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What beekeeping taught me about cost accounting

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In the build-up to spring, Management accountant Makbul Patel explores the buzz of cost accounting in relation to beekeeping.

14th Apr 2021
Principle Accountant Bolton at Home
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I can’t contain my excitement and it’s not because Primark is open again, although that’s still high up the list. No, it’s because spring has arrived. The air is full of fresh potential for the new year. Spring also means my bees will start buzzing about, free from their winter dormancy.

Sorry, I should have said - I’m a beekeeper. I’m fairly new to the craft; ‘wet behind the ears’, so to speak. This will be my third season. However, it is tinged with some sadness. Last year my one colony wasn’t strong enough to survive. The single hive I had was abandoned - my bees swarmed and left the hive. Honeybees are classed as livestock, so they must be closely monitored for diseases and treatment for medicine. There are many diseases and parasites beekeepers must be vigilant for, the most common being the varroa mite. A little parasite, no more than a pinhead, that makes its home in the bee cells, the comb, and feeds off the larvae of the new bee. It distorts the growth of the bee. I know it sounds heart-breaking, and it is. It’s the stuff of nightmares. These insidious creatures could creep in and destroy the hive in a season.

My beekeeping was also featured on ‘The Great British Bake Off’ last year. As my beekeeping profile was raised, many people got in touch to buy my organic honey. All well and good, but how much do I charge for a jar of honey? This is where my experience of cost accounting came in handy. This includes working at engineering firms, factories that made household detergents, passenger airliners and at multinational corporations that produced planet destroying plastics (my apologies for being in that system, it put food on the table - very selfish I know).

However, being a cost accountant, I was reasonably skilled in producing Bills of Materials - that is, the recipe for the product that is being made. Add to this process costs, direct and indirect labour, fixed costs and you finally arrive at a unit cost. Management accounting is more intriguing than you think. I am of course simplifying the procedure but cost accounting is a very underrated science of accounting.

There are a few philosophies of cost accounting - who’d have thought? When your whole company is dependent on the sale of your product or service it is critical you arrive at the correct selling price. 

Many firms now are embracing ethical socio-environmental production values. This makes the exercise of cost accounting ever more important, to incorporate more environmentally friendly and ethical, ergo expensive, process costs and raw materials that ensure the product is valued correctly and adds to the prosperity of the organisation. I was once working for a company that would not source any products from a supplier that traded with South Africa, during the Apartheid years.

Cost accounting has much relevance to everyday life, including my beekeeping. Okay, I may not draw up formal Bills of Materials and process costing to evaluate a jar of honey to sell but I must still have a rudimentary appreciation of the technique. We all use cost accounting, but may not know it.

The honeybee is precious and contributes to the national agricultural output of the world, from pollination to food. There are many local beekeepers who are in the supply chain to health food shops, hotels and restaurants. It is imperative they don’t undervalue the product but at the same time drive custom away with unreasonable prices. For these professional beekeepers cost accountancy is crucial. Coupled with costing is the efficiency of yields per frame of honey and reducing waste. This particular aspect of yield efficiency was an integral part of cost accounting when I was a cost accountant at the chemicals firm near Manchester. Wastage above a certain threshold was investigated as it increased the unit cost.

And talking about wastage, as I mentioned earlier, my bees had disappeared. Honey yield was down and I was left broken. The lovely people at the National Bee Unit (NBU) did an inspection of my hive and found no sign of disease or parasites. The main reason for swarming was because of the lack of space. I was unprepared for the scale of expansion within the hive last spring. I gave them no room to expand into. I should have installed an extra brood box with more frames. Honeybees are highly intelligent. If they don’t find living conditions to be ideal they will swarm to make a new colony elsewhere, taking the all-important Queen with them. To restock a colony with a productive species of honeybee costs around £250 per hive from a local breeder. This year I have upped my game and will be managing two colonies - £500. Ouch, that stings!

Fun fact. As an international standard, the queen bee is known by a colour for the year it was born. For 2019 the colour was green. 2020, the colour was blue. 2021 the colour is white. Next it will be yellow and then red. And then repeat.

Makbul Patel

They expect to live for around three to four years, constantly laying eggs and expanding the colony. That’s her only job - just breeding and laying eggs all her life. And we accountants think month-end is stressful!

Local honey is pure, organic and the most delicious thing you will ever taste. Forget shop bought honey - local organic honey is where it’s at.

A super frame, the frame that contains the honey for harvest, will yield about 1.2 kg of honey. Each year a fully functioning hive may yield about 20 frames of honey - 24 kg!

I eventually arrived at a cost. But hang on, to what extent should I recover my fixed costs, such as the asset of the hive, the bees, the frames, my bee-suit, the smoker? Contribution to fixed costs is something the company has to make an executive decision over based on production. Also, as I mentioned earlier my bees got into the habit of swarming last year, so my honey yield wasn’t that great. Each jar was coming out to be very expensive.

In the end I thought, why am I into beekeeping? It certainly wasn’t for the money. The intrinsic joy in being so close to nature provides benefits that cannot be quantified in pound notes. I sold the honey for what I would expect to pay if I was buying organic honey. The money was a bonus. It isn’t a commercial enterprise. I have calmed down a lot and my focus is on wellbeing, enjoyment and sharing the happiness.

I am really looking forward to this year, with more positivity and (pun alert) wizzzzdom for my beekeeping. We are always learning though. Watch this space.

Replies (3)

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By Duggimon
16th Apr 2021 09:40

We were in a similar situation last year after losing our only colony, however a swarm arrived at our vacant hive and set up residence in it. We've been through it the last few weeks clearing out and checking the health and they're lovely happy bees and doing well, so I expect this will be the lowest unit cost for a jar of honey we've ever had.

We do run ours as an entirely altruistic loss making enterprise though, giving away the honey we don't eat, I take my accountant hat off to get my veil on.

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By jewins
17th Apr 2021 19:40

Thank god there is another cost accountant in the world - I was beginning to think we were extinct! And keep those bees coming we need them

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By DJKL
28th Apr 2021 01:14

Cost accountancy- the one part of accountancy at university that did not raise one iota of enthusiasm from me, I could never get that worked up apportioning the cost of oily rags amongst the three products the factory always produced, why was it always three? Give me business finance, cost of capital, NPV calculations, DCFs any day.

However bees I do like, we had a couple in late March though one died, April no signs (though the wasps are now appearing). I am really relying on the bees to get to work (save me wandering around with a small paintbrush trying to pollinate the garden (which must make the neighbours think I am touched))

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