Nearly three thousand horses were kept in eighteen state-owned stud farms at the beginning of 2013. Horse breeding companies supervised by the Agricultural Property Agency focus on the maintenance of stallion herds which they provide to breeders and on horse farming. The aim is to protect and improve high-quality genetic material of purebred and half-breed horses for the needs of domestic horse farming, and also to keep indigenous breeds. Private breeders cannot guarantee that because they are too much dependant on the market condition.
Key irregularities identified by NIK:
The Agricultural Property Agency did not analyse profitability of the horse breeding business so it did not know real costs of that activity. It turned out that the Agency, which was to protect and ensure continuity of high-quality horse breeds in Poland, did not know if the horse farming business generated profits or losses. NIK auditors found out that only in 2 years (2011-2012) all stud farms covered by NIK audit incurred losses of as much as PLN 18 million. The reason was too big a number of horses in non-breeding livestock, with limited possibilities of selling horses and reduced demand for studs.
Procedures related to the appraisal and sale of horses were not observed which generated losses on part of stud farms. Thirteen companies covered by the audit sold the total of 1251 horses in the period 2011-2013 (1st half). The stud farms lacked transparent procedures. As a result, the company employees appraised and sold horses at their own discretion.
Examples:
- in one stud farm horses were sold to an illegal intermediary. That company established horse prices mainly based on economic, not breeding-related criteria. Therefore, some healthy horses went to the slaughter. The intermediary paid PLN 82 thousand for 36 horses of which 27 were sent to the slaughter. The company received PLN 129 thousand for their meat. NIK reported that case to a relevant county veterinary doctor who sent a report to the Prosecutor’s Office of reasonable suspicion of a crime on part of the intermediary.
- Three stud farms did not have horse appraisal methods and three others did not observe regulations binding in that matter. As a consequence, the horse accounting value was underestimated by nearly PLN 6 million. In three stud farms 17 horses were sold from the basic herd (mainly mares and stallions) without prior consent of the Agricultural Property Agency.
- In two stud farms internal procedures for selling horses were not complied with. As a consequence, clients received outdated and incomplete sales offers and thus the horse prices could not be verified with the market. Besides dues were not collected from horse buyers.
- In one stud farm contracts for selling 35 horses were signed by unauthorised persons.
Some stud farms did not meet veterinary conditions required in horse farming. Irregularities in that area were related to the maintenance and transport of horses, hay storage, provision of disinfectant mats in case of animals’ infectious diseases. In one stud farm, for instance, horses intended for sale were kept on pasture 24 hours a day. In three stud farms veterinary documentation was kept improperly, e.g. the times of medical procedures or medicine administration were not specified.
Irregularities related to running horse boarding facilities and leasing own horses. In nearly half of the companies the prices for horse storage were lowered and, what is more, amounts due for that service were not collected. Consequently, the companies lost profits of about PLN 23 thousand. Besides, three stud farms did not work out any procedures for leasing horses or collecting dues for that service (PLN 21.5 thousand debt was not collected). In two stud farms contracts to lease a horse were signed despite the fact that the lessees were in default.
Poor technical condition of facilities in nearly all stud farms. The companies did not conduct any periodic technical inspections or repairs of the facilities which caused gradual degradation of the buildings. Detailed inspections of 88 facilities showed that part of them were about to collapse, others had a damaged roof cover, damaged lightning conductors, devastated interiors as well as damaged floor and plaster. Some stables had cracked and damp walls which caused mould growth.
Irregularities related to the administration of properties managed by stud farms. The companies provided apartments to employees and third parties without written agreements, at preferential prices, even free of charge. As a result three stud farms lost PLN 88 thousand.
Recommendations:
To administrators of stud farms:
- to order procedures for the maintenance, appraisal and sale of horses and to increase effectiveness of horse breeding business;
To the Minister of Agriculture and Rural Development:
- to update the list of horse farming companies in a relevant ordinance;
- to monitor structural changes in horse farming companies;
To the President of the Agricultural Property Agency:
- to develop the target concept for the functioning of state-owned stud farms to make sure the breeding industries guarantee effective selection of horses upon keeping the required genetic base of high-quality horse breeds;
- to consider property and organisational restructuring of stud farms which generate losses.
