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jamesc

The final Reckoning

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Well hallelujah .....we pulled the last strips from the bees today, did the final disease check and are still melting wax into blocks of gold. This is the time of year when my mind turns to how much we made.Did  I work for nothing , or did I  hopefully pay costs and  make a little ?

I floated this idea a few years ago along the lines that every week in the farming paper I get to read about farmers and their operations and how the numbers stack up. It met with a muted response, mostly that people were'nt prepared to share the viablity of their operations. Last week  I read one of Steve Wyn harris's articles about the returns from his newly cut forest block, so along those lines I offer this up.

 

So .... the final tally came in today. We ran 1409 hives last year with two labour units. My labour is free. The main man takes home a bit under 50k

We produced 42,000 kg's of honey off 1090 hives. The balance were too weak to make a crop or were nucs growing after late season splits.

The honey is yet to be sold, but might average $7.00/kg

 That gives us a gross income of $294,000.00

 

Our contracts with Rayonier estimate the yearly hive running cost to be $400.00/ hive . I think that might be a little on the high side, but I'll go with that .... so by my sums we made a loss of $116.000

 

That job driving a truck for Fonterra looks pretty good to me.

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27 minutes ago, jamesc said:

Well hallelujah .....we pulled the last strips from the bees today, did the final disease check and are still melting wax into blocks of gold. This is the time of year when my mind turns to how much we made.Did  I work for nothing , or did I  hopefully pay costs and  make a little ?

I floated this idea a few years ago along the lines that every week in the farming paper I get to read about farmers and their operations and how the numbers stack up. It met with a muted response, mostly that people were'nt prepared to share the viablity of their operations. Last week  I read one of Steve Wyn harris's articles about the returns from his newly cut forest block, so along those lines I offer this up.

 

So .... the final tally came in today. We ran 1409 hives last year with two labour units. My labour is free. The main man takes home a bit under 50k

We produced 42,000 kg's of honey off 1090 hives. The balance were too weak to make a crop or were nucs growing after late season splits.

The honey is yet to be sold, but might average $7.00/kg

 That gives us a gross income of $294,000.00

 

Our contracts with Rayonier estimate the yearly hive running cost to be $400.00/ hive . I think that might be a little on the high side, but I'll go with that .... so by my sums we made a loss of $116.000

 

That job driving a truck for Fonterra looks pretty good to me.

If you got a truck driving job can you carry that loss and pay no tax .

Or would that only work if you brought a house or your own truck .

My friends did get $12.50kg for multifloral Manuka.

Would $12.50 put you in profit .

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18 minutes ago, kaihoka said:

If you got a truck driving job can you carry that loss and pay no tax .

Or would that only work if you brought a house or your own truck .

My friends did get $12.50kg for multifloral Manuka.

Would $12.50 put you in profit .

I think the answer lies in why everyone is chasing Manuka. For NZ 42 kg /hive is not a bad average for the year, particularly when we had 60% dead in the spring.  We need about 400k to break even. Our crop on manuka prices would have netted us 1.6 mill ..... I'd be happy with that !!

But anyway, we do what we do because we enjoy it and get a buzz. I don't think I'd get a buzz from  a Fonterra milktruck ( them Volvos don't look very elegant), and besides, i think they might be short of a a few cows shortly, so the honey will sit in the shed for a while. Heaps of guys will need dog work shortly  so I can become a house husband and send the missus out to work.

 

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Or work on lowering that 400 bucks a hive 

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You're onto it brother... or we is heading north again now that the restraint of trade has done it's dash. A holes

Edited by jamesc

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2 hours ago, kaihoka said:

If you got a truck driving job can you carry that loss and pay no tax .

Or would that only work if you brought a house or your own truck .

My friends did get $12.50kg for multifloral Manuka.

Would $12.50 put you in profit .

12.50 is aboutbreakeven.  But  us hobbyist's ....we do it for love  right ?

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There are sweet spots in any industry/business where things work well. With beekeeping more hives do not always mean more profit and with the changes in the standards this is even more true now (and for the foreseeable future). I am currently working through a replan starting with a blank sheet of paper and trying to plot a future course for myself and my business. Though we had a good year I am not naive enough to assume this will be the case into the future...what affects our honey clients affects us as their queen breeders. The joy of being self employed a winter off work planning for the next summer if work. 

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8 hours ago, jamesc said:

The main man takes home a bit under 50k

 

8 hours ago, jamesc said:

running cost to be $400.00/ hive .

Double dipping surely, the 400 includes labour right ?

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He's probably still sleeping....  I suspect yes, labour included. And 400 high.  The range would be 200-400. 

Which ever way you spin it, not a great return for a good crop of honey and hard work done. 

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29 minutes ago, BSB said:

I am currently working through a replan starting with a blank sheet of paper and trying to plot a future course for myself and my business.

 

You would be silly not to.  Though silly is out there.  I may consider some winter kiwifruit work if, if, if, needed.  Used to do kiwifruit season.  Just won't be picking hairy fruit.  The forklift. 

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I don't buy into the $400 per hive. To attempt to arrive at that figure you would include your staff wages, and your own wages.

 

But ages ago when I saw someone showing how he arrived at that figure, it also included some crazy high per hive site rents. Which is why I refuse to pay them, other than a cut of the profit if I make one.

 

To some extent I think the $400 per hive number has been bandied around as a tool to express to site owners who think the bees just sit in the paddock and there are no expenses, that there are expenses, and beekeepers are not a bottomless pit of money.

 

Pretty sure a highly skilled corporate accountant if asked to, could prove on paper that it costs his corporate client $400 per hive to run them, if he quietly blended in the directors mega fees. But end of day James if you can get 7 to 10 a kg I believe your accountant will hand you a profit. Unless of course, you have been going nuts with site fees, but I suspect after your North Island adventures, you are now a smarter man than that.

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1 hour ago, BSB said:

..what affects our honey clients affects us as their queen breeders. 

 

What is your pick for the direction of future queen prices?

 

My own thoughts are there are enough guys who did OK this last season or at least have money in the bank, to keep buying. So short term prices will hold. Longer term demand may fall, and combine that with the fact that now nearly everybody and his dog is a queen breeder, there will be plenty of supply.

Edited by Alastair

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I've heard of one branch of a corporate running at $800 a hive and that's probably without paying the CEO.

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I believe it.

 

It's where a smaller owner operator can be more efficient.

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True .... I'm not sure how Rayonier arrived at the hive cost ..... I suppose it's a starting point for creative accounting. But if you tally up things like your wages, insurance on buildings and bee hives, compliance costs, repair and maintenance, let alone bee hive costs of varroa control, sugar, extracting ..... it all adds up. And what about the 100 hr service on the Hughes 500 .... that certainly chews up a few dollars.

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I've previously worked on $350/hive including wages for me.  

 

I've just peered into the budget for the coming season and it is more like $400/hive.  That includes some allowance for a helper this year.  I've also allocated some of the costs for mobile phone, property costs, insurance away from the personal side into the business side of things as they are partially tax deductible.

 

By far the greatest cost is my wages which need to account for living in Auckland with a family to support.  Click here to givealittle.  Sugar, extraction costs, helper's wages are other notable expenses.  

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1 hour ago, BSB said:

 

Yes there are a lot of 'queen breeders' out there, much like the rest of the industry this has been brought about by largely unskilled people seeing the dollar signs and flooding into the market...with a bit of luck they will get burnt off along with the honey rustlers. Most of my clients are very good beekeepers who run things well. Although their orders may be a bit lower than last year due to cashflow constraints they are still there and I don't expect them to go under any time soon or at all. 

 

With all of the effort people are making to keep hive health foremost in their plans it still amazes me that so many are blind to the quality of the queen being the MOST IMPORTANT thing influencing hive health and productivity. Whatever you do, however hard you work, if your queen is rubbish you will not be making money. I expect good breeders to continue to do well and those who are professional, produce a good product, and are not just using queens as a way of supplementing their honey income to continue on ok. I have always priced slightly below the market, not due to my feelings on the quality of my queens but so that I have the ability to choose my clients to some extent and to ensure that all of my production is sold. I intend to continue to do this. 

 

While the demand for nucs has softened and the price of hives decreased (both due to more hives being on the market) I don't envisage queen prices going backwards much if at all. 

 

In the end if you want a good productive hive you need a good queen and if you want a successful business you need productive hives. I would recommend that those looking for queens from breeders do their work and research into the breeders, who they are, their experience, what they are breeding for etc etc.... Do your research and planing at the front end and then trust the breeder to deliver the quality product to you.

 

So endeth the rant. 

 

Is it the case with most of your customers that they usually have a combination of one year and two year old Queens (that's what I tend to have...)

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Some re-queen each year and I have a decent number who double queen (adding a new queen into each hive stack each year). Some run a combination of their own mated queens (using purchased cells) and queens that have been purchased from me mated and yes some do have a combination or 1 and 2 year old queens. 

 

In most cases the difference between 1 year and 2 year if well mated is negligible visually at peak season however the build up laying is almost always slower and therefore the honey crop lower. This lower crop can seem mysterious as, as I was saying, the laying and 'look' of the hive is similar at peak season. In the end younger is better as the hives are generally better positioned when the flow starts. This particularly applies to those with early crops and those working their hives hard, feeding for quick build up and/or putting their hives on multiple crops or going from pollination to honey. 

 

I've said it before. The queen is the 'engine' of your hive....spend your money on this before anything else (with the exception of food...the best queen is no good if it has starved). I practice what I preach, all of my hives are requeened post Xmas, many in Feb and early Mar. Every hive in our operation.

 

 

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I mark potential breeders at one year and select the best at two years. I can't say I've ever seen any real difference in honey production between one and two-year-olds. If I keep a particularly good breeder into the third year they usually still have a lovely brood pattern but there won't be as much of it and they often struggle to maintain bee numbers. I think it depends to some extent on where you are. If you're queens have the winter off they will last longer. When I lived right in town I used to re-queen my home hive every year as they would get worn out from laying all winter. Despite what all the books say I have also found that autumn queens in their first spring swarm just as badly or worse than two-year-old queens. I have little or no problem with early spring swarming but some years when you hit that November dearth they can be very hard to stop.

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Spelling mistakes and general bad editing.
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I have never had any real issue with swarming regardless of queen age....we work our hives regularly and are stripping brood for mating units so this tends to keep all of that under control. The worst spring I had for swarming I had 3 in one yard, none in any other...so I put that down to my management rather than queen age.

 

With winters off queens will definitely last longer although this is generally out of the beekeepers control...weather and temp being major factors. 

 

When it comes to breeder selection that is a whole different conversation and probably thread but yes they are run differently and should be to ensure suitability and productivity. These are monitored and run for longer periods.

 

 

 

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For the vast majority of my hives most years I have no trouble with swarming at all but in one area if conditions are right they will attempt to swarm in October November no matter what you do. Some of those hives this year I took three frames of sealed brood out of and 10 days later they were still trying. I removed another three frames and guess what happened 10 days later, yet the same thing again. I managed to stop about 9/10 from swarming but it didn't help the early honey flow having to knock them back so hard. It only seems to happen when they are doing nothing. These hives had tons of room and were not congested at all. Is just as well I had a mate who needed some spare brood to build up some hives. Apart from stripping brood three times I had weakened them down previously as well because I know the area can be a problem. The one good thing that came out of it was I was able to select a couple of breeders which showed no tendency to swarm at all as well is being exceptional produces.

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Getting back to the topic. Gross return per hive and net per hive are the two most important calculations on the financial side in my opinion. We have a base number gross that we work with but as we fold hives down for winter and run more through, break them out in spring into a lot more mating nucs with a remaining number of hives it can be a bit fiddly. Generally I work off hive numbers of 350 which is the summer hive operation and dont include the 1500-2000 mating units in play. We work our hives quite intensively so the gross profit per hive should be a lot higher than others running honey in our area (which is not high value) though our costs are too.

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