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Egg Production: What You Need to Do and Charge to Make It Pay

By   /  May 2, 2016  /  7 Comments

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Photo by Kathy Voth

Photo by Kathy Voth

I adore eggs, the way they look with their different shades of white, off-white, tan, brown, green, and blue, their smooth shell, their sensual shape. I love to eat eggs, the quick and easy package of calories, protein, and nutrients they provide and the myriad of ways they can be cooked. In fact, I just ate two sunny-side eggs on top of black beans with an avocado on top for breakfast this morning, taking all of 5 minutes to put the dish together. Even the most expensive eggs provide more protein, calories, and nutrient-density than most meat of the same volume, so they are a populist food. Those that are allergic to eggs or don’t like the taste are missing out, but I fully understand. I hate the sulfury flavor of an overcooked egg too.

Many small and beginning farmers start with laying hens because of their low-cost of entry and relatively quick cash turn around. Egg production can be a focal point of a farm (as ours once was) or a nice ancillary enterprise for a diversified farm. The hens themselves provide a multitude of benefits to the farm- pest eradication, fertilizer, weed consumption, waste recyclers, entertainment, etc. But increasingly, egg production can be a farm’s downfall, money pit, or both. I have to write this article because I am helping yet another farmer understand that their costs of production are too high and that their egg prices are too low in comparison. Unlike most consumers, I am usually that lady admonishing a farmer for their low prices and telling them they need to raise their prices. What kinda nut-job customer tells a farmer to raise their price? In my case, one that has raised too many chickens to keep straight and understands the full costs of production only too well (at our high point we produced 350 dozen eggs a day!). A farmer need not loose their shirt on chickens and a consumer need not pay a dollar an egg to have healthy eggs. There is a happy medium, but it takes diligent record-keeping, good management, and accurate math to reach it. I will elaborate for those that produce eggs (back-yard style or commercial farmers)…

Free-range and pastured laying hens produce fewer eggs than confined birds. They also have higher rates of death loss and lower feed efficiency. This has all been scientifically proven. So, using a typical Rhode Island Red laying hen (which is a solid brown egg layer that can last 2-3 egg cycles), on the low end you could expect to get 200 eggs from one bird and up to 275 eggs a year if you provide supplemental lighting in winter time. So lets use this 200-275 eggs as our low-high range for the following calculations. Egg yield is a very important factor in a successful egg operation, but something that is often overlooked. Many farmers pick breeds that don’t produce very well, they don’t cull out unproductive birds, or they don’t provide supplemental lighting, so their per bird egg yields are on the low end. Underfeeding or overfeeding can also negatively impact egg production.

Farmers also overlook many of the expenses of egg production, often just looking at their feed costs as the only input. You (farmers) must include ALL the costs of production, or you will consistently loose money. Here are some of those inputs with typical costs if you had a 200 bird flock:

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Photo by Kathy Voth

Hatchery chicks ($2.75 average, sexed)

Feed until laying age (25lbs from day-old chicks to 22 weeks x .32lb. is $8)

Feed for 12 months of production (.27lbs a day most efficient x .32lb. is $31.50)

Bedding material, oyster shell, grit, diatomaceous earth ($2 a bird)

Electricity for brooding, supplemental lighting, egg refrigeration ($2 a bird)

Chicken coop, waterers, feeder, egg washer depreciation ($4 a bird)

Egg cartons, labels, ink for labels ($3 a bird)

Labor (.10/day x 365 days per bird is $36.50)

Overhead (insurance, prop taxes, etc. is $3.60 a bird)

Total Expenses per Bird: $93.35/year

So, if that bird was producing 200 eggs a year, each dozen would cost the farmer $5.62. If that bird was producing 275 eggs a year, each dozen would cost the farmer $4.49. Of course, if you increased the flock size, some of the per bird costs could go down, such as electricity, depreciation, labor, and overhead.

Now, if the farmer was charging something like $3 or $4 a dozen, which are typical prices (sadly) that I have seen all over the country even for organic eggs, then you can see that the farmer could be loosing between .49-1.62 per dozen eggs. LOSING money for every dozen eggs they sell. How many other businesses do that? So obviously, if the farmer is producing the lower yielding egg numbers, they need to be charging at least $5.62 a dozen to BREAK EVEN. If they are producing higher yielding eggs, they need to be charging at least $4.49 to BREAK EVEN (all costs being the same). So when I tell farmers they need to raise their prices (usually to at least $5/doz. but sometimes $7-8/doz. if they are buying more expensive organic feed), there is a method to my madness.

My take home messages:

  • Photo by Kathy Voth

    Photo by Kathy Voth

    Egg production numbers are important to keep track of. Pick the right breed, cull the unproductive hens, consider supplemental lighting, and make sure their diet is on track for good production.

  • Look at your other expenses and consider ways to lower them or spread them across more animals if your land-base and market will support that. For example, if you can raise 1,000 birds just as easily as 200 birds and your land can support that (& your market), then maybe you want to up your numbers to spread your costs out amongst more birds.
  • Feed efficiency is crucial since feed costs are your highest priced input. Don’t underfeed and don’t overfeed- it negatively impacts egg production, egg size, etc. Study & do research. For example, I just read that providing diaotomaceous earth in layer feed improves feed efficiency! Explore all options! Also, don’t think you can feed less just because they are on pasture. They will actually need MORE feed to process all that fiber, break down the nutrients in the grass, etc.
  • Don’t forget death loss. I didn’t even factor that into my costs, but pastured birds have higher death loss, sometimes as high as 25% if predation is constant. Good electric fences, livestock guard dogs, locking the birds in at night, etc. will keep them from dying. Dying from prolapsed uteruses often happens from overfeeding too.
  • Buy your inputs wholesale. Don’t buy retail egg cartons, labels, feed, etc. Shop around!
  • Don’t forget infrastructure and equipment depreciation. If you don’t build that into your price, you won’t have the money to fix stuff that will inevitably need fixing. This is crucial!
  • Rebecca's new book just recently hit the shelves. You can buy it at the On Pasture bookstore (service by Amazon and 10% of proceeds go to On Pasture!)

    Rebecca’s new book just recently hit the shelves. It’s got a lot of great information for raising and profiting from all kinds of livestock. You can buy it at the On Pasture bookstore (service by Amazon and 10% of proceeds go to On Pasture!) Just click!

    Farms have overhead. You have things like property taxes, liability insurance, interest payments, software, web-hosting, etc. that need to get spread out amongst your various enterprises. Factor those real costs into your price.

  • Review your costs of production annually so you can adjust your prices accordingly. Don’t keep the same price for years and years when your costs of production are going up!
  • Add a profit margin (such as 10% for unforseen costs, higher than usual death losses, etc. ) to the top of your egg price so that you cover your costs and make a profit. That’s only an extra .50 cents or so. Keep in mind that distributors and food retailers often make margins of 30-50%, so for you to make 10% is reasonable since you are doing 90% of the work!
  • Lastly, be honest with your customers and help them to understand what it costs to produce eggs. If you are producing nutrient-dense, tasty, healthy eggs then most likely your customers will be willing to pay for that. If they balk at your new price, do more education, provide taste tests, farm tours, or other methods to get them to better understand. Likewise, stay on top of your expenses and practice cost containment measures so you don’t just keep raising your prices to exhorbitant levels each year. Your customers should not have to pay for your poor management.

Rebecca shared even more information in Chris Blanchard’s Farmer to Farmer podcast.¬† Check it out!

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7 Comments

  1. Lisa says:

    How accurate is the study that free range chickens produce less eggs than confined chickens. My chickens & eggs are for my own personal use mind you….I have 8 chickens and they produce fantastic on a daily basis even through the winter with about a week break mid February and they are free range.
    They are most definitely earning their keep with their egg production. Thank you for this great article.

  2. Lucy says:

    wow, my cos per dozen using local certified organic groan is $7.50 per dozen. Fortunately I will sell the eggs via my CSA for $8 a dozen so will be able to make a very small profit. But If I sold for $8 a dozen to he public I would lose money as few would sell at that price

    • Lucy- you may need to work on getting your feed costs down. If you are paying $7.50/dozen in feed costs alone, perhaps you need to look to purchasing feed in bulk or use more productive hens. I have never heard of anyone having feed costs that high.

  3. Michael says:

    I often see the admonition that egg producers need to cull unproductive birds, from old farming books from the 50’s right through to this article. When you have a few hundred birds that all look pretty much identical running around and you are just coming in a few times a day to feed and collect eggs, how do you know which hens are the freeloaders who aren’t paying their way and need to go?

    • Michael- I would not make sense in flocks that large to figure out bird by bird which ones are more productive. What we did and many other egg producers do is to simply cull out all the birds of a certain age. We generally do that after two lay cycles. We would purchase a different breed or different color bird for each flock, that way we could tell them apart. We also generally ran flocks separately and didn’t mix them, mainly for biosecurity reasons (vaccines wear off). That makes it easy to know how old a flock is and cull the whole thing (or sell them live to people who want a few for their backyard or their soup pot).

  4. Harold Schrock says:

    Pretty realistic figures. The only difference I see from what I’m doing myself is feed cost. Mixing all my own feed I am monetizing my grain and covering all expenses at $.24 cents a pound instead of $.32.

    Also if you can develop a good market for spent hens it can almost cover the cost of raising the pullets.

    • Harold- I agree. In many places you could get between $10-15 for a spent hen, either live or dressed out. That can cover your replacement pullet costs. But I do know some farmers who live in areas where they lack the population of people who want spent hens, so they struggle to sell them.

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