Price talk: Are our hens' eggs expensive?

We have 29 hens and 2 roosters on our farm and we sell their eggs. Our chickens roam freely in a big outdoor run all day. They are “farm animals” but they are treated more like pets. Some of them have names. When a hen got injured, we took her to the vet (she recovered).

We sell their eggs for 60 Japanese yen (0.5 USD)/egg.

That is 360 yen (3 USD) for a box of 6 eggs, or 600 yen (5 USD) for a box of 10 eggs.

The other day I went to the supermarket and I happened to walk by the egg section. As we only eat eggs from our farm at home, it has been a long time since I had a closer look at supermarket eggs and their prices. I knew that our eggs were more expensive than "normal" eggs, but what I saw was still surprising.

Our local supermarket egg section: Prices are without 8% consumer tax.
(click on picture for enlargement).

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Prices with tax (= final price for consumers).

The eggs were sold, on average, at about 20 yen/egg – that is one third of the price of our eggs. The cheapest package cost only 163 yen - just 16 yen for an egg. This is considered a normal price of eggs in Japan.
For comparison, one apple in Japan costs somewhere between 100 - 200 yen, one potato about 40 yen, a 500 ml bottle of Coke 150 yen. One beer in a pub will cost you about 500 yen. An average monthly salary (net income) is about 250,000 yen.

Needless to say, all of the eggs on the above picture come from the most "efficient" and in Japan still the most prevalent production system - cages.

Our hens' eggs cost three times more. I don't think they are expensive, but I understand that some people may find them overpriced.

So here I would like to explain what constitutes the price of an egg from our farm.


What does the price of our hens' eggs include? 

The following graph shows what the price of 60 yen/egg from our farm includes.

Click on image for enlargement.

This calculation is based on actual or precisely estimated costs,  assuming that we will keep selling eggs from the current flock for the period of one year and manage to sell on average 80 % of eggs. (The rest we eat ourselves, barter for other goods, or spend in other useful ways. If we manage to sell more than 80%, that's great. So far we haven't.)

The same calculation in percentage points:

Click on image for enlargement.

Here is each category in detail:

Operating costs in pre-production period ( 6 yen out of 60, or  10% of price)
Pre-production period is the period between 0-5th month of chickens' life, when they don't lay eggs yet, but need care and feed.
Operating costs in pre-production period include: (1) price of baby chicks, (2) their feed for 5 months, (3) electricity (used for baby chicks heat lamp, lighting, pumping well water etc).
It does not include other expenses such property tax and gasoline (e.g. car trips to buy feed).

Operating costs in production period (17 yen out of 60, or 28% of price)
Production period is the period between 6-18th month of chickens' life, after they start laying eggs.
Operating costs in production period include: (1) feed, (2) packaging, (3) regular salmonella testing, (4) electricity.
It does not include other expenses such as property tax and gasoline.

Initial investment (13 yen out of 60, or 22% of price)
This includes the cost of building chicken coop (the new coop) and a fence, calculated for a return period of 7 years (that is, about 15 % of initial investment should be paid back from egg sales every year).
It does not include the cost of building the old coop and of digging a well. (Which were both built for the chickens and both are essential for continuing the farm.)

Labor costs (24 yen out of 60, or 40% of price)
This is the cost of our time.
If 80 % of eggs get sold every month at 60 yen/egg for the period of one year, my "salary," calculated for the period of 18 months (to include the chickens' first 5 months of life, when they need a lot of care but bring no income) would be 9,733 yen/month.

So, to sum it up, selling eggs from our farm yields a salary of less than 10,000 yen/month. If we split it with Nobuo, we get almost 5,000 yen each!

This was the basic analysis of the price of our hens' eggs. Thanks for reading! If you are not bored to death yet, more detailed explanation follows.

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Self-employed people usually don't count their income in terms of hourly wage, because most of us would get very depressing numbers. But it can be quite illuminating, or maybe a good joke, to do so here.

Work on the farm typically takes about two hours a day, divided into several short sessions following a day cycle. This mostly includes feeding the chickens and collecting and selling eggs. These two hours do not include any extra work that is done with less-than-daily-frequency (shopping trips to buy feed; delivering eggs, picking up okara, taking eggs to the health center for salmonella check; catching escaped chickens; writing this blog...).

So the work normally takes two hours, but for this calculation let's assume that all the work on the farm could be done super efficiently in just one hour a day, 7 days a week, 365 days a year (chickens need to eat on national holidays too). Then the monthly reward of 9733 yen would mean a wage of about 324 yen/hour.
For comparison, the minimum wage in prefecture Ibaraki, where we live, is 747 yen/hour.

Of course, this is a silly calculation. Our farm is not just a business, it's also a hobby and an experiment. The experience and the fun is just as important as the monetary reward. But the truth is that in strictly economic terms, our chicken farm is not a self-sustaining business, even if the eggs sell great.

The reason why I go to such lengths to explain all this is to show that the price 60 yen/egg is not unreasonably high. It reflects real costs, which we are trying to keep low, and very modest profit.

The point is that the price of 60 yen for an egg would not be too high even if we had 100 chickens, not 31 (provided that the 100 chickens were kept in the same happy "free range" conditions). Then it would finally become a feasible business model: The farmer would make enough money to consider it a meaningful source of income - still just a side income, but one worth putting the time in. It would finally be a sustainable solution, when doing the right thing also helps pay the bills.
(By the way we don't plan to increase our flock to 100 chickens. Given the limited size of the farm, chickens would not be happy with such a population increase. They would eat up all the grass. They couldn't all fit into the coop. And there wouldn't be enough customers for so many *expensive* eggs. This was just a theoretical extrapolation.)


Higher prices of eggs produced on smaller, more animal- and environment-friendly farms are a result of higher costs, not just greenwashing. (Although they can be. If possible visit the farmer whose eggs you buy, and make sure the farm is what the label says. Good farmer should be happy to show you around.)

Frankly, I can't imagine how a small farm dedicated to ethical and ecological practices could sell their eggs for anything less than 60 yen without compromising either animal welfare standards (overcrowded barns; no outdoor run) or farmers' wages (working too long for too little compensation) or environmental standards (sloppy waste disposal) or  food safety standards (no salmonella tests).

Conclusion 

Based on the math above, I dare to conclude that 60 yen is a just price for a humanely and locally produced egg.

Obviously this is an unconvincing conclusion from someone who actually sells eggs for that much.

The only thing I can say to my defense is that our chickens will not be here forever and the time will come when I will move back to the consumer side of this story. When that time comes, I will  be happy to find a farm like ours that treats chickens well, tries to feed them locally and is generally a nice place, and asks only 60 yen for one egg. I will not consider them expensive.

As someone with low income myself, I will solve the question "How can I afford to pay 600 yen for 10 eggs?" very easily - every month  I will simply give up a few soft drinks from a vending machine, or have one less beer when occasionally meeting friends in a pub. Just one less beer will save me almost enough money to buy those ten eggs.
I only hope I will find a farm that will produce them.

I hope so too!