Pricing your Poultry Two
Posted: October 5, 2011
Personally, I know the price of feed I’ve been paying is around 50% higher than I paid just two years ago. So it begs the question, what should I charge my customer? I need to remain profitable but I also need to make sure my products are affordable.
It always comes down to knowing your cost of production and your largest cost is going to be feed. Even birds raised on pasture are going to consume a lot of feed. Knowing the average consumption of feed per bird will help you get a handle on your largest expense. Luckily, we have some tools to use to figure this out.
First, we need to know the conversion rate of the breed of turkey we are raising. That is, how much feed the bird will consume compared to how much meat it will produce. If you are raising the common turkey known as the broadbreasted white, their feed conversion is around 3 to 1. That means it takes 3 pounds of feed to produce 1 pound of meat on a dressed turkey.
For example, I know the feed I purchase is $25 per 80lb bag which comes out to $0.31 per lb of feed. So, let’s say you have a turkey that dresses out at 20lbs. Assuming the rule of thumb 3:1 conversion, my per lb of finished meat cost is $0.93 per lb (three lbs of grain to one lb of meat) for a total of $18.60 of feed cost for a 20 lb bird. Given that feed is your greatest expense, you should look at ways to make sure your birds are making the most efficient use of their feed.
There are some additional considerations when it comes to appropriate feeding of poultry. Jeff Mattocks is poultry nutritionist from Fertrell. Jeff has created many of the poultry ration recipes used specifically for birds raised on pasture. Here is what he suggests;
• Make sure feeders are level with the birds' back. This will help prevent the bird from "sorting" or scratching at the feed.
• Feed enough feed so that there is only about 10% feed leftover from the previous feeding. This will prevent sorting and wasting. The bird will eat more of the complete feed rather than just what it wants to eat therefor, you'll have a more efficient use of feed and better, more consistent conversion rates. Think of it this way, if you go to a buffet, you tend to eat only what you want to eat. If you are served a limited amount of selected items, you tend to eat what you are given. The same applies here. Eliminate the buffet.
• Provide enough feeder space. The amount of feeder space given to each bird should be increased as the birds grow. This will avoid crowding and potential injury.
Once you know your feed costs, you can factor in your other costs such as the cost of the poults, housing, equipment, processing, labor, and management. Generally, you will want to divide your costs into two categories, fixed and variable. Fixed costs are items that are usually a one-time purchase and can be depreciated over the life of the item. Fixed costs in turkey production can include housing, brooder facility, processing equipment, brooder equipment, feeders, and watering systems. Variable costs are repeated purchase items such as the cost of poults (or chicks), bedding, feed, utilities, bags and labels, marketing, and labor.
Remember, farming is a business. Factor in the percentage of profit you need to keep your farm in business. One last thing to keep in mind, turkey is usually an annual consumer purchase for a holiday event. That means that customers might be less price sensitive then they are with staple products like chicken. This doesn't necessarily mean that the sky is the limit in pricing holiday turkeys. What it does mean is that you could make a reasonable profit on your turkeys even in uncertain economic times.
I know that once your turkey season is finished, you probably don’t want to think about turkeys for a while. But, I would encourage you to take some time and look at your records to measure your exact feed costs with the actual finished weights of your turkeys to see if you are indeed getting the conversion rates you think you should be getting. Keeping an eye on the details just might make your season that much more successful.