WALL STREET JOURNAL — MAY 3, 2012 — EMINENCE, Mo. — Jim Smith rumbled down a dusty road in his truck to check on the herd of wild horses he has been looking after near this tiny Ozarks town for more than two decades.

The herd, which got its start when horses were abandoned during the Great Depression, is growing again as tough times have pushed owners who can no longer afford to feed their horses try to give them a fighting chance in the wild.

Jim Smith driving past a ‘dumpout,’ or recently abandoned horse, foreground, grazing next to a wild horse last week near Eminence, Mo.

Mr. Smith, who runs a trail-riding operation and captures many horses to limit the herd size and protect the newly abandoned “dumpouts” from harm, thinks there is a solution that makes many people uncomfortable: the slaughterhouse.

“The horse industry has gone to hell in a handbasket,” said Mr. Smith, a 67-year-old with a shotgun and a rifle in his pickup. “An old horse, a crippled horse, an unwanted horse, they all cost the same to feed, and nobody wants them, so they keep dumping them off here. Until there is a place to take them, it’s not going to get any better.”

To the relief of some—and the horror of others—that day may be approaching. Companies are planning to revive the horse-slaughter industry in several states, including Missouri, thanks to new rules authorizing federal funds to again be made available to inspect the facilities.

The Growing Herd

In 2006, Congress, bowing to animal-welfare groups, cut off funding for inspections, effectively shuttering the domestic industry. Without federal inspections, slaughterhouses can’t ship horse meat to Europe and Asia, where it is consumed by people. The last domestic horse slaughterhouse closed in 2007; as recently as 1990, more than 300,000 horses were slaughtered annually in the U.S.

Congress reversed course last year, authorizing funding for inspections after the Government Accountability Office concluded that the closing of domestic slaughterhouses had caused a decline in horse welfare, partly because it prompted more horses to be transported long distances to Canadian and Mexican slaughterhouses, without adequate rest, food or water.

A horse can typically bring several hundred dollars at slaughter. According to the GAO report last year, the demise of the domestic slaughter industry drove prices for all low-end horses down by 20%, while the tough economy drove prices down an additional 5%.

By 2009, owners who couldn’t afford the average annual cost of $2,500 to care for a horse also were having a hard time finding buyers. Reports of horses starved or abandoned surged, and rescue facilities across the country began to fill.

In Eminence, a community of 600 people 150 miles southwest of St. Louis, folks have been looking out for decades for the wild horses, which move along the Current River in Ozarks National Scenic Riverways, a large national park. After the park tried to have the herd removed in the mid-1990s, Congress stepped in and protected the herd’s status but capped its number at 50.

Mr. Smith and his pals created the Missouri Wild Horse League to protect the animals, which are good for tourism. In the past five years, the group has held the population to 50 by capturing, and then adopting out for free, 40 or so newly abandoned horses. Some horses are able to crack the herd’s stiff social hierarchy and win acceptance. Others failed to thrive and have been found dead.

Last Friday, Mr. Smith drove his truck slowly down a one-lane road in search of the herd. One of the region’s richest sources of revenue here is tourism, and trail riders come from across the country hoping to catch a glimpse of the wild horses. An hour away from his ranch, Mr. Smith stopped his truck. “There they are,” he said, pointing toward nine horses, heads down grazing, in a meadow framed by oaks and sycamore. A bit closer, he saw a young reddish colt. “That’s a dumpout,” he said. “We’ll have to come back and get him.”

Now, as abandoned horses vex communities across the country, companies are applying for permits to restart the slaughter industry. “This would be good for our economy,” said Rick De Los Santos, spokesman for Valley Meat Co., which wants to open a plant near Roswell, N.M., that would employ at least 50 people.

But the plant faces pushback. New Mexico Gov. Susana Martinez, a Republican, wrote a letter last month to Agriculture Secretary Tom Vilsack, urging the agency to deny the application, on animal-cruelty grounds.

Another company, Unified Equine LLC, based in Wyoming, hopes to build slaughterhouses in Missouri and Oklahoma by the end of this summer.

Animal-rights groups call horse slaughter inhumane; horses are sensitive, they say, prone to try to flee during the slaughter process. “Horses are often hit multiple times on their head before they are rendered unconscious,” said Nancy Perry, senior vice president of the American Society for the Prevention of Cruelty to Animals.

Critics of slaughter plants also maintain that unwanted horses can always find a home. “Most people would love to have a horse, and here are people using and discarding them as if they have no other purpose than to generate commerce,” said Susan Wagner, president of Equine Advocates, which operates a horse sanctuary in Chatham, N.Y.

In the Ozarks, patience for animal-rights advocates is limited. Mr. Smith says he has a hard time adopting out the horses he captures and can’t charge a fee to cover his costs. Meanwhile, car wrecks involving horses have become weekly occurrences, according to highway officials.

The newly abandoned horses, which are less adept at foraging, also tend to more aggressively invade backyards and private meadows.

“I don’t know of any horseman who doesn’t think we should reopen the slaughterhouse,” said Phil Moss, who lives in nearby Ellington and who helped build a corral to trap the newly abandoned horses on his property after they started grazing there. “We need to do something pretty quick.”