Farm Economics - The Pig Lesson

LOL No Ernie he wasnt implying anyting his statement was clear and concise.
Now You on the other hand seem to be climbing on the "bash the people who know what they are doing "band wagon.(Im not implying that either)

Some?,Vast majority? th truth is likely in the middle somewhere but who knows, might be different in each of your neighborhoods.

I think rationalizing $6 a dozen eggs pretty much makes Rich and Dales point


I doubt that statement There are very few large farmers that didnt make HUGE money this year.

“That's been my experience in general with homesteading. Other homesteaders get it. "Professional" farmers look down their noses at the folks with a diversified farm. Only without their corporate welfare in the form of corn subsidies, stolen from the pockets of the homesteaders by graft-fat politicians, many of the "professional" farmers would be on food stamps because they can't eat out of their 2000 acres of high-fructose corn syrup.”, but I’m the one that’s sour?
There are significant differences between farmers and what we like to call homesteaders. A long while ago, I posed the question on what defined each one. Turned out to be a hot potato. Many hobby farmers like to think of themselves as homesteaders. For them their in town jobs can support their recreational farming activity and instead of receiving a farm subsidy, they take a loss on schedule F when they do their income tax. Now don’t get fired up over your form of welfare, it is legal, just as the “Professional” farmers and their subsidies.
You say your hens produced ten dozen eggs and that’s $60? Where can I get 6 bucks a dozen for eggs?
My comments don’t come as a Big Agra business farmer looking down his nose at you. It is more of a been there done that sort of thing. I’m trying to explain that it isn’t as easy as some like to believe. You want to compare commercial livestock prices that farmers get to the price you pay in the store. You ate $2000 worth of food off your place this year. That’s great. Keep up the good work. Pretend that you didn’t have a $80 purchase at Johnny’s Seeds or that you didn’t pick up any tomato plants from the greenhouse in town. It is just too discouraging to think about all the time and hidden costs to produce our own food. If you ate 10 dozen eggs and figure they’d be $6 at the store so you broke even. Fine, enjoy your hens. I won’t spoil your dream. But in the real world, it is different. You claim to have several different enterprises that are turning a handy profit. Great. If your figures are as all inclusive as you claim, I think you’d be better off if you’d quit your job and farm full time. You’d be a shining example to the rest of us dummies.
Holdem3 tells an interesting success story about 122 pigs and a $5000 profit. However grandpa already had a building, fences, etc for them and he bought them at the unbelievable price of $7. If the normal price of $50 each were spent, he would have lost money on the deal. As with many things if you can buy at 12 cents on the dollar, you can make money. Doubtful that happens very often, but even a blind pig finds an acorn once in awhile. Sometimes finished hogs go thru the sale barns when there aren’t many buyers and they can be bought home for a lot less than 40 cents a pound. Can’t depend on it every week, but as you pointed out, bargains can happen.
As a small farmer, raising many different types of farm animals, keeping track of every expense, over a span of several decades, I know that marketing is more important than just growing. I also know that it isn’t as important how much you make as it is how much you keep. I know that I can’t grow or raise anything cheaper than a commercial operation, unless I spend an equal or greater amount of time in marketing. If I consider the 4 hours a week at the Farmers Market social time, then I can imagine I’m making a profit on my daylilies, eggs, snap beans and fruit trees. If I pick up feed and attend the Farmers Market while I’m in town renting a DVD, then the fuel and wear on the truck isn’t a factor. Just depends on how you look at it.
Grandma made her grocery money from selling eggs. But that was only because she got the feed free from Grandpa and he paid the upkeep, taxes and mortgage on the property where her hen house sat.
Most folks think hobby Farmer is a dirty word. It hurts to think all that money and labor to produce some chicken, milk or zucchini is just healthy recreation. We do it for the sense of knowing what we eat, a connection to the land and our ancestors. But to turn a profit (or simply break even) is a lofty and elusive goal.
I guess we can agree to disagree. I won’t ask you to admit to being a Hobby Farmer (one who depends on off farm income to support themselves and/or their gardening and/or livestock operation. Just because you fill out a schedule F doesn’t elevate you to farmer) if you won’t display some dreamt up figures justifying your hobby. Deal?

"Their is one further benefit from working for your own account as opposed to for others. It's income tax.

When I cut my wood, raise a hog or chicken, Ect for my own use.My labor and value added profit is not taxable. So when I produce for myself I get an automatic 15% profit even if the direct cost is the same. This can and does change most of the above calculations."

As far as employment taxes reduction, an argument can be made work and paying for the pork has benefits over home-grown when you consider what is in the difference between gross and net. If you pay into unemployment insurance, it helps cushion unemployment (although working on the homestead during such times is possible), disability (and health*) insurance is something you aren't going to get for free only working on the homestead. SS taxes are a future benefit - a homestead would have to plan for at least the same level. Also, if you are employed and become severely or permanently disabled SS disability can be applied for - something not necessarily available to the homesteader.

If a 'homesteader' is employed full time at home, then likely they are more in the category of farmer than homesteader. Since many (if not the dominant part) of homesteading jobs are done before or after employment elsewhere I'm not even sure how it factors in. Seems a bit of the best of both worlds for the outside income paying for other things. That money to purchase hog feed is going to have to come from somewhere in a one-pig (no outside sales) operation.

When we lived on the dairy farm in Slinger, WI during winter (between harvesting and planting) Dad worked a 40+ hour job in a factory in Milwaukee, as apparently did almost all of the other local dairymen. Should technically those earnings be kept separate from the dairy itself?

(Dad story: One night the barn caught on fire. Dad was called at work. He is reported to have said, "What do you want me to do, come home and p**s on it?" He finished the shift before he came home.)

About the cost of those home-raised porkchops...

I once had a pig, he was called 'Denise', after my ex MIL (very easy to take to the slaughterhouse with that name).

He was cheap to raise because I scrounged for him at the local farmer's market, dumpster-dived for him at the grocery store, and got permission from the foodbank to feed him all the stuff we didn't eat (there is just so much cassoulet, choucrout, and lentil saucisse that one can eat, starving or not).

I didn't count the labour.

The slaughtering was what bucked up the price...back then, I didn't know how to kill a pig on my own, although I had been watching and taking notes at pig-killings, and did the headcheese, boudin, sausages, and confit by myself.

When all was said and done, and the cost had been added up and compared with the price per kilo of that week's half-a-pig special at the local market...it was about the same, pound for pound (except I got the bits and the blood and the liver, etc., and the supermarket one was just the pig part).

And, of course, I knew what my pig had eaten and how he'd been raised, and the kids and I were even invited into the killing room of the abbatoire to see the end....and afterwards we went to the church and lit a candle for him and all the chickens he'd eaten alive.

Actually, he might have been cheaper to raise, pound for pound, had I waited a bit more...he brought only about 100 kilos of meat, when all was said and done. But then, he was only about six months old, at the end. The chickens were the reason he'd gone so soon. And then, when I caught him nuzzling the belly of the baby goat..well, he'd doomed himself.

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I wish! We pay more then double that for one hog, including hams and bacon, cut, wrap, freeze, and some sausage. I supposed if we just had them kill it, we could do it for $75... maybe.

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Mindy
www.hurryburry.com

Maybe the price has gone up since I raised pigs, or maybe it's just cheaper around here.
Used to pay .35 a pound for fresh and .45 a pound for cured (proccessing).
I was figuring on .45 a pound processing.
The kill fee used to be $10 so that'd make it $85.00 or so.
They must be charging over a dollar a pound where you live?

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Whenever you find yourself on the side of the majority, it is time to pause and reflect.
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ΜΟΛΩΝ ΛΑΒΕ

I think you are kinda comparing two totally different things.
Commercial farming and Homesteading. In homesteading we can save a lot of the overhead and associated costs. IE S.S. or Insurance ect. This is due to the fact that it is a homestead (Living off the fruit of your labor). Not necessarily living totally off the homestead.

IMHO, Ernie was trying to relate the cost of a hog on a homestead v/s the cost of purchasing meat at the store. Not the worth of commercial hog farming. In a homestead situation it's almost always "profitable". This is due to the many middle men cut out of the transaction.


The reason I mentioned the lack of tax in home production for your own account was to counter those that always come up with the ......(Loss of potential) arguments.

RichieC I agree with you almost across the board. Magic pencils don't make real profits. Most people have very little understanding of what the costs really are. I agree that there are huge intangible benefits to raising your own food and if i was faced with break even or a small loss i would still do it for the intangibles but they need to be brought into the playing field as a like tangible ie dollars how much are you willing to lose to raise your own food? That will give you the value of it. Sorry Richie i got side tracked my qualm with your numbers is putting a value on waste products. In some houses table scraps are a liability and disposed of at a cost. In this scenario the hogs have transformed that liability into an asset, i personally would not charge the pigs for those scraps and i might give the hogs financial credit for it (odds are disposal prices would be minimal). If you have an alternative use for instance compost i would charge the pigs the value of the scraps as fertilizer - the value of the hog manure in its place. I know its splitting hairs (i would rather split hares with my rifle) but thats really all i disagree on. Can we still be friends?

Our kill fee was $35 a head and we had to take it to them (that was very interesting, loading up 4 pigs!). It was .38 for cut/wrap, I didn't want any sausage because this one place only used MSG flavorings. I had to take my bacon/hams to another place for curring (I wanted them to do the whole thing but they were 4 months out and I didn't realize I needed to schedule so far in advance). They charged me $1.20 a pound for no-nitrate curring. I ended up paying around $600ish for 4 pigs. Plus of course the raising of them.

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Idleness is leisure gone to seed

Ernie,
I think you're over estimating how much scraps from the kitchen and garden you will get. If you're going to raise a hog, get two - they're very social & like the company. Young pigs are going to need higher protein - they can starve to death on extra milk, table & garden scraps (we found out the hard way.)

We wouldn't be without our piggers around here, although raising them on pasture, Jersey milk, table scraps and garden refuse, it takes them 6 months to get to finish weight.

You actually got someone to commit to buying wool site unseen and not even knowing what kind? Trusting folks! When I buy raw fleece, I always get a sample. There are a couple shepherdresses that I've bought from for years and I trust them since they are spinners themselves and can judge the wool quality.

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Schedule F could make the hog more profitable from a tax standpoint. I'm not a tax expert so correct me if i'm wrong. You factor in livestock bought and livestock sold but there is not a line for livestock eaten. If this is the case it would make raising and eating your own critter a big advantage for a small operation. If you have ten hogs you set your basis on their purchase price add your expenses then sell 9 subract the cost of all ten and poof you don't pay taxes on one critter all together and all costs associated with the freezer pig come off the top lowering your taxable income. If someone knew more about this than myself would explain this in detail i would be very interested.

Thanks

This whole arguement of whether or not you can produce food cheaper than you can buy it somewhat silly. It is predicated on the assumption that time is money. It isn't.

Time can be exchanged for money, but the reverse process is not possible. You can not get back the time you invested by giving back the money. Sure you can buy some one elses time, but that's not the same as getting back your time.

The question is not if you can do it cheaper by doing it yourself. Sometimes you can, some times you can't. The real question is: If you do it yourself, whether for less money or for more, will you be happy with your decision?

Even if you want to say that time is the same as money, the arguement as to if it is better / cheaper to raise it your self is meaningless because the exchange rate is variable. For example, how much your time is worth depends on if you enjoy the activity or detest it. There are services that I could perform that would earn me much more money than I make now - I don't do them because I wouldn't enjoy it.

Here's a different way of looking at it, for all those who still want to argue that time is money. Lets say you can earn 50 dollars an hour. Well, then you since your time is worth 50 dollars an hour, can never produce practically anything cheaper by doing it yourself, right? Wrong.

How much do you spend on entertainment, vaccation, relaxation? It's not uncommon to spend several thousand dollars on a weeks vaccation. The very wealthy might spend several 10s of thousands of dollars on vaccation. Did they get there money's worth? Only they can say.

So if I get pleasure out of raising my own food, and it costs me money, is that any different than my spending money on a vaccation or some other source of pleasure? Only I can tell you if I got my money's worth. So only I can place the value on the time I spend raising animals.

You say I could have someone else care for my animals for $6 an hour. What if I told you I have paid $45 an hour to spend time with other peoples animals? So by caring for my own animals, I am netting $51 per hour. Crank that number into your equations, and I think you will that raising food myself actually pays me a good living...if time is money. Good thing time really isn't money, or the IRS would tax me on it.

It seems to me one must consider quality of life issues. We moved from a suburban home to a small acreage in the country. So that being said considering the change in the convenient access to the markets (one five miles the other fourteen) time lost going to the market with the extra cost associated and also the need to leave the stead verses being able to control the production process, the love of lifestyle and self sufficiency to attach a cost associated with time on the stead which is desired is not applicable. Therefore only the cost of penning and food should be considered. And YES I love the lifestyle. So how much do you rate the cost of love?

Peace

the last couple of posts are fine, and I expect no one on this forum would really disagree with either. But they are not economic arguments. They are, 'some things are more important than money' arguments. This thread is about Ernie's contention that there is a sound economic basis for small scale production. And there may be. But the case has not yet been made.

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"If you have ten thousand regulations you destroy all respect for the law." -- Winston Churchill

You are not supposed to deduct items used for yourself on Sched. F. So if you buy 600# of feed for the pig that goes in your freezer, you can't deduct it. If you --ahem--follow all the rules correctly. If you grow ten pigs you can probably get away with it, but if you do just one, well, there's no way you can justify it.


Jennifer

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-Northern NYS

I am asking everyone to raise at least two animals together----one is just too lonely and it is not a good life for them.The pork industry in Canada is in very hard times right now.

Well, I have been following this thread for a while and have learned a few things, thanks everyone. My pig economics this year works like this, there is a fellow down the road who has 6 hogs, he raises a hog for himself, and some for family members plus ususally one to sell. The place he has his hogs butchered no longer kills and guts the hogs (something about health regulations, but I don't know for sure what). Well the fellow down the road isn't comfortable killing and gutting the hogs, he is afraid he will mess up his meat. So here is where my hog economics comes into play, he is going to give me a hog if I will kill and gut his hogs he is even going to let me use his tractor. He will then take his hogs to be processed himself. So for about 10 dollars in gas, 2 dollars in ammunition and about 3 hours work I have got a hog. Of course I will have to buy the paper to wrap it and pay for the electricty to process it but nothing else as we will butcher it ourselves so I figure all told I will have about 30 bucks in this hog that was free range until finishing time and given no growth hormones or other "bad stuff". I figure I got a deal now if someone would just need some quality beef killed.

I was just reading, in the Capital Press (ag paper) about a person that raises 2-4 pigs at a time about 9 per year in Washington State.. He spends 15 minutes a day with his pigs. He figures that it takes, 2.5 pounds of grain to get one pound of gain. About 500 pounds of feed per pig. He broke down the costs. $215 to $225 to raise a pig. He gets $200.00 for half a pig. Butchering, cutting and wrapping expenses are paid for by the custormer. That works out to a $175 profit per pig. His customers pay for premuin product for $3.10 to $3.25 per pound. His advice is to call the closest county extension office, for good information on raising pigs in your area.
I live in Oregon, so the price to raise pigs, is pretty much the same. Wiener pigs are anywhere from $30-$50 apiece depending on the breed here. I have been thinking about raising some pigs. He also says you must never grow one pig at a time. "They need the competition scrambling for the food. They'll grow faster than a single pig." This was by David Ridle, Washington State University Extension livestock advisor.

Edit: He does not pasture his pigs, to destructive. So he feeds vegetables scrapes and grain. I would like to pasture raise my pigs, but I have been warded about the pigs destructive behavior, from my own Ag Agent. I didn't believe him on how distructive ducks can be. I do now.

bump

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Not sure I fully agree with you. The economic argument can only be examined in terms of expenses and to produce the item vs the cost to buy that item.

He presents his "costs" to produce the item, and immediately people begin pointing out that there are "hidden costs", his time being one of the major ones.

My point is that you can't always assign a dollar value to the various hidden costs. So, I don't know that you can examine it from a strictly economic sense. If you only count the dollars invested in the animal, and other things you buy to raise the animal (feed, vet bills, etc) then it can be cheaper to raise your own than it would be to purchase the meat, providing you don't spend much in the way of food etc.

But then the hidden cost's are always brought up - the cost of the time to grow the feed / produce the feed you didn't buy (gas and seed is easy to quantify so I don't count those as "hidden"), the cost of the time to take care of the meat, for that matter, you should also include the cost of the land that the animal is raised on... but how much does the land cost you, in terms of raising an animal, if you would still have the land even if you didn't raise the animal?

I guess my point is that you can't "settle" the issue until you agree on the rules for evaluating it.