Part 2: State Of The Industry Series
We asked about growing produce, using biocontrols and mergers and aquisitions. Here’s what you had to say.
January 29, 2013
In recent years, some growers have been growing produce in between their ornamental crops. The produce, which may include strawberries, cucumbers, peppers, tomatoes, raspberries and leafy greens, is harvested a sold through a variety of local outlets. The local-food movement, which stems from the increased desire for sustainability and the increased interest in cooking with fresh food, is allowing growers to generate a profit from vegetable and fruit crops and reduces overhead costs for their operations.
Nearly half of the 185 growers who responded to the question were already growing produce (22.7 percent) or had plans to do so within the next few years (25.4 percent). Small-sized growers (less than 100,000 square feet) have been the quickest to jump on this trend, with nearly 28 percent already growing produce in their greenhouses. However, nearly 40 percent of medium-sized growers and 29 percent of large growers (400,000-plus square feet) are planning to grow fruits and vegetables in the next few years.
Most Growers Use Biocontrols At Least Some Of The Time
In the State of the Industry Survey, we also asked growers about their use of biocontrols. The vast majority (45 percent) of respondents said they use biocontrols sometimes, 16.4 percent use them frequently and 17.5 percent make using biocontrols a priority and use them as often as they can. Twenty-one percent said they never use biological controls.
Of those who do not use biopesticides in their greenhouses, the reason given was almost equally split between not knowing enough about them (40 percent), and the belief that biocontrols are not as effective as traditional chemical products (41 percent).
Taking a closer look, 58 percent of large growers who do not use biocontrols cited efficacy as a reason, while 43 percent of medium-sized and 42 percent of small-sized growers said a lack of information was the main reason. A significant percentage (32 percent) of small growers said cost was the main factor.
Mergers And Aquisitions
Every month or so it seems that we hear of another greenhouse industry business being sold or merged with another. Depending on your vantage point, you may think this trend is a positive one, allowing for greater economies of scale and one-stop shopping. Or, it may be an unwelcome development ― a sign of decline in quality and service. Either way, when we asked the question it elicited strong opinions from both sides. Of 156 survey respondents who weighed in on this question, 47 percent had a negative opinion of mergers and acquisitions in the floriculture industry, 29 percent thought the trend was not only a sign of a maturing industry, but was beneficial as well, and 22 percent were neutral.
Growers Sound Off On The Mergers And Acquisitions Trend
Personally, I think it is sad for any family-owned company to be purchased or merged, but I believe that it is good for the industry that these companies are merged or purchased rather than closed. — Belynda Rinck, Ag 3, Inc.
I feel like the family-owned businesses are being taken down due to the economy. It is a hard business we are in, and the next generation of families in the family owned greenhouses are not interested in working as hard as previous generations.The cost of automating these systems are so astronomical that the family-owned greenhouses find it impossible to compete in today’s market. — Tammy Maxey, Tammy’s Flower Garden
The larger companies will have more buying power, bigger marketing budgets and the ability to be more efficient, allowing them to compete with big box stores and increase consumer spending as well. — Scott Burdeshaw, Graf Growers
If you have a passion for your plants and grow better quality, you will have a niche. You will fill the void of the big boys. The more the big boys screw up, the more my business grows. Keep a great attitude and build a great relationship with your customers. — Barry Ritter, Ritter Horticultural
Mergers are inevitable in tough times [and are] probably necessary for the industry to survive effectively. — Fred Dabney, Quansett Nurseries
Competition is essential for both professionals and consumers. It drives innovation, keeps pricing fair and encourages diversity. Lack of competition leads to stagnation, higher prices and lack of selection. — Erik Jacobsen, Parkway Gardens, Ltd.
We see this throughout the country, and it's inevitable that it would happen in our industry as well. I anticipate more start-up businesses in the next generation.
— Willis Bruce, Bruce’s Greenhouses, Inc.
In order for many of these businesses to continue to grow, they need partners. Unfortunately, some great distributors and growers have fallen on hard times. In today's economy, it is often less expensive to merge operations together in order to become more competitive and profitable. I don't think it is a matter of liking it or not. Going forward I believe we might be surprised at who we will see become the next merger/acquisition. — David Holley, Moss Greenhouses
That's capitalism – we shouldn't have a problem with it. It can be disconcerting to see long-time, family-owned businesses swallowed up, but if we regulated against it, we would see less innovation, more stagnation in business and generally more apathy toward success. Ultimately, it's a positive. — David Vos, Vander Giessen
It’s positive. They do the advertising and promotion for all. We're all selling pretty much the same thing. — Jim Kwilecki, J & L Floral
I don't necessarily feel positively about corporations acquiring small businesses, but I do think the industry was experiencing a glut of product. I hope we can take the last several years as a shake-up to encourage us to improve existing processes and be innovators in developing new ones. — Jane Stanley, Saunders Bros.
Consolidation of un-rooted cutting suppliers has been a huge plus. Hardgoods, no.
— Marian Nolt, M&M Greenhouse
We have merged with others [and have] more buying power to reduce costs. [We are] consignment buying on seed, soil, other supplies. — Nolan Jeske, Color Spot, Troup location
Have any of the mergers and acquisitions impacted your business?
Yes, the merger of Wetsel into BFG Supply Company. Customer service has remained decent. Terms and six-month credit have been easier to get with BFG than with Wetsel. Shipping rates for drop-shipped hardgoods have gone up 50 percent. — Paul Hutcheson, Windmill Heights Garden Center.
Yes. A local acquisition generated inventory unbalances that were sold at extremely low prices, hurting our margins and volume. — Ray Rueda, Nature’s Dream Nursery, LLC.
Yes. We used to deal with a couple of these bigger companies many years ago. Their customer service was sorely lacking so we looked for other vendors. We found a couple of great local/regional suppliers that loved to do business with small companies like ours. Now the big boys have bought out the great, local/regional vendors and we are looking for someone other than them to do business with. You can't buy great service if you don't know what it is. — Kevin Wilson, Shademakers Nursery & Landscape, Inc.
Robin Siktberg is editor of Greenhouse Grower.