Thursday, March 13, 2014

Stacking Up

One of our goals with the farm is to maintain consistent pricing that keeps good, local food accessible to a larger portion of the population.  The problem is - figuring out a fair price isn't always as simple as you might think.  I started thinking about this because we were among those recently asked to complete a pricing survey for eggs and poultry (chickens).  So, without further ado, we'll share what they had as the results for LAST YEAR.

EGGS

"In 2013, we discovered the average price of a dozen eggs sold at the farm was $4.59 per dozen and the wholesale price was $3.71 per dozen. Approximately 22% of the respondents had a flock size between 51 and 100."

This is interesting.  Our flock size falls into the 51 to 100 range.  Since it is listed, we assume that it was probably the highest response grouping in 2013.  Our direct sale price currently stands at $3.25/dozen and has been there now for about a year.  Prior to that, it held at $3.00 for some time.  On the other hand, when we've had the opportunity to travel, we have looked for local eggs and have paid $5 per dozen in Oregon and $7 in Hawaii.  Granted, the costs of feed, egg cartons and other things for the Hawaii producer were very high.  She had to charge that much just to earn something back.

So, like many things, it can be a matter of regional economics.

BROILERS

"In 2013, we learned that the average broiler cost was $3.99/lb for on-farm sales. Wholesale price was $3.57/lb. Boneless/Skinless breasts retailed for approximately 2.5 times that of the whole bird cost. Approximately 22% of the respondents indicated they raised between 500 and 1000 broilers in one year."

Our prices have been $3.25 per pound for some time now.  We have tried a few other approaches for sales, setting a per bird price regardless of size for example.  But, in the end, per pound pricing usually seems the fairest way to handle it.  However, we find it interesting that our price is not only below on-farm sale pricing, it is also well below the wholesale price.  Once again, we need to consider the regional economics of the situation, among other things.  After all, an average is made up of several data points.  There will be prices well above and well below this average and there is nothing that says we must charge within a certain range of any established average. 

Why bring this up?

First of all, I found the reported information interesting and wanted to share it.  But, perhaps more importantly, we also prefer to share with everyone some of the reasoning that goes into our pricing.  And, I suppose, it doesn't hurt to show everyone that our prices stack up favorably to the national average from a customer's point of view, if price is your major criteria for what you purchase.  But, there are a few things that bother me that I wanted to point out to you.

1. Local growers charging $1 a dozen for eggs
Why should this bother me?  It's their call to do this, right?  Yes.  Maybe what bothers me the most is that there are people that purchase from them and let them get away with shorting themselves.  They lose money with every sale they make.  And, if you buy dollar a dozen eggs from someone like that, you should feel guilty.  Give them at least $2 and maybe they'll break even with their expenses, but it will do nothing to defray other costs that I'm guessing they have done nothing to track.

I realize some of these folks raise the chickens for themselves and figure a few dollars here and there are just a bonus for something they do anyway.  But, in my opinion, they would do better to donate their extra eggs to local community dinners, church dinners and the food bank.  If you are going to 'give' your excess away, then get it to people who really need the break rather than people who could afford to pay you a fair price.

2. Comparing $1.89 dozen eggs at X store to $3.25 dozen free range, local eggs
Most people who have had our eggs, or the eggs of another local grower who lets their birds run outside, etc etc will tell you that there is no comparison as to the quality of one egg over the other.  In fact, these folks will tell you that the best way to find this out is to buy the local eggs for a month or so, then go back and buy some cheaper eggs from the store.  You'll taste the difference.

Eggs we raise are better for baking.  If you need to separate the whites or yolks, it works far better with our eggs instead of the weak yolks and watery whites you'll find in the 'factory' produced eggs.  But, rather than get on to a soapbox about it, let's just get to the point.

These are two different products that just go by the same name - "eggs".  So, comparing prices between the two makes no sense. 

But if you insist...

3. Why do local farmers charge prices that are sometimes higher than the grocery store?
Think about this question for a second.

Ok, second's up!

A small farm such as ours, that sells all of its eggs direct to consumer must do all of the following:
   acquire chicks, have brooders to raise the chicks, keep the birds fed, keep them watered, give them secure places to live, give them the ability to have access to the outdoors, deal with any illness or injuries, cull the flock as birds age and replace with younger birds, collect eggs more than once a day, clean the eggs, check for broken eggs, put eggs in cartons, keep eggs refrigerated, advertise the eggs, arrange sales locations, deliver eggs, collect payment for the eggs, handle customer relations, maintain a an insurance policy for liability etc etc etc.

Unlike the grocery store, we have to handle the entire production side.  Also, unlike the grocery, we have to handle delivery logistics.  The grocery promotes, orders, stocks and sells.  Other organizations handle transportation and production.  And, in almost all cases, one of their top priorities (if not the top priority) is to cut costs so they can have a higher return.  And this is true for each step of the process.

While a small farm might also consider cutting costs to improve the bottom line, it is also true that it is the quality that makes a small farm's product different.  Excessive cost cutting does not maintain quality  And, a small farm is not able to take advantage of specialization and bulk pricing as much as an industrialized operation anyway.  So, it makes sense that farms like ours should focus on the better product and simply charge what is necessary to earn a fair profit as well as cover the costs of producing quality eggs.

Thank you for your support!
In case you were wondering if someone complained to us about our prices or if there was a direct confrontation that spurred this post - the answer is no.  We have many very supportive people who happily pay the price we need to receive to keep our laying flock happy and producing.  Typically, we will sell between 25 and 35 dozen eggs per week without great amounts of worry.  But, we are also fully aware that there are many people out there who undervalue quality local foods.  We are hopeful that saying something is better than saying nothing.

Enjoy your eggs!    

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