# Price Management for Hives (Pollination Prices)



## Riverdog (Mar 15, 2009)

Dear Keepers(geared towards pollinators)
I've have talked to a lot of keepers large and small. Frankly I'm hoping the industry can launch some sort of updated business plan that would show growers that need bees what it takes to provide a quality hive. I get so perplexed as if the price of the crop sets the price of the hive. I've studied and will continue to apply better accounting practices to justify hive prices. The word "fair market vaule" is way over used. It generalizes to much the space between the best broker or self brokered and the bottom of the market or lower quality hives. Most growers have budget. We do as well.(Do you) Maybe we could start talking about what it takes for an avg. Mid West keeper pays to take a 8 Frame min. to the almonds considering it's that time of year and a large portion of industry starts there each year. Do any of you run a budget starting Jan. or at the begining some other time like April? And of that budget what % of that budget should each crop pay? This unlikey a new topic but I'm humored by the extremes expressed about prices. And what bothers me more is the keepers that unintentionally lower prices and undercut the brotherhood which in turns blows the budget.

So I'm just throwing an idea out. Let's say _current_ hive conditions require you to each calender year to re-queen, replace some equipment, medicate, feed, pollen subs, transport, labor, tools, equipment, insurances, and in some cases replace hive completely. This causes say the avg. keeper $150.00 a year per hive?(some less some more) Of that what should almonds, cherries, bluberries, apples, pears, melons ect. pay. You could in some models throw in bee sales and or honey as well. I don't really know today how I feel about what I'm really saying but it's direction or thought could spur a healthy economic decision and is better than pure speculation which could stablize prices and would be based on keepers cost of doing business. Throw out outlying CCD, and lack of bees. 

No right or wrong just throwing it out there and think abundant, I'm not looking for the extremes. And try your hardest to contribute positively to the discussion. We can learn and grow and move forward. Stay focused on the cost of doing business, and we all know that each keeper living and working a custom outfit will be different. Remember we do all have one thing in common. Keeping bees alive. What does that cost?
Supply and demand curves will always exists, and I don't think I have all the answers, but I don't think market conditions for renting bees would remain the same if customers who desire bees understood its true cost.

Chad Ragland


----------



## Keith Jarrett (Dec 10, 2006)

I take it you missed the lasted almond board meeting, I think Dan Cummings hit on this topic.

:waiting: :waiting: opcorn:


----------



## sqkcrk (Dec 10, 2005)

I never try to explain why I increase my pollination fee. The grower can either afford it or they can't. And no amount of explaination will make things otherwise. Also, they don't care why I think that i need an increase. 

They, apple growers, can't pass the cost along anybetter than we who produce honey in volume can pass our costs along to the honey packers. So look at it that way.

Pollination, like honey and selling bees, is a beekeeping commodity. You sell the service just like you do your other beeproducts.

The three things that your consumer is paying for and the three things that you are selling them are quality, price and service. Keep that in mind and charge accordingly or accept the growers price w/ that in mind.

I don't care what it costs someone to grow an apple, I just want an apple to eat that is of good quality, reasonable price and available all year around. Growers are consumers. They want the same thing. But someone has to push the envelope and if you don't get as much for your product or service that you could have, you have actually lost money.

I don't know if that actually addresses riverdogs "question" or not, but there it is.


----------



## Countryboy (Feb 15, 2009)

_I get so perplexed as if the price of the crop sets the price of the hive. _

The price of the crop does set the input prices the producer can afford to pay. Just like the price of corn sets the price a farmer can afford to buy fertilizer. If the yield gains don't offset the increase in fertilizer price, it doesn't make sense to buy more fertilizer.

If you want higher pollination fees, find a way to improve almond yields even more per hive. (Which is why hives with 8+ frames of brood get paid more than a hive with 6 frames.) You have to help the almond grower make more money BEFORE they help you make more money.

Cutting your costs and running your business more efficiently results in more profit, even when pollination prices remain the same. That is how it is supposed to be. Businesses that can't adjust and still be profitable go bust - there should not be a guarantee that however poorly you run your business, you still get a bailout of sorts, even if the bailout is getting paid higher pollination fees.


----------



## JohnK and Sheri (Nov 28, 2004)

Saying we should help the growers make more money before they pay us more is a little like me telling the HFCS suppliers they should help me make more money before they can raise _their_ prices. HA. Expenses can go up independently of income growth and often do. We all know that, beeks more than some.

I don't expect the growers to support me or my industry, any more than I want to support theirs. Supply and demand are always in flux. If they don't pay us 'enough' we will not come. If they can find enough bees at a lower price they will not care. If they can't, prices rise. Simple. In the end, almonds need beeks more than most beeks need almonds. 
Sheri


----------



## Riverdog (Mar 15, 2009)

Do any of you keepers who responded use a budget for any or all of your hives? If you don't would you ever consider to? We started one last year and found it difficult to do each hive and moved it to an each apiary basis. Cost of opperation of all our hives were than averaged. I have close number but realize each and every operation out there will vary. I doubt a standard could ever be met, however I won't be selling any of our services short of our opperation cost and living. ie if I can't run black than we won't be running regardless of what any crop price is high or low. This discussion is focus is on bee keeping operation budgets. 

Opperation cost and feedback welcome

Thanks
Chad Ragland


----------



## JohnK and Sheri (Nov 28, 2004)

We keep our books on an annual basis, annual expenses, annual income. Our number of hives varies each year, in fact can vary much _within_ each year, with progressively higher numbers being the trend. We do not keep a per hive average. As it is our only income it is easy to see that we are running 'in the black', otherwise we wouldn't be eating. Staying in business is a constant analysis of what is making you money and what isn't, what expense is justified and what can be eliminated. We are constantly thinking about what we do and how to do it better. I would hope and I am fairly certain that most beeks who depend on honeybees for their income analyze the costs and benefits associated with each particular aspect of their business, with a goal of maximizing profit. Keeping the lights on is at stake.

In our case, most yearly expenses were in place before we went to almonds so it isn't difficult to count the _additional_ expenses associated.
It would be more difficult for someone providing multiple crop pollination services but there might be more to be gained by the extra effort. For instance, if most years the colonies taken into a particular crop, say cucumbers, failed to produce a honey crop, that lack of crop could be put into the equation. If the pollination fee or other benefit didn't offset the loss of honey, cucumber pollination could be profitably eliminated from services provided, most years. Of course, no 2 years are alike, complicating things further. 

I want to note that we analyze the costs of our products and services not as a means to justify pricing to consumers, but to make decisions as to what price we are willing to provide these products and services for. There is a difference. 
Sheri


----------



## Countryboy (Feb 15, 2009)

_Saying we should help the growers make more money before they pay us more is a little like me telling the HFCS suppliers they should help me make more money before they can raise their prices. HA. Expenses can go up independently of income growth and often do. We all know that, beeks more than some._

Migratory beekeepers are working for the almond growers. Yes, we hope the relationship is mutually beneficial, but we need to remember we are working for the almond growers.

Tomorrow morning, when your hired hands come to work, about the time they tell you that you need them worse than they need you, and they want more money - What are you going to do? Do you cave in to their demands and just give them more money because they want it, (they have bills too, or aren't good at managing their money) or do you explain to them that when they make you more money, you will pay them more? (If they scratch your back, you'll scratch their's.)

And if the worker doesn't pick up the pace, and isn't happy with their pay, they go find a new job. You can replace them, just as the almond growers can replace a migratory beekeeper who wants more money. There is always someone hungrier than you. Remember that.


----------



## JohnK and Sheri (Nov 28, 2004)

The title of this thread is "Price Management for Hives", we can take our discussion to PM, Countryboy
Sheri


----------



## KQ6AR (May 13, 2008)

If I was going to try to figure my per hive cost. Id average all my expenses from a 5 year period. every penny. labor including you're own time, new wood ware, everything. Now if you buy a new truck every 20 years you need 1/4 of that cost in the formula, insurance, etc.
Now divide by 5 for a yearly average.

Now figure average # of hives per year over the same time frame. 

Thats probably as close as you can get in beekeeping. I don't think anyone could keep per individual hive records. Why even try you'll be spending the same amount of money no matter what, But loose a lot of time & headaches trying to figure it out.

I used the 5 year, because I'm assuming some woodware will need to be replaced at 5yr intervals. & you need to be able to include all woodware purchased into the formula.

I think we would all be surprised how much we spend per hive.


----------



## Bens-Bees (Sep 18, 2008)

Hey, if CB wants to work his arse off and have nothing to show for it, let him. With that policy he'll be out of business as soon as the first major unexpected expense shows up anyway. 

Personally I think beekeepers provide a valuable and vital service to the growers that less than 1 tenth of 1 percent of the general populace can provide and we should expect to get paid accordingly. Sure we work for the growers, but that doesn't mean we have to work for free. If my current employer told me tomorrow that they want to pay me less, I'd have a different employer tomorrow.


----------



## Riverdog (Mar 15, 2009)

This post by Joe Tranyor hit close to home and is very well put

"What is a fair rental price for almonds? A fair price is determined by first getting a firm grip on operating costs and then adjusting pollination fees accordingly. Dr. Michael Burgett (Oregon State University) has published the Pacific Northwest Honey Bee Pollination Economics Survey every year for the past 23 years. This survey performs a tremendous service for all beekeepers as it gives them a handle on pollination prices and operating costs. The current Survey (see Summer 2009 Speedy Bee) gives an average annual hive maintenance cost of $178/colony with a range of $132 to $225/colony. Burgett politely suggests that 'beekeepers should try to be more precise in calculating their operating costs. If you can’t answer the question of your operating cost on a per colony basis, you need to adjust your operational accounting.' 
Burgett makes a trenchant point: How can you set pollination fees without knowing what your operating costs are? I know of no beekeeper that can give me a precise figure on his operating costs. My guess is that most beekeepers set pollination fees (for almonds, or for any crop) that are below their operating costs for that particular crop. In contrast, I know of no almond grower that does not have a firm handle on their operating costs – I have seen their accounting sheets that neatly categorize every operating input. These sheets include a column for ROI (return on investment). There are probably some out there, but I don’t know of any beekeeper that has ROI down on paper or in his head; some have never heard of the term.
Beekeepers can, perhaps, be excused from their lack of knowledge on operating costs as these costs can vary widely from one year to the next – unlike almond growers, there is no typical year for beekeepers. With the recent nosema ceranae scare, beekeepers that had never invested in fumagillin are winding up with a significant fumagillin bill (and, as others have pointed out, it is not clear that this money is well spent). With almond growers demanding stronger colonies, beekeepers’ supplemental feeding bills have skyrocketed in recent years. Honey production costs can vary widely from year to year as can queen replacement costs. In determining operating costs, a three-year average will produce a more reliable figure than costs in any given year. A beekeeper that makes 150 lbs of honey/hive and gets a 90% take on his queens one year, but only 20 lbs and a 20% take the following year would be best off averaging the two years when setting pollination fees."

I especially like the ROI. I really hope to be a bee keeper that has a "can do" account attitude. I hope to work with others out there to justify and create a floor for pollination prices that account accordingly. If your interested in accounting beehives or participating in learning more about this topic. please PM me. Thanks

Chad

http://www.beesource.com/point-of-view/joe-traynor/2010-almond-pollination-water-honey-nuts/


----------



## loggermike (Jul 23, 2000)

The most recent pollination survey is at the end of this months USDA Honey report here:
http://www.ams.usda.gov/mnreports/fvmhoney.pdf


----------



## Riverdog (Mar 15, 2009)

Some of you may use QuickBooks and question what you categorize everything as. Over the Holiday I'll be finishing a template that you can either receive by email or you can even copy it off our web site.

As for a "as hive" basis it's very difficult. We'll be changing to a accounting for an apiary basis.(48 hives) We use ammo cans that keep a log book that keeps track of each apiary and what we give/take and work with. This years per hive cost was in the $180.00 range. I'm just curious if anyone else may be speaking the same English.

Thanks for feedback
Chad Ragland


----------



## sqkcrk (Dec 10, 2005)

This years per hive cost? Interesting. Is this the maintainence cost? Or what?


----------



## loggermike (Jul 23, 2000)

I'm not sure either. I guess they mean total yearly expenses like labor,fuel, feed and queens ,plus yearly depreciation costs for infrastructure(honey house) and other large expenses like forklifts and trucks. Divided by hive count-highest number or lowest?
I quit keeping individual hive records many years ago. Records are kept on yards only in the form of a daily log.The date yard was worked and what was done there. Plus general comments on conditions.
I can't believe anyone who pays taxes on their bee income wouldn't have all this info.


----------



## KQ6AR (May 13, 2008)

Commercial guys would also have to figure in the mortgage on the farm, & property taxes into what each hive costs to run. Their medical insurance, life insurance. 

After all the bees pay 100% of their bills. Its their livelihood.


----------



## loggermike (Jul 23, 2000)

Right.But for business purposes (taxes) they need to be kept separate. No co- mingling of personal and business.


----------



## LT (Aug 17, 2006)

Someone with computer smarts could make a templete to share. I wish I was smart enough. It would be greatly appreciated!!!!


----------



## KQ6AR (May 13, 2008)

You're absolutely right about IRS. But it does affect the actual cost per hive. If you want to tell someone how much it cost to maintain a hive, on a per hive cost all of it has to be included.



loggermike said:


> Right.But for business purposes (taxes) they need to be kept separate. No co- mingling of personal and business.


----------



## Bens-Bees (Sep 18, 2008)

loggermike said:


> Right.But for business purposes (taxes) they need to be kept separate. No co- mingling of personal and business.


Well sort of... it's actually still included though... it's part of the labor cost because it should show up in what you pay yourself.


----------



## loggermike (Jul 23, 2000)

I was only referring to strictly business expenses, as opposed to the cost of living.
Anyway,I don't think that knowing your expenses per hive is going to give you any more pricing power in the pollination game. There is only a price range you can operate in .Charge too much-you wont get enough business. Too little and you will go broke. But keeping good records may show where you can cut costs or do something more efficiently.


----------



## Bens-Bees (Sep 18, 2008)

loggermike said:


> I was only referring to strictly business expenses, as opposed to the cost of living.


Right, but follow along here... your salary (what you pay yourself) IS a business expense, just like what you pay for other labor is. So it's still included, just in a roundabout way, it's also not totally accurate because you could either be paying yourself less than the cost of living (thus eating into savings), or more than the cost of living (thus allowing you to save or invest), but not offering an accurate enough break-even point to allow you to get a good grip on cost-based price minimums.


----------



## loggermike (Jul 23, 2000)

No salary here,not inc. and no payroll. But I agree ones labor is a business expense in the sense that you gotta know if you are getting paid for all the work and hassle of pollination.Just not deductible as a business expense on taxes (I have been looking at tax forms and rules for hours lately and my brain is getting fried)


----------

