Northwest Colorado Health Food Coalition: The Economics of eggs or cheaper by the dozen?
December 3, 2017
How much does a dozen eggs really cost? Or a pound of ground beef or jar of honey? There are countless options with a variety of price points at the grocery store and online. There are many factors that influence the price, but let's consider the producer.
The farmer or rancher who raises the animals and grows the produce. When you buy a dozen eggs, how much of that purchase price does the farmer receive? The short answer is, “it depends and yes, it's complicated.” But let's narrow our focus to local food.
As a local, nonprofit organization Community Agriculture Alliance has taken the lead to promote and support local food in our community. CAA provides leadership with the Northwest Colorado Food Coalition and the Local Food Task Force. CAA's programs include the CAA Market, an online year-round farmer's market.
Currently there are 60 producers who list local food and products for sale with weekly ordering and pickup at CAA offices. More than 500 products are listed and include grass fed beef and lamb, local honey, seasonal vegetables, pork, veal, buffalo, chicken/turkey, homemade jellies, baked goods and farm fresh eggs.
Producers set their own prices and receive 100 percent of sales. Customers who shop on the website often ask about pricing. The average price for a dozen local eggs is $6. Compare to grocery store pricing, which can range from $1 on sale to more than $6. Why the difference? Are local producers greedy? Is someone getting rich from selling eggs? Again, the short answer is “no.” But let's look at the economics of eggs, as an example of local food production.
The basic expenses related to that dozen eggs are somewhat obvious with the initial cost of getting chicks or laying hens and feed, is the largest and most consistent monthly expense. Just looking at those two costs, it may seem like a great idea to run out and get some chickens today. But hold on, there are many related, hidden expenses that we don't often think about. Chicken coop/shelter, bedding material, water/electricity, egg cartons, labeling, labor including time caring for chickens, collecting, washing, transporting eggs, insurance, certifications, licenses, land/buildings/property taxes, machinery, tools, marketing, advertising, transportation and storage.
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It is estimated that total expenses per chicken for a larger flock of 100 birds is almost $100 per chicken per year. Now comes the egg math.
If an average chicken lays year-round, which is challenging in our climate, 200 eggs per year, each dozen eggs costs the farmer/producer approximately $5.75 per dozen with the above expenses. With an average retail price of $6 per dozen, assuming everything goes perfectly, the producer can make about $0.25 profit per dozen.
Yes, producers can reduce expenses and work to increase egg production, but remember most local producers are doing this as a side business or hobby. They are not in commercial egg production and have small flocks, typically less than 20 chickens. They love what they do, enjoy raising chickens and the lifestyle it brings, but are clearly not getting rich off eggs.
This example can be applied to just about any local food product. Raising animals for meat production raises similar expenses and many more with larger dollar amounts, and a slim profit margin, if any. Fruit and vegetables offer similar economics. So why even bother to raise, produce and make local food? Because it's worth it.
It's worth supporting our heritage of local agriculture and keeping it vibrant in our community. The average food product in a grocery stores has traveled more than 1,500 miles to get there. Buying local helps to reduce environmental impacts, food is fresher and tastes better.
And while some local products may cost more than commercial ones, you will be surprised that pricing is similar for many things. Every dollar you spend on local food helps make a direct economic impact for local producers. They pay taxes, support community organizations and give back to our community. Your purchasing power makes a difference.
So, the next time you reach for a dozen eggs at the store take a moment to think about your choice. And maybe consider buying local. Whether it's from a neighbor or friend, or the online at the caamarket.org you won't be disappointed. The eggs will taste great and you are making a difference by supporting local producers.
Michele Meyer is the local food coordinator for Community Agriculture Alliance, a member of the Northwest Colorado Food Coalition. Visit communityagalliance.org for more information.