Thursday, April 19, 2012

The Rise of the $20 Chicken

I hate to say this, but customers are going to get sticker shock this year when their local seasonal farmers markets open. Yes, the price of your food is rising and this is why.

Most notedly, it will be with the meat and dairy vendors, but the fact of the matter is all of us--fruit, vegetable, bread, flowers, value-added--all have to drive to the market. In the last two years, the cost of just getting to market has increased overall by 40%. That's for fuel, maintenance and insurance for vehicles.

While fuel prices may be obvious to everyone, we farmers are increasingly being saddled with not just rising costs of inputs, but also onerous state and federal regulations that continue to take a significant chunk out of our profits and ultimately, your wallet.

The biggest offender has become the lowly chicken. Here's the breakdown of what it takes to get our feathered friends from the pasture to your plate.

Day-old chicks are generally ordered in batches of 50, 100 or 200 on a weekly, bi-monthly or monthly basis. Broilers (meat birds) cost between $0.75-1.31 per chick depending on the supplier. Cheaper is not always better, as many of us have learned through experience (i.e. mortality). For math purposes, I'm going to stick with a 100 chicks at a dollar a piece, which has been fairly stable the last several years. However, all chicks are shipped via United States Postal Service and yes, postal costs have been rising. I'm fortunate to live close enough to commercial hatcheries to not incur steep shipping costs.

Cost of Chicks  $100
Shipping            $14.10
Tally                   $114.10

For the rundown on this exercise, I'm not going to include the cost of equipment as many of us over the years have devised our own homemade equipment costing a fraction of what commercial-grade brooders, waterers, feeders, nest boxes, housing, fencing, etc. would cost. But realize, there is still a significant investment made on our part, especially those of us who process our own birds.

Once the chicks arrive, they are brooded meaning they must be kept in a warm, dry, safe place until they get feathers. No, birds do not go right out on the pasture although some farmers will brood on pasture within their chicken tractors (contraptions that allow birds to be raised on confinement on pasture). This typically takes a few weeks and requires electricity for the heat sources as chicks need to be kept at temperatures in the mid 90's.

Chicks are fed starter mash--a finely ground mixture of grains and minerals. Contrary to popular belief, chickens can not be raised solely on pasture, especially if they are confined to a chicken tractor. They require protein in order to grow. If left to forage, they consume bugs, grubs, worms, flies, grasshoppers, even snakes, mice and lizards! But for the most part, we're left paying to feed our chickens.

For a moment I'm going to digress to the heritage versus utility breed argument. Most of us who subscribe to the sustainable model of agriculture began in a utopian model of farming and that meant going back to what are defined as "heritage breeds" meaning they haven't been specifically bred to grow faster and disproportionately to supply consumer demands (i.e. bigger breasts & thighs). But after a few years (if that) of penciling out the numbers on paper, many of us realized it cost us more to produce a skinny bird that people didn't really want. The truth is a K-22 or Cornish Giant tastes just as good as Brahma or Australorp as long as it is raised on pasture with quality feed and water. By the way, those heritage chicks cost approximately $2.50 each, even when you buy 100 at a time.

But back to the numbers...

I can raise a great tasting meaty bird on pasture in 6-8 weeks using a non-medicated grain-based diet. Lately, many chicken producers have been pushed by our educated eaters to reduce the use of soy in our feedstocks. What some of us have found that while soy-based feeds do indeed cause birds to grow rapidly, that fast track lifestyle increases mortality meaning they die from growing too fast. Their poor little hearts just can't keep up with their bodies and at the slightest excitement, they'll drop dead of  heart failure.

In the last two years, the cost of chicken feed has increased 22%. Organic (non-certified) soy-free feed now costs $36 for 75lbs. By comparison, a non-medicated soy-based feed is running around $21 for the same quantity.  It takes approximately 13 pounds of feed to produce a 3 1/2 pound pasture-raised broiler.

$0.48 feed X 15 pounds = $6.24 to get the chicken to a size to harvest in 8 weeks on non-soy feed or
$0.28 feed X 13 pounds = $3.64 to get the bird to the same size in 6 weeks with soy-based feed.

Heritage breeds require twice as long to reach harvest weight so basically double the cost.

Here's the tally with the cost of chicks & feed.
100 Chicks
Utility on Soyless feed           $738

Utility with Soy-based feed   $478
Heritage on Soyless feed       $888
Heritage on Soy-based feed  $628                                                

So that means it costs anywhere from $4.78 to $8.88 for the farmer just to produce the bird. That doesn't include our labor. Remember, these things require daily care for six to sixteen weeks, depending on what type of birds chosen.  And at this point, it still is a live animal.

On to processing, packaging and selling.....

Let me preface this portion of this post by saying killing and cleaning chickens isn't fun, but you get used it it. Some farmers choose to pay someone else to do this deed and yet others of us are forced to pay for processing even though we would much rather do it ourselves. I'll explain.

Meat sales are regulated by the United States Department of Agriculture (USDA). These are the regulations to which, as a poultry producer, we are required to abide. For many years, farmers, market managers and consumers have looked the other way at many vendors who cross state lines in the mid-Atlantic region who taking on-farm processed poultry to farmers markets. Why? Because USDA processing will add as much as $5 per bird to the overall cost of production. So on a 3 1/2 pound bird, you're paying $1.43 a pound for the producer to transport the birds (often more than an hour away) to a USDA approved slaughterhouse where we have zero control over the processing of the birds we have so lovingly raised. In order to mitigate contamination, USDA processed birds are submerged in some sort of sanitizing solution after processing. These solutions can be chlorine or formalin-based, meaning your dinner is dipped in toilet cleaner or embalming fluid. At some of these facilities, the processor doesn't even guarantee that the birds you get back are your own!

According the law, I am able to raise and process up to 20,000 birds on my farm in a calendar year and sell them directly to the consumer, but only within the state produced. While it is perfectly legal for me to raise, kill, clean, package and sell poultry in Pennsylvania, crossing the state line only twenty minutes away constitutes a federal offense. Yet, I can drive them three hours to Pittsburgh or Philadelphia.

Last year an intern at a Washington DC news organization wrote an investigative piece where she purchased chicken livers and hearts from two popular farmers markets in the District. A private testing laboratory confirmed the presence of Salmonella in one sample and E. coli in the other. Ironically, cooking kills both pathogens. After all, who eats raw chicken hearts & livers?

She also pointed out that both farmers were selling non-USDA inspected bird outside of their home state. The result? Farmers markets put an all-stop to poultry sales at farmers markets unless the birds were compliant with the law. Producers lost anywhere from $200 to $2,000 at each market leaving them with a glut of product that quickly filled freezers, went to food banks and even ended up as pig food. This decree was well into the season so many producers also had large flocks of turkeys started for metropolitan markets. Would we be able to sell them come Thanksgiving?

Producers with large flocks had no choice but to turn to USDA processing in order to maintain their cash flow, but they also had to increase prices. Still, the numbers were harsh. Sadly, these regulations have forced many producers to become liars and law-breakers, only processing a fraction of their poultry at a USDA facility to get that piece of paper, while continuing on-farm processing of the rest of their birds. After the brouhaha died down, many market managers went back to turning a blind eye understanding the reality of the matter while others became tyrants threatening to kick farmers out of markets that they've spent years attending and building a faithful customer base.

On-farm processing isn't taken lightly. For anyone processing a quantity of birds regularly, investing in good equipment is critical. A good plucker and scalder will set you back a couple thousand dollars, but will pay off in the long run. Because the regulations stipulate that poultry must be processed on the premises where it has been raised, there are mobile units mounted on trailers that can be moved from farm to farm. The typical cost is around a hundred bucks a day to rent such a unit. For the purpose of this article, I'm going to estimate the cost of a farmer processed bird to be $1 and non-USDA on-farm slaughter services at $2.50 per bird.

Let's do the tally now.  To get the production cost per bird, simply divide by 100. Once you have the cost per bird, divide that by 3.5 to get an approximate cost per pound just for production. As you can see, it ranges from $3.97 to $1.65 per pound depending on what type of birds, methods of feeding and type of processing.

And the tally continues....
USDA processing will be $500 bringing the total cost of production to:
Utility Breed       $1238  (non-soy fed)  
Heritage Breed   $1388  (non-soy fed) 
Utility Breed       $978     (soy fed)
Heritage Breed   $1128   (soy fed)

On-Farm processing service will be $250
Utility Breed       $938    (non-soy)  
Heritage Breed   $1138  (non-soy) 
Utility Breed       $728    (soy fed)  
Heritage Breed   $878    (soy fed)

On-Farm processed by the producer will be $100
Utility Breed       $838   (non-soy) 
Heritage Breed   $988   (non-soy)
Utility Breed       $578    (soy fed)
Heritage Breed   $728    (soy fed)

"If I can't make $4 per bird, I may as not even do it," said one producer who sells poultry at several of the larger metropolitan markets, including the premier FreshFarm Markets. Their birds are pastured Cornish Crosses fed a soy-based grain. They have a portion of their birds processed USDA, but if they have to do them all under federal inspection, they will no longer raise poultry for meat, including turkeys which will put a serious damper on holiday dinners.

So let's add that profit on to the gross costs per legal bird. That mean the utility breed chicken fed non-soy based food processed by a USDA facility would cost $16.38 or approximately $4.68/lb.

Keep in mind that this estimate does not account for mortality (i.e. dead chickens) and sometimes that can be quite a bit. With all the rains last year, many producers often lost as many as half their flocks during storms, especially with turkeys which cost as much as $9 a chick and eat three times as much grain as chicken.

It also does not include the 5-7% fee collected on gross sales by most farmers markets, local health department permits required to sell "potentially hazardous food" and liability insurance ($500 per year, up from $295 just two years ago) that all farmers markets require.

Looking at prices from well-known pastured poultry producers in the mid-Atlantic region, $4.99/lb appears to be the average price per pound. So when you ask your farmer for a four-pound chicken, be prepared to fork over a $20 bill.

1 comment:

  1. Another fine article! It's always a pleasure to read your work Sandra Kay!