Tuesday, May 1, 2012

Pricing Our Products

I belong to an email list based in the next county north of us that includes small-scale farmers, local food advocates, and homesteaders.  The listserve is a great forum for discussing issues, advertising products and seeking advice on a wide range of farm-related topics.

Recently, someone posted an offer of "organic" eggs for $2 per dozen.  This person, it seems, was overwhelmed by spring egg production in his small flock (chickens always pick up their production when the weather turns nice this time of year).  As you may well imagine, his extra eggs were snapped up quickly at this price!

As for me, I found myself struggling with this offer.  We also have a small flock of laying hens - they are cared for by our youngest daughter, Emma.  By choice, we have kept this flock small - partly so that our 8-year-old can manage it on her own.  We've also made sure that Emma is beginning to understand the economics of her farming enterprise.  She charges $4/dozen for her eggs.  From this income, she pays $1/dozen for feed.  The remaining margin covers her labor - twice-a-day feeding, watering and egg gathering, weekly pen cleaning, and marketing and sales time.  We've done some rough calculations and have determined that she earns roughly $8/hour on her enterprise - minimum wage!

We use conventional feed - organic feed is nearly twice as expensive in the quantity we'd need, and we're not sure we can get the $5-6/dozen for organic eggs that we'd need to maintain Emma's return to her labor.  We've also decided that we don't want to expand the enterprise - our 15 hens seem to be just about right for Emma.

Getting back to the $2/dozen organic eggs, those of us who sell food that we produce within our community have a huge responsibility.  We are responsible to our customers, obviously - folks who buy our food expect it to be of the highest quality and wholesomeness.  We also have a responsibility to our fellow farmers.  If we can assume that farm income is critical to the economic success and livelihood of most farmers, then we each have a responsibility to understand our costs of production and to price our food accordingly.  I suspect that the person who sold his eggs for $2/dozen has no idea what it costs him to produce that dozen eggs.  While it's none of my business whether he makes a profit, it is my business when his prices put downward pressure on my prices.  Competition is a good thing, provided we're competing on the basis of sound economic analysis.

As I've written before, many of us enter the "profession" of small-scale farming at least partly because we reject the mainstream emphasis on profit and material wealth.  Despite my own rejection of these "values," I do need to make a profit from my work - profit allows me to pay the mortgage, save for my daughters' education, and maybe even take a few days of vacation each year!  When my fellow farmers price their products at a level that results in a loss (whether through ignorance or indifference), it impacts my ability to make a living.

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