Small-farm “Egg-onomics”

We sometimes receive wide-eyes or raised eyebrows when we answer the question “how much are your eggs?” Our pasture-raised, free-range, organic-fed hen eggs, we reply, are five dollars per dozen.

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10 thoughts on “Small-farm “Egg-onomics”

  1. Oops, I was reading the wrong column on our enterprise budget. A break even cost of $4.80/dozen would have been the case if the hens were completely free range (assuming they all went home at night and actually laid in the nest boxes, neither of which did we find to be true).

    Counting the labor in futzing around with electronet, our break-even jumped up to $5.30/doz. That’s with feed costing 12c less per pound than organic. So with organic feed, and all our other costs considered, our break-even would be $5.78, and we’d have to sell eggs for $7 to get a 20% net!

    (Yes, you need at least that much net, because you still have to cover overhead — insurance, office time, truck repairs, etc.)

    If we didn’t have so much predator pressure, doubling our hen replacement costs, we could sell our local-grain-sourced-but-not-organic eggs for $6 and do all right. We are out in the wilderness a bit, which doesn’t help on the predator end.

    It’s not impossible, but eggs didn’t work for us.

  2. Nice article, thank you. There are some other factors which change the numbers. When we started including this stuff it really clarified our enterprise analysis and we dropped the egg business.

    We were, at the time, keeping 225 commercial egg layer hens (they really do lay more), buying bulk non-GMO locally sourced grain at about $0.35/lb, and selling the hens after two productive years for $3 a pound at the Farmers Market as “stew hens.” It cost $5 per hen to process them and most came back at 2 to 3 pounds, so we didn’t recoup much. At that scale, paying $10 an hour for labor, our break even came out at $4.80 a dozen, not counting marketing costs. Our pasture process sounds very much like yours.

    1) Paying your self $8 an hour is too little. We use $10 and it is still too little. $12 would be more reasonable. There are hidden costs in wages, especially if you have employees, so $10/hr actually comes out to minimum wage.
    Even with 225 hens, at $10/hr, our labor costs were ALMOST AS MUCH AS FEED –$30 per hen per year. The two most time consuming parts were moving electronet and washing and packing eggs. So that’s huge. Don’t discount labor!

    2) Don’t forget property taxes, mortgage payments, or rental/lease costs for the property. We count taxes at $50/acre, and also land care costs, like lime and a yearly mowing, at another $50/acre.

    3) Don’t forget marketing costs! Delivery and invoicing for wholesale, including gas and time, or fees, driving, and labor for farmer’s markets, which comes to $100 – $150 per market.

    4) One of our big costs, even with electronet, was predators. Hawks do not care about electronet, and our pastures have trees for them to comfortably roost in. For a while in there, we were losing 2-3 hens a week! That adds up fast. We also had losses from diseases like chronic pneumonia, especially in the winter, which was hard to kick once it got on the farm. So counting these deaths, our replacement costs for hens was significantly increased.

    5) Speaking of replacement costs, it comes out better for us to buy well-started pullets than to try to raise them ourselves, and to run an All-In, All-Out set up for disease control, than to have flocks of mixed ages.

    6) Make sure you have a year round market at full price for as many eggs as you produce. We had no trouble moving eggs retail during the farmer’s market season, but in the winter, we got stuck with wholesale at $3.75/doz, and that didn’t work at all.

    Again, thanks for a good article which affirmed our experience. I wonder if five hundred hens would create a different return. Would need a completely different market.

    1. What had us ditching the egg enterprise were Labor and Losses.
      Discounting labor has you working for nothing- none, zip, nada, this is depressing and for us unacceptable. The words “loss leader” are not good. I know I am worth a living wage. We spent hours every day on those hens in the pasture, feeding, watering, moving fencing, herding them in at night, collecting eggs, washing eggs, sorting eggs, packaging eggs, keeping a separate fridge for storage, marketing them, raising replacements, …..
      Losses. I see a 10% loss in the beginning as chicks but what about later on? We had hens for 10 years with excellent net fencing and housing for the 4 seasons in the Northeast. We always had losses. Hens die, sometimes for no obvious reason. Illness and disease happen no matter how excellent your operation. Let’s not forget predator strikes- yup those happen no matter how great your fencing or housing is. 1 little slip up and there goes half your flock. Eggs disappear when you get a rogue egg eater. Egg production goes down with weather extremes which happen often and all year round.
      Sales were great all summer and not so bad going into fall. I found myself spending more time to market them- time is not free!. By January sales dip big time while costs seemed to go up. Hens ate more and needed more bedding in their housing since weather outside was dismal they didn’t want to go out much.
      I resorted to trying a wholesale account but each and every one would only pay below my cost of production. Losses. There are so many backyard producers who say things like ” I don’t need the money I have a real job that pays the bills”. Sigh……..
      We tried lots of creative ways to keep eggs sales going into winter with no success.
      We dropped the egg enterprise, we stopped the losses, we now had 3 hours extra per day (or more) to use on money making enterprises- or just plain old family time which is much better all around. Heck with all that extra time we did some amazing things that were profitable and got us our dream farm.

  3. Josh- it’s great you are trying to break down the numbers. Don’t forget to factor in both labor and overhead (mortgage/lease, insurance, licenses, marketing expenses, phone, internet, etch). So your break-even price is probably closer to $4.50/dz in which case $5 does not give you much profit. You may need to charge $5.50 or $6 to make a decent margin. I wrote about this issue on my blog just a few months back at Keep up the writing!

    1. Thanks for pointing this out, Rebecca. I was aware I had not included overhead, part of the reason being the discrepancy between where we are now, financially, with our farming, and where we project to be in the future, when all our “enterprises” are up and running. At that point, apportioning the percentage of our total overhead (insurance, utilities, rent, market costs, etc) to our egg production component would indeed add a little over a dollar per dozen to our costs.

  4. Thank You!!! We raised over 200 hens, housed them on pasture, fed them and counted eggs everyday– the numbers did not add up for us either. It is very hot down here (South Louisiana) and we are almost convinced a hen will not lay enough eggs through the summer to make it worth keeping them for profit. Fertilizer value is one thing that keeps making us revisit the idea, but for now we are happy with our 20 older hens giving us enough eggs for us and family/friends.

    Great Article, Thanks!

    1. Up here in the Adirondacks, the summers are no problem, its the sub-zero wintertime that can hurt us!
      Related to lapses-in-laying, since first analyzing our numbers, I revisited the idea, and the costs, or raising our layers through only one year of lay, rather than two (with its associated period of molting and subsequent reduced production volume). Surprisingly, it actually pencils out better to butcher our birds at 1.5 years old, rather than 2.5, providing we can get a good enough price selling “stewing” hens (which we can at the moment/scale).

  5. Great article! It’s nice to see that someone else has thought through the numbers enough to charge more than just the cost of feed! I’ve seen so many farmers go out of business, complaining that they couldn’t make it work for $3/dozen, but they refused to make the effort to educate their customers about the difference in quality and sustainability of their business compared to conventional. And even $5/dozen is still stinking cheap! How many people can you feed with that? 3-6? Try feeding that many people at McD’s for that amount!

  6. Great article Josh! A real resource for folks starting out, or for an occasional audit of an established model.

    After 20 years of raising pastured layers, I’ve got three basic truths: 1) it is a labor of love, in order to create a superior product, 2) it’s a collaborative component of soil building and fertility enhancement for our truly sustainable livestock, ie sheep and cattle, and 3) the economy of scale on layers starts at about 400 birds and peaks up around 1200.

    1. I think your “three basic truths” are pretty on-the-mark, Forest. We might include in the “labor of love” category the role of (potentially low-profit) pastured eggs as a bit of a loss-leader for the diversified market farmer, just as it is for supermarkets. We’ve found that eggs are one of the things customers at our farmers’ markets are most interested in, and having those eggs available brings people to our stand (and then once customers try them, it keeps bringing them back!). Plus, eggs offer an entry-level price point – a new customer may be willing to spend $5-$6 for a dozen eggs, but its a much harder sell for a $20+ chicken, for instance.

      As for the fertility value, we can affix a bit of a price to that as well, though it doesn’t really encompass everything the chickens do and add. From what I’ve read, a chicken will put out in manure 100% to 115% of what they put in. So a 1.5 year old hen may have consumed around 100lbs of feed, producing the same in fresh manure (1/20th of a ton). You can then compare the N-P-K values of that manure to what could be purchased as equivalent fertilizer. For some of the figures I’ve seen, it might range from $25 to $40 per ton, so one laying hen might thus offer $1.25 to $2 in manure. But she also (when outside) spreads that manure herself, as well as that of any ruminant she joins, as well as removing thatch and reducing fly and parasite numbers – all told, harder to measure!

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