8-1012 May 1964 Planning for Profitable Egg ProducIio TEXAS ACM UNIVERSITY TEXAS AGRICULTURAL EXPERIMENT STATIUN - - - TEXAS AGRICULTURAL EXTENSIUN SERVICE I Cullege Station, Texas ‘I atttttbt ‘illn- €~ t ‘B'S‘$€‘ ‘i€i‘f'=K“é Contents Introduction ...................................... .................. s- 3 Study of East Texas Flocks ................................... -- 3 Procedures .................................................... -- 3 General Flock Management .......................... -- 3 Production and Management Practices Affecting Production .................. -- 4 Mortality Rates .............................................. -- 5 Mortality Rates and Housing ______________________ -- 5 Feed Consumption ........................................ __ 6 Sources of Feed ............................................ -- 6 Labor Requirements ...................................... _- 6 Production Costs ............................................ -- 7 Egg-handling Practices, Merchandising and Prices ........................ __ 7 Handling Losses ............................................ _- 8 Evaluation of Various Systems of Egg Production--- 8 Procedures ...................... -- 8 Requirements for Commercial Egg Enterprises- 8 Land ...................... -- 8 Improvements and Equipment .............. _- 9 The Laying Flock .................................... _- 1O Egg Production Requirements ...................... —‘ 10 Feed Requirements ................................ __ 1O Labor ..................................................... __ 1O Flock Replacements .............................. __ 11 Market Supplies .................................... s- 11 Truck Expense ....................... ............. __ 11 Repairs and Upkeep .............................. @— 12 Interest on Investment .......................... _- 12 Depreciation .......................................... -- 12 Miscellaneous Items .............................. _- 12 Egg and Poultry Sales ................... ______________ -- 12 Factors Affecting Poultry Profits .................. -- 12 Egg Production Per Hen Related to Profits .... -_ 12 Feed Efficiency Related to Profits .................. -- 14 Differences in Mortality Rates and Earnings--- 14 Savings in Feed Costs .................................. -- 15 Producer Merchandising and Egg Profits ...... -- 15 Size of Flock Related to Profits ...................... __ 15 Acknowledgment This study was made possible by the cooperation of the egg producers who furnished the information which was used in developing models for various egg- laying systems. NG THE PAST DECADE the production of eggs {has changed from many small backyard flocks _- er, larger, commercial operations. This has l‘ possible the application of new methods and gruction techniques designed to improve the ef- cy of the enterprise. fLarge-scale commercial egg production is a rel- fly new enterprise on most Texas farms. Many lems of management are encountered as farmers i from cash crops to specialized enterprises such f» mercial egg production. A study was designed to determine the manage- I problems associated with large-scale egg pro- on and factors contributing to an efficient and ftable poultry enterprise. The first part included ailed study on cost and returns of commercial Production in East Texas. Special attention was f to management practices that affected the effi- _ of egg production. Data for the study were ined during each of the four years, 1959-62. ‘ uidelines developed from this basic information been used in developing models for various egg- systems. Budget analysis was then used to late each of these systems. Study of East Texas Flocl were limited but the cost of upkeep on auto- . feeding equipment was relatively high for the studied. UCTION cosrs The production costs shown in Table 1 include h costs plus a charge fo-r depreciation and in- The cost of hired labor is included as a mis- eous expense, but there is not a charge for the of the operator or his family. Feed made up about 60 percent of the cost of ' g a laying flock and, together with the expense ock replacement, was about 85 percent of the 1510f producing eggs. flocks increased in size, some producers hired ional labor. This largely explains why miscel- costs averaged more in 1962 than in previous The average annual cost of keeping a hen in the p; flock ranged from $4.64 to $5 and was approxi- y $5 during 3 of the 4 study years. On the of eggs produced, the cost was about 30 cents idozen each year. The labo-r of the farm family not included in calculating either of these costs. HANDLING PRACTICES, j HANDISING AND PRICES Eggs were gathered regularly, usually three or if times daily. With the exception of one flock, all I: iately to market were cooled when cooling was East Texas poultrymen had the alternative of ering eggs to- a grading station or looking for a if price through some other outlet. Producers shown increasing interest in the latter alterna- iisas production costs have increased mo-re rapidly ‘ egg prices. e price-making mechanism for eggs sold by i Texas producers is not clearly defined. As the . ction of eggs has become commercialized, there been numerous marketing problems. All the 'dual egg producer has been able to do to im- the price received for eggs at any specific time ,9 - n to take advantage of opportunities to market ]ua1ity eggs at higher prices. he development of a sufficient volume of eggs fovide an operating and selling profit for egg ants would undoubtedly attract qualified egg 7. . In the meantime, supermarkets, other gro- retailers, hotels and cafes have been substantial a from local producers. n 1959 and 1960, more than 75 percent 0-f the ction on cooperating farms was delivered to a g station. Eggs for this market were put in ikary 30-dozen crates before cooling. Deliveries were gathered by hand. Eggs that did not go a Figure 2. Forty percent of the flocks studied were housed in in- dividual cages. Mechanical feeders and waterers were commonly used by flock owners of 10,000 or more layers. The cost, new, of the house, cages and facilities for mechanical feeding and watering was $1.75 per hen capacity. to the grading station were usually made two or three times each week. Four producers made a special effort to find a better than average market in 1959. These men ar- ranged to furnish grocery stores and cafes, and, in so-me instances, to retail eggs to individuals customers. Eggs for this market were cleaned, candled, graded and put in either cartons for retail sale or in case lots for the hotel and cafe trade. Eggs going t0 a grading station during 1959 brought an average of 31 cents per dozen, Table 1. This price approximated the production costs of eggs on these farms. At the same time, four pro-ducers who prepared eggs for retail sale received an average of 44.8 cents per dozen fo-r their entire output. In 1960, the price spread between these two out- lets for eggs averaged more than l0 cents per dozen. As a result, the proportion of eggs going to a grading station dropped in 1961-62. Even so, eggs going to a retail or other special outlet continued to average 7 cents per dozen above grading station prices during these years. Cleaning, grading and packaging eggs for cus- tomers willing to pay a premium price required extra labor and special equipment. Other added cos-ts included egg cartons and the extra mileage for the truck or pickup used for egg delivery. The usual practice in processing eggs was to sub- stitute machinery for hand labor whenever feasible. One producer with approximately 10,000 hens bought cleaning and grading equipment that cost $2,600. Four persons with this equipment could clean, candle, grade and carto-n 360 dozen eggs per hour. At this rate, the peak production of 50,000 hens could be processed in an 8-hour day by four workers. Owners o-f small flocks reported less expensive equipment used to process market eggs. For ex- 7 w: ww-v-W- ample, equipment costing about $600 was used to good advantage with flocks numbering 5,000 layers or less. In general, average prices received for eggs dur- ing 1959-62 did not permit large profits. Some pro- ducers who followed good practices in the manage- ment of their flocks did little more than meet pro- duction expenses because egg prices were low. Al- though all flock owners were hurt by low egg prices, inefficient producers were more severely affected. Before a new egg enterprise is started, it is im- portant that the poultryman explore and arrive at a marketing outlet that will provide a price which warrantsthe risk involved in the enterprise. HANDLING LOSSES About 97 percent of the eggs gathered were sold. This difference of 3 percent included eggs broken or badly cracked, either in gathering or during subse- quent handling, and eggs that were not saleable be- cause of blood spots or for some other reason. Al- though breakage was reduced by careful handling, all of the producers reported some loss in the number of eggs marketed as compared with the number gathered. Evaluation of Various Systems of Egg Production PROCEDURES The results of the study of East Texas laying flocks were used as a basis for setting up model systems of production for various poultry situations. These models involved differences in systems of man- agement and in management practices. A budget analysis was then used to evaluate each production model. Budgeting is a systematic method of esti- mating the profitability of different management situations. Data obtained from producers were utilized in calculating feed, flock replacement, labor and other costs associated with the various situations for which models were prepared. It was evident from the first phase of the study that poultry earnings were greatly influenced by the size of the laying flock. To better evaluate this effect, complete farm budgets were prepared for flocks of 3,000, 5,000, 10,000, 30,000 and 60,000 layers. During 1959-62 the average annual rate of lay for the highest-producing flocks was 240 eggs per hen per year. On the other hand, relatively 1ow-produc- ing flocks averaged only 180 eggs per hen. The 4- year average for all flocks was 206 eggs per hen annually. These three levels of production were used in the models included in this analysis. Feed requirements and other inputs for each level of pro- duction were based on producer experience. 8 With good flock management, death loss :5 not run over 12 percent annually. Howev extremes in the mortality rates were re r individual flocks. The flocks studied were into three categories, those reporting annua} losses averaging approximately 12, 24 and 36 _i Consequently all three categories were used i up situations for evaluation. The trend is for more and more poul V make arrangements for supplying regular bu i graded eggs. In 1962, the price received this outlet averaged approximately 40 cents u Table 3. A few owners of small flocks mad. house-to-house delivery or retailed eggs at This market outlet required extra work and I used by large producers. During 1962 the r eggs sold to individual customers averaged ~ per dozen. These two prices together with an, price received for ungraded eggs in 1962 (g per dozen) were used in making an evaluj the various systems of egg production. " Flock owners have the alternative of bu commercially mixed feeds or purchasing eq‘ with which to prepare the laying ration by and mixing grain with a high protein con The costs associated with each alternative as ‘I by flock owners were used to evaluate the t’ tlces. ‘ ; In summary, the model situations forf budgets were prepared included: 7 1. Five sizes of flocks, namely 3,000,? 10,000, 30,000 and 60,000 layers. " 2. Production for each flock calculated‘? basis of 240, 206 and 180 eggs per hen per 3. Feed required calculated according- production. 4. Annual mortality rates equal to 12, 36 percent of the total flock. 5. Two sources of feed, commercially mi farm-mixed. " 6. Egg receipts based on an average A 45, 40 and 33 cents per dozen. V’ REQUIREMENTS FOR COMMERCIAL EGG ENTERPRISE A Requirements for laying flocks include f‘ investment capital as well as items of ann f Capital needs for land, improvement, equipm laying hens were considered. LAND. The land requirements for a =2 commercial egg enterprise are relatively small ‘ the acreage used for poultry and for the f Q were included in this study. Parts of the f for other purposes were not considered. investment was figured at $100 per acre and ranged from 5 acres for the 3,000-hen flock to 25 es for 60,000 layers, Table 2. _ IMPROVEMENTS AND EQUIPMENT. Brood- houses and other facilities for raising flock re- if cements were not considered in this study. Con- iuently, the laying houses and the egg storage room hde up the major investment in buildings. The _ i. of a new laying house for birds in floor-type p ses or where individual cages were used was $2 r layer capacity. The investment for laying-house equipment as a in Table 2 includes. individual cages with ijtomatic waterers. The figures in Table 2 are based y hand-fee-ding equipment for flocks of 3,000 and ‘@111 hens but for 10,000 or more birds, automatic doing equipment is included. The cost of new auto- ltic feeding facilities was figured at 33 cents per _d capacity. A tank for storing bulk feed cost ut $300 and is a part of the equipment figured f each laying house. The operator with floor-type housing does not ve to invest in the individual wire cages included _ Table 2. However, this saving is largely offset ' the investment in the nests, feeders, waterers and ter necessary in floor-type» houses. Equipment for cleaning and grading eggs was ually in the same building where eggs were cooled id stored. The investment for these combined 'lities was usually small when eggs were sold to a iding station. The investment shown in Table 2 Figure 3. The investment for a floor-type house with nests was about the same as a similar capacity house equipped with indi- vidual cages. This floor-type house is equipped with mechanical feeders and waterers. is for the facilities needed to provide co-ol storage and space and equipment to clean, grade and package eggs for the retail trade. The cost of suitable new facilities for grading and storing eggs from a 10,000 and a 60,000-hen flock was about $4,200 and $14,000, respectively. This investment on a per-hen capacity basis amounts to 42 and 23 cents, respectively. With prices prevailing during 1962, po-ultrymen could make a substantial saving in feed cost by com- bining corn and grain sorghum with a high protein concentrate as- the main ingredients of the laying ration. However, not all poultrymen followed this TABLE 2. CALCULATED INVESTMENT ASSOCIATED WITH LAYING FLOCKS OF VARIOUS SIZES 3,000 Layers Using 5,000 Layers Using 10,000 Layers Using 30,000 Layers Using 60,000 Layers Using Commer- Commer- Commer- Commer- Commer- cially Farm cially Farm cially Farm cially Farm cially Farm mixed mixed mixed mixed mixed mixed mixed mixed mixed mixed feed feed feed feed feed feed feed feed feed feed 1 -—-—-———-——————-—Dollars—--———————-—-— _ d1 500 500 700 700 1,000 1,000 2,000 2,000 2,500 2,500 flying houses” 3,000 3,000 5,000 5,000 10,000 10,000 30,000 30,000 60,000 60,000 ying house equipment“ 1,175 1,175 2,420 2,420 5,325 5,325 14,775 _ 14,775, 29,500 A 29,500 i; room, cleaner , and grader“ 700 700 700 700 2,100 2,100 6,500 6,500 7,000 7,000 P: mixing equipment” 450 450 850 4,500 5,000 g ellaneous equipment“ 175 175 290 290 580 580 1,740 1,740 3,480 3,480 ‘up, other trucks’ 900 900 900 900 900 900 3,400 3,400 6,100 6,100 s‘ 5,250 5,250 8,750 8,7 50 17,500 17,500 52,500 152,500 105,000 105,000 tal 11,700 12,150 18,760 19,210 37,405 38,255 110,915 115,415 213,580 218,580 irage per hen capacity 4.05 3.75 3.84 3.74 3.82 3.70 3.85 3.56 3.64 j ued at $100 per acre. vestment calculated at 50 percent of current cost, new. - 1 ludes wire cages and automatic waterers in all instances. Automatic feeding equipment for flocks of 10,000 or more birds. ’ ludes equipment to clean, grade and prepare eggs for retail. ‘i; baskets, clocks, sprayers, etc. v YQ of replacement pullets at $1.75 each. TABLE 3. AVERAGE PRICES RECEIVED FOR PRODUCTS SOLD AND AVERAGE PRICES OF ITEMS USED IN PRODUCTION, 1962 Unit Dollars Products sold Eggs—retail—individual customers (cartoned) Dozen .45 Eggs—grocery stores and /or cafes (cartoned) Dozen .40 Eggs—delivered clean but ungraded (loose) Dozen .33 Cull hens Head .25 Production requirements Commercially mixed laying feed cwt. 3.85 Ingredients for farm-mixed laying feed 41 percent protein concentrate cwt. 5.50 Grain Sorghum cwt. 2.12 Corn cwt. 2.70 Oyster shell‘ cwt. .90 Pullet replacements Head 1.75 Egg cartons for retail eggs 100 2.30 Egg flats for delivering eggs in cases 100 1.30 Regular hired labor Week 35.00 Irregular hired labor Hour .75 ‘Oyster shell purchased in small quantities was at a somewhat higher price. practice. Consequently, the investment information for various-sized flocks, both with and without equip- ment suitable for grinding and mixing feed is shown in Table 2. Such equipment comes in sizes ranging in capacity from less than a ton to more than 3 tons per hour. High-capacity mills for grinding and mix- ing operate automatically with minimum labor. The poultryman can select the capacity best suited to his needs. Other investment items include baskets for gath- ering eggs, time clocks for turning on lights, spraying equipment and numerous other miscellaneous items. The total new cost of these relatively small items is approximately 6 cents per hen. A pickup truck is included as part of the invest- ment for the laying enterprise. Additional trucks are in common use with large flocks for handling both eggs and feed. Here a truck equipped to» deliver bulk feed from the feed mixer to each house is a great labor saver. The mileage covered for this purpose is low and secondhand bulk trucks that are unloaded automatically have been used successfully for this job. THE LAYING FLOCK. The hens in the laying flock are a major item of investment. This is true whether the poultryman raises his own replacements or buys pullets to go directly into the laying house. By the time pullets were in 50-percent production, their total cost was approximately $1.75 per bird in 1962, regardless of the method of replacement, Table 3. This figure is used throughout the study. For a person just starting a commercial egg enter- prise, about 30 percent of his investment will be for the laying flock. Because the laying flock is replaced about every 12 months, established producers usually consider this an annual expense. 10 Data in Table 2 do not include faciliti brooding chicks and raising pullets. i The total average investment per hen ca i‘ including feed grinding and mixing facilities, f, from $3.64 for 60,000 layers to $4.05 for a 3,000 flock, Table 2. I This total average invesjtment is based of percent of the new cost forlall improvements, ment and facilities. Consequently, the avera vestment shown in Table 2 should not be cot with the investment required to start a new n [f cial egg enterprise. " The capital required to start a 60,000-layer I prise including pullets at 50 percent productil housed in individual cages and with facilities pare- a farm-mixed laying ration, would am i $330,000. This is $5.50 per hen capacity. 10,000-bird flock the investment would be $5.80 per hen capacity. EGG PRODUCTION REQUIREMENTS The amount of feed, labor, replacement‘ and other physical requirements needed with ent egg-production systems were determined for; eting purposes. All other requirements invli either cash or overhead costs were also incl ~:_ presented in the following discussion. *- FEED REQUIREMENTS. Unless feed/- age was a factor, feed consumption tended t; with the level of egg production. For example,‘ producing flocks (averaging 240 eggs per hen): sumed approximately 90 pounds of feed annua f hen. Birds laying at an intermediate level u eggs per hen utilized 86 pounds each. On the»; hand, hens averaging only 180 eggs annually W A 821/2 pounds of laying ration. These feed requirements were used in p I budgets for egg-laying systems with flocks u‘ at these respective levels. The 1962 prices ~§ chased feeds are shown in Table 3. é LABOR. Among the farms studied, a l 3 portion of the labor was provided by the farm f In the evaluation of different egg-production s l" it was considered that both the 3,000 and 5, L flocks could be taken care of by the farm i As budgeted, eggs from the 3,000 hen flock wi tailed through house-to-house delivery to i f. customers. House-to-house delivery was ti suming; consequently, about the same labor quired with this system as was needed to care 5,000-hen enterprise with eggs marketed - other outlets. 1 A flock of 10,000 hens was calculated to ' one full-time- worker in addition to the time, operator and his family. Hired labor for‘ layers included 5 full-time men caring for f __ 6 persons working part-time in the egg house eggs were cleaned, graded and packaged for i 6t. A flock of 60,000 birds was calculated to require full-time help of l0 men caring for the birds and f ons working full-time in the egg house. Both and women were usually employed for cleaning, 'ng and packaging. These labor costs do not vde the time necessary to raise pullet replace- its. Producers who raised their own pullets had j- labor requirements. Prices paid in East Texas ired labor used in 1962 are shown in Table 4. jFLOCK REPLACEMENTS. Most East Texas ttrymen did not cull laying flocks periodically. lore usual practice was to replace the birds in l house about every 12 months and to make all ‘replacements for a particular house at one time. H were more birds added to a house during sproduction year. The 1962 replacement cost of 15 per pullet was budgeted as an annual expense. ’ MARKET SUPPLIES. These consisted prima- v of containers in which eggs were delivered to 10,000-hen flock averaging 240 eggs per hen annually buyers. In most instances ordinary cartons each hold- ing 1 dozen eggs and costing 32.30 per hundred were used in packaging eggs furnishe-d to grocery stores. Brightly colored or specially made cartons were more expensive. Containers (filler flats) for eggs deliver- ed to a grading station cost $1.30 per hundred, Table 3. The cases (30-dozen size) were returned and re-used. TRUCK EXPENSE. This item included the operating costs for all forms of transportation used on a commercial egg farm. Owners of small flocks used a pickup to deliver eggs and for other light hauling. Here commercially mixed feeds were de- livered to each laying house. Those who prepared a home-mixed ration usually purchased grain and other ingredients delivered to the farm. In addition to one pickup, the cost of a truck to handle bulk feed was included among the expenses for flocks of 30,000 birds or more. Also on these farms, small trucks. with a special-type body were used to deliver eggs in good condition to retailers. It was estimated that these costs will run from about $120 to $180 annually per 1,000 layers. A E 4. SUMMARY BUDGETS FOR 10,000-HEN LAYING FLOCK AVERAGING 240 AND 180 EGGS PER HEN PER _, WITH 12 AND 36 PERCENT MORTALITY RATES AND EGGS MARKETED, UNGRADED AND AT RETAIL OUT- -. LET PRICES, 1962‘ 10,000-hen flock averaging 180 eggs per hen annually 12% annual mortality rate 36% annual mortality rate 12% annual mortality rate 36% annual mortality rate Eggs sold, Eggs sold, Eggs sold, ’ Eggs sold, Eggs sold, Eggs sold, Eggs sold, Eggs sold, ungraded" gro. 8c cafe” ungraded gro. 8c cafe ungraded gro. 8c cafe ungraded gro. 8c cafe ----—————— ————Do1lars—————-------- .|_.~ 60,412 72,944 52,548 63,632 45,135 54,708 39,372 47,724 hens 2,200 2,200 1,600 1,600 2,200 2,200 1,600 1,600 ' otal 62,612 75,144 54,148 65,232 47,335 56,908 40,972 49,324 i ses . .1 -farm-mixed '5 tion 25,380 25,380 22,140 22,140 23,265 23,265 20,295 20,295 _;- replacements 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 +1 labor 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 ting pickup d trucks 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 I ket supplies 664 4,194 50s 3,659 411 3,146 369 2,744 airs and upkeep 1,246 1,340 1,246 1,640 1,246 1,340 1,246 1,340 rest 2,272 2,350 2,272 2,350 2,272 2,350 2,272 2,350 reciation 3,572 3,978 3,572 3,978 3,572 3,978 3,572 3,978 ' ities and misc. 2,096 2,096 2,096 2,096 2,096 2,096 2,096 2,096 ' l-all costs 57,530 61,638 54,129 57,863 55,162 58,475 52,150 55,103 " per dozen eggs 30.6 32.8 33.0 35.3 39.1 41.5 42.4 44.8 ‘ -family r-mgt.‘ 5,082 13,506 19 7,369 ——7,827‘ _ -1,567‘ __l 1,178 _5,779 a s-family labor- . using commercially l, ed feed 73890 7,607 -3,505 2,280 -—ll,829 ——6,937 —14,602 —10,407 ' -three cents per dozen. v cents per dozen. tions made for depreciation and interest. l-s otherwise indicated, feed costs were calculated on the basis of farm-mixed laying ration. amount of money left for the labor and management of the farm family after all operating expenses have been paid and xtes a minus income or the amount that total calculated cost exceeded total calculated sales. 11 REPAIRS AND UPKEEP. Annual repairs for laying houses, other buildings, feeding and watering equipment, egg room equip-ment and feed-mixing facilities were included in repairs and upkeep cost. Rates for calculating repairs and upkeep were com- puted from data secured from farms studied. Land taxes were a minor item and were included as an upkeep cost. The largest items of upkeep were in connection with the laying house and with automatic feeding and watering equipment. Total annual upkeep of improvements and equipment averaged between 3.5 and 4 percent of the original cost. INTEREST ON INVESTMENT. This cost was calculated on the investment items listed in Table 2. Interest on land was calculated at 4 percent and all other capital at 6 percent. DEPRECIATION. Depreciation rates for im- provements, various kinds of poultry equipment and trucks were based on the experience reported by co- operating poultrymen. Laying houses, bulk feed tanks, nests, wire cages, the egg room and cooler and feed-mixing equipment were considered to have an average life of approximately l5 years. An expected life of from 5 to l0 years was reported for other facil- ities. No depreciation was included for land and the replacement of the laying flock was treated as an annual cost. The total depreciation cost for the various build- ings and equipment used for a commercial egg enter- prise approximated ll percent of the original cost. MISCELLANEOUS ITEMS. The miscellaneous requirements associated with an egg enterprise in- cluded expenditures for telephone, sanitation, insur- ance and utilities. Most of these costs tended to vary directly with the size of the laying flock. However, the volume of eggs marketed from the larger flocks encouraged the producer to contact distant buyers in looking for his best outlet. This was done largely by telephone. Consequently, among relatively large flocks, this cost item was much higher than for a producer with a small flock who depended primarily on near-by mar- kets. Also, the large amount of accounting associated with the large flock encouraged‘ hiring someone to keep up with the business records. The owners of small flocks kept their own records. EGG AND POULTRY SALES Egg sales for each system. of production were calculated to be 97 percent of the number gathered. This was in keeping with the experience of East Texas producers as previously reported. Egg sales accounted for about 97 percent of the gross sales of all management systems studied. Sale of the cull hens made up the remainder. 12 -with different market outlets. In all, the y: Poultry manure was disregarded as a M income for this analysis. In numerous manure was not sold but was given in exc l; cleaning the houses. When the flock owner ti‘ manure on pastures or cropland, it was not to estimate its full value over and above the“. of spreading. FACTORS AFFECTING POSUITRY PROFI i The following 6 factors were found to greatly the earnings from a laying flock: 1. Annual egg production per hen - Feed efficiency Mortality rates Savings in feed costs 9‘§-“‘:P*9°!\° Merchandising practices of produci Size of the laying flock i The estimated earnings and egg product for a 10,000-hen flock, producing at differ l: and with two rates for death losses are Table 4. Also included is a comparison in with two prices for eggs and different costs feed. Estimated earnings for flocks of vari and rates of lay, and with varied mortality shown in Table 5. Also shown are estimat’ ings with alternative feed purchasing pract“, returns for 180 different egg production sysi shown in Table 5. EGG PRODUCTION PER HEN RELATED TO PROFITS i; In budgeting for this study, 240 eggs perf year were regarded as a high level of »-__ Hens laying 206 and 180 eggs per year were ered respectively as intermediate and low-l‘ ducers. Many of the production costs per hen be relatively fixed. The most important Q was feed requirements which tended to vary i, extent with the level of egg production. that averaged 20 dozen eggs annually req pounds more feed per hen than a flock af only 15 dozen eggs. Based on the 1962 costs '7 mixed laying feed, this difference amounted? 23 cents per hen. Also the per-hen cost of marketing eggs varied directly with egg prod Aside from increased feed and marke plies, improving the average production if spreads approximately the same costs over u a thus reducing production costs per dozen. Calculated egg and poultry sales and i for 10,000 hens producing at two levels f two mortality rates associated with each ra . shown in Table 4. Budget summaries in Table jinclude two egg price situations also. y Hens averaging 240 eggs annually layed 33 per- _t more than the 180-egg producers; yet other ings being equal, total production costs were only to 5 percent more at the higher production level. Based on eggs priced at 40 cents per dozen, gross ‘es from a flock averaging 240 eggs were $1.94 per Q1 more than sales with birds averaging only 180 B; . Egg production costs for 10,000 birds were ~ fated to be approximately 9 cents and 41/2 cents i’ per dozen, with hens averaging 240 eggs and eggs respectively than with layers averaging only g1 eggs annually. _ The labor and management income from 10,000 lh-producing hens with a 12-percent mortality was Jculated to be $13,500 when farm-mixed feeds were f0 and eggs sold for an average of 40 cents per 1 en, Table 4. Total production costs amounted to ‘v 32.8 cents per dozen eggs gathered. Under the same situation, but with hens averaging 180 eggs, the cost per dozen eggs was calculated at 41.5 cents per dozen. Here, total sales lacked more than $1,500 of paying estimated production costs. With 10,000 layers, im- proving the rate of lay from 180 to 206 eggs per hen increased the estimated labor-management income by $6,500, Table 5. For a 10,000-bird flock, with a 12-percent mor- tality rate and averaging 180 eggs per hen annually with farm-mixed feeds, increasing production one dozen eggs per hen annually added a net increase of $3,000 to the income o-f the operator. In other words, for such a flock, each dozen increase in egg produc- tion adds 38.8 cents to gross receipts and adds only 8.8 cents to total production costs. Consequently an additional dozen eggs under these circumstances, adds 30 cents to the operator’s labor and management return. A LE 5. ESTIMATED OPERATOR’S LABOR AND MANAGEMENT WAGE FROM 5 DIFFERENT SIZES OF COMMER- l L FLOCKS, 3 LEVELS OF EGG PRODUCTION PER HEN, 3 ANNUAL MORTALITY RATES, 2 MARKET OUTLETS AND USING EITHER FARM-MIXED OR COMMERCIALLY MIXED FEEDS‘ 3,000-bird flock 5,000-bird flock 10,000-bird flock 30,000-bird flock 60,000-bird flock Eggs Eggs Eggs Eggs Eggs Eggs Eggs Eggs Eggs Eggs sold retailed sold sold sold sold sold sold sold sold ungradedz individual ungraded to gro. ungraded to gro. ungraded to gro. ungraded to gro. buyefi stores, stores, stores, stores, cafes, etc.‘ cafes, etc. cafes, etc. cafes, etc. _ —————-———————Dol1ars—————————————- -.~ using farm-mixed feeds a Leraging 240 eggs per hen 42% annual mortality 2,536 7,653 4,633 9,050 5,082 13,506 15,735 36,032 25,432 73,543 §24% annual mortality 1,794 6,780 3,389 7,516 2,480 10,437 7,929 26,825 15,630 55,478 ‘ 5.36% annual mortality 1,044 5,685 2,146 5,982 19 7,369 120 17,621 720 37,380 eraging 206 eggs per hen 12% annual mortality 354 4,141 998 4,769 —2,304“ 4,944 ——6,85l 10,629 —13,505 22,945 24% annual mortality —252 3,613 —16 3,507 —4,326 2,423 —-l3,215 2,783 —25,934 8,120 ;36% annual mortality —860 3,105 —l,025 2,248 -—6,348 — 9 —l9,579 —4,783 —38,362 _6,712 j. A ging 180 eggs per hen 12% annual mortality —l,300 2,671 —l,765 1,512 —7,827 —l,567 —24,01l __9,l87 —47,233 —l5,527 924% annual mortality —l,803 1,907 —2,599 461 —9,497 —3,673 —29,283 —15,505 _57,515 ——27,901 36% annual mortality —2,205 1,143 ——3,433 —59l __11,178 _5,779 —34,552 —21,823 —67,791 _40,275 1?: using commercially mixed feeds raging 240 eggs per hen 12% annual mortality 1,205 5,996 2,371 5,877 890 7,607 —3,0l4 17,285 _1,132 36,049 4% annual mortality 524 5,008 1,272 4,546 —1,306 4,943 —9,603 9,293 —14,3l4 20,414 f.“ annual mortality —-I39 4,025 173 3,214 _3,505 2,280 —16,197 1,304 —27,502 4,746 ' _ ging 206 eggs per hen o annual mortality —993 2,632 —1,246 1,743 —6,344 —631 —24,l16 _6,919 ——43,340 —1l,585 % annual mortality —-l,513 2,313 —2,117 674 ——7,980 —2,796 —29,922 —l3,924 _54,952 _25,294 __ % annual mortality ——2,035 1,521 —2,982 -391 —9,8l6 ~4,93l ——35,l25 -,20,329 —65,358 —37,804 A. aging 180 eggs per hen 2% annual mortality -2,634 927 —3,990 —l,396 —ll,829 —6,937 —4l,l71 -26,347 -77,450 __49,909 annual mortality i‘, -'—.—3,053 273 _4,68l —2,261 ——l3,2l6 —8,672 —45,330 —31,552 _-85,768 —59,995 11.. annual mortality “s ~3,469 —379 —5373 —3,127 —14,602 _10,407 —49,486 —36,757 —94,080 ——70,143 :1 is for hens housed in individual cages. Ige ungraded price, 1962-33 cents per dozen. - for eggs sold to individual buyers—-45 cents per dozen. i’ for eggs sold to grocery stores and cafes—40 cents per dozen. tes a minus income or the amount that total calculated costs exceed total calculated sales. 13 For a similar situation, but with eggs bringing 33 cents a dozen delivered to a grading station, the operator receives a net return of 26 cents for every dozen that production is increased above 180 eggs per hen. g Similarly, for all of the situations evaluate-d, the level of egg production greatly influenced earnings, Tables 4 and 5. Because of the fixed nature of so many costs associated with commercial egg produc- tion, improving the rate of lay normally added more to sales than was added to costs. At present costs and egg prices, a low level of egg production was not profitable. In this study, relatively high labor-man- agement incomes were always associated with a high rate of lay. All of the systems with production aver- aging 180 eggs per hen returned a relatively low labor-management income. Healthy birds that are free of parasites and of a high producing strain are necessary for a high rate of lay. Also, birds must be comfortably housed, must consume large amounts of properly balanced feed and have access to water at all times if they are to lay well. FEED EFFICIENCY RELATED TO PROFITS Feed efficiency concerns the amount of feed re- quired for each dozen eggs gathered. A considerable part of the laying ration is needed for body mainte- nance of the flock and must be supplied in addition to that which is converted into eggs. Consequently, heavier layers consume a relatively large amount of feed per bird. For relatively small flocks where no labor was hired and where a commercial mixed laying ration was used, feed expenses made up nearly 6O percent of the total cost of producing eggs. When a farm-mixed ration was used with flocks of 10,000 or more birds, feed expenses dropped to below 50 percent of the total production costs. Even so, a flock owner has more likelihood of cutting egg production costs through practices that increase feed efficiency than by any other means. Feed efficiency of the laying flock was closely associated with the level of egg production being maintained. For example, hens that averaged 180 eggs and used 821/2 pounds of the laying ration re- quired 5.5 pounds of feed per dozen eggs. When feed was $3.15 per hundredweight, the 1962 cost of a farm-mixed ration, the feed cost per dozen eggs was 17.3 cents. On the other hand, hens averaging 20 dozen eggs per year consumed 90 pounds of feed or 4.5 pounds per dozen eggs. Here feed cost amount- ed to 14.2 cents per dozen eggs. This savings in pro- duction cost of more than 3 cents per dozen amounted to an increase in income of $600 per 1,000 birds. The initial step in any effort to improve the feed efficiency among layers should be to minimize feed 14 ity. Where death losses are concentrated earlyé. waste. Feeders should be checked frequen kept in good rep-air. It, is equally importa, birds have access, at all times, to ample am good-quality feed. Birds that have been often have trouble picking up laying mash uni supply is plentiful. Automatic feeding eq may require frequent adjustment and close at to insure that ample feed gets to the birds. In winter when days are short, produ electric lights to give hens enough day l” stimulate a full rate of lay. This practice s improve both the rate of lay and the feed e _ of the flock. Efficient utilization of feed was so closely; to a high rate of egg production that anyth'_ reduced the rate of lay tende-d to lower feed ef~ and vice versa. '5 DIFFERENCES IN MORTALITY RATES AND EARNINGS a When old layers were replaced, laying were usually filled to capacity with pullets. Ir] quent death losses reduced the number of‘? from which to gather eggs. With heavy m‘ the poultry enterprise was operating at consi, below full capacity unless additional repla were made. I If a mortality rate of 1 percent per m0_ uniform throughout the year, the average of layers on hand during the year would be Q cent of the original number in the laying the beginning of the year. In other words? would be an average of 940 layers through“? year for each 1,000 pullet replacements. S, enterprise is operating at 94 percent of capa With a 3 percent per month mortality _ average number of layers was 820 per 1,000 put in the laying house at the beginning of l Here the enterprise is operating at 82 percent‘ production year, and no additional replacemf made, the average number of layers during is somewhat less than 820. With egg production at 20 dozen eggs 3;. flock that averages 280 layers during the duces 2,400 dozen fewer eggs than a flock av 940 hens. This decrease in eggs gathereddu- year because of higher death losses reduced -‘ by $931 when the price was 40 cents per d1 There was little that the poultry operat: do in the way of reducing expenses to "y," for this loss in egg sales. Therefore as dea h; increased, the cost of producing a dozen creased because there were fewer eggs to abso costs. - .' The higher the death losses the fewer the number ld hens for sale when the birds were replaced. hens have been cheap but even so, with a 10,000 I flock and 12 percent annual mortality, the in- ~ from hens was $600 more than from the same ‘flock with a 36-percent death loss, Table 4. l The combined effect of having fewer eggs and i hens to sell affected earnings adversely when ' losses were unusually high. For example, with t eggs and high producing hens, the estimated _~ management return from a flock of 10,000 layers 12-percent annual death loss was $6,100 more from a similar flock with a 36-percent death loss, le 4. With eggs selling at 33 cents, this difference calculated to be $5,000. Earnings from a high- fucing flock were reduced more as a result of high I losses than was the case with average or low ucers, Tables 4 and 5. mes m FEED costs 5' Since feed is the largest single item of cost in production, it is important that the producer é re a high quality ration at the lowest possible per hundredweight. Egg producers have the choice of purchasing ercially mixed feeds or of purchasing the in- ents from which to mix the laying ration. for commercial feeds vary with different brands in 1962, good-quality ready-mixed laying rations available for about $3.85 per hundredweight, _ own laying ration, combined a commercially 71 ed, high protein concentrate with corn, grain ‘um and oyster shell. The 1962 prices paid for - items are shown in Table 3. Worm treatment ', er compounds were added when desired. On gasis of 1962 prices, the ingredients for 100 fl- of farm-mixed laying feed cost approximately p. Added to this cost was the expense of owning operating suitable grinding and mixing equip- , and the necessary storage space. é e depreciation, upkeep, interest and operating “e for grinding and mixing equipment and ;- suitable for a small or intermediate size a was calculated to be less than 25 cents per weight for the laying mash used. The cost _ ing and using feed processing facilities suit- ‘t. a flock of 30,000 to 60,000 layers amounted roximately 20 cents per hundredweight of ' feed. ith a flock of 10,000 layers, savings of from * to $5,000 were qpossible by using farm-mixed I This saving in‘ feed cost amounted to 40 to f. ts annually per hen or 2 to 21/2 cents per , in the cost of producing eggs. Savings associ- using farm-mixed feeds were about the per hen and per dozen eggs regardless of the flock, Tables 4 and 5. f ed to the farm. Flock owners who mixed - It is important that the capacity of equipment purchased to grind and mix feeds be in keeping with the size of the flock. More feed processing capacity than is needed adds unnecessarily to investment cost whereas insufficient capacity will not be efficient to operate. PRODUCER MERCHANDISING AND EGG PROFITS Results of this study emphasized the wide differ- ences in earnings associated with the price spread between various market outlets for eggs, Tables 4 and 5. As indicated previously, the 3 prices used in budgeting were 33, 40 and 45 cents per dozen. Cleaning, grading and packing eggs in cartons added to the cost for producers who found customers willing to pay a premium price for high-quality graded eggs. With a flock of 10,000 hens, the annual cost of owning cleaning and grading equipment, including depreciation, upkeep and interest amounted to ap- proximately 1/2 of a cent per dozen eggs. When used with a flock of 30,000 layers, this cost was reduced to 4/10 of a cent per dozen. Preparing eggs for retail outlets required extra labor. In some instances this added to cash costs whereas in other instances unused labor that was already available was utilized. When this work was all hired, labor costs were increased about 1.4 cents per dozen eggs processed. Truck expense for de- livering graded eggs within a radius of 35 miles of the farm added another 2/10 of a cent per dozen to marketing costs. With 1962 production costs and with eggs sold ungraded, extremely efficient management was nec- essary for each production system studied, to provide an estimated labor-management income of $2,500 or more, Table 5. Of the management situations eval- uated, only those involving a high level of production (240 eggs per hen) and the use of farm-mixed feeds were in this category. In most instances, a relatively low mortality rate was necessary also for this level of income. SIZE OF FLOCK RELATED TO PROFITS Of the 180 different systems evaluated, the most profitable gave an estimated labor-management re- turn of $73,543, Table 5. At the other extreme, estimated egg and poultry sales lacked $94,000 of meeting all production costs with the least profitable situation. Both of these management systems in- volved flocks of 60,000 layers. In general, for a system of management that consistently made money, the larger the enterprise the greater the income. At the same time, with management practices that lost money consistently, 15 the larger the volume of business the greater the loss. Not all managers who were successful with a relatively small number of hens have been efficient in handling the numerous management decisions associated with a large flock. In this study it was assumed that there are numerous persons capable of managing flocks of 30,000 to 60,000 hens. At the same time it is recognized that not all producers are in this category. The results of this study indicated that a well- managed family-sized enterprise was profitable. Even when eggs averaged 33 cents per dozen (the average price for ungraded eggs in 1962) the estimated labor- management income from a 3,000-hen flock with superior over-all management was $2,500, Table 5. A high rate of lay, low death losses and the use of farm-mixed feeds were necessary for this level of earning. This study indicates that 3,000 hens is the min- imum size flock likely to give a labor-management return of $2,500 from eggs sold at 1962 average price for ungraded eggs. When the eggs from this size enterprise were delivered to individual buyers at a premium of 12 cents per dozen above the ungraded price, the return to labor-management was estimated to be doubled. With this 12-cent per dozen premium, ; management return of more than $3,000 v mated from 3,000 layers even though egg p a per hen averaged only 206 eggs and the a " tality rates went as high as 36 percent. i’ The estimated laboriinatnagement inc p’ 5,000 hens under top-level management and $1.81 per hen capacity, with eggs sold a at 40 cents per dozen respectively. l1 A well-managed flock of 10,000 hens mated to return a labor-management ' " $13,500 or $1.35 per hen capacity from ; cartoned eggs averaging 40 cents per doz {f highly efficient management and 40-cent 3Q layers were estimated to give a labor-ma return of approximately $1.25 per hen Consequently, the total return to labor-ma»; from a well-managed enterprise of 60,000 about 51/2 times the return from $10,000 ti; were equally well-managed. Similarly, the loss estimated for a ~ aged enterprise of 60,000 birds was appro =5’ times the loss calculated for 10,000 hens wi n poor management practices. " Texas Agricultural Experiment Station, R. -E. Patterson, Director, College Station, Texas