Thoughts on homesteading: selling eggs at a loss

In a recent Farm Update post I mentioned that we are currently selling eggs at a loss. Reader Jo asks, reasonably enough, “Why?” It does sound like an odd thing to do. Rather than give a short answer, I’ll try to identify all the different considerations that have led us to do this.

First, when I say that we are selling our eggs at a loss, I mean that the feed which we give to our laying flock costs us more than we would make if we sold all the eggs they lay at our current price. Earlier in the summer our hens were laying 30 eggs per day, or 2 1/2 dozen per day, or 17 1/2 dozen per week. If we sold them all, at $1 per dozen that would yield us $17.50. Meanwhile, the feed they eat now costs us about $35 per week, or about $2 per dozen eggs.

Also, those are theoretical eggs. Over the summer production has dropped to as low as 9 dozen per week, but has rebounded recently and is now around 14 dozen per week. Feed consumption varies day by day, but overall seems to be pretty steady. So at any given time we have been spending from $2.50 to $4 per dozen eggs to buy feed.

And last winter there was a stretch where the hens laid nothing at all. The cost of the feed that kept them alive then would need to be amortized over a year or so to give us a more accurate picture of what those eggs are costing us. But at least we know they are costing us even more.

So far this doesn’t sound too promising as a business proposition. But we need to keep in mind that it isn’t a business proposition, but just a snapshot of one aspect of our ongoing effort to learn by doing. We didn’t get here by sitting down and deciding to keep a certain number of hens that would eat a certain amount of feed in order to produce a certain number of eggs at a certain price to obtain a certain profit.

Three years ago when we moved here we inherited a chicken coop and a ragtag flock that produced the occasional egg. We fed and watered and sheltered those few, and by the next spring we were accustomed enough to having chickens free-ranging our yard that we decided to order ten laying hens along with the broilers we planned to raise in tractors. Our son Matthew, who has always been drawn to birds, took those chickens under his wing and learned the things that needed learning to get them organized as a laying flock.

It took nearly eight months, but sometime late in the year the new hens began to lay steadily and prolifically, and we had our first real supply of eggs. For awhile we had only enough for our own needs, with the occasional dozen to give to friends. Somehow that flock grew to about thirty hens (neither my records nor my memory tell me how; both last year and this we have had hens hatch their own chicks, but not in enough quantities to account for the growth), and very early this spring we were getting 30 or so eggs per day.

We decided to order an additional ten female chicks this spring, thinking that we need to keep a steady supply of new hens coming in to replace hens that eventually stop laying. Those will not be laying for another few months, but they are eating, and they are taking up room in the coop. In fact, as presently organized the coop is full and there aren’t enough laying boxes for when the new hens start laying; this will push us to think in more detail about what we need to do to organize the coop for maximum use, and whether we actually want to do that.

The upshot is that right now our laying flock is an awkward in-between size, too large if all we want to do is supply our own needs, too small to produce enough eggs to supply any sort of commercial customer base. But that’s the size it is right now, and it isn’t much of a headache to keep it there for awhile. Which gives us an opportunity to experiment with various interesting ways to deal with an excess supply of eggs.

The first thing we did was decide who we wanted to supply with weekly free eggs; that list ended up as our elderly next-door neighbor (one dozen), Jerome Lange (two to three dozen, depending), and one of our pastors (1 1/2 dozen). Next, we asked a couple of nearby neighbors if they wanted to buy any from us, and they both did—but at what price? Well, the going price for eggs around here has been $1 for roughly forever, so that is what we told them. That accounted for another three dozen. And one of those neighbors told some Amish neighbors that we had eggs for sale, so a couple stopped by to ask if they could have some, and that accounted for another three dozen. Which is about all we could supply, given that we like to eat a lot of eggs ourselves.

So: we supply neighbors with roughly ten dozen eggs per week, six of which we are paid $1 for. We keep between four and six dozen for ourselves. We collect the eggs into used egg cartons and keep them in the basement, and we have a weekly schedule where either one of the kids takes the eggs to a neighbor or the neighbor stops by.

From a strictly business point of view, this is a disaster. We are spending $35 a week, plus the labor we invest, and we are making $6 per week, i.e. it is costing us $29 per week to keep this operation going. But what else are we getting for our $29?

  • Four to six dozen eggs.

  • We are learning to keep chickens at a ‘real’ scale, i.e. forty hens rather than just a couple.

  • We are learning to produce at a ‘real’ scale, i.e. we have people depending on us to supply them with eggs regularly, and we depend on them ourselves.

  • We are learning a little bit about how to manage direct sales to neighbors (not quite the same as wholesaling or direct sales to non-neighbors).

  • We are establishing stronger relationships with some of our neighbors.

  • We are serving our neighbors, the paying ones with a good inexpensive product and the others with a loving gift.

  • We can base our decision as to how to proceed on our own practical experience, rather than speculation or someone else’s advice.

On that last point, here are some of the options before us:

  • We could continue on as we are doing.

  • We could raise our costs to something approaching what it costs us to produce a dozen eggs, say $3.50.

  • We could raise the cost further, to pay us something for our time and trouble, say $5.

  • We could scale back our flock to produce just enough eggs for ourselves, which would be costing us between $2 and $4 per dozen (or more) depending on the time of year.

  • We could scale it slightly larger, so that we could give eggs to friends that would be costing us $2 -$4 per dozen (or more).

  • We could try to reduce our costs by raising some or all of our own chicken feed.

Here’s what we think of those options at the moment:

  • Continuing on is not a good idea in the long term—the benefits, especially the ones that involve learning, will diminish with time—but there’s nothing urgent about changing things.

  • We can’t ask our neighbors to pay $3.50 for a dozen eggs, especially when they are selling for just over a dollar at the grocery store. We could conceivably ask non-neighbors to pay that, given that they are not industrially produced, but at $3.50 we only break even and wouldn’t be much interested in giving a product at cost to people we don’t know.

  • We certainly can’t ask our neighbors to pay $5.00, and I’m not sure I could bring myself to ask that much from anyone else, since it would require me to persuade them that our eggs are worth four times as much as industrially produced eggs, something I’m not convinced of myself.

  • We could very well scale back our flock to supply only our own needs, although it might also require that we cut back on our own egg consumption, given how much the eggs are costing us.

  • We’d like to always produce a surplus of whatever we raise, so as to be able to give some of it away. But this works better when production cost is mostly labor, as with vegetables, rather than w
    hen the cost is mostly inputs, as with eggs.

  • This is a path we hope to follow in nearly every area of homesteading, namely reducing input costs to zero by producing your own inputs in a sustainable manner.

As tediously detailed as this post is, it only covers some of the concerns that go into deciding about eggs. Other concerns will be raised when I talk about how we are deciding about meat in a post soon to come. And still others will be raised when I talk at some point about the unavoidable need to produce cash income.

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13 thoughts on “Thoughts on homesteading: selling eggs at a loss

  1. Thanks, this is very helpful. We’re gradually moving in that direction ourselves. Currently our hens lay enough to feed us and allow us to give away a dozen every week or so. We have one friend who wants to buy from us and she pays… I’ve forgotten what it is now, but it’s whatever is charged in the Amish community — about double the grocery store price. That seems to be the going rate for free-range eggs around here.

    None of ours have ever gone broody — we have mostly Red Stars and a couple of Barred Rocks. What kind do you have?

  2. We have this discussion frequently, as we have the same size flock and feed prices have spiked up to about the same price/wk that you all are paying. It’s great to have the occasional dozen to gift to someone and we love to do that as well.

    At the farmers market this summer, we explained to our customers what had happened with feed prices, and of course they know we drive 90 miles to get there, so the gas factors in as well. We sold eggs for $5/dozen and no one walked away without buying after learning the price.

    I do believe that when we take “real” food back into the city, the freshness of what we sell is worth a small premium in sale price. Store eggs are not as fresh and they do not have the flavor our pastured eggs offer; so for an older, less tasty product, you’d expect to pay much less.

    Talk of premium aside, however, even at $5, I’m losing money over the course of a whole year, since we do not light our pens and the hens “take the winter off”.

  3. I’ve forgotten what it is now, but it’s whatever is charged in the Amish community — about double the grocery store price. That seems to be the going rate for free-range eggs around here.

    Kelly,

    I’m guessing that is because you live so close to Washington D.C. and your Amish neighbors sell to a largely urban clientele. Out here we are far beyond communting distance to any city, and so neighbors and potential customers are rural through and through; even if you could convince them that your eggs were much better than store-bought (not too hard to do), it wouldn’t be prudent for them to spend what little money they have on quality. We face the same problem every time we go to the grocery store, trying to balance what we know about industrial food against the need to conserve cash that is becoming ever more precious to us.

    None of ours have ever gone broody — we have mostly Red Stars and a couple of Barred Rocks. What kind do you have?

    We have mostly Black Australorps and Barred Rocks, both of which have gone broody for us. The new female chicks we got this year are Partridge Rocks, advertised as good for brooding chicks but it’ll be another year or more before we know for sure.

  4. “We didn’t get here by sitting down and deciding to keep a certain number of hens that would eat a certain amount of feed in order to produce a certain number of eggs at a certain price to obtain a certain profit.”
    That too bad. Its actually pretty simple.
    •Feed should cost no more than $9.00 per 50lbs bagged (non-organic). Or 18¢ per lb. If you’re paying more, find a new source.
    •A good “feed to dozen egg” ratio would be 3.5 lbs of feed per dozen eggs.
    •40 birds= 3 dozen eggs a day
    •3 dozen eggs X 3.5 lbs of feed = 10.5 lbs of feed per day
    •10.5 lbs per day X 18¢ per lb = $1.89 per day in feed costs for 3 dozen eggs.

    We have been raising organic free range eggs for 5 years now. And it can be profitable. I pay nearly double that for certified organic feed and still make a profit.
    We also live very far from a large town in a economically depressed area. But there are people willing to pay $3.00 per dozen. I didn’t believe it at first either. Now we have roughly 80-90 layers and sell all our eggs.

  5. We have been trying to ‘do the math’ as well. We currently have 6 Barred Rocks, 1 Rhode Island Red (don’t ask), and 5 Ameracauna who won’t start laying for about another month.

    We live 30 miles outside of town but have two convenience stores next to the recreational lake that we hope to be able to sell to once we increase our flock (which will happen if I EVER get the bigger coop finished!). We already have many friends eager to buy at $1.50 per dozen (which is just a hair over store prices here), so we’re not going to make a margin there. I buy my feed from a church friend’s feed store; it is a bit more, but I am willing to pay a bit more to support a Christian brother’s business.

    The way we try to keep our costs down is by supplementing the birds’ feed with table scraps (some of which we get after church fellowships) and by throwing in grass clippings after I cut the grass. I don’t know if it is the oppressive Texas heat, but they do not eat a great deal right now. I have been using the same 50-pound sack of feed for six weeks now (I’ll need more in a couple of days). So, my feed costs are relatively low.

    How things will work out with the expanded flock is anybody’s guess. We hope to get 50 Wyandottes (Silver-laced and Red-laced) because they are good winter layers and make great meat birds when they stop laying. (Plus, I may get rid of the Rhode Island Red cockerell I have ‘for show’ right now; he just eats feed and makes noise.)

  6. Of course, something I forgot to mention, is that we don’t confine ourselves to thinking of our egg production in terms of dollars. We barter and trade with others for things we think are of equal value (wild hog meat, vegetables, etc.). With the deteriorating value of the dollar, this actually makes more sense for us when we can do it.

  7. Rick,

    We have about 35 Barred Rocks that lay between 7-14 dozen a week depending on the time of year. We have them out free range and also feed them a mixture of organic grains. We produce eggs for ourselves, give some away, and sell some for various prices.

    Originally, we sold them organically for $3.50 a dozen which came close to covering our costs. This entailed a frequent 40 mile round trip which eventually began to be too cumbersome so we ceased selling them this way.

    Locally, 12 egss sell for $1.50 in the store for white large, $2.5 for brown, and around $4 for organic. Most folks pay us between $2-3.

    Regarding feed, I am amazed at the difference in the effect in the hens between the industrial non-organic feed and the organic grain mix we feed. If the hens are outdoors, I am not sure that you can tell any difference in the color and quality of the egg, but you sure can tell a difference in the henhouse! The industrial crumbles leaves behind a manure that is much more unpleasing to the nostril.

    While I am not a rabid organic agrarian, I do prefer the natural ingredients of an organic grain mix versus the 50 ingredient list of the non-organic crumbles. I always wonder what the “animal protein” consists of. Bonemeal?

    I think ninepoundhammer hit the nail on the head, though. While it may be necessary to occasionally make some money on our ventures, it seems like chickens and eggs might be hard to realize any profit on a small scale. However, a dozen eggs makes a great bartering tool and it does provide a means to be neighborly. Awhile back, a gift of a dozen eggs and a half hour conversation netted me a nice carpentry job!

  8. Couldn’t agree with you more Bob, we don’t have anywhere near the number of chickens you have. In fact only five at the moment and one gorgeous duck, but come spring and summer they produce more than we need. And it is an absolute pleasure to be able to share excess eggs with friends and familly, none of us ever have to nip out to the shop for eggs. Viva the chickens!!

  9. Chickens love variety. Tablescraps, compost, Japaneese Beetles (from the trap), grass clippings, and chickweed by the armload (in the spring) all make them go crazy. If you grow watermelons, there should always be some extras to bash and toss to them.

    Try buying some whole or cracked corn to mix into their feed. They love that and it’s cheaper than pellets.

    Happy chickens are laying chickens. And movable pens are the way to go!

  10. Been in the same chicken house with you I think. This was back before the big jump in feed prices the last year or two. However, the point is still the same – you started this as a learning process and have learned and maybe still are. But the price you sell at are to much to carry on the operation. I would suggest maybe raising the prices $2.00 per dozen to offset some and should not be a burden given where grocery store eggs are priced at now, especially given the additional aspects your customer would have of knowing where the egg came from and such as that. I would also suggest the moving more toward doing your own feed, but as another commenter suggested, a lot of the scraps you have from other things are great for supplemental chicken feed. Also, the additional usage of perhaps growing some feed stuffs specifically for feeding the chickens, on a small scale may help to offset some. Lastly, the chickens are free ranging? If not get them outside some where they can range on their own or at the very least a chicken tractor setup is in order.

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