Friday, 1 February 2019

Small Farm Organic-Fed Egg-O-nomics


We sell our extra-large and jumbo eggs for $7.00 per dozen. These are some of the common responses we get when we tell people the price: 

“I thought farm eggs would be much cheaper.”
“If I buy 2 dozen can I get a discount?”
“My neighbour sells their eggs/I can get eggs at Costco/elsewhere for $5.00/dozen, why are yours so expensive?”


We hear these questions often, and they are good questions from people who aren’t on the farm to see the ins and outs of egg production on a small farm. 

I'm here to answer that question. Are you ready? This will be long. Grab a cup of coffee or tea (or wine!) and a comfy seat and give me 10 minutes or so of your time. I'll put lots of pictures in to keep you entertained. Yes, these are all pictures of our own chickens and eggs.

If you don’t have time right now, bookmark this for later reading. Here is the tl;dr: 

 
It costs a lot of money to ethically raise and keep laying hens while feeding them organic food to produce a highly nutritious and pesticide/herbicide-free egg.

Much more than one would think. And hey, the grocery stores sell their extra-large organic eggs for up to $8.99/dozen (and they are making far more profit on that dozen than we are) so in fact you ARE getting a deal.

 

 

The Details:

The bottom line is that egg production with heritage hens is barely profitable for the small farmer. Profitable egg production is achieved only by scale (tens of thousands of hens), by breeding hens to be egg laying machines, and getting rid of them after about 18 months to get in a new set of egg laying machines. Commercial layers produce at an average of 90% over their lifespan or 328+ eggs/year. They are worn out at 18-24 months of age. 

As a small farmer we are severely limited by government regulations as to the number of hens we can have until we are infringing on quota. We are only allowed to have 99 laying hens before being required to get a permit, so we can’t get anywhere close to the numbers of hens needed to make a living wage by producing eggs. 

In fact, we would have to sell the eggs for at least twice the amount we do to make a reasonable wage. Egg production is more about a labour of love – love for the hens and a desire to provide them with the longest, best life possible. It’s about pride in producing huge, beautiful, healthy eggs for our customers and ourselves in a manner that supports regenerative agriculture and soil building. 

This means sourcing, raising, and keeping chickens ethically. Our hens live full lives, cage-free, uncrowded, free ranging or pastured, and have the freedom to express all their natural behaviours. It means not jumping to cull and replace them as soon as their egg production drops a little due to age or lighting conditions. This all comes at a cost to the farmer. 

Everyone deserves to make a living wage and should not be working for free. But farmers often only make just enough money to survive. We have huge mortgages and the same bills as everyone else, food, clothing, orthodontics, and kids. Some costs such as utilities, repairs and insurance cost far more than for the average house owner. We do it because we love what we do. But we also deserve to be paid fairly for that work. If we don’t get paid then we can’t continue doing what we do: providing high quality food while rebuilding the soil, sequestering carbon and increasing biodiversity i.e. fighting climate change. 

But enough philosophy; let’s get down to some hard numbers. Let’s suppose we want to have the government mandated maximum of 99 layers.

Sourcing the layers:

We care about how the parent flock that produces the hatching eggs, chicks or pullets we will buy are kept and housed. Economies of scale dictate that often these parent birds are housed in huge barns with the minimum amount of space mandated by regulations. They may not ever see natural light or get to be outside. We feel that it is very important that the whole lineage of our layers is ethically raised, not just our chicks.

We therefore choose to buy production-bred heritage breeds from True North Heritage Hatchery, a small breeder in BC. The parent flock is a mix of heritage breeds and runs around on pasture eating bugs, grass and generally living the ideal chicken life. The chickens have been carefully selected over years for better production without compromising their health, vigour and quality of life. Along with increased egg production, they are bred for healthy genetics, their ability to live on pasture and a desire to forage. 

However, these hens will never reach the level of egg production of the high production breeds, and we will pay more per chick or per egg as it costs more money to raise birds this way. We feel good about supporting small, local producers who have the birds’ best interests front and center.

What age layers should we get? 

Once we’ve chosen from where to buy our layers, there are three options: incubation of fertile eggs, buying day-old chicks, or buying point-of-lay pullets. 

Hatching fertile eggs requires an incubator that can incubate at least 200 eggs (half the chicks hatched are going to be male). An incubator that size costs between $1600- $3000.00. We will need about 260 eggs in order to account for eggs that do not hatch and the fact that half of the chicks will be male. That’s about $450 - $500.00 for eggs and shipping. Once we’ve invested in this, would we use it enough to justify its expense? 

Point-of-lay pullets are more expensive as they are raised to 16 weeks by the breeder. Advantages are that they are almost ready to lay and we didn't have to feed them from day one. The main disadvantage is the difficulty in shipping that number of adult birds. 

Currently we can’t afford an incubator of that size and quality, especially given we aren’t sure if we would use it more than once every year or so. That lets out hatching eggs. 

As for point-of-lay birds, any method of transport for 99 almost fully grown birds is likely to be
logistically difficult and prohibitively expensive. This lets out point-of-lay pullets. 

For these reasons we went with day old chicks. Plus, baby chicks!

 

Choosing a breed:

We could buy 99 female sex-linked chicks (the feather colours of the boys and girls are different at hatch so you can immediately tell them apart). However, these chicks are more expensive and they tend not to lay as well as other breeds. Over the life of the hen they are more expensive than buying non-sexed chicks.

Or we can buy 198 straight run chicks (males and females are the same colour at hatch so you get roughly 50:50 of each sex) of a higher producing variety. The hens of this breed will produce more eggs than the sex linked, but half of the chicks will end up being male so we need to start with twice as many chicks. We wont know which are which until about 6 weeks of age. 

After running the numbers, economically it made sense to go with straight run chicks. We chose Production Reds which lay about 280 eggs/year. Remember in comparison the commercial hen lays 328+ eggs/year.

To ensure we end up with 99 hens we need to order more than 198 chicks in case there are slightly more males than females. We also need to account for typical losses in day old chicks. Losses may be higher in shipped chicks depending on weather and/or how they are handled by the shipper. So, we should order about 220 chicks to account for those variables.
With shipping the cost will be about $800.00.

Rearing Costs:

  • Electricity: The chicks need supplemental heat for the first 3-6 weeks. Electrical costs will vary depending on rate, how much heat they need, and how long they need extra heat.  
We estimate the average cost will be between $14 - $28.00.
  • Feed: Organic feed is between 1.4 -1.7 times as expensive as conventional feed. A bag of organic feed costs between $26.00 - $33.00 for 20kg.
In the first 6 weeks, each chick will eat about 1.1kg of feed – 220 kg for 200 chicks or $297.00 – $363.00
Over the next 14 weeks each chick will eat about 5.2kg of feed – 1040 kg for 200 chicks or $1400.00 – $1700.00.

After 20 weeks the males can be processed for the freezer so we are (hopefully!) left with our 99 pullets. At 20 weeks the pullets are considered to be point-of-lay (laying or almost laying) and will eat about 0.9-1.0kg feed/hen/week for the rest of their lives. They might not start laying for another 4-8 weeks depending on breed and season/light levels. 

Feed cost for the rest of their first year (32 weeks) is 2850 kg for 99 hens or $4277.00 – $5227.00.

Total expenses for the 1st year for 99 hens is an average of $7395.00. 
This assumes there are no losses along the way and that we still have 99 hens.
Hopefully the hens will start laying at 20 weeks but at this point their eggs will be small (not saleable) and will get larger over the next several weeks. 

Revenue:

In their first year the hens will lay saleable eggs for 29 weeks. Since they lay an egg approximately 77% of the year (280/365), this means each hen will produce 156 eggs by the end of her first year.
99 hens will lay 15, 444 eggs or 1287 dozen. 

Sale price $7.00/dozen = revenue of $9000.00. 
Subtract expenses of  $7395.00. 
We have a net profit of $1605.00!

Yay! 

But wait! We have not included labour in our costs! We probably average an hour a day on caring for the chicks, hens and the eggs. If we break that down to an hourly wage, it means we paid ourselves about $4.45/hour. Sad face.

Okay, maybe in year two we will make a bit more money and can pay ourselves a better wage! Feed will cost the same, about $7722.00 year. The hens will produce about 280 eggs per year each. Or will they? Egg production drops as hens get older. They probably will lay at 77% the next 6 months til they are about 18 months but then after that production will slowly decline. In their second and third years, this production may drop to 57% or 208 eggs/year, or lower. Ouch. 

But lets be hopeful. If it is all sunshine and rainbows and the hens give us maximum production for the next 12 months (until they are 24 months old) the math looks like this: 
280 eggs x 99 hens = 27,720 eggs/yr or 2,310 dozen at $7.00/dozen =  revenue of $16,170.00. 
Subtracting the feed costs leaves us profit of $8448.00. 

Yippee! Much more! That’s $23.50/hr. Much better! But it’s an average of $13.75/hr over the first 2 years. Oh. Nowhere close to a living wage. 

But what really happens in year two? Egg production can drop quite significantly after 18 months. Instead of laying at 77% we should realistically expect about 57-65% lay from 18-24 months. Doing the same math, its more likely that in year 2 we make a wage of $16.50/hr. Averaged over the first 2 years we make $10.50/hr. 

And we very probably will not have 99 hens anymore as chickens find many ways to die. We expect at least 10% losses over this time period. In year 3 the egg production may be even more dismal, and we can expect more losses in number of layers. It very quickly becomes a break even or even a losing situation. 


Now lets do the math at a sale price of $5.00/dozen. 
  • Year One: Net loss of $860.00 
  • Year Two: (sunshine and rainbows version): Profit of $4155.00 = Hourly wage of $4.50
  • Year Two: (realistic version): Profit of $2776.00 = Hourly wage of $3.84.
  • Year Three: Net loss of $893.00
Lets just stop there as it just gets worse every year thereafter.



In order to keep just breaking even at the $5.00/dozen scenario or making a below living wage at the $7.00/dozen, we need to repeat the process every 2 years with a new set of hens. Small scale farmers rarely do this. They love their hens and find it hard to kill them off just because they aren’t laying as well as they were. 


 

Other Expenses:

In these calculations we have not considered the cost for things like fuel for trips to the feed store. Infrastructure. Electric netting to keep them on pasture is $600.00. Portable chicken housing costs about the same. Nesting material is approximately $100.00/year. Electricity to run the nets is minimal but we shouldn’t forget that in our calculations. We also need to consider repairs and disasters. Things like predation, or a wild bird borne illness can wipe out an entire flock literally overnight. Some chickens get a taste for eggs and will actively seek out eggs to eat. Chickens learn by watching and this bad habit can spread rapidly throughout the flock. These egg-eaters drastically reduce profit.  

For pastured hens, labour also includes moving them along every 1-2 days so they always have fresh pasture and are contributing to soil regeneration and not degeneration. Moving 99 hens to new pasture is about as easy as, well, herding 99 hens. This alone should pay about $100.00/hr!

There are also the hours of mental gymnastics and anxiety trying to figure out why the hens choose to lay eggs on the ground instead of the beautiful nest boxes you built them. Building, re-building, tweaking, trying new and different nesting materials, cleaning them, replacing bedding as often as needed – up to once a day if it’s wet and muddy. Time spent staring at various hens and wondering if that one is sick and are we going to get enough eggs to break even today? The anxiety over money can be exhausting. 

Other feed options:

If we fed non-organic feed we would make more money faster and for longer. But organic is really important to us. Many pesticides and are fat soluble and will concentrate in fat (i.e. egg yolks). GMO-free feeds are popular and less expensive than organic, but this doesn’t mean that they are herbicide or pesticide free. It goes farther up the chain than just personal health choices as well. By buying organic feed we are supporting farmers that grow organic grains, a tough way to make a living, just like us.  

Something better:

The bottom line is that in order to significantly profit from eggs that sell for $5.00/dozen, you need to go large scale. You need to intensively house chickens bred only for egg production in large scale production environments. 

These chickens are usually destined for an 18-month maximum lifespan of an unnatural life. They are often housed in battery 


cages, may not ever see daylight or the outside, often pick on each other because of stress, and eat non-organic feed. They look horrible as they sacrifice their general health to produce massive amounts of eggs. It seems like they are treated as machines with little regard to their value as an individual living creature. 

Many small farmers generally want something better for their animals. They want animals that can express their natural behaviours, are free of stress and anxiety, are healthy and vigorous and produce highly nutritious and pesticide-free eggs. They want them to have only “one bad day” (the day they go to slaughter), instead of an entire life of misery. It costs far more to be able to meet these goals. 

This is why our eggs cost more than you might expect when shopping directly from the farm.
Small scale farmers who sell low priced eggs are either taking a loss and may not even know it (many of us are poor business managers as we do it for the love of animals, not for the money) or feeding conventional feed or both.

Now you may be thinking that we will be making money from other farm activities so any profit is good. We hope we will. However, there are very few small scale animal enterprises that will make us even close to $10.00/hr. And an hour's work is an hour's work and deserves a reasonable hourly wage. No matter what, in terms of paying the bills, $10.00/hr sucks. 

Soapbox Shoutout!  

Support your local farmer. They love their animals. They produce top quality food. They are trying to help reverse climate change. They struggle to make a reasonable living. Toss in that extra toonie and feel good that the hens that laid your eggs were happy and you are supporting local, regenerative agriculture. Beyond organic! /soapbox

Whew. Did you make it all the way through? Fantastic! I hope that helps you understand and even agree that we need to charge $7.00 a dozen for our eggs. And hey, as we said above, grocery stores sell their organic eggs for 7.99/dozen (or more!) so in fact you ARE saving money by shopping at your local farm. 



If you have more questions or want to see how our hens are kept and fit into our regenerative agriculture and soil building goals, please email us or message us though Facebook.






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