April 30 (Bloomberg) -- Lentenor, a one-year-old brother of the late Kentucky Derby winner Barbaro, is hungry, and that's going to cost Bill Thomason $1,500 more this year than last.

Thomason, 52, is the financial manager of Mill Ridge Farm, in Lexington, Kentucky, where Lentenor is boarded for owners Gretchen and Roy Jackson. Thomason says in his 26 years at Mill Ridge, he's never seen prices for the farm's staples -- hay, grain, bluegrass seed -- rise so fast, 40 percent in a year.

``Expenses have increased tremendously, and that will have a trickle-down effect throughout the entire horse economy,'' Thomason said. ``We're having a problem getting supplies, period.''

Higher commodity prices are upending the horse industry, from recreational riders who own a pony to trainers and horse farms that care for hundreds of thoroughbreds. Grain prices rose as much as 50 percent in the past year. U.S. farmers increased corn planting after ethanol demand drove prices to a record. That reduced the supply of food and seed essential to the $112 billion-a-year horse business.

Inflation has rocked the low end of the business for almost two years. Some of those unable to pay more for supplies -- and others who can't even find hay to buy -- have abandoned their animals.

When forced to fend for themselves, many horses die of starvation, said Keith Dane, director of equine protection at the Washington-based U.S. Humane Society. Hay shortages are most acute in the South, Southeast and Upper Midwest, leading to increases in horse neglect and abandonment there, he said. No one to his knowledge tracks the number of horse deaths, Dane said.

Deadly Consequences

``I've never seen a time like this where so many horses are found dead on farms or been rescued strictly because of the price to keep them fed,'' said Bayne Welker, 46, head of stallion sales at Mill Ridge.

At the industry's high end, the wealthy owners of racehorses aren't yet feeling the effects, Thomason said. That may change if farms like Mill Ridge boost their fees to cover rising expenses, he said.

With supplies running low from last year, trainers and horse farms that cater to racehorses are beginning to feel the pinch. The impact of higher commodity prices is making an expensive business even costlier, Thomason said.

Increasing costs are creating `` a whole other economic model,'' Thomason said.

Mill Ridge, owned by John and Alice Chambers, has 350 thoroughbreds on 1,100 acres. Revenue last year for the farm was $23 million, derived primarily from breeding fees and maintenance charges, Thomason said.

40 Percent Increase

Lentenor's feed bill this year will rise 40 percent to about $5,214 based on increased costs of hay, grain and grass seed.

The farm buys 850 tons of hay annually and will soon run out of inventory purchased in 2007 at $200 a ton, or $170,000. Replenishing the supply this year will cost $300 a ton, or $255,000, Thomason said.

``Farmers can push a pencil and figure out that it's more beneficial for them to produce corn and soybeans than it is hay,'' said Lee Hall, vice president of Hallway Feeds in Lexington.

Corn prices rose yesterday to a record $6.24 a bushel, or $245.66 a metric ton, up 63 percent from last year. The average price of hay in March was $139 a ton, according to the U.S. Department of Agriculture Web site.

`80,000-Pound Gorilla'

``Corn is the 80,000-pound gorilla,'' Hall said. ``It drives the price of so many other commodities.''

Mill Ridge spent about $145,000 in 2007 for grain, used to supplement hay, compared with $130,000 for the same amount in 2006, Thomason said. He estimates the cost will exceed $175,000 this year.

The price will continue to rise by about 15 percent annually for the next three years, said Hall.

Kentucky bluegrass, synonymous with thoroughbred racing in the U.S., is a resilient grass that stands back up after being trampled by racehorses that can weigh as much as 1,200 pounds. Mill Ridge reseeds its pastures at least once a year. The farm spent $25,000 on seed last year, and this year Thomason said he expects to pay $40,000.

``Seed farmers have also converted their crops and aren't even producing the bluegrass seed we need,'' Thomason said.

Robert Cleveland, 53, owner of Woodford Feed, in Versailles, Kentucky, said farmers are abandoning grass seeds for higher- value crops like wheat.

``We've had to increase our bid prices to farmers as incentive for them not to convert their fields,'' he said.

Expenses Overtake Purses

Todd Pletcher, 41, named top trainer for the past four years by the National Thoroughbred Racing Association, charges $100 a day for the 170 horses under his care. Higher expenses may lead him to raise his rates for the first time in two years, he said.

``I'm just going to see how it goes for the next few months,'' said Pletcher, whose horses earned a record $20.8 million in winnings in 2005. Pletcher, based in Elmont, New York, has Cowboy Cal and Monba vying to run in the Kentucky Derby May 3.

Trainers' charges have increased about 13 percent in the past 18 months, said Josh Cooper, 33, chief operating officer at West Point Thoroughbreds Inc. in Mount Laurel, New Jersey, with 83 horses.

``We're seeing universal increases in day rates,'' Cooper said. ``Purses are not increasing as fast as overhead.''

To contact the reporter on this story: Carol Wolf in Cleveland at cwolf@bloomberg.net

Last Updated: April 30, 2008 00:01 EDT