Re Rustica

  (Squaw Valley, California)
love your food!
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question from the Bee

We had written to the Bee a news tip after hearing some perncious piffle on the radio.  We posted our objections previously to our blog under the same. 

Today we got a response back from Mr. Downing, of the Bee:

Rustica, Thanks for the tip.  I question your calculations, and ask you: If pastured eggs are so cheap to produce, why do they sell for $7-$8 a dozen?  I completely agree that they are a superior product, but I do think they're expensive to produce. Best, Jim

Dear Mr. Downing,

Thanks for your question - it is your willingness to follow through to report truth that earns our respect for the Bee!

The two questions are somewhat unrelated and will be addressed independently. 

<strong>The answer to your second question first, </strong>

in free markets, commodities will sell at the highest price the market will bear and for the lowest price the producer can afford IN A GIVEN MARKET.

Demand side first.

If you take a trip of even a few miles outside of Sacramento, you'll find that the relative supply of pastured eggs to caged eggs is reversed and there is a surplus of pastured eggs.  Eggs sell for as low as $1 per dozen in some places!  This is because the cost of producing eggs by pasture is so low and easy that the producers have to sell cheaply to compete with the home grown article.  The cost of caged eggs is increased by shipping, and may sell as high as $4-$8 per dozen.

In the city, it is quite the opposite.  Transportation systems from centralized production centers (which specialize in cage production) reduce the cost of transporting caged eggs and the laws that prohibit the production of pastured chickens within city limits increase the scarcity of the pastured egg, and raising the price accordingly.

<strong>Now, supply side.</strong>

Economists generally agree that there are two efficiencies of scale in any industrial production.  The first, made possible by roboticization and mechanization, is the efficiencies of "mass production."  The second, made possible by biological training, is the efficiencies of "small run production."  Mass production and small run production enjoy the same efficiency when undertaken at the proper scale of production: the marginal cost for small run producers has its minimum far earlier than the marginal cost for mass producers due to the variability of production.

An objection which should be dealt with very first and before discussion of the production efficiency of grazing versus caging chickens is that small run production cannot produce the same TOTAL eggs as mass production.  This is true, however, it does not account for the market encouraging a cooperative of many small run producers.  This cooperative system is more common in plant production.  Examples are many: many small wheat producers organize to feed the nation, sunmaid buys from many small producers, coors buys from many small barley producers, etc. 

This was the principle mode of industrial production until the industrial revolution.  It is still common in many industries today, examples can be given upon request but will be witheld from this particular discussion to simplify our response.  Many small run producers create the same TOTAL eggs as one mass producer, and for the same PER UNIT cost.

Mass production is preferred by noncooperative ("designed") market systems that aim to monopolize markets for the interests of the State, whereas in "free" markets, the high cost of machines and robots encourages mutualistic cooperation to "capitalize" and overcome the would-be inability of small run production to meet TOTAL demand: in capitalist systems, demand is high and prices are higher until the cooperative producers begin to fill total demand.

"Cooperative" does not imply communist marketing, where various small producers are enpartnered.  However, "cooperative" does suggest natural mutual production and marketing goals and interests.

Back to the supply side discussion:

Cages require a system of mechanization and roboticization.  (Definition: mechanization is the process of using machine labor, which is a methodical, tireless laborer - usually inorganic - designed to use a particular tool repeatedly.  Roboticization is the process of using robots, which is a mechanized manager of machines).  The cage is a tool used by the biological laborer (chicken) (the egg falls into a predictable, tireless, methodical location regularly), and the human and inhuman labor undertakes processes of robotization by collecting, standardizing, and otherwise processing eggs, feeding chickens, cleaning waste, culling birds, etc.  The birds cannot be allowed to act even semi-randomly, and none of the processes from feed to chicken to egg carton and broiler can be variated.

Grazing is a small run system.  The chicken can be taught to lay eggs in one place every day, and trained roosters and human labor are relied upon much the same way that machines and robots are relied upon in mass production.  The producer increases their flock size until such point as pasture is maximized or other resource constraints (more usually labor) is overwhelmed.  For us, this cap is about 500-800 hens, a production level of about 250 dozen per month on average.

Much more than that and it becomes too expensive (for our own operation's constraints) to produce eggs at a profit.  However, by advances in technique, we are becoming more efficient and are gradually increasnig production.  Yet we will never produce by ourselves as many eggs as a roboticized and mechanized farm and rely on contracts with our neighbors to supply what surplus demand is to be had.

Advances in transportation technology (especially recent advances in biofuels) have reduced our costs of transportation so we can bring our eggs to markets where they are in even higher demand, allowing us to capitalize upon the efficiency of our production and transportation by selling at a market price above the economic equilibrium of our home economy.

At peak efficiency, both large scale and small scale production will employ similar laborers per hen.  The efficiency per laborer is held constant by the limitations of husbandry not yet overcome by technological advance.

Now, to your first question about feed.

We raise chickens and are diversifying currently into ducks and geese.  We have excellent data for our chickens, and only national statistics for our ducks and geese.  Our data for the chickens meshes fairly well with national expectations, and so we trust the national statistics generated by veterinary schools and can provide those to you if you like - but the question for the voters was on chickens, so we'll stick to that for simplicity.

In a cage, each bird will eat 0.18 pounds of feed per day using our high energy feed that we mix ourselves.  This meets all caloric and nutritional needs at a cost of $0.36 per day.  This works out, at current prices, to be $131.40 per year.  With grain prices doubling last year and expected to perhaps double this coming year and perhaps not, a high expectation (~60% of doubling) we would budget about $210.

Each of our birds eats a combination of pasture and grain.  The grain is used primarily for training, and suppliment food in the winter (we have snow and there is little for these tropical birds to eat).  Our birds eat about 1/4 as much on average (for those keeping score at home, a total of ~$52 per bird per year).  When we maintain in our flock a popultion of about 1/3 roosters, the price PER HEN increases to about $80.

The machine of cage producers cannot rest, so they heat their birds and provide artificial light in the winter.  Our hens lay much more in Spring and Autumn than they do in Summer and Winter and so we need no heat.  The birds don't idle in those periods, but build up their strength to lay eggs cyclically, raise baby chicks (we do sometimes get a few broody hens, though training can reduce or nearly eliminate the risk of chicks, and harvesting eggs daily certainly eliminates chicks.  However, our customers demand we treat our birds ethically in such a way that broody hens are allowed to brood).  Mortality rates are equivilant between pasture and cage production. 

There are innumerable minor differences, adding costs to cages or to pasture, and resulting in greater returns to cages or pasture.  These are held to be equivilant in our data, and not seeing professional researchers at universities undertake the necessary tests, we encourage you and all other amateur scientists to undertake independent trials.  By the nature of the production, we are sure that the data will agree: small run grazing is as efficient and profitable as large scale mechanized egg production.  The price per egg when the State does not interfere (beyond city limits) bears this truth.

If you have further questions please let us know

Please let us know if we can provide more support.  We hesitate to take up your time, but the strong lobby of the large producers in this State are endangering both the will of the people and the interests of a free capitalist society.  By flooding the market of ideas with half-truths (yes, mass production is cheaper, but so is small run production on certain scales, etc.) they demonstrate that their monopolistic interests lie in the dominance and extermination of their competitors, not in the well being of society, the free market place or our national economy.

These large producers, having enjoyed special privilage from a socialist State that encouraged their monopolization through the illegalization of small scale production near to centers of demand and through other fees, taxes and regulations that only are compensated by large scales of production, are obviously terrified at losing their competitive edge by regulations that now, insetad of helping them, discourage them in favor of small producers. 

That the State is now promoting the small scale producer instead is only marginally better than the fostering of monopolies: at least the capitalist system will be freely preserved under the new law.  However, the sooner the people and State of California recognize that a free economy is the best way to secure their interests, the better it will be for all producers.  And the sooner that larger producers recognize that their interests lie in the betterment of all producers - large and small - the sooner they will profit better.  There is plenty of room in a free market for small and large producers.  The greed that motivated them to influence the public towards regulating the market for their benefit has come to bitter fruit, but it is not too late to undo the damage - if journals like the Bee will only investigate the whole truth of the matter for the advisement of the public.

please let us know if you'd like to borrow our personal books on economics, or would like references for your own access at the public library.  We are

at your service,
Aaron and Mary

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