When I started researching this study of urban beekeeping, to be honest, I was a bit intimidated. Urban apiaries remain the domain of the hardcore—the tattooed hipsters in Bushwick or other outer-borough neighborhoods and their communist swarms. Yet what I found was quite surprising: that there may be an easy pot of gold waiting on fire escapes around the city.
New York City repealed a ban on the practice of urban beekeeping earlier this year. In line with a national uptick, apiculture within the city limits has since taken off. Everyone from paralegals to punk rockers to the Parks Department are installing hive boxes. Classes held by the NYC Beekeepers Association and the NYC Beekeeping Meetup Group are packed. And folks such as Megan Paska in Greenpoint and Jon Feldman in Bushwick have even started capitalizing on projects that many still consider a hobby.
The commercial U.S. honey industry grosses approximately $332 million per year. An additional $260 million worth is imported. The majority of U.S. honey production is based in the South and produced via a migratory system: Hundreds of hives are trucked around the country, following massive blooms on commercial farms. One week may be spent parked in Florida for the orange harvest, and the next week the bees are packed up and trucked across the country to catch the almond blooms in California. In fact, our agriculture system (particularly fruit and nut orchards) as we know it, with its large-scale monocropping operations, simply could not exist without the migratory honeybee industry. It’s an engineered co-evolution.
There are major downsides to this model, and many argue that bees are the bellwether of macro-risks in our food supply. Shipping hives around the country causes stress-related deaths—often up to 10 percent of hives will perish in each transit. As a result commercial hives are heavily medicated (organophosphates for mites, nerve agents, etc). The bees also need to feed in-between stops, so corn syrup, as well as soy powder and food industry byproducts, are hosed into the hives.
Research suggests that these practices, extensive use of agrochemicals and pesticides, and other commercial imperatives in the agriculture sector, are the causes behind the ongoing outbreak of CCD (Colony Collapse Disorder – the mysterious disappearance of entire colonies) and the varroa mite parasite, which have wiped out 30 to 90 percent of total hives in the U.S. Hives are collapsing en masse globally, with government bailouts and concerns that our entire food supply is at risk.
In the multi-cropped (polyculture) farms of yore, bees stayed in one place and fed on different blossoms throughout the season. Many feel that a return to this form of pollination and honey-production is at least part of the solution to CCD. For the time being U.S. customers are relying increasingly on imported honey.
So now you understand why some folks are willing to pay more for local and urban honey. Much more. Commercial honey retails for about $4 per pound, local honey from nearby farming regions for $5-10 per pound, and ultra-hip urban honey from Brooklyn, if you can find it, sells for about $15-22 per pound.
Flavor is a factor as well. Commercial honeys are blended from the honey produced from many different flowers. Small-scale honey productions are limited to the flower varieties in their immediate area, thus have more distinct terroir. “It's really light, yet complex and herbal. It’s almost chartreuse in color,” says Megan Paska of BrooklynHoney.com, who runs 10 hives on volunteer rooftops in Brooklyn.
Jon Feldman, who runs six hives with the owners of Roberta’s, a pizza restaurant in Bushwick, says "NYC is an orchard of sorts. There are so many rare flowers, plants, and trees that have been brought here to beautify the city.” The premium is further supported by some customers who believe consuming homeopathic doses of local pollen reduces allergy symptoms.
So why aren’t more people quitting Goldman Sachs and instead filling golden pots of bee spit? Both Paska and Feldman are adamant that a home apiary can easily break even within two years (despite the fact that they themselves are not aggressively expanding, and they make their money from other means). Here's my question: Can you not only break even, but beat the stock market with urban beekeeping? And if you are therefore going to quit your day job, what would be a good model?
Let's take a look at the nitty gritty. In your first year, you can expect 15 pounds of honey per hive, and from year two onward, that number jumps to 100 pounds per hive. At a market rate of $15 to $22 per pound, we get an annual revenue of at least $1,500 from year two onward. It's true that output is affected by weather and other external forces, but to play it safe, we'll use the bottom end of the pricing spectrum.
The startup costs per hive are relatively large. The woodwork will cost around $300, the tools necessary for beekeeping another $75 or so, and the bees themselves go for around $75 to $90 per colony, bringing you up to $465 per hive. Maintaining and operating the hives also costs money. Every year and a half a new queen needs to be introduced. The hives have to be fed with sugar or corn syrup during the winter, and jars for honey cost money. All told, you can expect yearly costs of around $100 per hive. Megan Pashka manages to reduce these costs further by selling entire bars and combs of honey to restaurants rather than using standard 1 quart bell jars. This creates display value for the restaurant while decreasing her variable costs.
As we can see, we're doing pretty well. In the first year, there is a loss of $339 per hive ($225 in revenue minus startup costs and yearly operating costs). However, thereafter the urban apiarist earns a net profit of $1,401 per hive per year, forever! The bees just keep regenerating, and variable/annual costs are minimal. Pretty close to free lunch!
So what we are experiencing, in reality, is a perpetuity—a bond that pays you annual coupons until infinity. This is not an outrageous fiction. The British government used to sell perpetuities to the public. Their value is not, in fact, infinity, thanks to the time value of money (do you really care about $1,401 a million years from now?).
In our case, the perpetuity commences in Year 2, which is when the annual earnings for bees roughly stabilizes. According to some standard formulas for evaluating the present values of a perpetuity, a hive that produces $1,401 per year has a present-value of $20,014. Take out the $339 loss from the first year, and you get a value of $18,366. Not bad for a $465 investment.
Of course, there are other factors to consider.
On the negative side, there are bee stings (you will get stung), some focused work (setup, learning, 15min check-ins every 1-2 weeks, and approximately 10hrs to process at harvest time), and having to limit your dating pool to those who aren’t afraid of bees (possibly a good thing). And that's to say nothing of the time and effort needed to distribute and market the honey—a significant cost that is not built into this analysis.
On the positive side, you get huge amounts of safe and delicious honey, a source of cheap gifts that seem fancy, something to talk about at parties besides the stock market, and the satisfaction of helping rebuild bee populations and pollinate the city.
According to some, it’s the profit motive that’s destroying bee populations (and the environment) as a whole, and thus you shouldn’t go into urban beekeeping looking to make a buck. It’s the care, love, and fascination that makes beekeeping both worthwhile and tasty. But here's something ironic: at $1400 in net earnings per year, single hive operators are actually saving more money than most commercial operators who have tens of thousands of hives—the latter have been actively losing money for years due to Colony Collapse Disorder.
Bees are a wild and complex species upon which most of our food supply depends. Small, controlled hives where operators are not forced to maximize annual yields, have managed to largely avoid a devastating macro-risk that has cost commercial beekeepers billions. So it appears that those tattooed Bushwick anarchists may have something to teach us capitalists about net present value. In return, perhaps this calculation can help passionate urban apiarists become financially sustainable, supporting themselves and those around them with healthy honey.
And of course, as with all things, there are limits. Too many hives in one area can max out the available pollen sources and become weak. “It remains to be seen how such an [fully established] industry could take root in the City. I’m not completely convinced the City can sustain it,” says Paska. “But the only way we can find out is if we try.”
Image credit: Eric Tourneret
