Lowest Cost Production III: Efficient Until it Hurts

In a recent posting I was suggesting we, as cattle producers, need to lower costs. I also wrote this ridiculous run-on sentence:

Is it more efficient to plant, fertilize and spray herbicide on corn and beans, harvest those crops, screen them, haul them to town, dry them in a bin, grind them into feed, haul that feed back to the farm where you feed chickens in long houses with high rates of death so we can manually pack the birds into crates, haul them to a processing plant, hang them on a shackle, dress the bird out on a conveyor, part the bird up and sell the tenders at the deli than it is to do basically the same process with cattle?

So why on Earth is chicken cheaper than beef? I have already demonstrated that I can raise slightly more meat per acre with chicken than with beef. Just imagine if I could raise 6 batches of 20,000 birds working year round? Then we can focus on mechanization of the process. I could just build a house, have my wife and kids clean out the dead birds a couple of times/day and every 2 months we could cash a check. In return, we could cover our pastures in 6″ of broiler litter each year! Beyond the increase efficiency, I would be handling feed in larger quantities, receiving chicks in larger numbers…economies of scale apply all around. But the birds would never see the sun. And they would probably stink. But a little efficiency here and there add up and pretty soon it is more efficient to plant, fertilize, spray, harvest, screen, haul, dry, grind, haul, feed, catch, haul, hang, dress, part and cook chicken than it is to do basically the same process with cattle. Largely, though, this is because cows aren’t built to digest grain and are therefore harder to mechanize.

In yesterday’s article I worked out that I need 2 acres of crop ground to support 500 broilers plus a third acre to raise those birds on sustainable pasture. If I built a 20,000 bird broiler house my ratio would be much closer to 2 acres per 500 birds, maybe less if I grow them to a mere 3 pounds. In fact, we may need less than two acres per 500 birds because I’m guessing that the feed ration is made from processed grains and by-products, not whole grains (which may even make the feed free!). I would also have to deal with the significant debt and maintenance of a long broiler house. It is difficult to determine what the true profit margins are for broiler farmers. This article indicates it’s pretty low but no financials are revealed. This article, though, paints a bleak picture and says the farmer keeps 3-5 cents for each pound of chicken produced out of which he has to pay a $550,000 mortgage…and buy groceries, make a car payment and plan for the future. I mean, it stinks for the poor schmuck but it’s great for consumers because we can buy a fully-cooked 2.5 pound rotisserie chicken at the grocery store for $6! And we only have to pay the rube $0.15 for the bird! (And here I have the audacity to raise my birds to 5 pounds and charge $15 for each one and not even give them a single dose of antibiotic!) Please don’t misunderstand me. I’m not suggesting we should pity the chicken farmer. He may be doing quite well at $0.05 per pound. He may be living out his dreams. And maybe $6 chickens are just what the world needs.

But from where I’m sitting (and based on the high rate of turnover in the industry), it looks financially bleak for our chicken farmer friend. If he decides working 12 hour days to make $5,000 every two months  isn’t what he wants to do (BTW, the payment on a $550,000 mortgage is more than the chickens earn him each month)…well, what else is he going to do with those chicken buildings? The banker may have something to say about his desire for a career change. In fact, they may suggest he just borrow more to build another chicken house. Take care of twice as many birds. Then he can make some real money! Remember this conversation in Food, Inc.? He may find himself married to chickens…at least until the “mort” in mortgage happens.

So let’s review the comparison I made in the previous article. You could borrow a bunch of money, erect a 40×200 structure of concrete and steel, put in power and water lines, heat and cooling and never take a day off again in your entire life while depending on cheap fuel prices to continue ripping, planting, harvesting, drying, grinding and delivering grain to your chicken masters…OR you could buy or rent a little land, build a little fence and run some solar-powered cows you may or may not own. If you need a day off, build your daily pasture allotment larger than normal. If you need to make a little more money, build some chicken tractors and raise chickens SEASONALLY. Or quail. Or pheasant. Or layers. Or not. Let’s just stick with the cows. Are you going to get rich? Nope. But the chicken house doesn’t look like the road to riches either. In fact, the moving target that is “rich” may be a mirage. Another day. Besides, your neighbors may not want to live downwind of a chicken house. Who wants to be rich while polluting the commons and being hated by neighbors?

Now for some news: You can manage your cattle differently than your grandpa did. You can bunch them up into a tight herd, fitting more cows on fewer acres while building and improving soil and forages. You can have your grass and eat it too. It’s true! Use dense hooves to trample uneaten grass in to feed the soil. Just allow the ground to rest between grazings and make a few (just a few) dollars on little more than harvested sunlight and rain. And you can do it with just a couple of hours each day. And the more cows you have doing this work the more impressive the results are…within certain constraints.

I started this series by weighing MY chicken operation against MY cattle operation. And the figures I reveal show that I should be growing chickens across all 60 acres, not across a mere two acres. But that is a lot of work. I fit birds in where it is appropriate and when I want to. Pigs too. Both of these act as additional profit centers and diversify my risk and income potential. None of these activities are my master.

Compare that to a commercial chicken house.

So, back to my original posting. If we are going to take on a low-margin, land extensive enterprise like raising cattle, we better find ways to keep our costs low. The good news is that cows were originally designed with grass in mind. And a blade of grass is a solar collector. Just add water. No tractors are needed. No feed grinders. I don’t even need to own a truck. I suppose, if it came to it, I could walk my cows to the local slaughterhouse. Heck with the concrete, rebar and unpayable, intergenerational debt. I do not desire to be a slave to chickens, to mechanization or to bankers…any more than I am.

7 thoughts on “Lowest Cost Production III: Efficient Until it Hurts

  1. This one brought back some memories. The reason I’m where I’m at today was because I was orginally going to buy a chicken house. So I started doing some research on the topic and came across “Pastured Polutry Profits” by Joel Salatin. It sent me down the proverbial rabbit hole. And the rest is history.

    • Thanks. I don’t know if you had time to read them but those two posts I linked to were fascinating. Especially the second post.

      We were looking (just looking) at property in Arkansas. Looked great for cattle but it also had 10 chicken houses and the current owner was reserving a lease for himself on 50% of the space. Sounded like a bad idea to me.

  2. Started out great. And good article over all. Too bad the guy that wrote is a statist troll (who blames the Republicans; it’s all their fault Democrat) and only adds fuel to the fire of why we are in this mess. I also love when an author will claim they “deregulated the market.” But never cites the law or the so called “deregulation” they speak of with such vitriol.

    • LOL

      Let me tell you about deregulation. My best option is to deregulate myself into another state. But it’s a little bit like picking your poison.

      To be honest, I didn’t even notice the red team/blue team stuff. I was astounded by the idea someone would borrow that much money BEFORE he bothered to get a contract.

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