In the end, despite cheaper feed, the daily cost of horse upkeep (the horse’s subsistence wage, if you will) was higher than the horse’s productivity in its transport and agricultural roles.
Presumably the absolute productivity of a horse (the amount of land it can plow or stuff it can haul) has not changed. So this only makes sense if the market value of the horse’s labor has declined even faster than the price of feed. Is that the case?
Humans have a considerable up-front cost also—it’s called birth and childrearing!
Maybe absolute horse productivity actually has declined, at least for non-farm work. All the roads have been rebuilt for cars, there are no places to tie up my horse for a quick trip to the supermarket, etc. (For that matter, is riding horses on city streets even legal? Regardless, it’s certainly less convenient than it would’ve been in 1900.)
AI analogy: If a job consists mainly of communicating with other employees, it’ll become harder for a human to maintain the same productivity when 99% of those other employees have been replaced with AIs, even if the human is just as intelligent as before.
If there is less demand for hay from horses, that will not increase the supply much because cattle, sheep, etc. will pick up the slack.
Other funny thought: From a horse’s perspective, the Amish are an aligned superintelligence.