Bracing For Big Changes
Health care, immigration and energy reform have the Top 100 Growers talking this year.
April 20, 2010
The greenhouse floriculture industry, at this moment, is in a state of great change. Sustainability is becoming second nature, growers are taking on responsibilities that were once considered the retailer's, and production, in many cases, is becoming more diverse with the introduction of crops that match the needs of a changing consumer base.
Changes are occurring on Capitol Hill, as well, and those changes have tremendous implications for the Top 100 Growers. That's why Greenhouse Grower puts the spotlight this year on national issues - health care, immigration and energy - in the 23rd annual Top 100 Growers Report.
"All three of these issues - health care, immigration and energy - are very, very complex," says Bob Dolibois, executive vice president of the American Nursery & Landscape Association (ANLA). "There are so many elements with the issues that interact, and it's very difficult to achieve real change in terms of laws. Still, in all three instances, there is a real need for change."
For this report, we surveyed the Top 100 Growers about health care, immigration and energy. We asked the Top 100 how they currently operate in regard to each national issue, how the issues are affecting their operations and which legislative solutions would best serve them.
We also asked the Top 100 Growers to offer comments about the state of health care, immigration and energy reform, and we present some of those comments within this report. We present additional comments from the Top 100 in our inaugural Top 100 Growers White Paper, which can be downloaded at GreenhouseGrower.com.
Health Care Top Of Mind
The Top 100 Growers, for the most part, agree health care reform is necessary. They mainly agree because the costs insurance companies charge them are overwhelming their bottom lines.
Still, the Top 100 Growers question which form of reform would best serve their operations. The operations currently offering health care cite health insurance as a major business expense - and some argue it absolutely should not be their operation's responsibility to provide health care for employees in the first place.
"The cost of care needs to be controlled by controlling factors that make it go up: ridiculous lawsuits and the cost of insurance for doctors," says George Lucas, co-owner of Lucas Greenhouses. "If we have a nationalized health care system, will I have to provide food next?"
Now that President Barack Obama signed a health care reform bill into law in late March, nationalized health care is seemingly on its way. But ANLA's Dolibois reminds the Top 100 Growers and others that it's incumbent upon them to be more engaged in the political process if they believe the law needs further improvement. And there are still opportunities for the Top 100 to be heard on Capitol Hill.
"The health care law now needs to be converted into regulations, and that's going to be a lengthy process," Dolibois says. "The funding to overwrite the implementation of those regulations still has to go through Congress in one form or another. And the big wild card is the involvement of the states, because the states currently regulate the health insurance business."
Health Insurance Plans
Health care reform is a big deal to the Top 100 Growers because most of them offer health insurance and have been affected by rising costs from insurance providers. Nearly 95 percent of the Top 100 Growers offer health insurance and 69 percent of the Top 100 make health insurance available to all full-time employees. More than 13 percent of the Top 100 make health insurance available to managers only and about 12 percent make it available to everybody who works for the operation.
The Top 100 offer a variety of health insurance plans to employees, as well. Some operations offer more than one plan, but the majority (60 percent) offer at least PPO plans. Thirty-two percent of the Top 100 offer HMO plans and 18 percent offer employees traditional insurance. Point of service plans (8 percent) and other plans (4 percent) are offered by a small number.
As for a nationalized health care program and its effect on the Top 100 Growers, the majority (48 percent) of the Top 100 simply aren't sure what the effect of nationalized health care will be. Forty-four percent say a nationalized health care program is going to have a negative impact on their operation, and 8 percent say nationalized health care will have a positive impact.
"Although the health care debate is quite contentious, one factor in favor of a national plan is that it will help even the playing field within our industry between growers who are offering health care and those who are not," says Bill Swanekamp, Kube-Pak president. "If a grower is offering health care, it adds substantially to his overhead versus a grower who is not offering health care. As a result, the grower who is not offering health care can sell his products at a lower price."
Even if Top 100 Growers can't agree on the impact the health care reform we're ultimately getting will have, the Top 100 can agree something needs to be done.
"The insurance companies are so outrageous in what they charge," says Marc Clark, Rocket Farms executive vice president. "The system must be reformed without the insurance companies as part of the solution."
Ric Stevens of Nash Greenhouse agrees the health care system needs to be overhauled, but he isn't exactly sure what the costs will be on his greenhouse operation post-reform. Another Top 100 Grower, Paul Ecke Ranch, would like to see reform as well.
"This year, we project a 10 percent increase in the cost of health care," says Steve Rinehart, Paul Ecke Ranch's chief operating officer. "Although this is lower than originally projected, it is on top of multiple annual increases. Our highest cost is insuring out-of-state employees and the excessive premiums placed on these people."
On a national stage, immigration took a backseat to health care reform over the last year. But immigration reform is as important as ever to the Top 100 Growers and the greenhouse floriculture industry.
Exactly how important is immigration reform to the Top 100? Fifty-five percent say it's extremely important to their operations, and another 30 percent say it's moderately important. Only 4 percent say immigration reform is barely important, and 7 percent argue it's not important at all. The bottom line, though, is immigration is important to the Top 100 Growers, even if they don't depend on immigrant labor or a guest-worker program.
"Some businesses in the industry are very successful without immigrant labor, and that's fine," ANLA's Dolibois says. "The issue is if there is just arbitrary law passed, which necessitates that all businesses no longer resort to immigrant labor to perform their work, a business that is currently able to survive without that immigrant labor will be in competition with other businesses that have used immigrant labor."
Therefore, greenhouse operations will be forced to hire only domestic-born workers, and those operations will be in direct competition with others. As such, Dolibois wonders if the Top 100 Growers and other small businesses can compete on wage.
"A total collapse of the immigrant worker system would result in a competition for that workforce that the industry at large, with its price points and margins, simply is not in a position to objectively compete in," Dolibois says.
The immigrant worker system as is, however, has been troublesome to the Top 100 Growers - particularly the H-2A guest-worker program.
"The H-2A system has been a real mess," says Brian Gamberini, the government relations coordinator for the Society of American Florists. "It's made things tough on our growers. The system is really broken."
The Top 100 Growers using H-2A agree with Gamberini. Most Top 100 Growers do not use a guest-worker program, although a handful use more than one program. In fact, 80 percent of the Top 100 Growers we surveyed do not use a guest-worker program. Sixteen percent of the Top 100 use H-2A, 10 percent use H-2B and 2 percent use another guest-worker program.
But just because Top 100 Growers are not using H-2A doesn't mean the program is immune from needing improvements.
"We need a usable guest-worker program," says Cathy Kowalczyk, Willoway Nurseries vice president. "Changing rules in the H-2A program make it too hard to manage."
One solution to H-2A and broader immigration issues is comprehensive reform. The majority of Top 100 Growers (44 percent) listed comprehensive reform as the No. 1 immigration reform solution for their operation. Another 27 percent say an improved guest-worker program is the best solution, and 4 percent say an enforcement-only plan based on deportation is the way to go. Nineteen percent aren't sure which form of immigration reform would best serve them.
"We need to come up with a reasonable solution to the labor reform issue," Kube-Pak's Swanekamp says. "Sending everyone back to their foreign country is not a practical solution. A combination of prevention and legalization is essential."
Richard Wilson, the owner of Colorama Wholesale Nursery, has a different proposal.
"As much of a sore subject as it is, our opinion is to do a blanket amnesty and then close the borders - all borders - and allow immigration on a controlled basis," Wilson says. "Still, it's easy to say that and hard to do."
Energy, like health care and immigration, is a touchy subject for the Top 100 Growers. Energy is regularly one of the biggest cost burdens on their greenhouse operations, and the majority of the Top 100 (64 percent) anticipate increased costs and taxes on and for the use of fossil fuels like natural gas and oil over the next three years (cap and trade, e.g.).
Despite their anticipation, the majority of the Top 100 (52 percent) do not plan to implement a renewable energy system like biomass, geothermal or solar into their operations. The upfront costs and questions about renewable energy's availability and efficiency are often cited as reasons for sticking with fossil fuels.
"Such solutions are not within reach for 95 percent of our industry," says Al Gerace, CEO and president of Welby Gardens, referring to alternative energy systems.
Still, a handful of Top 100 Growers do plan to implement alternative energy systems - or they already have.
"We are exploring all options that are available and any that will have a direct impact on our bottom line," says Nash Greenhouse's Stevens.
Mark Elzinga, president of Elzinga & Hoeksema Greenhouses, has implemented a geothermal/solar energy system at his operation, and he expects it to provide for 80 percent of the greenhouse's heating needs. Unfortunately for Elzinga, his sustainable action comes with additional costs.
"Michigan is taxing wind and solar as real property and killing any new construction by agriculture," he says.
Next For Energy
On Capitol Hill, there is still interest in enacting an energy bill that addresses the carbon-based fuels. The House's cap-and-trade bill was, however, declared dead upon arrival to the Senate. But just because there's currently little momentum for an energy bill doesn't mean energy reform isn't on the way.
"I think you're probably going to see something more incremental than a comprehensive cap-and-trade kind of bill get enacted," ANLA's Dolibois says. "I think you're going to see a significant focus of that bill on utilities because that allows for a much more focused attention."
Top 100 Growers and others interested in implementing alternative energy systems into their operations may want to act sooner rather than later, Dolibois says, because there isn't enough money in the federal system to continue the subsidies operations like Green Circle Growers and Grower Direct Farms have received. Some Top 100 growers even question the role of government subsidies in alternative energy.
"I think energy systems have a place but if the only way it is cost effective to implement them is through grants from the government, then I am against them," says Lucas of Lucas Greenhouses. "Systems need to be efficient and affordable enough on their own."
Otherwise, growers like the Top 100 won't be able to sustain them. But on the other hand, nothing stays the same forever. The greenhouse floriculture industry is in a period of great change in just about every dimension, and tomorrow's Top 100 Grower will be vastly different than today's.
"There are a couple of significant tectonic plates moving around that affect our market right now," Dolibois says. "They suggest the spoils are going to go to the victors of change."