This post is part of an ongoing, fascinating discussion/debate between ourselves and a mid-scale organic egg producer from Wisconsin (commenting as “Mac”), sparked by a comment thread on our earlier post about small-farm egg economics. Read that post and thread first, to gain the context of the discussion and the two farm models under discussion. My latest response simply became too long to be a useful comment and stands well on its own as a comparative analysis of the two models, so we’re published it here for further discussion. Also coming in a future post is a long discussion of our justifications for raising heritage breeds and doing our own breeding, something Mac also initially challenged.
I greatly appreciate your openness with numbers and experiences; this makes for an excellent discussion. I’m glad to see that there is a model for a farm to make decent income on eggs, but from our perspective there are still flaws in your production and marketing model, and I will discuss these below. Also, please keep in mind that being organic, or even nearly so, in Missouri and many other places is harder than in Wisconsin. We don’t have the local support network of organic co-ops, crop farmers, hatcheries, and feed mills that you do; we have to do everything ourselves or ship it in from far away, and our state government is also generally more hostile. One organic egg producer I know personally drives to Kansas to haul back organic corn for his custom-ground feed because it’s not available reliably here. I suspect your support network helps keep your prices down, which is fair and understandable but still different than many other places.
We’re discussing two very different models of poultry/egg production, and I’m not sure they’re directly comparable in economic terms. My numbers and analysis apply to a system in which the birds are primarily pastured-raised in a rotational system that changes the area under their feet on a regular basis. This is a standard model for small or diversified farms; even at the scale of someone like Joel Salatin at Polyface Farm, the birds are still regularly moved to new ground in portable pens, or new ground is brought to them in the form of portable fencing (incidentally, Polyface keeps their layers for two years rather than one). This is an inherently labor-intensive model, but the tradeoff is perceived to be healthier birds and pasture because there is more fresh food available and the pasture is allowed to recover.
In addition, our eggs are far fresher, reaching the customer within 2-3 days, rather than 1-2 weeks in your model; this has specific culinary implications in some circumstances such as poached eggs, and this also justifies a higher value to the consumer. We feel our eggs also taste better than store eggs, and while many such claims are unsubstantiated, we do have a bit of evidence in our favor: we held a tasting event on our farm in 2010 in which a crowd of people blind-tested boiled eggs (among many other things) from our flock and from Organic Valley eggs. Here’s our synopsis of the results; rankings are from 1 (best) to 5 (worst):
Boiled chicken eggs
Organic Valley: 2.71
I thought this difference was fairly subtle, but the results were fairly clear. This was a close comparison, as Organic Valley is widely regarded as the best of the large-scale producer brands, and our eggs are coming from winter chickens who still are eating mostly grain and not a lot of foraged protein. Our yolks were noticeably yellower, but the flavors were only subtly different. If we can beat the best store option at the low end of our chickens’ flavor potential, that’s not bad. And it speaks well for O.V., as I’ve had far blander store eggs before.
Both consumers and advocacy groups tend to perceive rotational pasturing as an ideal situation. For example, the Wisconsin-based Cornucopia Institute defines the ideal pasture management for egg production as “diverse, small- to medium-scale family farms. They raise their hens in mobile housing on well-managed and ample pasture or in ﬁxed housing with intensively managed rotated pasture”. Whether or not you like or agree with Cornucopia’s specific standards, they are representative of the wider cultural concepts among our target customer base, which in turn drives marketing and pricing.
Joel Salatin at Polyface, a dedicated capitalist but hardly an elitist, appears to sell his rotationally pastured, non-certified eggs for about $4/dozen on-farm, and $6/dozen off-farm (based on prices quoted by customers online; the latter probably includes a considerable retail markup). In addition, I’ll cite a recent article in Growing For Market magazine (Nov/Dec 2011 issue, not available online) written by a mid-sized vegetable farm in Virginia, using methods that are a hybrid of our two models (they buy mature layers, manage them in a rotational pasture system for six months, then sell them for meat). They concluded that $5/dozen earned them a little over minimum wage, and their feed costs were a bit lower than ours for organic as it’s easier to get in Virginia than Missouri; they also noted that they didn’t think they could go any higher given the underpriced competition in the area. We know and trust this farm’s judgment, as it’s where we got our start before settling Missouri (we’re not from Virginia, though).
Of the organic/sustainably minded professional farmers I personally know in this area, one has gone to $6/dozen for pastured organic eggs, one feels that $3/dozen for pastured eggs from hens fed conventional feed is a loss leader for their CSA, and one has quit selling pastured eggs altogether because of economics. Another sells certified organic eggs for $4/dozen but does so in a partial confinement model similar to yours, though with fewer birds and thus less economy of scale. So within the system of small-farm rotationally pastured poultry, I think we’re in line with the economic reality, given that a segment of consumers do in fact want pastured eggs and the labor requirements that come with it.
You criticized this model for trading on the willingness of a “fortunate few” who would pay for overpriced eggs. However, it seems to me that your model is equally reliant on this consumer dynamic, as by your own admission your eggs at $4/dozen are still too expensive for most of your rural neighbors (who, as you noted, don’t care about organic). It is a choice, too, whether or not they think it is: I’d like to see the sales numbers for the alcohol, cigarettes, candy, soda, lottery tickets, snacks, and other discretionary sundries from your local gas station/grocery store, as those form the profit backbone of convenience stores everywhere.
It seems to me that the $4/dozen retail price is what keeps you in business; you still need your co-op to do the transportation and marketing work for your overall volume (and for the other farmers whose total production makes the system’s efficiencies possible), for which it doubles the price, to be paid largely by the same mostly urban “fortunate few” who choose to pay up to four times more than the cheapest option. Another reason your model works is your organic certification, which again allows you to charge a higher price for effectively the same food product (by your line of argument), which is mostly an ethical choice by the same urban foodies. Thus, you’re doing the exact same thing as we are: you’re selling an environmental and cultural ethic, and a higher-quality product, that allows a far higher egg price than cold, hard economics would dictate. Both our prices are determined in part by just how high up the sliding scale of perceived ethics/sustainability our methods place.
I will openly and happily grant that your system is way better than a conventional feedlot’s. I would buy and eat your eggs. However, your methods as you described them still fall in the middle of the potential range of flock management ethics, though I’m open to more details. For example, I’m curious how you manage the pasture attached to your barn to avoid overuse by the flock. As I said above, I know from experience what even 30 foraging hens can do to fresh pasture if kept on it too long; I don’t see a way for 2500 birds to use the same pasture year-round without destroying it unless they don’t use it as heavily as truly pastured birds do. Cornucopia’s egg producer ratings describe their middle-ground ranking as “family-scale farms that provide outdoor runs for their chickens, or from larger-scale farms where meaningful outdoor space is either currently granted or under construction. All producers in this category appear committed to meeting organic standards for minimum outdoor space for laying hens”, which fits the information I have about your setup. They, and I, agree that this is not an inherent criticism, simply a statement that there are even more ideal ways to manage birds when possible. For reference, their top-ranked farms include one in Wisconsin which practices intensive pasture rotation and charges $5/dozen.
The most fundamental difference in our numbers is labor cost; you’re producing far more eggs per unit labor than we are. This is certainly more efficient, no argument there. Measured in the simple terms of eggs out vs. labor in, true feedlots are also a lot more efficient than you are, but I doubt you would advocate their methods over your own. However, you’re still basically using the “factory” model in which all the inputs are purchased off-farm (birds, feed) and mixed together in a production facility before selling the finished product, with little to no reliance on or integration with the overall farm landscape and environment. Your model may have pasture, but it’s not based on pasture. Our pastured birds, on the other hand, utilize far more on-farm resources from foraging in otherwise unused areas to cleaning up produce and cooked animal scraps (fat, whey, etc.) sourced on-farm. But even with partial-factory methods, you’re still doing it to certain ethical (and expensive) standards that do set you apart from the true feedlots; thus we’re both setting an ethical standard for farm management and animal care that is economically arbitrary except for what we perceive our customers are willing to pay.
The final leg in your economic model is a carefully marketed consumer perception that egg production of all certified organic eggs involves birds that are more pastured, and less confined, than many actually are. Pretty much every egg carton I’ve ever seen, organic or otherwise, has some version of the diversified pastured-based Old McDonald farm on it, with a happy chicken out in the sunshine. Whether or not it resembles your farm, relatively small among your peers, it certainly doesn’t represent them all.
An organic inspector we know has told us of organic egg operations that are quite unlike the pasture-based systems envisioned by the average consumer. This Cornucopia Institute photo gallery has some excellent examples from the various scales. I suspect you fall in the mid-range, and I suspect your farm looks pretty good. However, the disturbing photos of confinement pullet production for Organic Valley (such as this one; link added 2/11/12) an otherwise highly-regarded organic co-op, makes me wonder where yours are from, and whether they grow up in such a crowded indoor environment, especially given the price you quoted which seems quite inexpensive. Have you been to your pullet source? In any case, I doubt a carton with a large image of thousands of hens indoors on litter, happy or otherwise, would sell as well. In effect, your co-op is likely marketing all of its members’ eggs as coming from intensely pasture-based farms, and consumers lap it up.
This matters because, in my five years selling at a farmers market, I consistently found that consumers held a much rosier view of farm conditions and economics than reality justified based on our insider knowledge. I blame it equally on the media and advertising agencies, but people consistently assume that anything local is organic, that all chickens live happily on grass all day long, that grass-fed means no grain, that no-spray means organic, and so on. So even gentle greenwashing is very powerful when it comes to crafting an image that is at odds with the reality, even if that reality is reasonable in its own right, as on your farm.
There is room in our economic system for both our production models; you’re able to handle the larger accounts that farms like ours would have a hard time meeting, and there are customers who don’t insist on truly pastured birds like ours, just reasonably well-treated birds not pumped full of drugs and GMOs. We’re each meeting a specific consumer niche with a price that’s reasonably appropriate to the economics of the customer-desired farm management. I don’t consider your methods ideal, but that’s one reason we started raising our own (another option rural people who “can’t afford eggs” should consider). We’ll admit that our model isn’t 100% ideal either; we’d rather not ship in feed from long distances, but economics of growing our own are truly prohibitive given the government crop subsidy system, and we refuse to compromise our principles and buy GMO feed.
I have no apologies or concerns about raising and marketing pastured eggs from heritage breeds to people who value those concepts, at a price that justifies the work. If I’m the food equivalent of a hand-crafted Fair Trade artisan pottery mug, so be it. Anyone offended by “overcharging” for a product should go after luxury cars and the fashion world long before small farmers. I’m still producing a useful and beneficial product, along with personal income and tax revenue in a rural area that really needs it, with the profits (if small) staying here and not padding someone’s faraway golden parachute. If there are customers out there who will pay as much for a dozen eggs as a 6-pack of bottled water, bless them. There ought to be room for us all in a free market, without the mid-level farmer looking down on the small farmer while the feedlot peers over their own shoulder.