The Economy of Bees

[dgoodman]

Hello All,

Just out of curiosity, for those of you who are beekeeping for profit , at what point did you break even?

Mid way through my first season, I'd say that the hobby is tremendously rewarding and satisfying, but it's not inexpensive. As I was dropping a few more dollars today in preparation for tomorrow's harvest (T minus 24 hours), I began wondering how the heck anyone can make money. What is the economy of scale where it all pencils out.

Perhaps it can be described in # of hives, pounds or gallons of honey? Is your money made in rental, and the honey is just a loss leader? Or is it the other way around?

It would be great to hear how you all think about your business of bees.


Thanks.

DG

[Dannny]

I made some money this season through honey, though I did the crush and strain techniqe which left out the expensive extracting equipment. I was thinking about approaching a beekeeper with a really nice extracting setup and try to workout a deal to rent his honey house, I heard 25 cents a frame is pretty good. My thought on this was If I could pay a fee to extract enough honey to buy an extractor, than I would break even on that part of beekeeping, which seems like the most expensive equipment. I also make my own hives which isnt too hard but I did invest 50 dollars in some second hand equipment to make them, but the math looks good on it because 2 sheets of wood costs me 85 bucks and it makes 13 deeps with some wood left over, which saves 80 bucks not including shipping which is another 30-60? so I save a hundred something. It takes some time but for me its either working on a hobby or philosophy. lol I try to save as much as I can in this hobby because the college ramen diet isnt too satisfying.

[Dannny]

[Dannny]

oh dude im like a 100 miles south of you, I cant find any other hobbyist beekeeper around here and the beekeepers who run polinations buisnesses here seem a bit hostile

[Carolina-Family-Farm]

Its a fun hobby but not much $$$ for the small guys that I can see.

[Branman]

you just gotta depreciate all your equipment over 10 years or so and I bet you're just cash flow negative, but revenue positive.

[Todd Zeiner]

I look at it like a hobby. Golfers pay $75 per game at some places, and play 2-3 times a week. I figure I'm having a lot more fun then that, and I get some cash going "IN" my pocket from time to time.

The true secret is to make sure your wife sees the $$ coming "IN" and brag about it. When you have to buy frames or wax, then dig that money out of the rat hole.

[Barry Tolson]

Last year I started out with equipment I bought used from a friend and a 3lb package of bee's. Then I bought 2 more established hives from a friend who's beekeeing husband had died. I did make a profit...and I had more than enough honey left over for my use.
This year I'm building more equipment from salvaged lumber and I took one swarm. I lost one colony over the winter so the swarm puts me back at an even 3 hives. They are all doing well and looks like the harvest will be more than last year...and everything is paid for.
I am fortunate in having a couple of friends who let me use their extractors for no charge when they are finished with their extracting.
So... one can be profitable from the start on a small scale.

[shoefly]

Right now, my commercial break even point would be at about $50 per pound of honey. ....well, yes I am paying myself generously.

[Robert Hawkins]

DG, if I took the business seriously as a business, I could have been breaking even the first year. That would mean Producing and marketing! Do all your relatives have honey bears and call you when they're empty? Do you have a quart canning jar in your car full of honey ready to sell for a good price? Have you planned your set up for the county fair, flea market, farmer's market? When you get all these going, then you can complain about not breaking even.

Hawk

[DennisT]

Just a question on this same subject- around here you can get discounts on 10 or more packages of bees. (I need 6-8 hives tops)But the prices, I imagine are still unreasonable if you were looking at making a profit. Do most commercial (small or large scale) beekeepers buy or make their own splits?
Nucs are nearly half price, I've been happy with them but who can afford to get no/little honey the first year. I gather this is why you have to get big or get out.

[Borgnik]

DG-

You bring up some interesting questions regarding the economy of bees. This is my first year of beekeeping and I was thinking of just how much it costs me to produce a pound of honey. Your post prodded me to add up everything I've bought to get started and to establish five hives. I depreciated hives and equipment over 10 years, some things like package cost over three years, and through in the stuff that is a yearly expense like jars to put the honey in and sugar for feeding, etc. My unit cost to produce a pound of honey is about $2.60. Of course, I have to make a few assumptions like I will make 70# of honey/hive (slightly over the Illinois average), I will be in the hobby for 10 years, I can sell my honey retail for $3.50/pound, and my time is worth nothing. This also doesn't include any insurance or mite treatments for this year. Of course, the assumptions you make will have an impact on the cost of honey you produce. My equipment is new and good and I saved money where I could (extractor cost $45).

What was interesting in my analysis is that most of the cost of a jar of honey comes from the short-term costs that are required every year like jars to put honey in, medications, sugar for feeding, sticky boards, etc. The hive bodies, bee suit, smoker, etc, etc, that can be depreciated and ammortized over 10 years only adds about 20% to the cost of my honey. If I scrounged a little and eliminated some costs I could have gotten my costs down to about $2.25. The important thing is to eliminate the short-term costs as much as possible. I figure I would need to have 6-8 hives to "break even" based on the yearly costs/hive and the expected revenue from the honey. This can certainly change based on whether you are in the right place, right time to get a deal on used equipment (like I did on the extractor), whether you want to build your own equipment, how many accessories you can live without, and what your personal resources will allow. There are lots of examples of ways to save money like folks not treating for mites and saving money, getting free wood for equipment, customers bringing their own containers for honey, etc. but that is not what the average hobbist will do and you may not be in the hobby long if you do. Different strokes for different folks. Bottom line is you have to control the yearly costs to a great extent.

I don't think a lot of folks know how much it costs to keep bees because they have never added up the receipts. If you buy a table saw to build hives do they add that cost into the hobby? Probably not. Do they add fuel into the mix while they are driving around scrounging for materials? When you build your own hives you still have to buy the lumber and at least for me lumber isn't that cheap around here. I'm just skeptical that you can "make money" with just a couple of hives and the fixed costs spread so thinly.

Based on my diversion of actually figuring out my costs, I won't be expanding to many more hives like I was thinking of next year. That would just increase my losses. I'll stay small and enjoy the hobby for what it is: fresh air, fascinating bees, an age-old craft, and fresh honey.

[Hillside]

I think you can be profitable with only a few hives IF you get decent production per hive and IF you can find a good market for your honey. You need to sell at retail. If you're thinking of selling honey to packers you may as well forget it. I don't know how the big guys can stay in business selling huge volumes at microscopic prices. As you get more hives, it gets harder to sell all the honey at a good profit.

I have a seasonal retail outlet where I sell plants. I can use that same outlet to sell honey. But there is a limit to how much honey I'm going to sell to my plant customers. Eight or ten hives is about all I need to supply those needs.

The average person doesn't have a good retail outlet, so they have to sell at a farmer's market, sell by the roadside, or find some other location where there is an opportunity.

When selling retail, you should be able to get full retail price for your product or even a little above full retail if you can show that your product is better. Don't go cheaper than the price for "good" honey at the grocery store. And not all honey at the grocery store is good -- you need to be careful you don't compare your product to the cheapest stuff available.

Even though you can amortize the cost of your materials over many years, it doesn't mean you get to actually pay for the stuff over all those years. Most of the money comes out of your pocket at the start up of the business. I wouldn't expect to see any real profit until about the third crop. And that assumes everything has gone smoothly.

Scarey isn't it.

[jalal]

pollination isn't a dollar to be looked over

it's like working for two different companies, doing the same thing, at the same place, but getting paid twice.

you don't need new frames, telescoping covers, inner covers, screened bottem boards or other novelities.

a box, a lid and a bottem work just fine.

put a hole in the lid so you can feed with good ol' gallon jars.

always treat your bees.

always overfeed your bees (syrup) when they require it.

-the above does not mean to drown them-

cut some corners, don't sacrafise quality though, unless it's worth it, but keep a standard somewhere, even if it is in your pocket.

part of being a beekeeper is barely breaking even, 30 million times.

that and being cheap so your efforts arn't in vain.

and if you are only doing honey, whynot run double queens? please.

[JohnBeeMan]

this hobby definitely pays better than some of my other hobbies - skiing, boating, etc.
But I would not say it is 'profitable' yet.
Last year I made abouy $500 selling out my front door (plus my gift boxes)- expect to maybe double that this year. If this keeps up I should break even in about 2 more years. My biggest savings may be replacement of my wine purchases with the mead that I am making ;) .

[MichaelW]

Here's 3 things to make the books look better for beginners:

The costs incured during the first 4 years are for education. The learnig curve is steep, but alot cheaper than your local university. If you got a business degree you wouldn't figure the cost of your education on the books of your new business.

The price of honey that you eat and give to the family is worth at least $12 a quart. Where else can you get more locally produced honey. Or better yet, use organic treatments and call it $15 a quart.

You really bought that table saw to build bird houses, charge them for it.

Thanks for the tips jalal. I'm looking out for scrap wood all the time to reduce costs. But it sure isn't scaleable.

[Borgnik]

The expense of owning a car is more than just the cost of gas. It's the depreciation, oil changes, and tires, too, and if you aren't including those in the cost of transportation you aren't being honest with yourself. Beekeeping has many ways to cut corners and methods of doing the same thing. I had no idea how much I had spent in the last year until I added it up. The figure I had in mind was less than half of the actual cost.

The original question in this thread had to do with the economy of bees and at what point, if any, do you break even or become profitable. Most of us have to either make or buy the equipment to get into the hobby. If you had to do that, too, do you have any actual numbers either in the number of hives, gallons of honey, at what sales price, at what production, etc. that you would like to share where you became profitable?? Be honest with yourself. Curious people want to know.

[BjornBee]

First, if you want to answer the original question, you have to expand the conversation beyond honey production. Most successful operations deal with more than honey. And most of the time honey is secondary to other profitable items.

Honey
pollination
propolis
wax
pollen
queens/nucs
equipment sales
swarm removal fees
and other

If the discussion is for what it takes for profitability purposes, than think and expand as a successful business would. I do not know too many operations(without secondary income such as farming/lumbering) that solely focuses on honey.

If as a hobbiest you are interested in nothing more than honey production and want to know what the break even point is, quit looking. There is not one. It may cover some of the cost, and for a hobby, thats a good point. But if its a hobby, than why worry about breaking even? Do all hobbiests in other areas such as biking, boating, gun clubs, bowling, and anything else that could be listed, worry about profitability and breaking even? A hobbiest beekeeper should enjoy the fruits of the harvest, enjoy the beekeeping friends along the way, and know that to keep bees, without a fulltime devotion, is going to cost a few bucks every year.

As for profitability as a beekeeper, making equipment yourself, queen rearing, doing things that some on this board would be against, and many other items are needed to be discussed and considered. And what would be exceptable? Someone making 30 grand a year in bees might be happy, and the next person would not be happy clearing 60 grand, taking into account time and other factors.

Not knowing your costs, which can change as for each persons management skills and process, than the question for being profitable should be more along the lines of "Can I make x amount of dollars, and how much per hive can be made? Can it be profitable if I can generate 100 dollars per hive per year? How many hives do I need to reach an income level I could be happy with. And can I do the things such as making my own equipment, raising queens, travel, market, manage, and anything else needed to get the job done.

One persons break-even point is different from anothers. Its not a matter of the number of hives. If you dicount the fact that certain equipment is needed, and set that idea aside, than the question is "can I make money with one hive? Yes the cost of the that smoker can be paid for in terms of pennies for each hives production, if you had hundreds of hives. But it is also true as you grow, additional equipment is needed, and that is part of managing your resources and reinvesting in your business.

Could one hive generate 100 dollars in revenue? (Would or could that be break-even for someone with a viel, or for someone with a full beemaster suit costing a couple hundred dollars?) Could 10 hives generate 1000 dollars. (Could that be break-even for someone crushing and straining, or someone spending a thousand on a radial extractor?) And could 500 hives generate 50,000 dollars? If you look at your community, your time requirements, and ability to do pollination and other items, than its really comes down to the same question. What can that one hive make me? 50? 100? 200? and each of these answers could be another persons break-point. But it also would be useless for another beekeeper to consider any other beekeepers numbers, unless you have the same buying opportunities, same economical situation, time requirments, and a host of other items.

Creativity pays.

[Joel]

We never made money as a hobby. As a business we expanded into all the areas Bjorn mentioned, spent a great deal of time and money getting educated, developed our own retail market for absolutely every thing we produced, designed and developed our own web site, use every possible production maximizing management while minimizing per hive mgt. time, make our own nucs, migrate our bees 1500 miles a year, and keep our noses pressed against the future of our industry. My suggestion is if you do it for hobby then consider the joy payment enough and any income icing on the cake. Once you start saying business it becomes work!

[Borgnik]

Well, that confirms what I had already proven to myself. I'll concentrate on the joy and let someone else worry about how to earn the profits.

[MichaelW]

If you can get 5-8 honey supers on about 10 hives, I don't see how you could have a problem paying for itself, eventually. There is an oldtimer close by with a sign by the road that just says "Honey". He keeps about 10-15 hives last time I was up there. Its the honor system if no one is home. He's been doing it for at least 30 years I think. If you don't forever expand and keep what you have in good condition the outflow of money should stop and then its all honey from there.

[iddee]

A watched pot never boils, or so they say.
Since this thread started, I have went back and counted. Hadn't bothered before.
Started the year with 2 overwintered hives. So for I have sold 2 hives, bought two hives for $155.00 less then I sold the 2 for.
Harvested 34 quarts of honey, sold at $10.00 per,
bought $1100.00 in equipment,and have at this time 10 hives. Charged $1200.00 plus for extracting colonies from buildings, trees.
So when do you break even, I don't know. I had passed there the first time I looked.

[Lew Best]

Another tip I got from an "old timer" yesterday; he has signs on the doors of his truck. Said people stop him constantly wanting honey, bees removed, offering swarms, etc. Said he got them 2-3 years ago & his business increased DRASTICALLY since he put them on the truck. He has about 150 hives iirc.

Lew