The Real Cost Of Real Food

Since I was a young boy, I have always wanted to have a farm, even though I have no farming experience or family involvement in farming. Four years ago, nearing retirement, I knew that I was reaching the point of no return: either do it now or it would be too late. So, while most of my friends were contemplating moving to the Southwest or taking up more golf, my wife and I bought seven acres just north of Denver and I began to farm. I learned by doing and by keeping my eyes and ears open. I read a lot. I visited other farms. Immediately I realized I wanted to raise food as naturally as possible. Why put all that effort of morning and evening chores and daytime work into an inferior product?

 I also loved giving farm tours to anyone who was interested in coming out to the farm. It seemed a novelty to my friends as well as to me to be doing something so fundamental and yet out of keeping with my business and academic background. Quickly my thinking evolved into more serious consideration of my role as a husband of the soil, plants, and animals on the farm and then onto Wendell Berry, Joel Salatin, and Michael Pollan-type thoughts of principles of sustainability. I gave a few talks to local groups and my thinking evolved further.

KEEPING TRACK OF THE COSTS

There is a huge disconnect between our food and food supply and what we need as healthy people, and it has all occurred in just the last half century. It is so alarming that I feel compelled to share my experience. From the beginning I kept detailed spreadsheets on all farm activities, the most extensive being my data on producing eggs, the product I started with four years ago. I begin with an overview of our farm and an account of the cost of production and then move to the implications for our future.

All Happy Farm practices promote healthy soil, plants, and animals. Livestock (sheep and goats) live entirely on pasture grazing and are rotated among fields frequently. Pigs and chickens are also rotated from field to field every few weeks. All animals are heirloom varieties. The chickens forage on green fields, eat organic supplement and get plenty of exercise. The egg yolks are Halloween orange, due to the high carotene content from the hens eating greens. Salt and pepper are an affront to both the hen who laid the egg (I presume) and one’s taste buds.

THE COSTS OF PASTURED EGGS

I generally have 75 to 100 hens. I buy cohorts of day-old chicks. I keep the hens in groups of 15, 25 or 30 per yard or coop to prevent the confusion and fighting that tends to occur among larger groups. Predators are a major problem which I will elaborate upon later. I use portable corrals and mobile tractors so that the chickens are safe and have fresh, green forage whenever the season allows. I buy supplemental feed in bulk (a ton at a time) which is corn-free, soy-free and organic. No antibiotics, pesticides, or synthetics are used for any plant or animal.

The cost categories for my calculation are the following: the chicken, shelter, mobile tractor, feed, utilities, labor, packaging, transportation, land, and supplies. For all items the calculated cost is associated with a dozen eggs. For capital items, the costs are amortized over the anticipated usable life of the property and adjusted for the number of eggs originating from that item. I deliberately used conservative numbers to build a stronger case.

THE CHICKEN

Buying 25- or 50-day-old chicks through a commercial house costs about $3.20 per chick. As the chick must be raised for six months before it lays its first egg, feed costs for the first six months are part of the cost of acquiring an egg-laying hen. Although a small chicken eats less than an adult chicken, the protein content and, thus, cost per pound, is higher. I calculate 20 pounds at 54¢/pound for a feed cost of $10.80, a conservative estimate. So, the cost of the chicken is now $3.20 plus $10.80 for a total of $14.

Not all chicks survive to adulthood. Mortality depends upon lots of things and the mortality rate of my chickens is higher than average because of my initial inexperience and ignorance. For the calculations here, I use a standard ten percent mortality rate due to suffocation, fragility and genetic flaws, which brings the cost to $15.40.

Estimating egg laying rates is difficult, and rates vary according to weather conditions and seasons and bird variety. Commercial bird breeding houses advertise chicken varieties yielding 200, 230 and even 250 eggs a year, but none of my purchases have given such stellar results. In the summer, absent extreme heat, my best egglayers, Leghorn hens, produce two eggs every three days. Barred Rock lay one egg every other day. Buff Orpingtons lay an egg every three days. Other varieties yield similar rates. Hot weather, cold weather, changing the membership of the group of birds living together or moving them to an unfamiliar setting are examples of stressful situations for them that will reduce egg laying. As the days get shorter and colder, production drops drastically to as low as a third of summer yield.

One winter I used lighting for a few hours a day and kept egg production from falling below 50 percent of summer production. Using lighting more extensively would keep production up even more. The industry standard for “natural” lighting conditions requires at least six hours of darkness. I have yet to find a farmer who does not use lights for at least some of the night, but it is not natural. Chickens need a rest from laying and need to conserve vitality while molting. If there ever were a case for seasonal pricing, natural chicken eggs would be the perfect choice. Food costs go up during the winter because there is no forage and because the birds need more energy to stay warm. This happens at the same time that egg laying diminishes drastically. Yet I have never observed any seasonal fluctuation in egg prices.

Aggregating all of these ups and downs in laying activity, I estimate that a new, ready-tolay hen will produce 240 eggs over the next two years. Dividing the $15.40 cost by the 20 dozen eggs I anticipate to get from the hen comes to 77¢ per dozen. The results are summarized in Table 1, page 60.

SHELTER

Shelter provides chickens with three essential needs: a place to rest and lay eggs, protection from the elements, and protection from predators. Predators are a particular problem where we are: hawks and owls by air; fox, skunk, and raccoon by land; and one two-legged upright night predator that required my placing locks on the yard gates. I have lost over fifty chickens to animal attacks. I suspect a fox and skunk are responsible. It appears that the skunk eats just the heads; the fox snaps the chickens’ necks for sport. It is too discouraging and costly to have that kind of attrition, so buildings have to be substantial and foraging has to be well managed. I built maximum security compounds that consist of ten foot by twelve foot sheds using a combination of cinder blocks, lumber and solexx for sunlight and heat penetration. Each shed has a completely enclosed (sides and top) chicken wired yard. Even with this space, a small number of birds will strip the area of any green whatsoever within a few days. To provide fresh forage, I use a combination of portable livestock panels to form temporary corrals and mobile chicken tractors that can be moved daily.

The shed calculation is as follows: Each house and enclosed yard costs about $6,000 to build, about half for materials and half for labor. I amortize the useful life over twenty years (although I know that repairs will need to be made before then) and distribute the cost over thirty chickens laying 10 dozen eggs per year. The calculation is $6000/20 years = $300 per year. $300/30 chickens = $10/year/chicken. $10 divided by 10 dozen eggs = $1. So, the shelter cost is $1/ dozen.

CHICKEN TRACTOR

The chicken tractor is my design and can be moved by one person without upsetting the 15 chicken occupants. There is a chicken wire-enclosed area on the ground with a roosting and nesting area built above it. The cost is about $500 per unit. I estimate a ten-year life (a bit on the financially conservative side as I doubt that the tractors will last ten years without repairs and replacing some parts). The cost per dozen eggs is as follows: $500/10 years = $50 per year. $50 per year/ 15 chickens = $3.33 per chicken per year. $3.33/10 dozen eggs per year = 33¢ a dozen.

 FEED

A commonly accepted number is five pounds of feed per dozen eggs. However, I believe that outcome is based on more gentle environments than what we have here in Colorado. Foraging during the summer reduces feed costs by as much as 20 percent but the cold temperatures of winter and lack of forage in the winter more than offset savings from foraging. And the overall greater exercise that my chickens get results in about seven pounds of feed per dozen eggs. At forty cents per pound (which is three to four times as much as commercial corn- and soy-based feed), feed cost is $2.80/dozen.

UTILITIES

Utilities consist of heating water during the winter, both the storage tank and the individual waterers, and using heat lamps for developing chicks during the cold months which run for about five months. Continuing a conservative bias, I exclude the cost of electricity for the heat lamps, which are used only when raising baby chicks, I estimate the electrical cost of heating the water tank and individual waterers in each shed. This requires three 60-watt heaters and one 1200-watt heater, which runs about half of each day. The imputed cost is 11¢ per kilowatt hour for a total cost of $273.24. That divided by yearly egg production comes to 30¢ per dozen.

LABOR

This is a highly contested item. Some people think that I should not include labor at all because it is fun to live on a farm or because the kids collect the eggs or because collecting the eggs can be batched with other chores. I contend, whether a person works on the farm or off the farm, compensation for work is appropriate. However, calculating a value for labor can be variable. Some chores are easier than others; some require more skill than others. Additionally, there ought to be a premium for someone who can be counted upon to do the chores every day. At times I do the farm chores; at other times, I have a farm hand do them. I give a value of $10/hour to that labor, which I think is a modest amount for someone who is dependable, conscientious and doesn’t mind walking in chicken poop.

The daily chores require a specific time sequence: (1) first thing in the morning, moving the tractor to a fresh spot of ground, opening the coop or mobile tractor ramp and feeding and watering, (2) collecting eggs in the afternoon, and (3) closing up at dusk. Cutting corners on these chores generally doesn’t work. For example, if you collect eggs later in the day when putting the hens away for the night you discover that some of the hens become egg eaters, a very difficult habit to break. The eggs have to be cleaned and boxed. All of these activities take about one hour and a half per day. At the rate of $10/hour, that’s $15. For three dozen eggs a day, the cost per dozen eggs is $5.00.

PACKAGING

Egg cartons in bulk cost about 35¢ apiece, and the price seems to increase with each successive order. Although it is against Colorado law to reuse an egg carton, many customers return them to me. There may be an exclusion for CSA and private sales such as mine.

TRANSPORTATION

Even though we love living in a country setting just twenty minutes from downtown, it takes an hour and two gallons of diesel fuel for me or a farm hand to drive to town once a week to the CSA and deliver the eggs. At $10 per hour for labor and fuel at $4.00 per gallon, that’s $18 for, say, 21 dozen eggs or 76¢ per dozen.

LAND

This is another contested item. Some people say that the land will appreciate on its own or that I get to enjoy the tranquility it offers and shouldn’t include it as a cost. While those points may be valid, it is also true that my wife and I could have chosen a less expensive property with less land and used the extra money for investing or taking a special vacation. I don’t have a definite fix on the value that should be placed on land used for farming, but the fact that farming requires land does need to be recognized. As a very conservative position, almost as a place holder, I offer the foregone return of the price of an acre of land as a reasonable value.

According to Peter Bane in his permaculture book, a chicken should have about four square feet of fresh ground each day. If the land is allowed thirty days to regenerate before being foraged again, a chicken requires 120 square feet. For 100 birds that works out to about a quarter of an acre. At a valuation of $20,000 per acre the annual value would be $600 at 3 percent. For a quarter acre, the cost would translate into 11¢ per dozen eggs.

SUPPLIES

These include, but are not limited to, waterers, feeders, electrical cords, lamps and heaters. The chickens and accompanying mice are adept at destroying all of these things, as is Mother Nature. This amounts to 10¢ per dozen.

Table 2 summarizes these costs. A few things are missing from the table, most obviously (at least to me) and most notably is profit. For a business to continue, most owners need to make a profit. Otherwise, it is not a business; it becomes philanthropy. A five percent profit is modest by most business models. Its inclusion would bring the cost to something approaching twelve dollars per dozen eggs.

THE TWELVE DOLLAR DOZEN

Readers may blanch at the idea of paying $12 for a dozen eggs. Most people shake their heads in disbelief knowing that they would never pay that amount. Very few nod their heads in agreement. Most individuals in pursuit of the “super” egg that is free of all bad things and loaded with good things and sells at nearly the same price as retail store eggs find themselves bouncing from one vender to another as farmers find their operations too costly and discontinue operations. In Colorado, a family farm with the largest CSA in the state and over 12,000 chickens filed for bankruptcy last year. Another well-established family farm which had sold eggs for decades relinquished its market.

Table 1: Costs per Dozen Eggs

Table 2: Percent of Budget for Food and Health

INTERNET SOURCES

 
WEEKLY MAGAZINE SOURCES

It is easy to think that economies of scale can reduce costs, but they tend to result in inferior food and less humane treatment of the animals. Transportation is the only cost category that is fixed; the other costs are variable and increase as size of the operation increases. Let’s hypothesize for a moment. If I had 1,000 chickens instead of 100, the additional requirements for more land, tractors, sheds, utilities, feed, and supplies would increase as the number of chickens increased. Labor would increase as well because the person would have to walk to more places, feed and water more, open and close more, pick up, clean and package more eggs. The only real cost savings is for transportation. Someone has to drive to town to deliver the eggs whether it is to deliver one dozen or one hundred dozen. The cost is almost constant. So, the cost savings might be seventy cents per dozen eggs. Are you ready to pay ten or eleven dollars for a dozen eggs?

Meanwhile, selling the eggs from a thousand chickens is quite different from selling eggs from a hundred. Through a CSA, members subscribe for the season to purchase Happy Farm eggs. During the garden season, all of Happy Farm’s egg-producing capacity is absorbed by the CSA. However, once the last week of the CSA season passes, I scramble to find customers to buy eggs. If I had ten times the number of eggs, the transition would be worse. If I turn to retail businesses, they will want to buy wholesale, whatever that means. To me it means selling the eggs for less, and they would want a year-round supply. (And I would have to include a new egg carton with each dozen.) In short, having more chickens is an invitation for me to offer a greater subsidy to customers.

Incidentally, I do not believe my situation is unique. In talking to a variety of small farmers, CSAs, and farm co-ops, I have not found one that did not (1) inherit their land, (2) receive grants, (3) use volunteer labor, (4) have a spouse or partner with a real job, or (5) have a day job themselves. While it shows resourcefulness to patch together whatever is necessary to keep a farm operating, my point is that I don’t think it constitutes a viable long-term model for feeding our nation real food.

WHAT WE PAY FOR FOOD

If my example of the cost of producing eggs is even remotely accurate, there is a huge paradox regarding the cost of food in the United States. In the last fifty years the food supply in the U.S. has undergone massive changes, but most people are unaware of the changes and of the huge significance of the changes. In 1970 we spent about 17 percent of our household income on food. By 2010 we were spending only seven percent of our income on food. (See Table 2.) This simple statistic masks underlying changes that have occurred but it is only part of the story. First and foremost, production of food has been largely taken over by large corporations. The practices of these agribusinesses involve using new chemical and biological products. In some instances we know the compounds are harmful to humans. In other instances it is too soon to tell what the effects might be.

We are not just talking about genetically modified foods that contain substances that the body does not recognize and therefore rebels against. It is not just the processed foods in which fats have been transformed into substances unrecognizable to our digestive systems and disruptive to our metabolic processes. It is not just that many nutrients have been stripped out of foods and replaced with synthetics. It is also the treatment of plants, soils, and animals in large, monoculture farming operations that has changed as well. How many times have we bought a beautiful red tomato only to throw it away after the first bite? Little does the color tell us that it is missing many trace elements and nutrients of its recent ancestors. More disguised is the apple, which may look good and even have a snappiness to the bite, but which has been sprayed so many times that you ingest some of those chemicals with each snappy bite. How good is meat that comes from an animal which is meant to graze but is forced to eat grains exclusively? What becomes of an omnivore like a chicken restricted to a vegetarian diet? The ludicrousness of this high-tech food industry is epitomized by the recent oxymoronic product, ultra-pasteurized organic milk. Organic is what we work hard to achieve. Ultra-pasteurization destroys vital enzymes and chemically alters the protein structures so they no longer are totally friendly to the body. Any benefit of being organic is lost through ultra-pasteurization.

The greater affordability of food has come about in part due to these changes and because agribusinesses are not held responsible for soil, air, and water deterioration and pollution that their farming practices create. Neither do they pay for remedying the health problems of farm workers and consumers caused by eating and contacting these so-called foods. Tax policy, in many forms, also favors large agriculture-based corporations.

This food revolution has been successful in large part because the industry has worked hard at concealing its effects from the public, and with every step small farms take to distinguish themselves from large agribusinesses, the food industry grants more concessions to the food supply giants. So while food labeling would be a positive step, food corporations lobby immediately to write the regulations in less restrictive language so that their products are not labelled. Unfortunately the FDA, USDA, and CPA, the three key federal public watchdogs meant to look out for consumers’ interests, work in actuality for corporate agriculture. The consumer’s best chance is to follow Michael Pollan’s advice: know the person you buy your food from, know your farmer.

FOOD COSTS OR HEALTH COSTS?

During the same period when food costs were decreasing, the percentage of income spent on health increased, offsetting almost precisely the savings from food. Table 2 shows that what we spend for health and food combined is the same now as it was forty years ago.

In sum, we have reached a peculiar place. We have obtained cheap food but it’s a false improvement. As food quality deteriorates, health costs increase—not a happy model. (The food industry is quick to blame the health problems on lack of exercise and lots of other things.) While agribusiness may want to continue their type of farming, we the people should ban their unsustainable ecological devastation.

“Real foods,” not those referenced above, are difficult to produce in a large corporate setting. While achievable at the homestead level, they are not sufficient to feed the population. The middle ground of small farms, community gardens, cooperatives, and CSAs represents the growers where there is potential for progress in providing quality foods for larger populations. However, data about food production and costs throughout the world suggest that we in the United States need to alter our thinking and behavior to accommodate a lifestyle of routinely eating high quality foods.

People in the United States pay less for food than any other country in the world. The normal reaction is “This is good.” The slightly cynical person would say, “Isn’t it good?” I should rephrase the original statement. People in the United States pay less for food because the cost of preventing destruction of our environment and ourselves is not included in the price of commercial (read corporate farm) foods. The U.S. feeds itself chemicals and additives and highly processed foods that less and less resemble the real food of origin. Other countries prohibit GMOs more than we do or raise their own foods more naturally, caring for the soil, plant, and animal. We spend about 6.9 percent of our household income for food. All other countries pay more. The graph below shows the results for a few countries around the world.

REAL FOOD COSTS MORE

The purpose of this exercise is to make two points. First, even though the Happy Farm data represent just one small example, and could be off by ten, twenty, or thirty percent, the overriding conclusion is valid: real food costs substantially more than what U.S. consumers are currently paying for their food-like substances. Second, we in the United States could eat real food if we were willing to pay what the rest of the developed world pays for its food. For example, the Germans and Japanese seem to lead productive, healthy, happy lives even though they pay a lot more for their food (whether it is real food or not).

Are they malnourished? Do they go without education, health and general welfare? The consensus is no. But they have made other adjustments to their lifestyles to pay for good food. I believe we in the United States need to make adjustments to our lifestyles as well in order for the populace to be able to afford high quality food. We need to reconsider how we house ourselves (average house size has gone up for decades while family size has decreased), how we transport ourselves (we are making some progress although SUVs are still very popular in the U.S.), how we entertain ourselves, how we organize ourselves, and what things we encourage and discourage through tax structures.

There are some people who have made these changes as individuals. As more people convert to this lifestyle, the sacrifices of the few will be distributed more broadly. Only then will financially and ecologically sustainable farming become a reality for our nation.

This article appeared in Wise Traditions in Food, Farming and the Healing Arts, the quarterly journal of the Weston A. Price Foundation, Summer 2014