Schroëdinger’s Egg Farm

Farming is famous for taking a lot of capital, requiring a huge amount of work, knowledge and skill, and paying very slim dividends.

And so it is with some skepticism that one should approach any claim of a small holder making much money in the farming game.

Take eggs.

The picture at top was taken this morning at Trader Joe’s in Ashburn, Virginia.

This is the retail price of a dozen “cage free large white eggs”.

I took the picture and then decided to look at production economics.

What’s the price of that paper egg carton alone?  

40 cents each from Uline at $80 for 200 cartons.

A single high-laying hen will produce 300 eggs a year, to fill 25 cartons costing $10.

What about feed?  

Chicken feed and grit will cost about 19 cents per day, based on a quarter pound of feed per bird per day.

So the 365 days of feed needed to produce 300 eggs will be $70.

Assume chick cost is zero.  

Assume zero chicken mortality.

Assume zero egg breakage.

Assume no capital costs, no insurance costs, no transportation costs, no licensing costs, no veterinary costs, no water bills, no maintenance.

Those 25 dozen eggs will cost $80 a year in feed and cartons alone, but will retail for just $70.

Impossible.

So how is it done?

Two ways.  

One way is to charge $8 a dozen for bespoke eggs advertised as “GMO, hormone-free, organic, pasture-raised, ‘girls on grass’”.

These are the eggs you sell to aroma-therapy enthusiasts who buy “smart water”.

This is the business plan of one of my farms — or at least it’s the business plan of the Potomac Village “natural food” store where their eggs are sold.

The other method is to scale up, so you’re not buying 400 egg cartons at a time, but 500,000, and you’re not buying feed in 50-pound bags, but in 50-ton railroad cars.  

With this kind of economy of scale, there’s no hunting for dirty eggs in the grass — instead, nearly pristine eggs roll down gentle slopes to conveyor belts that whisk them away to be cleaned, sized, individually labeled, and packed in cartoons quickly moved to coolers and transport trucks.

That’s how almost all of the 50 billion eggs (yes, 50 billion!) that are sold, bought, and/or used in ready-made foods in the US are created.

Is there a third way?

There is.  

These are the eggs produced by industrial scale mechanized egg production facilities, but which are relabeled and repackaged as “GMO, hormone-free, organic, pasture-raised” eggs.  

The big money is fraud; selling $2 a dozen eggs for $6 a dozen.

Is that done?  

Sure.  Some.

And why not?

Who will know?

You think that a restaurant that advertises that it’s using “locally-sourced cage-free, pastured eggs” is telling you the truth?

Probably not.  

Fraudulent restaurant claims for food sources is legion.  See >> https://terriermandotcom.blogspot.com/2016/04/the-bold-lies-made-about-local-foods.html?

How about those store-bought eggs that are advertised as being laid from “girls on grass”.  

Are they?

Maybe not.  

Egg fraud is a real thing and there’s big bucks in it, same as there is in olive oil fraud, coffee fraud, fish fraud, cheese fraud, and wine fraud.

See >> https://www.reuters.com/article/legal/pete-gerrys-settles-class-action-over-free-range-egg-claims-idUSL1N2DA32F/

See >> https://www.news.com.au/finance/business/manufacturing/free-range-egg-farms-fined-300000-for-misleading-free-range-claims/news-story/34eadaafc6ee8fa874b5c8c812bef0fb

See >> https://www.theguardian.com/uk/2010/mar/11/free-range-eggs-fraud

See >> https://www.nzherald.co.nz/business/revealed-west-auckland-farmers-three-million-free-range-egg-fraud-ends-with-home-detention/CQVAT5NPN37ED7SDAGXP72XDSY/