Pasture-raised meat chicken enterprise budget
/Update: This post was getting some additional traffic (thank you) so I’ve updated some of the numbers to reflect late 2022 pricing.
Raising chickens for fun and…profit?
I went over this for someone elsewhere, and decided I may as well write it out and put it up here. The purpose of this post is to help people who are thinking of starting a pasture-raised chicken enterprise. I also have no qualms about present or future customers finding out how much we (don’t) make from selling chickens, though I think it is vitally necessary to point out that:
(i) a sustainable farm business does not consist of a single enterprise, so that it would be unwise to extrapolate a single enterprise like chickens to the entire farm, and
(ii) we don’t raise chickens this way anymore since we switched to a free-range model. If anything, our costs are now much higher than this. Anyways, here goes.
(Edit: Note: If you don’t understand concepts like “feed conversion ratio”, “opportunity cost”, “depreciation”, “cost of goods sold”, or “gross margin”, then pause your plans to start a chicken business and go study some basic business concepts. Most small farmers lose money — and the farm — because they don’t understand what it actually costs them to produce food.)
Capital Investment (not included in cost)
I will assume producing 100 Cornish Cross chickens in four Suscovich-style coops. I think Salatin-style coops are cheaper to build, but they are also uni-taskers which seems like a poor investment to me. I am glad they work for Joel Salatin but I don’t think building them is a good business decision. Even if you never raise chickens again, the Suscovich-style coops are extremely versatile and useful to have around.
That said, I’m going to estimate $250 to build a Suscovitch-style coop. That will depend on lumber prices but I think it’s wise to err on the high side, and in fact $250 a coop is possibly low depending on how many modifications you need to make to John’s design to fit your local environment. So that’s $1000 which, depreciated over 5 years, is $200 per year. Since these coops have other potential uses I’m not going to require the chicken enterprise to pay for them, but keep that $200 in mind as we continue. You’re also likely going to need to spend on maintenance, such as new roof tarps every few years. That said, a single batch of 100 or 200 chickens shouldn’t be the goal, and the more chickens you raise in a year the more use you get out of your investment in the coops. It is, however, a startup cost to consider.
Chicks
100 Cornish Cross chickens from our local hatchery will cost about $275. Everyone should start out raising the standard Cornish Cross chicken. If you can keep these alive you can keep other hardier breeds alive, and the CX will likely net you the most return of any meat breed, so you’ll know what you’re giving up by switching to a more chicken-like breed of chicken, if you choose to do so in the future. Pasture-raised Cornish Cross are sufficiently different from grocery-store chicken that I think you’ll be very pleased with the results, although I think flavor is improved with slower-growing breeds.
If you put your brooder, where you keep the unfeathered baby chicks, in an enclosed and sheltered area then I think you can build it out of something like the cardboard box that a refrigerator or freezer is shipped in. Make friends with the warehouse workers at your local big box store. Cardboard would be a single use but it saves on initial materials cost. You could also build a similar-sized brooder out of plywood, OSB, and scraps. That would add extra cost. If you need to build a brooder outdoors you’ll need better materials and a better-engineered design. However, you’re probably going to need a better-engineered brooder because you have more orders for chicken, and perhaps you need to start chicks earlier in the season with a brooder which will keep them sufficiently warm. Brooder cost can therefore be a bit more in line with sales than is the cost of the coops. You’ll need a couple heat lamps and a way to get electricity to them but those aren’t all that expensive and can be reused many times. The only cost I’m going include for the brooder is the input of wood shavings as bedding, 2 bags for $18. If you use enough shavings they should still be quite high in carbon content but they will have some nitrogen from the chicken manure. They could make a halfway decent mulch for a garden or you could try adding them to a compost pile, so you can get some use out of them after the chicks do; still, I’ll call it an expense.
Feed
On pasture we should estimate that the CX’s feed conversion ration will be 4:1. It’s supposed to be lower, and certainly is in the CAFO settings these chickens were designed for, but you’re going to have feed waste on pasture regardless of what you do. Other breeds all eat significantly more than this, and free-ranging, while healthier for the chickens, increases feed use still further, as they spend more calories foraging than they get. Regardless of forage availability, these are not layer hens. You can potentially reduce feed waste by wetting the feed, which prevents smaller particles from being lost. A lot of people say you should ferment your chicken feed, and this makes sense theoretically but it is extra work, you have the potential risk of your wetted feed not fermenting but going moldy and being wasted, and I have not seen any study showing what the FCR benefit is from fermentation. Fermentation proselytizers get mad when you say, “I believe you that it helps, but show me the evidence that it helps enough to be worthwhile,” but there it is. Wetting the feed right before you give it to the chickens is easier to do, doesn’t introduce the risk of mold, and is at the very least probably not going to hurt anything, so long as your feeders are designed to hold the consequently larger volume of the daily food ration.
The cheapest feed is around 40 cents a pound. This may be lower if you live in corn and soy country and you are feeding corn and soy feed. Non-GMO, non-corn, non-soy feed may cost more. Given the rampant fraud (allegedly) in the organic feeds business, I think paying for organic chicken feed is stupid. Perhaps if you know the mill owner and they know the farmers and so on you will actually get a truly organic feed mix, and if you can find people who will pay the resulting chicken prices, well done. If you pay extra for a bag that says “organic” on it made by people whom you don’t know, who likely buy their ingredients on the open market from people they don’t know, then you’re just paying extra for a label. Most “organic” food isn’t tested in the field where chemicals would best be detected: nobody has the capability to do much more than “selectively audit” a few crops here and there. For anything which gets shipped from overseas, what is sold as “organic” is really just an “organic equivalent”, which in some cases means basically something like whatever “organic” legally means in the U.S. and in other cases is spelled b-r-i-b-e-r-y. Also there’s apparently no concern that having regulators paid by the farms they regulate might introduce a conflict of interest, which is…interesting. Mixing your own feed when you start out is a very bad idea, you will likely kill your chickens. Again, these are not layer hens that can survive on kitchen scraps. As you get more experienced you might look into mixing your own feed, but that’s not a good risk to take when you’re first starting out.
If we assume your average carcass weight will be 5 pounds, which is an achievable if particularly good result, then for 100 birds at 5 pounds and 4:1 FCR you need 2,000 pounds of feed which is $800.
Labor
It takes 56 days to raise a Cornish Cross chicken to processing size. You need move the coops and feed and water the birds every day that they are in the field, plus get and store feed, plus set up and clean out the brooder (if not using a disposable box). The work is less physical for the 2 or 3 weeks the chicks are in the brooder, unless you have brooder problems in which case you will be working a lot more to try to fix your setup and save the remaining birds. However, because of the many things that can go wrong in the brooder, you will need to check the chicks multiple times each day and night and adjust your heat sources and ventilation accordingly, so all these little visits are going to add up. I would estimate an hour a day working with the birds, and you will probably spend a lot more than that by the time you factor in building and maintaining coops, getting and storing feed, solving predator issues, catching and transporting chickens to the processor, and so on.
If you were to make $40,000 a year as a chicken farmer, and you worked 8 hours a day 5 days a week for 50 weeks of the year, your hourly wage would be $20. Of course this is a laughably absurd hypothetical situation, but people who don’t think you should make a below-average income, with zero benefits, in exchange for growing good food for them don’t deserve to be your customers (nor to eat, in my opinion), so value your time with the chickens at least at $20 an hour. That’s $20 times 1 hour a day for 56 days or $1,120.
You also have the rental equivalent of the land, but since pasture-raising chickens improves the soil fertility, as opposed to, say, leasing it out to a tenant farmer, I’m not going to include a cost for this. If you are raising chickens on someone else’s land, you shouldn’t pay them anything other than perhaps a few free chickens, and in fact if they don’t offer to pay you for providing fertilizer and pest control I would look for another business arrangement for your next season.
Losses
You should assume a 10 percent mortality rate. No matter what you do, some of your chickens are likely to die. Other breeds can be hardier than the Cornish Cross, it’s true. Probably your mortality will either be much higher (predation, brooder problems, heat wave) or somewhat lower (everything goes well) than this. Also, if all goes well most of your mortality loss will happen in the brooder due to chicks which just fail to thrive for genetic or other reasons. Still, to be safe you should assume you’ll lose 10 out of 100 birds when full grown. (In the Cornish Cross, the most dominant birds which gorge on the most feed and are the largest chickens in the flock tend to give themselves heart attacks just before your processing date.)
Processing
Processing is $4.00 $5.00 or $6.00 a bird, for whole bagged chickens. Again, the facilities to properly and safely process 100 birds in a day are not in your price range, starting out. If you have a day job, or other farm work to do, I don’t think processing on the farm is a good investment. This is something, perhaps, to look into at a larger scale, but again you have to think about the opportunity cost of time and facilities. By all means process 10 or 20 birds at home for personal use, but that’s different from processing 100 or more of birds you’re planning to sell. Assuming a 10 percent mortality loss, you’ll have 90 chickens to process at $6.00 a chicken for $540.
Adding up the cost of raising chickens on pasture
Thus, we have:
100 chicks at $2.75 each for $275.
2 bags of pine shavings brooder bedding for $18 total.
2,000 pounds of starter/grower feed at $0.40 a pound for $800.
56 hours of work (hah!) at $20 an hour (no benefits) for $1,120.
90 birds processed at $6.00 a bird for $540.
In total, that’s a cost of $2,753.
Over 90 surviving chickens, that’s $30.58 per chicken.
At 5 pounds each, on average, that’s $6.11 per pound. This is your break-even price on a batch of 100 meat chickens.
This doesn’t include the $200 depreciation on your coops, or your brooder once you build a permanent brooder. It doesn’t include any cushion for the inevitable times you have a heat wave at the wrong time and lose 20 percent of your flock despite staying out in the heat to spray them with cool water occasionally to try to save them, this doesn’t include losing your entire flock to a bad predator attack, or, if you can’t pick up from a local hatchery and have to mail order your chicks, having the postal service delayed by a day and losing half your chicks in delivery (most hatcheries will make this up to you, if they can, even though it’s not their fault.) This doesn’t include freezer storage for the chickens, if your customers aren’t picking up on processing day. This doesn’t include getting up in the middle of the night because it’s excessively windy or rainy and you need to go check your coops, and Heaven help you if the wind flips one of them despite your efforts in staking it down.
All other things equal, $6.11 a pound is not a break-even price for pasture-raised meat chicken. At this price you do not have a sustainable business enterprise. You won’t be making enough to maintain and invest in the business enterprise over time, which is a significant part of being “sustainable”. The only reason to do it is because of the added value you get in improving your soil fertility, which is why if you’re doing this on someone else’s land they should be paying you for your service.
What I’m saying is that you can’t charge that price, you have to charge more per pound or your farm business is going to fail. If you charge $7.50 a pound you’re making a bit less than a 25 percent gross margin (not profit), which is still stupidly low but might be enough to maintain equipment, invest in some improvements, and save up for when you have a bad season. In this case you would have a gross profit of about $125, although we haven’t factored in the cost of gas to go pick up a ton of feed and bring it back to the farm, and take the chickens to the processor and back, which is likely to be around $80 to $100 depending on how far you have to go and what gas prices are like.
Volume can help improve the picture somewhat. It won’t take all that much more physical work to raise 200 chickens than it will to raise 100, so you can allocate your labor more efficiently. However, you’ll then need to make extra capital investments; not just a larger brooder and more coops, but probably a trailer to transport that many chickens to the processor, and of course a way to get them home safely without spoiling the meat, and freezer space to store them. You’ll also need to make sure you get on your poultry processor’s calendar early, because 200 birds is going to fill up a significant portion of their day and they will need to schedule that well in advance, especially if you’re doing that multiple times in a season.
If you process on farm, you’ll save a dollar and change a pound. If the time and facilities and equipment you need to process on farm is worth less than that to you, great. Of course, if you invest in, say, what you need to process 200 birds at a time, and then you don’t sell that many, tough luck. You may have to process yourself if a suitable poultry processor isn’t available to you, but if you have a local processor then I think you really need to ask yourself what business enterprise you are engaging in. The same goes for hatching your own chicks. I’m not saying not to do it, but be very clear about the opportunity costs of significant investments in these other activities as opposed to, say, being more productive on your farm. If people want you to process your chickens on the farm, tell them to bring their own equipment and you’ll sell them a live chicken and watch them do it.
A message to people who think real pasture-raised chicken is “expensive”
Now, if you’re a consumer of chicken who has read this far, thank you. Please ask yourself: when you shop at the famous “organic” grocery store, where all the out-of-season apples are pristinely unblemished despite, supposedly, not having been sprayed with any potentially dangerous pesticides or antifungals, and you see a “free range” whole chicken being sold for, say, $5.00 pound, which includes an advertising budget, and commercial truck transport, and grocery stocking fees, and “fresh” availability year-round even when the grass the chickens are supposed to be “free ranging” on is covered in ice, and the “organic” grocery store’s markup — do you think, just maybe, that the agribusiness corporation pretending to be a small, sustainable farm business, could be, kind of…lying? Do you really think that corporate-branded chicken you see in the store was raised on decent, healthy feed in a clean, grassy field by well-treated workers, all for a cost at which that multi-facility agribusiness corporation calling itself a “family farm” can sell the bird in a high-end grocery store for $5.00 a pound and make a profit?
I am not saying the people raising these chickens are bad farmers. I can see how economies of scale could reduce the cost of raising chickens by half or more. And at the scale of tens of thousands or so chickens each year, you can of course afford to pay people to find even more efficiencies in the process. I think that these corporations are probably doing a better job than the companies (though often they’re the same) making a standard cheap CAFO chicken with its beak cut off in a cage. But they’re certainly not “sustainable” in any sense that normally implies. The idea that these are “family farms” is kind of like saying the Pritzker’s run a “family business”.
I have another blog post about why eating chicken is kind of weird and, in terms of sustainability, chicken is really more of a luxury item than the way it’s treated in modern American cuisine. Not that you shouldn’t eat it…I mean…we do.
Did you know that, despite the supposed benefits of modern medicine, in correlation with everyone eating this factory-produced, factory-farmed food such as cheaply-raised Confined Animal Feeding Operation (CAFO) chickens, deaths from heart disease have increased substantially over the past 100+years? Could this be a consequence of all the unhealthily-raised food that is sold to people these days? I’ll have another blog post about that, next week.