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 lose 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:
Hatchery chicks ($5.00 average, sexed)
Feed until laying age (25lbs from day-old chicks to 22 weeks x .32lb. is $8 a bird)
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: $95.60/year
So, if that bird was producing 200 eggs a year, each dozen would cost the farmer $5.75. If that bird was producing 275 eggs a year, each dozen would cost the farmer $4.15. 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 is 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 $5.75 a dozen to BREAK EVEN. If they are producing higher yielding eggs, they need to be charging at least $4.15 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:
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!
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 exorbitant levels each year. Your customers should not have to pay for your poor management.
Rebecca shared even more information in Chris Blanchard’s 2016 Farmer to Farmer podcast. Check it out.