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.

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.

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

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.


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.