What is the production cost per egg in 2021?

1. To operate profitably: To make a profit from the sale of any good, your cost of producing the good should be lower than what you sell it for. Assuming you purchased a pack of 100 toffees for GH₵ 15, you know that to make a profit, you need to sell each toffee for more than Gp 15. However, with egg production, estimating production costs is not as simple. You need to account for operating expenses such as feed, vaccines, wages, etc. After that, you must ensure that revenue from the egg sales outpaces your total operating expenses. You must note that assets such as land, the structure and day-old chicks are not considered as expenses since they are purchased for the long term, therefore they don’t immediately factor in when we are talking about egg production costs.

2. To gain a competitive advantage: Let’s assume most of your competitors sell a crate of eggs for GH₵ 22.00. Then upon your investigations, you find out that the production cost per crate of eggs is around GH₵ 15.90 for you. You may decide to sell yours for GH₵ 18 and still make a 12% profit margin while blowing your competition out of the water.

3. To understand the significance of economies of scale: Economies of scale is a concept which explains how larger scale business operations tend to have a lower cost of production for every unit of a product or service created. As a small farmer, you may find it very challenging to purchase the recommended feed for your birds. And this forces some farmers to attempt to find cheaper alternatives that may not necessarily be good for the birds. Again, as a farmer running a smaller farm who wants to give your birds the recommended feed, you might have to take out a potentially high-interest loan for that purpose. But for a large scale farm, they can likely purchase feed on credit and even receive some discounts when they pay back on time. In the example I used here, the large scale farmer avoids interest payment and at the same time enjoys a discount. This essentially means that she pays a relatively lower price per feed purchased as compared to the small scale farmer.