BENEFITS OF BACKYARD CHICKENS: AN ECONOMIC ANALYSIS

Are backyard chickens worth it? The quick answer is YES. But this requires smart planning and consideration of not only prices but opportunity costs.

This analysis is based on a real experiment with an eye on the economic aspects - or the opportunity costs and hidden benefits - of keeping your own flock of chickens in your backyard.

EGG VALUE BASED ON APRIL 2022 PRICES IN THE USA

This experiment includes two Golden Comet hens. Golden comets can lay 330 eggs per year. That is 660 eggs for two hens or 55 dozen eggs per year(Dunn Reath Farm.) This has been true in our experiment. We purchased Golden Comet pullets in mid December 2021 and they began to lay eggs in mid-February. Their volume for the year will be around 640 eggs for 320 days.

For the USA, the average price for a dozen Grade A eggs in April 2022 was $2.86 (St. Louis Federal Reserve.)

Note: Egg prices dropped to $2.70 cents for June 2022. The analysis here was based on April 2022 prices. It is impossible to get the average egg price for the year 2022 at the writing of this article. NOTE: The average price for a dozen eggs, USA, for November, 2022 measures $3.589. They are $4.89 in my area. Source: https://fred.stlouisfed.org/series/APU0000708111

Using $2.86 as our value, the savings at the grocery store for raising two Golden Comet hens is 55 dozen * $2.86 or $157.30 cents for a year.

MARGINAL COST OF KEEPING TWO GOLDEN COMET HENS

Chickens eat 1/4 pound of feed per day. This can be augmented with fresh garden scraps and free ranging your hens. For two birds, that is 3.12 50 lb bags of layer feed per year. I have rounded that up to 4 bags. In our area, that is approximately $80 per year in feed cost. This is a HIGH estimate. We do augment our birds' diet with free ranging and garden scraps.

Note: The marginal cost of 1 bird can be calculated as follows: 1 bird consumer a 1/4 pound of food per day multiplied by 365 days, which is 91.25 lbs. That is essentially two 50 lb bags, or $40 per year.

NET FINANCIAL VALUE

So, based on April 2022 prices for a dozen eggs, the marginal value of keeping two Golden Comet hens is equal to $157.30 - $80 or $77.30.

CAPITAL COSTS AND CONFUSION

We next consider our capital costs or investment in the infrastructure and the hens. This point of the analysis is often confused in social media circles. Capital costs should be considered as fixed. The net financial value per year, derived above, is then divided by your capital cost, your INVESTMENT, to determine your rate of return on your investment, which is commonly known in financial accounting as the ROI.

Note: I will discuss capital costs and opportunity costs later in this article.

The following investment scenarios are based on my experience in 2022 reviewing options to construct the infrastruct needed for two hens. The cost of the hens ($10 a piece) are included.

Capital Includes

$100 DIY with posts you already own and chicken wire, plus two birds.

$300 DIY big, or a small coop with a run purchased, plus two birds.

$600 Medium Coop Kit with hen house, plus two birds.

Our small kit house and coop, $249.00.

Our medium chicken run under construction, $289.00.

Return On Investment For Raising Chickens Strictly For Eggs In Year One:

Small Investment: $77.30 / $100 = 77.30 %

Medium Invesment: $77.30 / $300 = 25.76 %

Large Investment: $77.30 / $600 = 12.88 %

So, using basic business accounting techniques, and current 2022 prices, it is indeed worth it, monetarily, to raise your own hens for eggs. This is also where some in social media make a logical mistake. The thinking goes something like "but that $77.30 is less than my $100 outlay! How is that profitable?"

The investment cost is seen as a fixed investment. The question is, what is your opportunity cost for that $100 investment? As of right now, a standard savings account at your bank pays 1/10th of 1 percent in interest. Which is better? Compare 1/10th of 1 percent with the above returns.

Let us extend the analysis further.

Return On Investment For Raising Chickens Strictly For Eggs In Three Years:

Golden Comet hens are not only prolific egg layers, which is why they are so popular for home owners, but they also lay for 2-3 years before their production declines as they age.

So let us look at a 3-year return on investment. Keep in mind, that capital outlay does not increase each year. You have already built the infrastructure.

Small Investment $231.9/$100 = 231.9 % ROI over 3 years

Medium Investment $231.9/$300 = 77.30%

Large Investment $231.9/$600 = 38.65 %

Note: 77.30 per year * 3 = $231.9

As you can see, even if one compounds 1/10th of 1 percent over that 3 year period, the returns are much larger for an investment in raising your own chickens.

EVEN BETTER RETURNS FOR VEGETABLE GARDENERS

The returns increase further if you grow your own vegetables, as we do. There are hidden benefits or positive externalities so to speak for raising your own hens.

First, keeping and composting your chicken manure displaces your need to buy manure for your garden beds. For our own set up, that saves us $56 a year. We typically, without hens, buy 8 bags of aged cow manure at $7 a piece or $56 a year.

Also, you can use your birds as work birds allowing them to peck through your garden for beetle eggs, grubs, other pests and weed seeds. In our own set up that can potentially save $25 per year, which is a low estimate.

WHAT IS OUR ROI INCLUDING THE HIDDEN BENEFITS?

Small Investment $393.9 / $100 = 393.9 % ROI over 3 years

Medium Investment $393.9 / $300 = 131.3 %

Large Investment $393.9 / $600 = 65.65 %

Note: Annual benefits from external costs total $56+$25 or $81. We do not, however, add those for year 1. You cannot immediately add the manure. It must be aged. You could use the birds for late winter garden bed clean up, but we omit that possibility in this analysis. We only add $162 (two years) of hidden benefits to the analysis.

OPPORTUNITY COSTS AND HEDONIC BENEFITS

Opportunity costs not only includes monetary costs. There is another opportunity cost other than where you could place your invesment of $100, $300 or $600, and that is the TIME needed to tend to your chickens. You must feed and water daily. You must keep the coop clean or your yard will begin to smell and possibly tick off your neighbors. Is your time worth it? Your choice of raising chickens is not free. You could be using that time to do something else.

But, then again, there are other benefits that are not financial. These are known as hedonic benefits. In this case, it is the pleasure your receive from keeping your own backyard chickens. It can be quite satisfying. It is also true that backyard eggs are much tastier than store bought eggs. They are as fresh as you can get! And you know how they were raised and fed. There is no question about it since you raised the birds.

If that pleasure outweighs the opportunity cost of your time, then YES it is well worth keeping backyard chickens since financially it is a positive.

INFLATION PROTECTION

Keeping chickens for eggs (and even meat) is also a protein reserve in case inflation gets wacky, as it has recently. You are not simply replacing store bought eggs, you are replacing store bought protein.

SCALING & NEED

Doubling your flock only doubles your benefits and marginal cost of feed. The margin remains the same. The question is, how many eggs and lbs of chicken manure can you use in a year? We are a family of 3. Two chickens are enough for eggs. But we are adding two more for the manure and the pest control.

Also, there is only so much you can save in store bought pesticides and herbicides. So, if two chickens get the work done, adding two more is not a pest control benefit. They just do it faster. But you DO get more manure.

CONCLUSION

The bottom line is that keeping chickens is financially beneficial under the current price structure. How many to keep depends on your usage and needs.

The question then becomes is your time worth it? That is a question that only you can answer. Opportunity costs and hedonic benefits are subjective or personal.

Dr. Jamie Slate (PhD in Economics, Tennessee, 1995.)

One of our two Golden Comet hens, approximately 5 months old.