Foliage Forecast 2007
After rebuilding in 2006, the foliage industry is optimistic about the future.
June 13, 2008
No one can predict the future. So many variables can contribute to the ups and downs of any industry. But where the foliage industry will stand in 2007 might be best determined by looking at where 2006 has taken it. With no major hurricanes last year and fuel costs finally beginning to level out, some major changes may be on the horizon.
Florida Nursery, Growers & Landscapers Association (FNGLA) Executive Vice President Ben Bolusky explains that a lot of the biggest challenges the foliage industry faced last year are still evolving, one of them being buyer dynamics.
"In dealing with the growers, FNGLA sees buyer channels narrowing," he says. "The demand for tropicals and foliage is not shrinking, yet the base of buyers appears to be. It is challenging for foliage growers to identify and find a diversity of buyers in the wholesale marketplace." Bolusky also notes that the insistence of many big box stores to use a pay-by-scan system has been a challenge for a lot of smaller growers.
Mark Poorbaugh, owner of Prolific Plants, Inc. in Apopka, Fla., also says he's seeing a strong demand for foliage, but like Bolusky, he's noticed smaller nurseries struggling.
"I think there's going to be a consolidation," he says. "Some of the smaller nurseries are tending to give way to the larger nurseries in sales. I think the people who are large enough to stand through that change are going to do well."
Location, Location, Location
Having dodged the hurricane bullet this year, many foliage growers are poised to move up and onward in 2007, with stronger structures and new technologies. According to Bolusky, however, a number of South Florida growers have or are considering buying property in interior counties to cash in on high real estate values that will help them establish new nurseries altogether. Some growers, he adds, have invested in second locations to ensure that a single disaster won't destroy their businesses entirely.
Other growers, such as Prolific Plants, have seen little change due to last year's hurricanes and this year's lack of them. Because the company ships almost all of its plants outside of the state of Florida, Poorbaugh says the business has remained stable.
"Since we're geographically diverse in our sales, we haven't noticed any impact because of the hurricanes," he says. "There may have been a little higher demand because of the hurricanes hurting people in other areas, but sales were pretty strong."
Challenges in any industry are inevitable. The difference is in how each industry deals with those challenges, and according to Bolusky, this industry's resilience is key in its ability to survive and thrive.
"There are always challenges, yet this industry is entrepreneurial and creative in overcoming them," he says. He also notes, though, that over the past year, increases in property value have enticed some growers to cash out and retire. Poorbaugh agrees, saying that agricultural areas and towns are getting closer together, causing many growers to sell.
"There aren't a lot of young people coming into the business, so a lot of times they just decide to sell out for land value and shut business down," he says. "I think that's one of the things we're seeing - some of the nurseries are going away, because the land values are becoming so high, and the environmental restrictions we have to abide by to operate are getting tougher and tougher."
Bolusky expresses similar sentiments, saying that environmental restrictions are posing a big problem for some growers and that "regulatory actions can shut a nursery - or our industry - in the blink of an eye."
Kerry Herndon, owner of Kerry's Bromeliads in Homestead, Fla., sees insurance as yet another growing problem, and Bolusky agrees, saying one of the biggest challenges he's noticed is the rising cost of insurance, as well as lack of insurance altogether for greenhouses in Florida. That's why FNGLA is looking for ways to help, exploring a variety of avenues to develop a customized insurance program for greenhouse structures as an added benefit to FNGLA members.
Aside from insurance, rising costs of other commodities, such as plastic pots, soil and especially labor, have been a problem a lot of growers have dealt with over the last year. Herndon points out, though, that there are at least some solutions for the labor issues. "To some extent, we can reduce labor needs with automation and improved processes," he says.
Fuel surcharges have also put pressure on growers. According to Poorbaugh, in the last year surcharges have reached as high as 29 percent on total gross invoices. Although fuel prices are decreasing, he says the trucking companies aren't lowering their fuel surcharges as rapidly as they raised them.
"We're handling them [fuel surcharges] by absorbing them, and we're trying to pass the surcharges on, because it's a definable expense," he says. "When it's an expense like a pot price increase that goes up 12 percent, and the pot represents the smaller percentage of our cost, it's harder to pass on those insidious price increases we get throughout the year."
As much as they try to absorb them, though, the surcharges do take a toll on business, explains Poorbaugh. "What happens with our customers is, when the fuel surcharges make it so expensive to transport our product, they buy less."
With 2006 - a rebuilding year - under its belt, the foliage industry is ready to take on 2007, and many are optimistic.
"2007 will be a very good year for growers," says Herndon. He notes that because so many growers have cashed out due to increasing real estate values, fewer suppliers are left. "Good quality plants will be snapped up by the demand," he says.
As for FNGLA, Bolusky says the association "has an ear to the independent garden centers across the nation.
"There is a welcome awakening as to the role of Florida's quality tropical foliage plants," he says. "Since most tropicals and foliage are not seasonal and are available throughout the year, the potential is for them to become an increasingly important profit center for independent retailers throughout the United States."
Another avenue foliage growers might want to consider is landscaping, says Bolusky. "Landscaping has been extremely strong, and there is no end in sight as to the influx of new residents into Florida who need and want their homes and offices to have lush landscapes," he says. "FNGLA sees demand up North for tropicals as annuals, and splashy accent patio plants will remain very strong."
That's good news for foliage growers looking to diversify and grow their customer bases in 2007.
P@W And The Industry
Plants At Work (P@W), a national information campaign working with the industry to inform the public about the benefits of indoor plants, recently announced that it was selected as one of 15 organizations to be part of the United States Green Building Council's Greenbuild expo's Pilot Educational Provider Program. P@W also was approved as a Building Owners and Managers Institute (BOMI) International Continuing Professional Development (CPD) provider. What does this mean for the foliage industry? According to P@W's director of media relations MJ Gilhooley, the USGBC and BOMI approval will give P@W investors the "resources, credibility and ability to approach all local end-users with educational opportunities that are relevant to today's building and design trends."
In addition, ECGC, an alliance of leading independent garden centers that exchanges information and shares ideas, recently adopted the "Plants At Work And At Home" tag program. The educational tags are part of a point of purchase program that will inform customers about the benefits of plants in their lives.
Gilhooley believes both these new programs will be very beneficial to the foliage industry in the future.
"I think these two particular programs are going to have a very considerable and significant impact on actual buying," she says.
Ann-Marie Vazzano is managing editor of American Fruit Grower magazine, a Meister publication.