Egg Prices, Corn Prices and the Value of My Wife’s Time

What does it cost to produce a dozen eggs?  This is important since we’re staring down the barrel of a regional total crop failure.  Corn prices are rising and my dad’s tenant indicates that only about 1/3 of the stalks have ears and those ears aren’t filling out.  There’s hardly a bean in the soybean fields around me.  If this is true on a wider scale, we could be in some trouble.  How much will this affect the price of the eggs we produce?  Let’s break it down a little bit.

Averaged out, I get around 60 dozen eggs each month.  Each dozen needs its own, new egg carton (Illinois law).  When I ordered cartons in Feb. they were $0.32, now those same cartons cost me $0.56 each.  They have another paper carton that’s $0.36.  I don’t like it as much but two dimes saved is two dimes earned.  Eggs will taste just as good and the cartons are just as recyclable.

My flock of 40 birds eat 200 pounds of feed each month.  If corn costs $6.50 (what I paid last year for my dwindling supply of corn), it costs me $12.89 for the ingredients to grind my own bag of feed.  That doesn’t count the equipment cost or time involved in grinding that feed.  If corn stays at $8.00, each bag will cost $13.57 before grinding.

What other costs are involved?  Each morning we have to fill the drinkers and feeders and move the houses.  Each evening we have to gather the eggs.  Every other day we clean, sort, weigh, candle and pack the eggs.  Every few days we build fence.  What is that time worth?

It takes 5 months to go from chick to egg and those first eggs each pullet lays are quite small…too small to sell.  So, even though they start laying at 5 months, they are 6 months old before I can begin selling their eggs.  That’s 6 months of feed, water and care that I have to pay for with eggs over the next 18-20 months of productive hen life.

I have to pay for their housing.  I have to pay for the fencing that surrounds them ($0.04 per length per day).  I will lose some birds to predation and weather.  How much do I pay myself for sitting in a field all night holding a gun when predators get a taste for chicken?

I have to fill out the paperwork for our egg license and meet with our inspector annually.  He checks our fridge temperature, validates our scale and egg quality then hands us some promotional items.  At least he comes to our house so we don’t have to make a trip to some testing facility in Timbuktu but it still takes time.  We have to get a license from the king to sell our own eggs.  That license costs $15 each year plus we pay an inspection fee of $0.11 per 30 dozen eggs…to pay for our inspector to drive here once each year and say, “Hi”.  That takes away from our profit also.  One day, if we work hard enough, we can pay income tax too.  Oh, to dream!

So what do I charge?  It would appear that I could make a little (only a little) money selling eggs but the income is limited by the number of hours in a day.  I have to handle every egg.  The costs above indicate I am paying $1.28 just for feed and egg cartons plus a few more cents for inspection and licensing (you know, because consumers can’t judge for themseves if cartons are clean or if eggs are any good).  The fencing and housing are spread over 10 years and the chick and brooder time are spread over 2 years then we harvest and sell the bird as a stewing hen.  We charge $3.50 for our eggs and get an average of 60 dozen each month.  That means we make something like $3 each day from eggs before accounting for our time.  Either we need to increase our egg production, raise our prices or close up shop.  Salatin says he makes $12 over the life of the hen.  I think he’s right.  It’s a lousy primary enterprise but they do sanitize the pasture and keep the family entertained.  At $8 corn I’m under some pressure to lower my entertainment cost or find feed alternatives but the real pressure comes from labor costs.  It takes a lot of time to feed and water the animals then gather, sort and peddle the eggs.  Compared to our labor costs, the price of corn is insignificant.  My prices have to go up, not because the price of corn went up, but because I’m learning about business the hard way.

That’s not to say food costs won’t rise because of the bad crop.  They will.  60% of the corn produced in this country is fed to animals.  It’s in most dog and cat foods…not just what we feed pigs, chicken and (unfortunately) beef.  Corn is in everything…including your gas tank.  Soybeans are in everything too.  Producers are going to have to determine the marginal utility of each compared to substitutions.  I may feed potatoes and milk to pigs…if I continue to raise pigs.  But, as a consumer, you need to consider marginal utility as well.  Just because corn products cost more doesn’t mean you have to buy them.  What substitutions can you bring into your kitchen?  I’m afraid there is little substitution for a good egg.  I’ll do my best to make appropriate substitutions on my side as well as streamline my labor to encourage you to continue to buy my eggs.  I believe you will continue to find my products to be a good value even in the face of rising prices.

—UPDATE—

Dad pointed out a couple of things not factored into my equations above.  75 layers generate 15-21 pounds of manure each day or a maximum of 115 pounds of nitrogen, 65 pounds of phosphorus and 42 pounds of potassium per acre, not to mention the trace minerals I put in their feed ration.  That has value.  They also eat bugs.  That has value.  I don’t mean to say my chickens are a drain on our budget, I’m saying, in terms of farm cash flow, economies of scale work against me trying to generate income from a small flock.

Advertisements

24 thoughts on “Egg Prices, Corn Prices and the Value of My Wife’s Time

  1. Great post! As this is my first year with a mere 10 chickens and still waiting for my first egg I can appreciate this post. The time spent on varmit eradication has been ridiculous!
    We have these conversations frequently in the pottery/ceramic arts world as raw minerals escalate in price….. Seems to be a theme. And who IS making a decent living these days? Best with the rest of summer, been one for the record books here in Ohio too.

  2. I read someone else’s post about the poor corn crop (Gene Logsdon maybe? can’t remember) and figured it would affect us all in a few months. Didn’t think about soy. It really brings it home when you take the price of corn down to the level of feeding 40 hens and setting the price of a dozen eggs. How ironic that you can process all those chickens and sell them, but you need an inspector to sell a dozen eggs in a new carton. And of course, I have it the other way round…

    • Oh, our facilities are inspected annually so we can slaughter chickens here on the farm. I have to have the meat and poultry inspection to sell any chicken at all. I have to have the egg license to sell chickens off farm.

  3. I just did this sort of calculation for my one milk customer. They have no real skills and want to be able to barter their labor for our milk. At the price we charge them now ($8/gallon) we have $4.43 in direct costs (and we missed a lot of stuff) plus 1.4 hours in labor. So we get $8-4.43=$3.57 gross profit before labor. Further calculating, we make $3.57/1.4=$2.55 per hour. And I’m sure these customers would expect to have their labor valued much higher than that. So……as a customer, are you willing to compensate me at least $4.43 per gallon and work for 1.2 hours for it? And shouldn’t I earn a bit more for that? Are customer willing to pay $12/gallon? Which would yield me a whopping $6.55/hour. We both know that answer to that. Something has to give here or food like you and I produce will not be available for long.

    God bless!

    • Excellent. Thank you so much for your reply. We normally buy raw milk from a friend for $6/gallon. He apologizes when he raises prices but we both know he’s doing it as a labor of love. In fact, if you pin him down it’s his ministry. He gets to help a lot of people through his dairy, not only blessing their health with awesome milk but usually sending them home with carloads of produce from his garden.

  4. Thought provoking post… I have to admit that it is very hard for me to imagine the rest of the country being in such a bad drought… Here in the PNW we’ve had a perfect summer (I suppose it would be the equivalent of y’all’s drought, seeing as we’ve managed finally have a dry spell) and the grass has stayed green. But the thought of food going up in price really makes you think: How will we manage if it goes up too high? Are we prepared enough that we can take care of ourselves here on the farm? What do we do when grain gets too expensive for the livestock?

    I charge $10 per gallon for my raw milk (both cow and goat) and I have the lowest prices in the area. I would have liked to lower my price for cow milk down to $8/gallon, but grain is already expensive and my milker eats 100 lbs. per week. Ouch! Thankfully, customers don’t blink at my price. But yes… I don’t know what I will do if grain continues to skyrocket… Might have to dry the cow up!

    • Or lower production as you lower input costs. I have done a lot of reading on mob stocking dairy cows on mature grass swards. From what I have read, you should expect milk production to fall dramatically but your grass stands will strengthen and your production costs lower. Our cows get no grain. We also plan to milk once/day which will help maintain condition. We bought our cows from Steve. Steve’s cows have only seen corn as it grows across the fence. If we can make these kinds of changes we’ll handle the transition well. I feel for the 4,000 head dairies though. I don’t have much hope that they’ll suddenly switch to low-input mob grazing and OAD milking instead of high-input freestalls and 3x/day milking.

  5. I’m sure you’ve considered it, as evidenced by the last part of your blog post title, but what about sprouting grains to make them go further for the hens? I’m sure it’s a lot of work but perhaps the kids could help? What better way to teach science then through hands on? (and I know that you’re of that philosophy). Or perhaps working to create a ferris wheel-type sprouter like Joel Salatin has been contemplating. Just a couple of thoughts.

    I’m really excited to see that everyone has included their costs. As a future farmer (on a small scale) it really helps me with the numbers. I’m a meticulous planner and I like to have a well-rounded picture before diving into something. Thanks again!

    • We have thought about it. I’m sure we will be considering all kinds of alternatives…especially if the drought carries into another summer and the supply of corn dwindles. Did I miss the seven fat years?

  6. If you lower production while lowering input costs, that means in egg terms that you set out to get less eggs. What if you don’t even bother doing this as a moneymaker? Just keep a small flock of a dozen hens and a rooster in a chicken tractor that 2 kids can push around, and winter them in the hoophouse as you already do. Feed costs are way down, no inspector/license/cartons costs, labour is way less time and cost. And you still get the value of pasture sanitization, fertility and eggs for home use, which you could count as profit, since you’d need to pay for all those things as inputs if you didn’t have the hens.

    • The eggs work as a way to get our foot in the door. That first dozen eggs a customer buys almost always results in a lengthy conversation about how different our eggs are, how much better our eggs are, how much more fluffy cakes are or more gooey brownies are when cooked with our eggs. We explain it’s a combination of the freshness of the egg, the diet of the bird and the lifestyle available to the animal. Then we go on to tell them how we replicate that same treatment across our other flocks and herds. That dozen eggs usually leads to a chicken or two. Over time chicken sales lead to half a hog. You see where this is going?

      Eggs are our gateway drug.

  7. Goat Song – It is great you can get prices like that and higher but that doesn’t work, sadly, in most of Tennessee where I live. At least not now. Than again, the people to whom I refer have cell phones, home owners insurance, and air conditioning, all necessities by modern accounts. My family, by choice, has none. But we do own our own home, make our own electric power, cut & split our own heat, etc. These are all choices.

    HFS – It is great you have someone that is willing to work to provide others with food. I wonder if he has always farmed or did he (or does he) have a job with a nice retirement. I do see people here who sell milk for half what we do but they often have nice retirement plans and do it as a hobby. It is hard to compete with that when you don’t have those things. They keep the market artificially low.

    My husband and I have been talking about lifestyle and the grueling twice a day milking. We only have 2 cows in milk right now, both Jerseys, but will have a Milking Shorthorn x Jersey freshen next Spring. We are talking of milking all 3 cows 2 x per day for the first 3 months then dropping them to once a day for the remaining lactation. I’m not sure how it will work out but it should be much less time and the cows, as you note, may be in better condition with little or no extra inputs.

    We find it well worth our time, at our income level & with 5 children, to put in the effort to raise our own food. I can understand a family with fewer children, a higher paying job, or a couple or single person to purchase. I would likely do the same.

    • Steve bought a farm across the street from the farm he was raised on and where his mother still lives. He has roots there.

      He’s not retired. He works very hard in town and on the farm. I understand what you are saying about an artificially low market price…sort of. Steve keeps his costs at an absolute minimum. He grazes his livestock and manages his grass well. His facility is paid for, the land is paid for…you get what I’m going with here? He’s priced at a level that will bring customers to his farm out here in the middle of nowhere. But he’s priced at a level that allows him to make a profit…because his production costs are under control. To get customers to keep showing up (and because he’s exceedingly generous), he also loads them up with excess produce. He is an amazingly productive gardener. He can’t eat everything he grows.

      Steve certainly blesses the community but I think this is a good thing. He’s making an investment in our community while he can. When hard times come, he may need to make a withdrawal. Our communities, not our governments, should be relied upon to give us a hand up.

      I think this specific situation is different than a guy with a couple of cows and no entreprenurial ambition flooding the market with free milk and produce. Many of his customers drive more than an hour to buy his milk. They don’t drive that far because he has cheap milk.

      • O.k. I’m not sure if this comment got through the first time so here goes again:

        I understand. I’d love to talk to Steve about how he produces his milk for that price. We do the same: own everything outright, manage our grass well, etc. We just can’t sell for $6/gallon. As I noted above, we aren’t making money at $8. And you are right on about the government. If they would stay out of the business farming & food, my family might actually be able to make a living at farming. What we have in this area are a handful of folks (2 or 3) that sell milk for $4/gallon. This is what people buy around here, with no understanding of quality. This I cannot compete with. If I just let my cow continuously graze my pastures and fed co-op dairy feed (which contains animal fat, among other things), and put the milk in recycled milk jugs, I might be able to sell my milk at $4. But I can’t bring myself to do that. I’m producing milk primarily for my children. It has to be good.

        • Well, rather than take my word for it (because I’m still learning this lesson) I have two examples. Darby Simpson at Simpson Family Farm charges the highest price for chicken at both farmers markets he sells at. He always sells out first. HIs sales are not a function of price, it’s a function of quality.

          Here is a video of Salatin saying the same thing at Google. It starts about the 1 hour mark.

          Focus on quality and service. Don’t worry about what others are doing.

          Is Steve making any money? I don’t know. I know that customers drive more than an hour to buy his milk. That tells me that price is not a factor in their decision. His waiting list indicates there is room in the market for other producers.

        • Having spoken to Steve today I want to emphasize something. Steve makes a profit on his milk. Steve does not make a living from his milk. There is enough of a margin to make it worth his while to milk the cows and use the milk to attract customers to his farm to buy other products. Like my eggs, it’s profitable but the real value is in opening the market for other products.

          I think Mac Stone at Elmwood stock farm said he’s charging $6 for a dozen eggs these days. He sells out at that price. I guess it doesn’t have to be a loss leader.

          • I think this is the nub of the matter, right here. Steve makes a profit from this one enterprise, but not a living. Like you with your eggs. Joel Salatin doesn’t make his living from just beef or just eggs or just broilers either. Never did. It matters so much more when you don’t have a lot of revenue streams. Which I guess is a motivation to diversify.

          • See? And that’s why I read your blog, SSF. That’s exactly right. Several profitable ventures can be greater than the sum of their parts.

            Also, Steve stopped raising chicken himself and sends any customers who are interested in chicken my way. I send milk customers to Steve and have helped him sell hogs. Multiple profitable ventures give you options. Community makes this easier.

  8. Going down to a 1x’s day milking may have to be my option. When I first bought my milker (other one is still just a calf) she was on a OAD milking and giving 2.5 gallons a day; I put her on two a TAD milking but as it happens, the stress of the move made her go down instead of up in production. She’s now only giving 2 gallons a day. I would certainly go through less feed if I was only milking once a day! But it’s something that will take some hard thinking… This summer and most likely this fall are going to be really tight, money wise, so I’m trying to balance between as much production as possible, but not going overboard and upsetting things. I’ve tried feeding her sprouts, and the previous owners have tried doing a grass-fed diet for her, but she’s a high maintenance cow who falls apart without grain. Her one fault, I suppose. Sigh.

  9. Nitrogen $.1725/lb
    Phosphorous $.0794/lb
    Potash $.229/lb
    I suspect these are wholesale prices and they vary day to day on the markets. Probably cannot go to Farm and Home and approach these prices in a fifty pound bag.
    Guess you know not really caretaker!

  10. Using the max lbs per acre of fertilizer you added as an update x the bulk prices Caretaker shows above (a rate a small farmer may not qualify for) that is $34.62 of fertilizer based on 75 birds pro-rated to $18.46 for your 40 birds. Mr. Google tells me in my province at 2011 prices (tonne prices so here again small farm $ would be higher), this would be $56.67 based on 75 birds or $30.23 pro-rated to 40 birds.

    How many days would it take for 40 or 75 birds to cover an acre roughly – as layers and as broilers? Devils advocate – I am turning the table and looking at this from the opposite direction of what is the cost to produce this acre of fertilizer (and you just get eggs, bug control and manure spreading as a side benefit)?

    How many eggs a mth does your family consume? Does the 60 dzn eggs a mth from 40 birds include the eggs you consume?

    • Well, George Henderson would be disappointed by me but we don’t track the eggs we eat. We eat the cracked, stained and misshappen eggs. Right now we are also keeping pullet eggs. When I said 60 dozen per month I meant salable eggs.

      The layers (in a much larger flock 2 years later) are fenced into a larger area with more room to run and more work to do. But I have to move them frequently to prevent them from defoliating the landscape. They certainly do a good job of breaking up cow pies and eating bugs and I bless them for the manure contribution. There is more egg math in the future but I never really have calculated the real economic contribution of chicken manure from the layer flock…beyond what is said here. Have to think on that.

      Obviously I think we are better with layers than without them but eggs are largely a labor of love.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s