We’ll be selling eggs to off-farm customers for the first time in 2012, having expanded our laying flock to 35 hens. In past years we kept up to a dozen, which laid enough for our own household and some for workers, but this year eggs will be available to CSA members for $6/dozen. That’s higher than anyone around here is used to paying, so I thought I’d share the economic modelling that led us to this price. For reference, our friends at Happy Hollow Farm in Moniteau county came to the same conclusions, and are selling their certified organic eggs at $6/dozen as well. Our eggs are not certified organic and should not be referred to as such, though we absolutely refuse to feed out anything containing GMOs, whether chicken feed or food scraps.
Egg production & gross income
We have 35 hens, but I’m going to use 30 here to provide some slush for losses and poor layers (some of our current hens are over 3 years old). At their peak, 30 hens laying 5 eggs a week = 150 eggs/week. This winter, when most are taking a break (which they need to stay healthy), we’re getting around 60/week. You can up this with artificial light or other interventions, but that’s not healthy for the birds and we prefer to handle them naturally. So to account for the laying curve over the year, I used three different laying rates:
20 weeks at 150 e/w = 3000 egg
20 weeks at 120 e/w = 2400 eggs
12 weeks at 60 e/w = 720 eggs
That’s a total of 6,120 eggs, or ~500 dozen.
At our high price of $6/dozen, that’s $3,000 gross income per year (not counting any expenses, including remitting sales tax from that gross). And that’s assuming every single egg from a year’s production sells, which it certainly doesn’t (if nothing else, there are always cracked, overly dirty, or otherwise unsellable eggs). In other words, that’s the most we could possibly earn in a year on a flock our size if we had no expenses for feed, labor, marketing, or anything else.
Feed expenses
Organic chicken feed costs roughly $.50/lb here, about twice what conventional feed costs. If it’s not certified organic, it almost certainly has GMOs in it, regardless of other “natural” type labeling, and that is anathema to us. Figuring that an average hen eats 1/4lb a day, and using 40 birds to account for roosters and poor layers, we get this:
40 birds * 1/4 lb = 10 lb/day
10 lb/day * $.50/lb = $5/day * 365 days/year = $1825 annual feed cost.
Now, this is almost certainly reduced by the birds being on pasture and fed lots of farm scraps, so let’s reduce that quantity by 1/3, making annual feed costs around $1200 (not accounting for the time & labor of acquiring and handling the feed). This doesn’t really account for the fact that organic feed is difficult to acquire here; we have to have it special-ordered from Wisconsin through a local feed store, as does Happy Hollow, but that’s what it takes to avoid GMOs in Missouri.
So far we’re down to $1800 in net profit annually, before labor or other expenses.
Labor expenses
This is the other big one. Labor involves visiting the chicken house twice a day to check feed and water and collect eggs, any fence-moving to keep them on fresh pasture (which we do often, even in winter), cleaning & inspecting eggs, packaging eggs for sale/distribution, dealing with any health/management issues within the flock, remitting sales tax to the state on any egg sales, and so on. Any accounting for labor should also take into account the reality that we (or an employee) have to be here just about every day of the year, in any weather, to manage the birds’ pasture access, water, and food. Overall, my basic daily chores take about 15 minutes; I’m going to double that to account for all the rest which is harder to track, and I still think that’s a low estimate.
30 minutes/day roughly equals 4 hours/week, or around 200 hours a year.
Assuming my labor is worth at least minimum wage, 200 hours/year * $8/hour = $1600. With our $1800 net profit after feed expenses, $1600 in labor pretty much kills the remaining budget. We’re now down to $200 in remaining cashflow, to account for any other expenses like infrastructure, water, straw for bedding, and bird replacement.
Long-term flock maintenance
People sometimes forget that chickens don’t live forever. They get eaten by hawks (especially pastured ones like ours), or die from old age/disease like any animal. In fact, we’re probably better off regularly culling birds past a certain age, for three reasons: (1) to avoid aged birds introducing disease into the flock, (2) to give them a cleaner, more humane death than decrepitude provides, and (3) to get a bit more value from them (a 3-year-old hen is still a decent stew bird; a real geezer is not). Why bury an old carcass when we can eat a middle-aged one?
The corollary to this is the need for regular introduction of new birds, either by purchase or breeding. We’ve opted for the latter, buying a small incubator so we can breed and raise our own, and hopefully improve the genetics of the flock (one reason we keep a number of roosters around). However you replace birds, it costs time and money that aren’t easy to factor into an annual budget, and that remaining $200 somehow has to cover this and everything else.
Manure/fertility
I didn’t include manure production/handling here, which can be a cost and/or a benefit depending on the farm. For us, generating on-farm fertility is a major reason we raise chickens in the first place, so there is some inherent value there, although it’s hard to monetize. What’s the actual value of using our own manure rather than feedlot manure, other than removing GMOs, antibiotics, and off-farm diseases from our input stream? Even for a benefit like this, there is still significant extra labor involved in regularly cleaning out the shed, hauling & composting the bedding, and otherwise managing the waste stream to be a net farm benefit instead of a problem (like it is for larger operations). So I pretty much figure the manure handling evens out; more benefit offset by more work.
Infrastructure
Nowhere in this discussion have I budgeted for infrastructure. Everyone has to pay for, or value, the infrastructure needed to raise chickens, particularly if they’re being rotated on fresh pasture and not just let out to the same yard year-round. This includes fencing (whether permanent or moveable net), housing (whether building new or converting existing), refrigeration cost, feeders and waterers, and so much more. Even though we built our new shed from cedar lumber generated on the farm, that still costs chainsaw work & labor, milling fees, hardware, and roofing. These costs should spread over 20 years at least, but they still need to be there in the price of the eggs.
Conclusions
In effect, what these numbers tell me is that it’s possible to make at most minimum wage raising high-quality, organically fed pastured eggs, even charging the “high” price of $6/dozen, and that’s under a nearly ideal system in which few birds are attacked by predators and everyone lays to their potential. The real world is rarely so accommodating. Even if you quibble with specific numbers and estimates, you’d have to double or halve a major number to make a meaningful difference in the income, and that’s not realistic.
The same economies apply to conventional small-farm eggs, and to industrial ones. Let’s say we halve the feed costs for people just buying generic feed; we also then halve the price to the $2-$3/dozen typical of farmers market eggs, or even lower given that various country people sell eggs for ludicrous prices below $2/dozen. Given that feed and labor are roughly equivalent percentages of the whole, the same ratio holds: you’re making at most minimum wage in fairly risky business. People charging under $2 are simply insane, and those in the $2-$4 range really aren’t making much meaningful income if they’re accounting for their actual costs. They might be making a profit, but they aren’t making an income; there’s a big difference if you care about the long-term viability of local foods.
This tiny profit margin is why feedlot eggs sort-of work; you can afford to make a miniscule profit per bird if you pack ten thousand of them into a barn, keep them in artificial light throughout the year, pre-emptivally medicate them against inevitable health issues, and turn them into dog food as soon as they decline from peak production (and most of the profit still goes to the middle and corporate level, not the “farmer”, who still makes at or below minimum wage). But that system has also taught consumers that the “value” of a dozen eggs is lower than that of a few tomatoes, and so people are no longer willing to pay a reasonable price for a much more nutritional food. The price of cheap food is farmers unable to make a meaningful living at almost any scale.
It also tells me that many people selling eggs at farmers markets and roadside stands aren’t treating themselves like businesses. There is simply no way to actually make a living wage or meaningful income on eggs at the prices most people sell them for; the reality is that they’re not. They’re either doing it as a hobby, and/or not paying attention to their numbers. Lots of non-business-minded small farmers seem to equate gross income with actual income. In fairness, there are also people who do realize this, but just don’t think they can get a fair price (and often can’t), so charge whatever they can get because they like having chickens. That doesn’t change the economic reality, though, and hurts farmers who are trying to earn a living.
Personally, I think the skill and risk it takes to raise pastured eggs should be worth more than minimum wage, but $6/dozen is the only way we’ll even get that far, so we’re going with it for now. We agree with Liz at Happy Hollow, who’s said that if not enough people will pay minimum wage for good eggs, it’s chicken soup time and we’ll go back down to a home-sized flock. There are lots of easier and less risky ways to make minimum wage; neither of us will do this work, and take these risks, for less.