The Economics of Egg Farming
The Cost of Raising Chickens for Eggs Might Surprise You
Reading Time: 5 minutes
By Bill Hyde, Happy Farm, LLC, Colorado — When I started egg farming, I kept track of my costs. The numbers surprised me. Turning a profit leaves a lot of factors to consider.
I’m an old new farmer. With no family or personal background in farming, my wife and I bought a seven-acre property just north of Denver four years ago, when I started raising chickens for eggs. We added turkeys and ducks, pigs, and goats and sheep as I fenced some fields. From the outset, I decided to raise and grow heirloom varieties of plants and animals within practical limits and to provide naturally raised foods. I let all the animals forage and graze; feed supplements were organic and corn-free and soy-free. Everyone loved the delicious eggs with Halloween-orange yolks.
From the beginning, I heard a lot about sustainability of farming from environmentally and economically conscious groups, such as Denver Urban Gardens, the Slow Food movement, and the Weston A. Price Foundation, from many CSAs in my region, literature on permaculture, writings by people like Barbara Kingsolver and Michael Pollan, research by Jeffrey Smith, Gary Zimmer and others, and activists like Joel Salatin, as well as all the anti-GMO rhetoric. They all conclude that small, local farming is the way to go to get real food. While large, corporate farms, with the help of governments offering massive subsidies, have lowered the price of foods, many argue that the quality of food has suffered. The table below shows that the combined percentage we pay for health and food hasn’t changed over the last 50 or 60 years. What has changed is that as food costs declined, health costs have risen. Might there be a connection?
Percent of Budget for Food and Health
I decided at the outset of my farming experience to keep detailed records of my costs. The most comprehensive data I have is on egg farming. I considered 10 cost items: buying and raising a chick to egg laying age, shelter and yard space, food, mobile tractors, utilities, labor, packaging, transportation, land, and supplies for raising chickens for eggs. I have between 70 and 100 chickens at any time. For each item I calculated the cost of producing a dozen eggs. I amortized expenditures where appropriate, for example, building the chicken sheds. By way of illustration, the first cost item in the table below is buying a chick and raising it to egg laying maturity, which is six months. The total cost then is distributed over the eggs that the hen is likely to produce. The calculation is as follows:
I buy 25 or 50 day-old chicks at a time for a price of $3.20/chick; the feed for six months is $10.80 per bird; so, the cost so far is $14 per bird.
Mortality is about 20 percent. For me, it is generally higher; some operators have lower rates of mortality. So adjusting for mortality ($14 x 120% = $16.80), the cost for a ready-to-lay chicken is $16.80. I can expect 240 eggs (30 dozen) during its one-and-a-half to two-year productive life. So the $16.80 amounts to $0.56 per dozen eggs. Similar calculations are made for the other items.
The overall result of about $12 per dozen eggs is surprising. The biggest egg farming cost is labor. I imputed a value of $10 per hour. That may be a lot if an 8-year-old boy is collecting the eggs, but it is modest pay for a farm hand, and hardly exorbitant if you want a reliable, independent worker who is responsible to do these chores every day. The person needs to open the shed and coop, move and open the mobile tractors if in use in the early morning, collect the eggs in the afternoon and clean and package them, and close the chicken structures at dusk. These tasks take about an hour and a half per day, which amounts to $15 in labor for about three dozen eggs or $5 per dozen.
The second biggest item in egg farming is feed. I buy non-corn, non-soy, organic feed in bulk from a Nebraska farmer, which costs three to four times as much as conventional feed.
Mobile tractors are used during the growing season to allow the birds access to fresh forage every day. I used to have them run free, but after a fox attack in which I lost 30 chickens, I had to come up with a better egg farming plan.
The entry for land often prompts questions. People will say that I use the property as my home and that I shouldn’t treat it as an expense. Others will say that my land will appreciate, which it may, but it may depreciate. My ultimate answer is that I certainly could have bought a house with much less land and paid a lower price. The money I would save by doing that could be used for something else. I impute a 3 percent return on land priced at $30,000 for one acre. The issue could be argued on both sides for a long time, but I did feel that it was important to at least have some conservative number entered and to recognize that the birds need green space for foraging. The annual amount is $900 divided by 1,050 dozen eggs.
The chicken sheds are priced at $6,000 apiece. They are 10-feet by 12-feet cinder block structures with Solexx paneling to allow sunlight and heat in. Attached to each shed is a 400 square foot or larger area enclosed with chicken wire on sides and top (to keep owls, hawks, and raccoons out). Each shed houses 30 birds comfortably, and I amortize them over 20 years of egg farming.
There are a few things missing from the egg farming cost table. I have no item for marketing. With a great product, selling eggs via word of mouth is more than adequate. Once a few people know about the eggs, word spreads. The packaging item is in brackets because my customers recycle the cartons although it is against Colorado law to reuse a carton. Transportation is understated. The cost includes only the cost of driving into town to pick up restaurant food waste twice a week; it does not include delivering the eggs to a CSA or elsewhere. Another missing item is an entry for profit. Every business, if it wants to remain in business, should generate a profit. Since I am subsidizing the cost of my eggs by 50 percent (I sell them for $6 per dozen), profit is a long ways off.
Where does this leave us? Some people will say that they can’t afford to pay $12 for a dozen eggs. Yet, people in the U.S. pay far less for their food than anywhere else in the world.
In the U.S. an average of 6.9 percent of the household budget is spent on food. That is far less than most places. If we doubled all food prices (including paying $12 for a dozen eggs), we would pay about what the Japanese people pay for their food, and they don’t seem to be particularly malnourished or poverty stricken.
So, as individuals and as a nation we need to consider what quality of food we want to consume and if we are willing to prioritize for it. If nutrient-dense quality food costs a lot more than we conventionally have thought, many of us will have to make compromises elsewhere, in housing, transportation, recreation, and employment to afford real food.
Have you been able to turn a profit with egg farming? We would love to hear how you made it work.
Bill Hyde writes from his farm in Colorado.
Cost Per a Dozen Eggs
|Egg Farming Component||Cost|
|Buying, Raising Chick||$0.56|
|Shelter & Yard||$0.67|
|Labor (Feed, Water, etc.)||$5.00|
|Total w/o Packaging||$11.69|
Source: Calculated by the Economic Research Service, USDA, from various data sets from the U.S. Census Bureau and the Bureau of Labor Statistics.
Originally published in the February/March 2014 issue of Backyard Poultry magazine.