Poultry farm: three identical houses, different results

“Eighteen thousand layers, four hundred and thirty-three thousand eggs a month, revenue of one million seven hundred and thirty-five. And in my hand — a hundred and thirty thousand. I was certain that was simply the price of an egg” — that is how Taras Bondar, owner of a poultry farm near Khmelnytskyi, opened the conversation.

If you keep layers, you have already said this yourself. The birds are healthy, mortality is normal, the traders take everything down to the last tray. And in the bottom line — a sum that will not buy you even one replacement flock.

The cause is almost never the price. Taras's report held one figure for the whole farm: 130 140 ₴ of profit, a margin of 7.5%. And it described the farm as precisely as an average temperature describes three people, one of whom is running a fever.

We break the farm down into two units: the henhouse and a single egg. And we get to why three houses with costs identical to the kopiyka — 535 020 ₴ a month each — produce +134 580 ₴, +48 180 ₴ and −52 620 ₴.

Taras's path: from one henhouse to three

Taras started with one house for 6 000 layers. He carried the trays to the traders himself, watched the feed line himself, kept a notebook: sold this much, paid that much for feed, the difference is mine.

Then came a second house, then a third. The flock reached 18 000, poultry workers appeared, a livestock specialist, a vaccination schedule. That is when the feel for the figures disappeared: the head count tripled, revenue followed, and the profit stayed where it was.

“When there was one house, I knew everything about it: how many eggs were taken in the morning, how many hens were already due for culling. Now there are three houses — and ask me which of them feeds me and which one quietly eats me. I will not answer.”

Why “18 000 layers” is not one number but three

A hen is not a machine you can give more work to. She has a lay curve: a pullet climbs to the peak, holds it, then comes down. And the age of the flock is what decides how many eggs a house gives in a month.

And now the thing that makes a farm look like a single figure. Feed, the poultry worker's wage, light, vaccine — all of it accrues per head, not per egg. A hen eats her 1.61 ₴ of feed a day whether she has laid an egg or not. A house of 6 000 head spends the same in the seventh month of a flock and in the nineteenth.

The main unit: one egg, not one hen

The hen is the unit in which you carry the costs. The egg is the unit in which you are paid. Until the two stand in the same line, the cost of an egg appears only through a division at the end of the month.

The wholesale price is 4.00 ₴ and the same for all three houses: the trader does not care which henhouse a tray came from. The only difference is how many eggs the costs were spread over.

A hen eats the same — she lays differently

House A in its seventh month holds a lay rate of 93% — that is 167 400 eggs in 30 days. House C in its nineteenth gives 67%, that is 120 600 eggs. The same number of head, the same feed, the same poultry worker.

Feed for both — 289 800 ₴. The rest of the costs — 189 720 ₴. Flock depreciation — 55 500 ₴. 535 020 ₴ in total in one and in the other. This is not a typo in the table: it is the whole point. The costs are the same, the return is different.

Three henhouses, laid out one by one

Taras wrote the month out house by house: the eggs from the collection log, the money from the bank, flock depreciation from the cost of the pullets over the length of their life.

Indicator for the month	House A (7 months)	House B (13 months)	House C (19 months)
Lay rate	93%	81%	67%
Eggs per month	167 400	145 800	120 600
Revenue (at 4.00 ₴)	669 600 ₴	583 200 ₴	482 400 ₴
Feed	289 800 ₴	289 800 ₴	289 800 ₴
Rest of the costs	189 720 ₴	189 720 ₴	189 720 ₴
Flock depreciation	55 500 ₴	55 500 ₴	55 500 ₴
Total costs	535 020 ₴	535 020 ₴	535 020 ₴
Cost of an egg	3.20 ₴	3.67 ₴	4.44 ₴
Result for the month	+134 580 ₴	+48 180 ₴	−52 620 ₴

One feed, one wage, one price for an egg. Three columns — and three different businesses under one roof.

Why 134 580 plus 48 180 minus 52 620 comes to exactly 130 140 ₴

It is worth stopping here, because this is where people stop believing. The eggs add up: 167 400 plus 145 800 plus 120 600 is 433 800, exactly as in the log. Revenue: 433 800 at 4.00 ₴ — 1 735 200 ₴. And the results add up too: 134 580 + 48 180 − 52 620 = 130 140 ₴.

Nothing appeared and nothing vanished. Breaking it down adds no money: 130 140 ₴ is not the result of the farm's work but the difference between three results, one of which carries a minus sign.

“When they first showed me minus fifty-two thousand on one house, I asked for a recount. The birds in there are alive, they lay every day, the trays from that house go out together with all the others. It turned out that laying and laying enough are two different things.”

Houses A and B: 182 760 ₴ Taras never saw

Add the first two results: 134 580 plus 48 180 — that is 182 760 ₴ a month. Two houses out of three bring in exactly that much — 1.40 times more than what the farm shows as profit.

House A is the best thing a farm ever has: 93%, 167 400 eggs, revenue of 669 600 ₴ against the same 535 020 ₴, cost of an egg 3.20 ₴. House B in its thirteenth month is still in the black, but on the way down: 81%, 145 800 eggs, 583 200 ₴ of revenue, cost of an egg 3.67 ₴.

B is not worse than A — it is older, and that is the only difference. Which means it will become what house C is now.

House C: 120 600 eggs and minus 52 620 ₴

The third line is the one that made the farm look like a business with a penny margin. A flock in its nineteenth month lays at 67%: 120 600 eggs, revenue of 482 400 ₴. The costs are the same 535 020 ₴, and there is nothing to cut them on: the feed is the same amount, the poultry worker is the same.

The result is minus 52 620 ₴ a month, or 40.4% of the farm's profit. House C does not simply earn less — it eats two fifths of what its neighbours earn. Without it the profit would be 182 760 ₴, 1.40 times larger than the current 130 140 ₴. An egg here costs 4.44 ₴ at a price of 4.00 ₴, so every tray out of that house makes the minus bigger. Not closer to zero — bigger.

And the main qualification. House C is not “bad”: nobody messed up the feed there and nobody slept through the vaccination. It has lived to the end of its cycle — a flock lives 20 months, and this one is in its nineteenth. The point is not the hens, it is that the age of the flock has to be a line in the report.

Cost of an egg: 3.20 ₴, 3.67 ₴ and 4.44 ₴

This is where the mechanism clicks. A house's costs are 535 020 ₴, the same in all three. Divide them by the eggs that house produced and you get three costs: 3.20 ₴ in A, 3.67 ₴ in B, 4.44 ₴ in C. The price is one — 4.00 ₴: two houses sell an egg above their own cost, the third below it.

3.20 ₴ is no credit to the poultry worker in A, and 4.44 ₴ is no fault of hers in C: everything is decided by how many eggs the 535 020 ₴ were handed to.

The report Taras made every decision by

And now the report Taras lived in for years. Revenue is simple: 433 800 eggs at 4.00 ₴ — that is 1 735 200 ₴.

Cost item	₴ per month
Feed (18 000 × 1.61 ₴ × 30 days)	869 400 ₴
Wages	198 000 ₴
Electricity, heating, water	126 000 ₴
Veterinary supplies and vaccination	54 000 ₴
Packaging (0.10 ₴ per egg)	43 380 ₴
Equipment depreciation	84 000 ₴
Other	63 780 ₴
Flock depreciation (3 × 55 500 ₴)	166 500 ₴
Total	1 605 060 ₴

There is not a single mistake in that report

Invoices, the bank, the payroll sheet, the delivery notes signed with the traders — everything reconciles to the hryvnia. Profit: 1 735 200 − 1 605 060 = 130 140 ₴, a margin of 7.5%.

Then he divided the costs by the eggs: 1 605 060 / 433 800 = 3.70 ₴. At a price of 4.00 ₴ that is a margin of 0.30 ₴ on an egg, and over 433 800 eggs the same 130 140 ₴. Thirty kopiykas off an egg — that is exactly what Taras was retelling with the words “the price of an egg is low”.

Why the average 3.70 ₴ exists in none of the houses

Not one hen on that farm lays such an egg. 3.70 ₴ is an average of three costs, born of a division after the month was closed.

Let us label the two most dangerous numbers in this article, because there are three kopiykas between them. 3.70 ₴ is the cost of an egg across the whole farm, the average from the report. 3.67 ₴ is the cost of an egg in house B with a flock in its thirteenth month. The first describes no house at all, the second describes one.

As long as all three live inside one average, the loss-making house looks normal and the best one looks mediocre. A decision taken on the figure 3.70 ₴ cannot be right: it describes a farm that does not exist.

Life before the age of the flock became a line

The bookkeeping Taras lived in through those years will be recognised by any farm that grew out of one house.

• Eggs were totalled for the farm. One total for three houses — and no way of knowing which gave how much.
• The age of the flock did not stand next to the money. The livestock specialist knew the age of every flock, the bookkeeper knew the sum paid for feed, and those two notebooks never crossed.
• The cost of an egg was taken as a single figure. 3.70 ₴ per egg went into every calculation, including the decision about a new flock.
• Pullets were treated as a purchase, not as an asset. 1 110 000 ₴ went out in one payment once every 20 months and never appeared in the books again.
• The weak house was called “needs a push”. Instead of the amount of the loss there was a conversation about vitamins and day length.

Not one of those five problems is a husbandry problem. All five sat in the bookkeeping — and on a poultry farm nobody looks in there.

The hidden item: the flock wears out, and in the books it is free

Now the item that was in none of Taras's reports, and it is the largest one. A flock is an asset that wears out. The pullets for one house cost 6 000 × 185 ₴, that is 1 110 000 ₴, and they live 20 months. Divide: 55 500 ₴ a month per henhouse.

For three houses that is 166 500 ₴ a month, while the farm's profit is 130 140 ₴. The wear of the flock is 1.28 times more expensive than everything the farm earns.

“I paid for pullets once every twenty months, in a single transfer, and the rest of the time I sincerely believed my hens were free. Until I divided one million one hundred and ten thousand by twenty. Fifty-five and a half thousand every month for each house — I had never seen money like that anywhere in my accounts.”

Why 166 500 ₴ cannot be subtracted from the profit a second time

The commonest mistake after a calculation like this is to add 166 500 ₴ to the costs or subtract it from the profit. That must not be done: this money already sits inside the 1 605 060 ₴ as a line of its own and inside the 535 020 ₴ of every house. The farm's costs stay 1 605 060 ₴ and the profit stays 130 140 ₴.

What is the figure for, then? To see how much the farm has to set aside every month so that replacing a flock is not a blow to the till. Until the pullets are divided over the length of their life, the payment arrives like a natural disaster.

1.28 and 1.40: two different multiples

There are two multiples in this article and they must not be confused. 1.28 is how many times the flock depreciation of 166 500 ₴ exceeds the profit of 130 140 ₴. 1.40 is how many times the profit would grow without house C: 182 760 ₴ instead of 130 140 ₴.

“Everybody told me my feed was expensive. I bargained over feed, changed suppliers, counted the formula down to the gram. And the most expensive thing I had was the one thing that appears on no invoice — the age of a hen.”

What replacing the flock in house C gives

Next Taras worked out what happens if a new flock is brought into the third house. It climbs to a lay rate of 94%: that is 169 200 eggs and revenue of 676 800 ₴ at the same price of 4.00 ₴.

Let us separate the two percentages standing close together straight away. 93% is the lay rate of house A right now, in its seventh month. 94% is the lay rate of the new flock that still has to be brought into house C. One percentage point apart, but these are different flocks in different houses.

House C	Flock in month 19	New flock
Lay rate	67%	94%
Eggs per month	120 600	169 200
Revenue (at 4.00 ₴)	482 400 ₴	676 800 ₴
Total costs	535 020 ₴	535 020 ₴
Result for the month	−52 620 ₴	+141 780 ₴
Gain per month	—	194 400 ₴
Pullets (6 000 × 185 ₴)	—	1 110 000 ₴
Price of the downtime (21 days)	—	95 970 ₴
Total investment	—	1 205 970 ₴
Payback	—	6.2 months

The costs in the right-hand column are the same 535 020 ₴, including the same 55 500 ₴ of flock depreciation. One thing changes: how many eggs that money is spread over. The result flips from −52 620 ₴ to +141 780 ₴, a gain of 194 400 ₴ a month.

21 days of downtime cost 95 970 ₴

Here is the part owners forget to count. Between the old flock and the new one the house stands empty for 21 days: cleaning, disinfection, drying. There are no eggs and the costs are there — the downtime costs 132 804 ₴.

But those 132 804 ₴ must not be compared with zero. If the old flock had stayed in the house for the same 21 days, it would have produced minus 36 834 ₴ — a loss as well, only a smaller one. The downtime is 95 970 ₴ more expensive, and that is the true price of the pause.

An investment of 1 205 970 ₴ and a payback of 6.2 months

We add up everything that has to be paid: 1 110 000 ₴ for the pullets plus 95 970 ₴ for the price of the downtime — 1 205 970 ₴ in total. Against a gain of 194 400 ₴ a month that is a payback of 6.2 months. And do not mix up the two numbers around six: 6 000 is the layers in a house, 6.2 is the months of payback. Flock C will reach its 20th month anyway — the only question is how many months at 52 620 ₴ the farm will pay for that.

“I kept putting the replacement off, because one million one hundred is one million one hundred, you do not come by money like that just so. And then I put two numbers side by side: one million two hundred including the downtime, and fifty-two thousand every month while I think. It turns out the thinking was the expensive part.”

Why the age of the flock is not seen in the report

If the arithmetic is this simple, why does the age of the flock not stand in farm reports? The reasons are not about husbandry.

• Identical costs are reassuring. When every house takes the same feed and the same wage, counting them separately seems pointless.
• The lay rate lives in a different notebook. The percentage is known to the livestock specialist, the money to the bookkeeper, and only the owner can bring the two notebooks together, if it occurs to him.
• A loss-making house looks alive. The birds are healthy, the trays go out, the poultry worker is on shift. Minus 52 620 ₴ has neither a smell nor a sound.
• Pullets look like a one-off purchase. A payment once every 20 months does not remind you of itself, which is why it never gets into the cost of an egg.
• The price of an egg is too convenient an explanation. When the profit is thin, the easiest thing is to say “the trader pays too little” — and count nothing.

What changed once the age of the flock became a line

Three things changed in the paperwork. Egg collection began to be kept house by house. The costs were spread across the three henhouses. And the pullets were divided over 20 months and put as a line into the cost of an egg.

• Every house got a result of its own. +134 580 ₴, +48 180 ₴ and −52 620 ₴ instead of a consolidated 130 140 ₴.
• The cost of an egg is counted house by house. 3.20 ₴, 3.67 ₴ and 4.44 ₴ — three numbers that lived for years as a single average of 3.70 ₴.
• Flock depreciation became a line. 166 500 ₴ a month, 1.28 times more than the profit, is now visible every month instead of once every 20 months.
• The flock in house C was replaced. 1 205 970 ₴ including the downtime against 194 400 ₴ of gain every month — a payback of 6.2 months.

No new henhouse, no more expensive feed and no negotiations with the trader were needed. What was needed was to see the age of the flock as a line — with a lay rate of its own and a result of its own.

The takeaway for business owners. Wherever costs accrue per unit of equipment, per animal or per person while income accrues per unit of output, identical costs never produce identical results. Put two lines side by side: what it costs to keep one unit, and how many produced units that sum was handed to. Wherever the second number falls, the unit cost crosses the price all by itself, and no economising will stop it. And count separately the thing you buy in one payment once every few years: divide it over its service life and put it into the unit cost every month. This works just the same in greenhouses, truck fleets and any business where an asset wears out quietly.

Parting advice

• Give every house a revenue and cost line of its own. The costs are identical — 535 020 ₴ each, the results are not: +134 580 ₴, +48 180 ₴ and −52 620 ₴.
• Put the age of the flock in months next to the lay rate. 7, 13 and 19 months give 93%, 81% and 67% — the only thing that separates three identical houses.
• Do not trust an average cost. The farm's 3.70 ₴ exists in no house: there it is 3.20 ₴, 3.67 ₴ and 4.44 ₴.
• Divide the cost of the pullets over the life of the flock. 1 110 000 ₴ over 20 months is 55 500 ₴ per house and 166 500 ₴ for the farm every month.
• Count the price of downtime against the old flock, not against zero. An empty house for 21 days is 132 804 ₴, the old flock would have given minus 36 834 ₴, the difference is 95 970 ₴.
• Weigh a replacement decision on the gain, not on the payment. 1 205 970 ₴ of investment against 194 400 ₴ of gain a month is a payback of 6.2 months, while a month of waiting costs 52 620 ₴.

The money does not vanish — you simply do not see it

Poultry farming is easy to imagine as a business where feed and the price of an egg decide everything. You cannot start without them. But the earnings are decided by a third thing — how many eggs the 535 020 ₴ a house will spend at any lay rate were handed to.

A hole like that does not close by itself and does not show up in a consolidated report: the report totals the farm, while the minus lives in one house. But as soon as the age of the flock gets a line of its own, the main thing becomes visible. 7.5% of margin describes neither house A nor house C. It is a proportion in which a house at peak lay and a house where an egg costs 4.44 ₴ at a price of 4.00 ₴ have been mixed together.

How to see this on your own farm

Everything described above rests on one kind of bookkeeping: not the farm as a single figure, but the henhouse as a line where the age of the flock, the lay rate and the costs sit side by side. As long as profit is totalled for the farm, you can see neither that one house is working at a loss nor what the flock costs every month. When the same data is collected automatically, you can see when a flock has to be replaced, which is exactly why small and medium business owners use Finmap: to see the financial picture instead of piecing it together.

Read also

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• Equipment rental: why utilisation beats the day rate

Topic foundation: Management Accounting Explained: What It Is and Why Owners Need It