Tags

,

I  currently don’t plan on selling any of my broiler chickens.  I am raising eggs and meat chickens for my family, and basically to build the skill set to be a bit more self-sufficient.  However one of our regular subscribers Cliff asked a few questions about cost of raising meat chickens thus I wanted to go through a through experiment.

First some thoughts.  When estimating some equipment you can put expenses  into capital expenditure.  I see a lot of people saying “…it is $1,000 of equipment to raise your first group of chickens.”  Well that is mostly true, however the recovery of the cost or capital expenditures are often spread out over a number of years.  When people say “all of this investment makes it unprofitable” they are making the mistake of making the business look completely unprofitable in the first few years.  I even saw a blog post complain that she lost much of her first batch of broilers.  These are normal startup costs, and you don’t try to recover all of those loses in the first batch.  You spread those loses out over a number of years.  I don’t remember why, but 5 years springs to mind for major costs.  People finance these large expense in many ways.

Thus when I buy major chicken farm equipment like the chicken tractor i.e. poultry pen those cost are reasonably spread out over a number of years.  A chicken tractor or brooder box can last for many, many years.  I also don’t include the cost of land, and water at this point.  Simply because I have not broken it out how much I use for each farming center (eggs, broilers, etc.).  Thus let’s skip those major expenses for now.  We will look at them at the end.  Here is the expense of broilers.

Currently I am raising a small flock of chicken layers and “meat chickens” called broilers.  I use the Cornish Cross Jumbo hybrids.  I currently raise batches of broilers of 33 birds each. I can fairly easily scale to 150 birds in a batch.  I expected a mortality rate of 10% so I hope 30 will make it, but the first batched had a lot higher mortality already and they are still just chicks.  I take this lost part of my learning curve or what we call in technology beta release.   For now I will still estimate 30 birds in a batch.   I currently do not market my birds, I run my eggs and chickens as a “market garden” where I only sell to family and a few close friends.  Here is the cost estimates for broilers.   All of my cost will be broken down per bird to give me a cost per animal.  However I sell the product (the meat bird) by the pound.

The chicks are fairly expensive and if I ever went into business I would have to figure out a cheaper source than Murray McMurry.  Actually their cost of the chicks is a bit high, but what is really high is they are charging me $1 per chick to ship.  The cost break down of the chicks include (Cornish X males 2.49 + Coccidiosis vaccine 0.20 + Marek vaccine .20 + shipping and handling per chick 1.04

Energy. The cost of heat and water is a complete guess.  Water is nearly free in my area, and my electricity for the birds is not broken out separate from the house.

Hay. Some people use shavings for bedding of the chicks, I used old hay, and was actually no “additional” costs but I put in 5 cents per chick.  I think you should always have your “best guess” at cost until you figure it out.  Note I will switch to shavings as the breast of the broilers seem to be getting scarred with the old hay.

Grit. Chickens need grit, and chicks really need grit.  The grit cost is Grit bag is $5.28, but I really don’t track how much each chicken consumes.  This is a guess.

Feed.  $3.00  now this being a major cost, I really focus on a lot.  I am fortunate to get local grown chicken feed for .20 a pound.  I have budgeted 15 pounds per bird in truth I can expect 12 to 15 pounds of food over the life of each animal.   Thus .20 * 15 = 3.

Labor. I do pay myself.  In the State I live the minimal wage is $7.25.  I felt I should estimate around $10 / hour.  Pay some people more, pay some people less.  Now to get the labor rate, I feel it takes me 10 minutes to water, feed and move a single chicken tractor every day.  I will write a complete blog post on that, Joel Salatin and Polyface farms unintentionally misleads people that it takes “30 seconds” to move a tractor.  True, but moving the tractor is not all you need to do.  You need to refill the water, and feed, check on the chickens and keep the tractor working.  That is 10 minutes divided by 30 chickens in our case.  Thus that is $10 / 6 (minutes) = 1.6  * 7 (days) * 8 (weeks) = 93.33 / 30 or $3.11

Processing.  I will process the chickens on the La Haciendia Norte.  My thought is at first it will take all day, 8 hours to move live chicken to processed in a bag in the freezer.  Thus I took 8 * 10 = 80 / 30 = 2.66.  Now I think once I get more skilled I can actually process more than 3 chickens in one hour, but I am estimating the worse right now.

Storage. The storage is my estimated for electricity to store the birds.  Again this is a WAG of 50 cents a bird.

This comes up to approximately $13.41 per bird with some educated guesses.  Each bird is expected to weight between 4 and 5 pounds after processing so I am using 4.8 pounds as an average.  That means this bird is costing me $2.79 dollars per pound to produce grass fed pastured poultry.  That is without expense, specifically expense we may need to depreciate over a number of years.

Capital.  Right now my capital equipment on my (none existent) chicken business are my chicken tractors at about $300 per, the water, feeder, warm lights, and other misc equipment I will estimate at $200.  The brooder box is about $100.   It looks like I can get into a good 21 cu freezer for $800.  Thus lets say capital investment is approximately $1,400.  As most of this stuff last a number of years, then we may be able to take it as an expense in the first year, but lets spread it out over 5 years thus $280.00 per year.

My birds cost me approximately $2.79 per pound to raise.  I would sell them now at  $4.28 whole or $5.28 per pound cut up.  I charge you a $1 to cut it up for you.    When I go and check my math by checking what others sell their product for I find the guy who is the largest grass fed pastured chicken operation that I know of Polyface Farms is selling his whole chicken at $3.65 for a whole chicken and $4.65 per pound cut up.  Thus I could get more efficient, but like I said, this is priced out on a less than 100 chickens and he sells tens of thousands of chickens per year.  Also another data point is that CostCo sells an apparently decent version of USDA certified organic chicken at $6.67 a pound. Yet most USDA certified organic is not that good and not that expensive. You can tell because one USDA product is $6.67 per pound, and another is $1.99 per pound.  What is the difference?  I found USDA certified organic in a local supermarket for $2.00 per pound. I found normal chicken for approximately 0.98 – $1.19 per pound.

Again, organic chicken is a different product than grass-fed pastured chicken, but it is a good data point for what price are people paying for “better” chicken.  99.6% of meat chickens (broilers) are produced using industrial farming methods.  Industrial broilers, including those labeled “free range” or “naturally raised” even USDA certified Organic are typically confined to massive, windowless sheds that hold tens of thousands of birds each. Such intensive confinement breeds filth and disease. A Washington Post writer who visited a chicken shed said that “[d]ust, feathers and ammonia choke the air in the chicken house and fans turn it into airborne sandpaper, rubbing skin raw.”  Industrial-farmed animals are often fed sub-therapeutic doses of antibiotics because of the filth they typically live in and are given hormones solely to increase productivity.  Feeding animals low doses of antibiotics encourages the development of antibiotic-resistant bacteria—which people come into contact with when they handle or consume infected meat.

The Cornucopia Institute took over two years and visited 15% of “certified organic” egg farms in the US reported “Industrial-scale egg producers are gaming the system, producing ‘organic’ eggs in huge factory farms, crowding tens of thousands of chickens in two-story buildings with small porches passing as ‘outdoor access.’”  The USDA’s (and industry standard) definition for “Free Range” is that birds must have “outdoor access” or “access to the outdoors.”  In some cases, this can mean access only through a “pop hole,” with no full-body access to the outdoors and no minimum space requirement.

Thus this product (grass fed, pastured raised chicken) is a luxury or value product.  Obviously grass fed pastured chicken is a different than normal or USDA certified chicken and many people believe a superior product.Same with Harley Davidson motorcycles or Lexus cars.    Thus we have the cost some where around $1 for normal chicken and $2.00 – $6.67 per pound.  My independent cost analysis of $4.28 is somewhere between, thus it may be somewhat real.  Seems a little high.  If I can get it down to $3.90 or so per chicken I think it fits better.  Often the cost of producing anything is higher when you start because you are figuring stuff out.   Thus $4.28 per pound gross may be a good starting point.

Now $4.28 – 2.79 = $1.49 is net profit from the chicken per pound.  If we process 30 chickens at 4.8 pounds that is a total of 144 pounds of chicken.  Thus that is  1.49 * 144 = $214.00.  I can think of each chicken tractor delivering $214 of gross profit.  However we have to bill that for G&A (marketing, administration) and also to pay back those capital expenditure.  Thus we can take half of that $1.49 and put it operation and take half as real profit.  Thus every chicken tractor is $107 to G&A.  Another way to think of it, is that I may be able to put 75 cent in my pocket per bird.  Remember this is in addition of paying myself $10 per hour.

If I run this chicken tractor 5 times in one year and sell all the birds that is $1,070 that I can use to pay down capital expenditures and profit.  Nothing to write home about, but it potentially is real money.  Please check my math and logic and let me know in the comments below.