actions of government agencies, there is a lack of seriousness with sanitary issues, which is a concern for the producers, because it damages the trade and burdens the market with costs of examinations and certificates.

Conclusions
The state of Rio de Janeiro is the second largest producer of Mangalarga Marchador 32/year. This study shows that, not considering the cost of the capital invested, the largest expense within a property is labor, followed by concentrated feed, forage, and vaccines/exams. The agribusiness of the Mangalarga Marchador horse in the state of Rio de Janeiro spends more than R$650 million per year and employs more than 5,580 people directly.