By using 2 of one horseshoe, you can get 1 of the next level of horseshoe. This allows players to acquire the horseshoes they may be having a hard time acquiring because of low drop rates. So, for example, by giving 2 of the red horseshoes from deliveries, a player can craft 1 of the horseshoes from the chickens.
Note that this particular boost is only good for this event. Other boosts in other events may have different effects.