Wednesday, January 13, 2010

Production Costs - Winter

I am running my egg production business as just that: a business. You may want to look at your own operation as a business too.

My production costs are highest during the winter at exactly the same time that my egg production is at its lowest. Costs are high due to lack of free foraging, higher caloric requirement due to cold weather, electricity for water heaters and lights. Production is lower due to short days and cold weather.

During this critical time of winter, I want to analyze my profitability.


  • Food
  • Egg cartons
  • Shavings (bedding)
  • Electricity (water heaters and lighting)
  • Amortization of chicks, raising chicks to production age and housing

I used four bags of feed (200lbs, $39) during the past ten days. Egg cartons cost $0.20 each. Shavings are about $1 a week. I have not tried to calculate my electricity costs. During the past 10 days, I have harvested 22 dozen eggs that are suitable for sale (we cannot sell the jumbo and double-yolk eggs - they are too big for the cartons; nor can we sell the bantam eggs as they are too small).

Therefore, my per-day cost (ignoring electricity and amortization for the moment) are $4.50; including electricity, my daily cost is probably close to $5.00.

My customers prefer that I keep my pricing consistent rather than having it vary during the year. I currently charge $2.50 per dozen. That means my daily revenue during this period has been $5.50. That is pretty thin profit (and only a profit because my labor is "free" and I am ignoring amortized costs for the moment). Fortunately, my costs are much lower in the warmer months (free-ranging is awesome) and my harvest is better. During the warmer months, I have to recover the startup costs (chicks and feed for the first six months before they start to lay consistently).

I will also note that my existing coop is large enough to hold more chickens, so I could easily scale up my operation modestly. An increase in scale would give modestly better pricing on feed and would require no more electricity for lighting and heating water.

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