The Economics of Keeping Chickens

Probably the worst reason to get chickens is to make money or save money.

I’m certainly not opposed to investments and thinking about things in financial terms – I used to be a personal finance blogger – and I don’t judge people who want to get into chickens for this reason.  It’s just that all the money reasons associated with chickens would indicate you SHOULDN’T have them.

I’ll get into a bit more of the dollar and cents further down, but at a high level you can think of raising chickens from an agricultural-industrial perspective and it’s a highly efficient marketplace.  Think about all those eggs and rotisserie chickens that you see at Walmart or the grocery store.

Vast farms, often with 10’s of thousands of birds, have optimized every part of the process to deliver eggs and chicken meat to consumers for the lowest possible price (and therefore the highest possible profit for the farmers, stores and distributers).

Again, I’m not opposed to this process, it’s just that you have to realize this is what you’re competing with when you decide chickens are a money making venture for you.

In 2014, a dozen eggs (large, grade A) cost about $2.00 according to the Bureau of Labor Statistics  Dividing by 12, this gives us a “value” of 17 cents an egg.

If we use the rule of thumb that 3 hens will produce 2 eggs a day, this gives us 243 (365*2/3) eggs a year, or a value of $41.37 in eggs.  A chicken will eat about $16 a year in feed, maybe $10 of oyster shells and $10 of grit.

This gives us a “profit” of $5.37 per chicken.  HOWEVER, we also have to account for the coop, run, feeder and water dispenser.  We got a coop and run combo for around $200 – so this would be $67 for each of our 3 chickens.

We bought our chickens for $8 each.  If we called it $21 (or $7 per bird) for the feeder and water dispenser, this gives us a startup costs of about $82 (67+8+7) per chicken.  Therefore we’ll “break even” after 15.3 years (82/5.37).

Given that a 15 year old hen won’t be laying as often as younger hens, that we’ve ignored the time value of money (money today is worth more than money 15 years from now) and the value of our labour, it’s pretty clear that from a financial perspective this isn’t a good idea.  I suspect that the coop we bought won’t last us anywhere near 15 years – unless we’re spending time and money to repair it constantly.

A similar argument, compared to the $6 rotisserie chickens you can pick up, can be made against meat birds.

Farm fresh eggs will often sell at a premium, so the previous paragraph could be reworked with a value of $4 or $5 per dozen for the “premium” eggs that will be received from your chickens.  In spite of this, on the small scale we’re operating at it’s not going to be a good (financial) decision.

If No One Makes Money Raising Chickens, Why Do Farmers Do It?

Well, it isn’t that no one makes money raising chickens, just that backyard enthusiasts don’t.  In economics there is the concept of economies of scale.  The idea of this is that it’s cheaper to produce a lot of something than to produce a small number of the same thing.

If your goal is to make money, and for some reason you’ve settled on chickens as the way to do it, you’ll want to plan to eventually have thousands of birds – apparently the average commercial farm has 14,500 chickens – with large operations reaching 50,000 birds.  You’ll want to ruthlessly track the costs associated with each bird – food, housing, labour, medical care – and cut where ever you can.

If you’ve ever been bothered by the conditions commercial farms keep chickens under, this is the heart of the problem.  There isn’t a whole lot of money to be made in farming, so costs have to be cut everywhere possible if the farmer is going to stay in business.

Why Keep Backyard Chickens Then?

Ultimately, this is a question we each have to answer for ourselves =).  Probably common answers include:

  • Not understanding the money aspect of it and fooling ourselves that we’re making or saving money
  • Wanting to know the source of our food – not trusting the eggs or chicken meat available in supermarkets
  • Wanting to know that our meat was raised in a good environment  – if we object to factory farming conditions but still want to have eggs and / or chicken meat
  • Believing that food we produce ourselves is tastier or healthier than what is available from the grocery store
  • Enjoy chickens for their own sake, as a pet that also produces some yummy eggs / meat
  • Fertilizer from the chickens’ waste is great if you’re a gardener

Why do you keep chickens?  What was your original motivation when you started?