So, how do we make money on the farm? Well, we really don’t make much but opportunities abound. Today I’m going to talk about eggs and my answer is decidedly nonlinear. Further, the numbers I use may not apply to you at all but the process involved will at least provide you with the base questions to ask to determine profitability. Remember, price is determined by customers. It’s harder to find customers for $10 eggs than for $1 eggs. It’s hard to find chickens that lay eggs you can sell for $1/dozen. We currently sell $4 eggs. The money we make helps us move the farm forward, even if slowly. I’m happy to offer this transparency to our customers and readers. You should know what you are buying…what you are supporting…and what you are getting into. I have to make money to continue farming. If you think I’m making too much money (lol!) you can pursue other options.
I always enjoy talking to new customers after they have tried their first dozen eggs. Quite often they go on and on about taste, texture and color. Based on customer feedback and my own experience, we make the best egg in the world. However, no matter how good our eggs are, I won’t stay in business if I don’t count the cost. We have to figure out what it costs to sell eggs. Again, I won’t work for free. I need to make good use of my time. If eggs aren’t worth doing, we’ll make soup. This was originally posted on The Survival Podcast Forum but I have revised the numbers slightly.
Here’s what my numbers look like with additional detail below. Keep in mind we’re small potatoes so economy of scale works against us. Also realize I have been known to make errors in my math.
Costs (per day):
Chicks – $0.005
Feed – $6.72
Housing – $0.34
Egg handling – $1.89
Those costs total $9.265/day or $0.154/sellable egg (60 eggs/day annual average)…$1.85 per dozen before labor. I usually just say $2.
We retail eggs for $4/dozen and seasonally wholesale a portion of our eggs so we’re really looking at a gross of $19.50 and a net of $10.25/day, again, before labor. Labor includes moving chicken houses, feeding, watering, collecting the eggs then cleaning and sorting the eggs. This is unskilled labor and is valued on the market at less than $8/hour. (Probably much less than $8/hour.) That means I have to make darned I wrap up my work quickly or the farm is losing money.
Now the boring details. My feed is not organic. It is not non-GMO (Sorry for the double negative). I use the Fertrell poultry rations and grind my own.
Last year’s pullets cost me an average of $1.80 each. I bought 350 then sold 225 of them for $5 each at 8 weeks…basically covering the costs of all birds up to 8 weeks. This covers electricity, water, brooders, shipping and feed. So I’m starting at 2 months from zero. 3 months to go before the first egg.
I raised my pullets on the alfalfa field. The cost per day of using the alfalfa field is a wash against the benefit of the manure they put down and the minerals from their feed. I feed them broiler mash until 2 weeks before onset of lay. Last year broiler mash cost me $26.92/hundred to grind myself. 125 birds ate an average of 15# of feed per day for that period of time so we’re looking at $4/day to feed 125 birds until their first egg. Again, the bird was free for the first two months. I have 75 days of feeding at $4/day spread across 125 birds in the flock. Let’s say 120 birds in the flock because at some point last spring a raccoon ate 5 of them. (Dad and I took turns sitting out all night every night for a week and never saw him.) So, at point of lay, each bird cost me $2.46. That has to be recuperated over the remaining 18 months of productive chicken life…or an additional half cent per day.
As adults, the birds get a slightly different ration that costs $27.14/hundred for me to grind. During the winter they tend to eat more than summer but the flock averages 20 pounds of mash and 5-7 pounds of oats each day. Oats cost me $20/hundred so let’s say $1.20 worth of oats each day and $5.42 of layer mash totaling $6.62/day for chicken feed plus $0.10 per day for the range feeder (assuming it lasts 10 years). We get 80-90 eggs/day from those same now 110 birds (predation is an issue) and to make the math easier, I’ll suggest to you we get a yearly average 60 eggs/day that are grade AA Large. The balance are cracked, stained, misshapen or small. 5 dozen eggs are salable. With me so far?
The birds spend their lives (2 years) surrounded by four lengths of PermaNet. That’s a $660 investment plus a solar energizer that cost $350. The fencing and charger, spread over 10 years, divided out to a per-day cost takes us to $0.27 cents/day.
The birds live in two simple hoop structures that also should last 10 years. Each hoop costs $200 to build plus two nest boxes for $180 each, again spread over 10 years adds another $0.21 per day. If we winter in a high tunnel the cost of the tunnel is spread between the livestock we keep there and the produce we grow the rest of the year. Since we bought the tunnel used the cost per day is pretty low. If we apply the entire cost directly to the chickens we need to add $0.13 to the cost every day.
I pay $0.31 for unprinted paper egg cartons. I sell 5 dozen eggs/day so that’s $1.86/day. We collect our eggs in baskets or plastic egg trays daily. For sake of completion I’ll add those in at $0.03 per day.
Now, labor. For months we moved our pullets every day, never getting a dime (beyond manure value which we washed against alfalfa field usage). Now, every day we move the layer houses (1 minute each), feed, water and gather eggs (15 minute round trip from the house). Then we wash, grade, sort and pack eggs (1 minute/dozen). 23 minutes of time against $10.25. Really the margin isn’t very good but that’s why it is not a primary enterprise. Salatin says a layer should make you $12 over the course of her life. I’d say that’s about right. But having eggs to sell puts our label in a family’s kitchen every day of the week. Once we get our eggs in the kitchen we go ahead and sell a chicken. Then half a hog. Each of these operations is increasingly profitable.
You can see from that, once you calculate the value of your time, eggs are a hard way to make a living. Without paying a dime for labor we are in the neighborhood of $3,000 from egg sales this year and we only worked for 23 minutes each day…not counting time spent sourcing and grinding feed, checking water extra times on hot days, sleeping in the pasture to deal with whatever has been hunting my birds or just marketing product. My true labor average may be more like an hour per day. Also, the layers don’t lay steadily year round. At some point production will drop below 3 doz/day but costs will remain relatively the same. Finally, as my friend Matron of Husbandry would point out, those chickens are eating bugs and dropping manure…that’s worth something. I also left off a charge for land use which varies between $50 and $200 per acre (though that is likely an expense shared by additional enterprises). All of that is the nonlinear part of this equation. Too many things vary. I didn’t even account for the possibility of a tornado blowing the birds away or a mink killing them all in one night. Adjusting vaguely for those missed values, we can begin to see Salatin’s argument more clearly. Once we pay our labor, each layer may only be making us $12 over the course of her life (and I suspect that includes selling her as a stewing hen).
Obviously economies of scale apply but I really don’t believe moving to 3,000 hens would boost annual farm income (before labor costs) to $72,000. I would have a heck of a time retailing 144 dozen eggs each day. Wholesale numbers would have to go up so margins would drop but, sticking with the $12/bird notion, spread over two years, after labor your 3,000 laying hen operation could bring in $14,000-$18,000 each year to the farm keeping someone very, very busy for 4-6 hours each day.
We prefer to keep the laying flock between 100 and 150 birds as a sideline business. Though marginally profitable, we don’t see it as a mainline enterprise. Just a part of the whole. Remember what a cow costs? Individually, these enterprises won’t sustain us. Taken together, we have a chance.
I had some offline correspondence with Matron of Husbandry who sent me a couple of links. I particularly appreciated the breakdown listed in this post. I came to $1.85 before labor because I didn’t count brooder costs, having supported that phase by selling pullets. That author comes to something on the order of $2.61 before labor, though the post lists something on the order of $5/dozen including labor and includes chick and brooder costs each year of production. Do the math any way you like as my math may be wrong and your numbers will be different. Selling eggs is a hard way to make a living.
Should I raise my prices? Probably. Should I just stop keeping layers? Maybe. But how boring would that be?
First, I think you are over estimating the time your equipment will last. I’ve been using Premier fencing (Not Poultry netting) for 7 years and it is pretty beat up at this point. I’ve had numerous mobile chicken structures over the last 10 years and I don’t think you will get 10 years from them…..5-7.
Have you had any problems with your PRS 100 charger? I’ve have 2 PRS 50s and the batteries were shot after 18 months…..no voltage regulator. We have a solar home and it has a voltage regulator or the batteries are damaged. Also, our charger was shutting off in the heat of the day in high summer due. Do the PRS 100s have that problem?
OK. Let’s say the fencing and charger lasts us 5 years (it’s 4 years old in still in good shape except for two lengths that were hit by a car or a mower). 5 years would double the costs per day from $0.27 to $0.54. Add a quarter to my costs. It’s now even further from being a primary enterprise but still worth doing.
Our charger is great 10 months of the year. It stopped charging in December and January last winter as the days were too short. This winter we won’t be using it.
Another thought….if you can get oat for $20/100 weight, can you get barley, wheat, peas for a similar cost? If so, you may be able to go GMO free for not much more $$ on feed…..and charge more accordingly for your eggs. Just some thoughts. I also grind my own feed and have formulated a GMO free mix. But here, it costs me near $40/100! I’m reformulating now to reduce that. But oats here, grown locally, are $25 per 100.
GMO- and soy-free is a direction we are heading. We were considering sunflower as a replacement for soybeans but, to this point, our customers are happy with the transitional production. Were I to go to GMO-free I would probably establish a separate flock and offer two grades of egg. One for customers who want GMO, one that’s just a great pastured egg. At least until I educate my customers on the value of GMO-free.
That’s an interesting idea, marketing two kinds of eggs. I know a farm that does that with turkey – pastured turkey is $4.49/lb, farm fresh turkey is $4.19/lb. On non-GMO feed, I notice it’s only $1/bag more than my regular feed, compared to organic which is aobut $12/lb more per bag (bag = 20kg/50lb).
When you talk of grinding your own feed, what kind of grinder/mill so you use? We’restill atthis time relying on the feed store.
We bought a feed grinder from a scrap yard. It basically cost its weight plus hauling. We crossed our fingers and greased it all up and hooked it to the PTO. If it didn’t work we were only out the hauling. Guess what? It worked. And the hammers had recently been replaced…bonus.
It has needed a little adjustment and a new sprocket…but not a whole lot in 4 years. All that said, the grinder can be a good thing if you are putting it to work. We hardly use ours. I grind maybe 8-10 tons of feed annually. That’s just not enough. I would be better off building or buying a bulk bin and having the feed mill deliver bulk feed. That plan is in the works, especially as we work to expand our hog operation.
Buying one bag at a time at the farm store is probably quite a bit more expensive than from a mill. Shop around. If you’re feeding it to chickens you might do better feeding whole grains that you buy in bulk. Chickens have a built-in grinder…but using the gizzard may cut down on feed efficiency. Nothing is free. Maybe you could soak whole grains in skim milk…if you can find a bulk skim milk supply. We also have a manual countertop wheat mill. We can change out the auger to grind corn, beans or coffee. For a little while we made small batches of chicken feed with that. Now we just use it for coffee…no bread in the house. Just a few ideas.
You know, I’d seen that post on Honest Meat and couldn’t remember where when I was trying to look for it a while back, so thanks for linking it. I would like that blog a whole lot better if the author could just remember that loosing your shirt is untucking it, and losing your shirt is going broke. She just uses this particular mixup way too much for me to be able to read her posts smoothly. I know it’s quirky of me, but there you go, weren’t we just discussing “normal”? Loosing or losing, she makes some good points about costs, as do the commenters. It’s all helpful to those of us trying to make these things add up. Thanks.
lol, makes me that much more self-conscious.