AgriCulture: Eggs, a Great Source of Irony
Posted by: Rural Intelligence
Posted on: Wednesday, March 09, 2011
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Full Article
AgriCulture bloggers Peter Davies and Mark Scherzer are the owners of Turkana Farms in Germantown, NY. This week, Mark writes:
A story in The New York Times on February 19 about Maine’s Own Organic (MOO) Milk illustrated the difficulty of breaking even doing small scale agriculture. It described MOO Milk’s effort to market slow-pasteurized organic milk to a geographically limited market as a cautionary tale demonstrating that “true grit, a laudable philosophy and a hot trend aren’t enough to create a viable business.” As one of the cooperative’s participating farmers, Aaron Bell, aptly summarized it, “Our boat is made of duct tape and we’ve almost sunk a couple of times, but we’re paddling along.” The problem, the article pointed out, is that selling milk is an extremely low margin business. When margins are that low, the only way one can make money is with high volumes, meaning that small scale producers are inevitably doomed to struggle.
What’s true of milk is no less true of eggs, we’ve discovered. The economics of egg production, which occupies a small niche of our farm business, are easy to plot and follow, and they similarly reveal how difficult it is to overcome a small margin of profit without high volume production. I’ll (excuse the expression) lay it all out for you.
You’ve all heard of Tax Freedom Day, the mythical day some time in April when you stop working for the Government and start working for yourself. Well, we on the farm have what I’d like to think of as Chickenfeed Freedom Day, when the chickens produce enough eggs each day to pay for their feed rather than us having to buy it for them. Chickenfeed Freedom Day, in my judgment, is imminent.
How do I know this? In a typical week, I go to our local feed supplier, V.R. Saulpaugh in Livingston, and buy three bags of their “lay mash” for a total of $27, and one bag of cracked corn for $7. That’s $34 total. Strictly speaking, it’s not solely for the chickens. Our two obnoxious Chinese watch geese (still available for free to anyone who wants guard animals), the crippled duck who lives in our greenhouse, our four barnyard guinea fowl and the peacock and pea hen all partake of this fare. But there are ancillary chicken costs—the oyster shells we feed them to keep their eggshells hard, the electricity cost of heating their watering towers in the winter, the amortized cost of the 25 new chicks we buy each year to keep production going—that roughly bring us back up to the $34 mark. The grain costs go down in the summer when the chickens are grazing the yard and eating the cartloads of weeds we bring them from the vegetable garden, but then we have to figure in the labor costs for tasks like cleaning and repairing the coop, so we’re still, I’d say, hovering around the weekly cost of $34. Needless to say, this calculus values our time feeding, tending young chicks, collecting and washing eggs, and the like at $0. So be it.
We have to bring in $34 a week to break even. At $3 a dozen, that means selling 11 1/2 dozen eggs a week, or roughly 20 eggs a day. Right now, the chickens are producing that number only occasionally; the typical daily harvest is closer to 18. But experience tells us that as the days lengthen egg production snowballs into an avalanche, and for the next six months or so the chickens will again be collectively earning their keep. When they’re laying three dozen or more a day, assuming our market buys our full production, we can make (hold on to your hats) up to about $30 or more a week in profit. Of course, we snatch a dozen and a half or so eggs to eat ourselves each week, so we need to produce 13 dozen to have positive cash flow, but you get the picture. Over the course of the year, as long as we replenish our stock of layers each spring, we end up slightly in the black.
I can see the lightbulbs going on. You are all smiling to yourselves and wondering why you have passed up this lucrative egg business opportunity for so long. Indeed, you might be imagining ways you could change the balance more in your favor if you were the farmer. In order to reduce the feed cost, you might cull the old chickens who lay at best only one egg every few weeks, and generate more positive cash flow by selling them as soup chickens or starts for spaghetti sauce base. You might have raised your egg prices on January 1, when the Saulpaughs raised their feed prices. You might seek cheaper feed of dubious origin, which explains to some extent how American agriculture got into its current mess to begin with. You might increase the number of laying hens to raise production a bit.
Or, if you were really interested in making money at farming, you would probably get out of the small scale egg business altogether. This is certainly the solution advocated by my father, Felix, whose bemusement at my egg selling stems in part from recalling that when I was born he was making his living, such as it was, with an egg sales route. His true passion at the time was playing semi-professional soccer in the Maccabee League, so egg sales had to supply him with his real income. Uttering those two concepts, “egg sales” and “real income”, in the same breath still strikes him as laughable. But the real absurdity, in his mind, is all the years he worked so hard thereafter in the textile trade for his family’s benefit, to, among other things, foot the entire bill for my fancy Yale law degree, so that I, too, could sell eggs.
When I sell eggs to my neighbors here at the farm and downtown in New York, I give a little nod of thanks to Felix. When you enjoy our eggs, you might thank Felix as well. —Mark Scherzer
For the complete archive of past AgriCulture blogs, click here.
