Farmers coping with a scrambled egg market

Local farms try to answer growing demand for specialty varieties

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How do you like your eggs? Forget scrambled or over-easy — do you want them organic, Omega-3 enriched, cage-free, free-range, vegetarian-fed or pasture-raised?

The grocery store egg cooler holds an unprecedented array of options — not to mention a vast price range. A dozen eggs costs less than $2 or almost $9. The choices can be tricky for grocery shoppers to navigate. And they have real implications for Washington farms and grocers.

Eggs are a growing business. The average American eats 256 eggs per year, according to the American Egg Board, which represents a four egg increase in the last couple of years.

There are 1,053 licensed egg dealers in Washington, according to Kim Schmanke, a spokeswoman for the state Department of Revenue. That’s nearly a 25 percent increase since 2013, when the state had just 884 licensed egg dealers in the state. The current figure includes large operations such as Wilcox Farm, in Roy, which has more than 800,000 hens. It also includes small ones such as the Kelsey Family Farm, in Brush Prairie, which has about 325 hens.

Some of the fastest market growth is among so-called “specialty” eggs. The two best-selling specialty categories are “organic” and “cage-free,” according to the American Egg Board. But conventional eggs still dominate the market. In May 2014, those two specialty categories combined to make up just 5.7 percent of U.S. egg production, according to the industry group.

Ryan White, perishable foods buyer for New Seasons Markets, said eggs are the new coffee, beer or kombucha — the more local options a store offers, the more consumers will pay to snatch them up. The chain of natural food stores now buys eggs from seven local farms and is seeking more sources for pasture-raised eggs.

In Clark County, some small growers are finding a niche in the increasingly fragmented egg market by selling at their farms, in farmers markets, or wholesale to local grocery stores. While anyone may sell eggs from their own farm or chicken coop, farmers must obtain a license from the state before selling eggs off-premises, such as in a grocery store or farmers market.

Jonell Kelsey, 63, a former art therapist, and Chris Kelsey, 64, a real estate broker, have lived on the same 3.38-acre property in rural Brush Prairie for 27 years.

A few years ago, the couple’s son took a college course in sustainable food systems. As a project for class, the family procured its Thanksgiving feast entirely from local sources. They looked around the table at the turkey bought from a nearby farm and bread baked at a local bakery. Then they thought about their own land and wondered why the meal wasn’t even more local.

“We thought, ‘Well, why can’t we do that?’ ” Jonell Kelsey said.

The Kelseys took a permaculture design class and a small farming business class, then launched the Kelsey Family Farm as a business. Jonell Kelsey said she is filing the family’s taxes now and believes the farm might turn a profit for the first time this year, the fourth in its official history.

When they started raising laying eggs, Kelsey said the family couldn’t find buyers, so they donated the eggs to a local food bank. Then they began selling the eggs at a nearby produce store.

As the farm ramped up production, it began supplying eggs to Chuck’s Produce & Street Market in Vancouver. But the natural grocery store needed more volume than the Kelseys could provide, especially in the fall when production declined as the family’s entire flock molted its feathers.

All chickens molt, or drop their feathers, once or twice a year. Hens stop laying eggs during this transition.

In recent months, Kelsey Family Farm has sold most of its eggs to New Seasons at Fisher’s Landing.

“They buy what we have … which is good because it does fluctuate,” Jonell Kelsey said.

The farm has delivered as few as 18 dozen eggs in one week and as many as 55 dozen in another.

The Kelseys wash their own eggs, pack them in cartons, drive them to New Seasons and load them on the shelves.

New Seasons charges $8.99 for a dozen eggs raised by the Kelseys — more than six times the national average of $1.40 for a dozen eggs from a conventional farm, sometimes called a factory farm.

Eric Lambert, small acreage program coordinator for the Washington State University extension office in Clark County, said he thinks more people are starting up small egg-growing operations in southwest Washington. He couldn’t offer statistics, however, because few, if any, agencies keep track of small-scale egg-growing operations. Even the Washington State Department of Revenue, which licenses egg-sellers, doesn’t keep track of long-term licensing trends.

According to Lambert, eggs are a good way to get grocery shoppers interested in the so-called “locavore” movement or sustainable agriculture practices.

“Eggs are a good gateway food. Everyone likes eggs, and there’s a real difference, in my opinion, between eggs from a (conventional farm) and eggs that you get direct from a small, local farm,” he said.

Hens that eat a varied diet including bugs and foraged plants lay eggs with darker, richer-tasting yolks, according to Lambert. Industrial or conventional farms keep thousands of hens confined to cages or crowded warehouses and feed them a steady diet of processed pellets.

Once people taste the difference, Lambert said, they become more willing to spend extra money on hens raised outdoors.

Making sense of labels

White, the perishable foods buyer for New Seasons, said the stores haven’t yet discovered a price ceiling — above which customers won’t pay — for locally grown, pasture-raised eggs.

“It’s not our goal to find one,” he added. “At the end of the day … pennies to protein, eggs are still a value. Especially when compared to fish or meat.”

New Seasons still offers standard white eggs, for “more conventional customers,” as White put it, at much lower prices. But demand for eggs raised on small, local farms often outstrips the stores’ supply. Some locations are beginning to offer locally raised duck and quail eggs, as well.

The difference in taste doesn’t mean consumers can necessarily discern, from the labels on a carton of eggs, exactly what they’re buying.

Some products are “certified humane” or “certified organic,” which means the farming operation is audited by a third party.

Several independent groups certify egg-growing facilities as humane, each with their own set of standards. Most of these certifications require that hens be permitted to perform natural behaviors such as nesting and perching. Certain industrial practices such as starving birds to force molting at a particular time of year are prohibited. Under some programs, however, “certified humane” hens don’t need to have access to the outdoors.

The U.S. Department of Agriculture says that eggs labeled as organic must come from uncaged hens that are not treated with antibiotics or pesticides. Organic hens must eat only certified organic, all-vegetarian feed, so they are usually raised indoors, where food intake can be carefully regulated.

Other labels are not verified at all, so their meaning is more vague. For example, the USDA has not defined the labels “free-range” or “pasture-raised” for eggs.

“‘Cage-free’ means they’re still in a big, crowded henhouse,” Jonell Kelsey added.

Some farmers try to cut through the confusion by printing labels for their egg cartons that contain photographs of the farm. At Kelsey Family Farm, the scene is downright picturesque. Hens roam around grassy fields, pecking bugs from the ground. They fly into nearby pig and sheep pens to steal feed from other farm animals.

“Chickens are a lot of fun,” Jonell Kelsey said as some of the farm’s 325 birds strutted past her magenta rain boots on a recent day. “They have a lot of personality.”

Chris and Jonell Kelsey run the farm with their son Ryan Kelsey, 27; Chris’s brother, Tom Kelsey, 63; and a niece, Lauren Duquette, 31; and a nephew, Royce Kern, 29. Their birds are fed grain that comes from small, local farmers whose crops never contain genetically modified ingredients. The family goes out of its way to buy high-quality feed, Jonell Kelsey said. To keep costs down, they order it by the ton — which requires extra work from the family, as large delivery trucks can’t fit on the farm’s narrow driveway.

The Kelsey Family Farm eggs are not organic, however.

“The organic feed was just too expensive,” Jonell Kelsey said.

Visitors who stop by the Kelsey Family Farm on Monday afternoons can buy a dozen eggs for $7. Even at that price, the Kelseys are adjusting their practices to try to break even.

Their first batch of hens, for example, was a motley bunch of at least 10 colorful breeds.

“We picked them out just for their looks,” Jonell Kelsey said.

Recently, the family bought 200 more chicks — all ISA Browns, which were bred specifically for egg production.

Breaking even on eggs

The Kelseys are becoming more stringent about culling the birds who have begun their natural, age-related decline in laying. After all, full-grown hens all eat the same amount of feed — which costs money — whether they’re laying eggs or not.

A few past-their-prime birds are butchered for the family’s own dinner table. Most are sold on Craigslist, Jonell Kelsey said, where demand is high for backyard chickens.

“They may be past their peak production, but they will keep laying for years,” she said of the birds.

There are energy costs associated with egg farming, too. Chickens were bred from wild guineas, which are native to the tropics. So they require heat and artificial light to continue laying eggs in the cold, dark winters of the Northwest.

And then there’s the cost of packaging the eggs and transporting them to stores.

“One egg carton is 42 cents,” Jonell Kelsey said.

Lambert, from the extension office, said one big factor in egg pricing is how a particular farmer values his or her time.

“Farmers are infamous for undervaluing their time, really. They look at production costs and they’re working so hard but many farmers don’t really pay themselves, or factor it in,” he said.

Until last year, Matt Schwab raised eggs on his Ridgefield farm, Inspiration Plantation, and sold them to New Seasons. At one point, the farm had 900 laying hens. Last year, he and his wife decided to sell half of their land and most of their farm equipment.

“We weren’t able to make enough money to make it work,” Schwab said.

Schwab said eggs are the easiest farm product to sell but also the one with the most competition.

“Anyone with a couple of chickens is suddenly in the egg business. And they typically don’t understand the economics behind it so they just charge whatever they see at the store, which creates this downward pressure,” he said.

He added that it’s tough to figure out whether one is making or losing money on eggs. The life cycle of a chicken makes for a tricky math problem — chicks are purchased shortly after hatching, but they don’t start laying for another six months. After a couple of years, their egg production drops.

“So you have to track your income and expenses on something that’s more than 2 years old, while a normal accounting cycle is one year,” Schwab said.

Most of his farm’s eggs were sold at Chuck’s and New Seasons. He said he felt downward price pressure from both stores because they were hesitant to charge more than $7 per dozen.

So he charged the stores $5 per dozen, then the retailers sold them for about $7.25 a dozen, he said.

To compensate himself for the time spent farming, Schwab said he would have needed to charge the stores $7.50 to $10 per dozen. A typical retail markup would have meant a price tag of almost $15 per dozen.

“The issue I ran up against was the issue of scale,” he said. “All the big commercial egg producers have hundreds of thousands of chickens and there’s a reason they do. They need to do that volume to be able to buy a semi-truck of egg cartons and to buy all the equipment to do things efficiently.”

Today, Schwab and his wife have turned their full attention to running the business that once subsidized their farm. They’re franchise owners of six Subway restaurants in Oregon’s Clackamas County.

“It’s a bit of an irony,” Schwab said of the sandwich chain that doesn’t have a pasture-raised egg in sight. “Hopefully I can retire back to the farm someday.”