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Not at all. I think your expectations are right on par. I also have b/c foundations only.

I am probably stricter than you, but all my mares must paper blue by 3rd Gen with some exceptions such as color and mares that are producing foals that are higher quality but just not reaching that paper level and of course rarer genes.

Remember C stallions equals yellow paper mares, but I never have any mares paper yellow. B equals red, and A equals Blue and Star equals gold. So if you have B foundie stallions, the resulting offspring should either be high red or blue for 2nd Generation while I expect 3rd to be all Blue to be making good progress. Now with C stock it take ones generation longer, but by 4th all Blue for sure especially since I am getting Star stallions more and some Golds by 4th Gen with mixed B/C pedigrees.

If the mares paper red in 3rd Gen and are from C stock, then mostly I look at foals PT and see whats up. If they are all poor then I spay or maybe repaper. If its from mostly B stock I spay all that are not gaining ground in my expectations if not blue by 3rd.

Yeah, I had 3 mares that papered red. One was an automatic spay along with her foals because she had the very poor taste to paper worse than her dam. Her 3rd gen dam papered blue. The other 2 mares got spayed and their foals too. I just have to tell myself that this will be better in the long term and money that I would not be wasting on those mares and their lines. I'm just thankful that none of their offspring were stallions.