Here are a few ideas that may help some look at the bee business somewhat
differently.  I think it is obvious that proposing income and cost figures
as I do below may be argued with on many grounds.  But people absorb
financial ideas better when they have examples to consider.

Dr. Burgett has been doing a pollination survey of beekeepers with over 25
hives for 13 years in Oregon and for the past six years including Washington
beekeepers.  The results for 1998 were written up in the May 1999 issue of
The Bee Line, the newsletter of the Oregon State Beekeepers Association.
The following data may be determined from the article:

1.  Commercial beekeeper respondents received 65 percent of their income
from pollination rentals.

2.  The average total annual rental income per colony was $84.23 in 1998.

3.  If 65% is $84.23 then 100 percent equals $129.58.

4.  Honey (+wax?) income would be $45.35.  (divided by $.62/lb. = 73 lb..
honey crop.)

5.  "Several commercial beekeepers known to maintain excellent cost
accounting records for several years responded to the survey."  Their
combined cost figures averaged $114.85 per colony.

6.  $129.58 income minus costs of $114.85 equals a net profit of $14.73 per
hive, or $14,730 per thousand hives annually for owner/manager salary.

7.  Did the beekeepers include accounts for equipment replacement, return on
their investment, a medical plan and a retirement account in their cost
data?  We do not know.  If they didn't then:
    a) equipment replacement might be estimated at $6 per hive ($125 hive
value divided by 21 year life)
    b) return on investment should be something above bank interest so we
might use a figure like 6 to ten percent.  Some beekeepers have told me that
they borrow about one half of their annual costs.  So if we use the above
numbers we find that annual use of a beekeeper's capital to operate 1,000
hives would be $114,850, divided by two equals $57,425, times 6 percent
interest equals $3,446, divided by the 1,000 production colonies, equals
$3.45 cost per colony.
    c) we might suggest adding $4 per colony for a family medical plan,
    d) for a modest $200,000 retirement account, divided by 25 years
business life equals $8,000 cost per year, on 1,000 hives, equals $8 per
hive,
    e) when we add these estimated figures we get $21.45 per hive.

8.  $114.85 plus $21.45 equals $136.30 total costs per hive.

9.  Total costs of $136.30 minus $129.58 income equals a negative of $6.72.

10.  The fictional beekeeper in this scenario will decide whether he and his
family can live on $14,730 and whether the cost data represents his actual
data.

11.  He, or she, recognizes that they must run an extra 100 (10%) to 400
(40%) colonies to replace losses, and to maintain at least 1,000 production
colonies.  These added colonies are a cost.  How will they be paid for?

What should pollination fees and honey prices be to meet your business
goals?
Can retirees in the industry realize their needed retirement funds from the
sale of their operation and after taxes?
How can we attract young beekeepers into our industry?
Will they be able to make the mortgage payments?
Can they raise a family in this industry?
Is it realistic for pollinated agriculture to think that bees will be
available on a supply and demand basis in the future?

Lloyd Spear's post on 6/30/99 on this subject now takes on a different
meaning doesn't it?

James C. Bach
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