Thursday, February 19, 2009

Chicken economics - heritage breeds

MMP asked me what economics looked like for raising a batch of chickens, input costs, equipment, and so on. I've found that it's just as easy to raise 100 chicks as it is to raise 3, so I don't deal with less than 100 chicks at a time. This time of year I'm brooding 250-500 chicks constantly in batches spaced about a month apart, plus hatching my own eggs from turkeys and chickens. I'm self-sufficient on turkeys this year, but still purchasing about half my chicken chicks. I went to my own turkey flocks because poults don't transport well and are very expensive -- $6-12 per poult vs $1.80-$2.25 per chick.

So I'll do a rundown of laying hens based on a batch of 100 chicks. The numbers are similar for other types of chickens.

equipment for 100 chicks:
4 30 gallon rubbermaid tubs and metal shelving (to keep the chicks in the tubs) $80.
4 heat lamps, $52.
4 heat bulbs, $32
4 feeders, 4 1 gallon waterers, $35

This equipment lasts for at least 2 years, and during the year will be used to raise 3 batches of chicks. So I'll assign 1/6th the cost of the equipment to this particular batch, or $33.20. If you were to raise fewer batches you'd be assigning a higher fraction.

Labor
I calculate the labor as if I were paying someone minimum wage + all of the associated overhead taxes (medicare, social security, unemployment insurance, bookeeping, which adds about 40% to the base wage). I can't imagine getting someone to work for me for less than an hour a day, so figure labor at $14/day, or $100 a week. Over the course of the 6 weeks to brood out this batch, that's $600, but we're usually brooding 200-500 birds, so I'm only going to assign half of that labor cost to this batch. Call it $50 a week for 6 weeks, or $300. To keep the birds clean and healthy it does take 20-30 minutes per day per hundred chicks.

Mortality
Figure 15% mortality. That's pessimistic, but pessimists are only pleasantly surprised.

Consumables
Purchase price of chicks + shipping: $2/each
300lbs of chick starter crumble, $72
Wood chips/sawdust, $20 - we use free chips from tree service companies, but if we had to buy sawdust or chips, that's what it would cost in bulk.

Total cost to produce 85 chicks: $624, or $7.34/chick. That's cost -- with any business you need to make a profit for when you lose a batch of chickens to a weasel, or your shelter blows away, or any of a number of other bad things. So I won't sell them for less than $10 at this point.

That's the cost to get the chicks up to 6 weeks of age -- old enough to get out on pasture. After that the labor costs go down -- instead of cleaning bins we move the pens with the tractor. instead of having to hand-feed and water each bin, we're filling a large bulk feeder and waterer once every other week.

The outside equipment is more expensive than the indoor, but spread over a larger number of birds. So figure equipment costs for this batch at another $30, and labor at $100/month for 4 more months, or a total of $400 more. Figure another 5% mortality. To feed the chickens out to full adult weight takes 800lbs of feed at a cost of $180.00

My feed mill loves me, by the way. I buy 6 tons of feed a month, between the chickens and the pigs.

6 week cost: $624
+ 6 month cost $610
Cost to produce 81 birds: $15.23 each

I'll potentially invest over $1200 per batch of 100 before I see any return.

I sell those birds for a variety of prices. Qty 1-3, $25 a bird. 4-10, $22 10+ $20.

I don't sell birds for less than $20. If I don't sell the bird it becomes part of my own laying flock, and I sell those eggs for $5/dozen. Being next to a big city helps a lot.

In my opinion the biggest mistake that most farmers make is forgetting to pay themselves for their own labor. minimum wage in WA state is around $9/hour, and being an employer, all of that overhead I talked about would exist if I were to hire someone -- so I figure it in. If I do need to hire someone in the future, I've got the revenue to do so at the current wage. That way if I do decide the grow the farm I'm all set for an employee. If I can't make it work at minimum wage, I go back to the drawing board and work with my prices. Doing this sort of math also helps you hold the price when you've got a customer who wants to haggle. I can't tell you how many people I've seen selling animals at less than the cost to produce.

3 comments:

MMP said...

Thanks for the analysis. Good point of including at least minimum wage against labor in case you decide to expand by hiring.

Bruce King said...

Allowing and calculating a wage also allows you to pay far sitters in the event you need to be away from the farm for a while.

plus, do we really want to create a job for ourselves that is less than minimum wage? really?

howlingduckranch said...

So there it is! The search button. It is amazing how I missed that (the old 'staring directly at what you are looking for but not computing' moment I think!) I hate to consider the other possibilities.