Perspective: Barry Sturdivant, Bank Of The West

Perspective: Barry Sturdivant, Bank Of The West

What’s the best way to describe the financial health of the commercial greenhouse industry these days? According to Bank of the West’s Barry Sturdivant, our industry’s financial health as a whole is “very good.”

At Bank of the West, the country’s third-largest bank for agricultural production, Sturdivant has seen just about every agricultural commodity encounter stress over the last two years. But the commercial greenhouse industry, perhaps to your surprise, has been a bright spot–at least for the bank. In fact, Bank of the West has identified greenhouse operations as a key area for expected growth this year.

Recently, we caught up with Sturdivant to get his perspective on how greenhouse growers are faring compared to nursery producers, what he expects for our industry in 2011 and more.

GG: How does the greenhouse industry’s financial health compare to the state of the nursery industry’s?

BS: For the past few years, commercial greenhouse growers and commercial nursery growers have gone in two different directions. Nurseries have a much higher dependence upon new housing and commercial real estate development. In fact, many historically sold only to landscapers and developers–two sectors obviously experiencing difficulty. There was a tremendous oversupply of shrub and tree inventory the past two years, which depressed prices and accelerated the downward spiral for an industry already hurting. Most of the survivors are trying to “right size” and find new customers. Any grower of long-cycle material has experienced some degree of stress related to the economy. That has not been true of the greenhouse industry.

As I walk greenhouses around the country, I am seeing more and more gallon-sized perennials, roses, hydrangeas, flowering vines and small woody ornamentals. This can’t be helpful to the shrub growers who have historically supplied similar material.

GG: Because of the industry picture you just painted, what do you envision developing in 2011 on the financial front?

BS: In 2011, I expect to see more consolidation in the greenhouse industry. This will be mainly in response to the big box stores continuing to limit the number of their vendors and asking more of their primary suppliers. We expect to see the larger greenhouse growers continue expanding. Some will do this through acquisitions, but for the most part we expect the growth to come from on-site expansions. As an alternative to consolidation, some operations will seek more contract growers to supply the needed plant material. Of course, this means some operations will have to convert from direct suppliers to contract growing for the growers that still have the relationships with their customers. However, we expect to see very few greenhouse operators close their doors in the coming year.

Many nurseries will have another mediocre year in 2011. While we believe it will be much better than the prior two years, they need a good year to get back on track. Some will probably have to liquidate in the coming year. It is still unclear whether there is an oversupply or undersupply of material in several size categories. Many in the industry believe a perceived shortage will bring prices back to historic levels. Others believe there continues to be an oversupply and prices will continue to be low, hurting profits and cash flow. They will continue to seek new markets for their plant material and to find ways to cut costs.

GG: In 2011, do you envision growers having more access, less access or about the same amount of access to credit as last year?

BS: Growers will have more access to credit in 2011. After two years of timidity, banks are once again seeking to build loan volume. They have already recognized their loan losses and are ready to get back to business. Bank of the West, which has the only office dedicated to this industry on a national basis, is very interested in extending credit to greenhouse growers.

GG: Any thoughts on the U.S. economy in 2011? Do you expect improvement, more of the same or something else to take place?

BS: I believe the economy will be mixed. People who have retained their jobs will start spending more, but unemployment will remain high and that will limit the recovery. Housing starts, while improved from the trough of the past two years, will remain at historically low levels not perceived before 2008. Greenhouses should continue to do well in spite of the economy, but nurseries will have to continue to find new markets and keep costs under tight control.

GG: From your point of view, what should greenhouse and nursery growers be doing to put themselves in better states financially?

BS: They need to build working capital and watch their cash. One of the surprising, but very positive, things about the good spring in 2009 was the fact that most greenhouse growers were determined to hang onto their money. The temptation was strong to add greenhouse acres and invest in automation, but most realized that given the current economy and banking environment it was important to have more of a cash cushion to ensure they got through the next spring. Running out of cash during the shipping season is a bigger concern for nurseries and greenhouses than sustaining an operating loss.

Inventory control is also a huge factor for both nurseries and greenhouses. In fact, in our experience this is often the reason both nurseries and greenhouses get into serious financial difficulty. Greenhouse growers have to be careful not to overinvest in speculative inventory late in the spring shipping season.

Shrub and tree nursery operators have their own set of inventory challenges. Excess supply has reduced their selling prices and they are still finding themselves with excess material that continues to absorb cultural costs. It can be difficult to decide whether to destroy the inventory or hold it for next spring’s sales. There have also been several incidents where nursery operators couldn’t resist the urge to buy in long-cycle plant material at a low cost without being able to move it when expected. The bargain they thought they had created critical cash shortages, which threatened the existence of their company.

Leave a Reply

More From Finance/Operations...
Penn State Plant Bud

August 23, 2016

AmericanHort Is Helping Plant Importers Adjust To New Regulations

A report from Craig Regelbrugge at AmericanHort says the government is implementing a streamlined system for imports, in which all required data will be submitted electronically through a single window.

Read More
Plug Connection Assortment

August 9, 2016

AmericanHort’s Plug And Cutting Conference Will Feature Education, Workshops, And A Tour

This year’s conference, which takes place Sept. 19-21 in Carlsbad, CA, features discussions on water, pest and disease control, and production inputs, as well as a biocontrols workshop and tour of local cuttings facilities.

Read More
Cannabis In Greenhouse

July 27, 2016

The Top 5 Myths About Cannabis Production Cleared Up

There is a lot of misleading information going around about growing cannabis. Industry insider James Lowe makes sure you know the truth about cannabis production.

Read More
Latest Stories
Penn State Plant Bud

August 23, 2016

AmericanHort Is Helping Plant Importers Adjust To New R…

A report from Craig Regelbrugge at AmericanHort says the government is implementing a streamlined system for imports, in which all required data will be submitted electronically through a single window.

Read More
Plug Connection Assortment

August 9, 2016

AmericanHort’s Plug And Cutting Conference Will Feature…

This year’s conference, which takes place Sept. 19-21 in Carlsbad, CA, features discussions on water, pest and disease control, and production inputs, as well as a biocontrols workshop and tour of local cuttings facilities.

Read More
Cannabis In Greenhouse

July 27, 2016

The Top 5 Myths About Cannabis Production Cleared Up

There is a lot of misleading information going around about growing cannabis. Industry insider James Lowe makes sure you know the truth about cannabis production.

Read More
Joe Bischoff

July 26, 2016

SAF Partners With Cornerstone Government Affairs To Adv…

A new partnership between the Society of American Florists (SAF) and Cornerstone Government Affairs ensures that SAF will continue its highly effective work advocating for issues that affect the floriculture industry. “SAF and Cornerstone together provide experienced voices on Capitol Hill to protect our growers’ interests,” says SAF CEO Peter Moran. “We’ll continue to move major policy priorities forward on behalf of small business and agriculture.” Cornerstone is a public affairs firm specializing in government relations, strategic consulting, and advocacy. Its team of more than 50 senior professionals includes former senior professional staff from both authorization and appropriations committees and the U.S. Department of Agriculture (USDA), as well as veterans of the horticulture industry. Agricultural and horticultural issues of primary concern to SAF members include access to labor, immigration, crop protection, international trade and other matters related to the day-to-day operations of growers. Before she retired this year, SAF lobbyist Lin […]

Read More

July 26, 2016

AFE Releases New Videos Highlighting Industry Successes

The American Floral Endowment (AFE) recently released five new videos, created to highlight floriculture successes through industry collaboration, support, and participation. “Each video shares real stories from industry members on career development through scholarships and internships, and true examples of research solutions that have shaped how the industry operates today,” says Laura Shinall, President of Syndicate Sales, Inc., and AFE Public Relations and Development Chair. “We’re excited to be able to share some great success stories in an effort to increase industry participation.” The introductory video “Heard of the American Floral Endowment?” helps educate those who aren’t currently aware of AFE’s programs, while other segmented videos (retail, wholesale, grower) share how Endowment programs complement each group and why it’s so important that everyone in the industry participates: Retail Florists Share Why They Turn to AFE New Resources for Floral Wholesalers and Suppliers AFE Helping Growers Profit Ready for a Career in Floriculture or Horticulture? […]

Read More
Briscoe White, Growers Exchange

July 6, 2016

The Grower’s Exchange Unlocks The Secret to E-Commerce

In the Internet era, Briscoe and Kenan White knew they had to adapt or die and specialize to survive. Here’s how they took The Grower’s Exchange online.

Read More
Brie Arthur

July 6, 2016

5 Can’t-Miss Events To Watch For At Farwest 2016

Whether it’s classes on biocontrols and gardening trends, or networking opportunities in and around the trade show floor, there’s plenty happening at Farwest 2016 in Portland, OR, in August.

Read More
Cannabis states 2016

July 1, 2016

Adult Use Of Cannabis On The Ballot In 2016

25 states have legalized cannabis and public opinion is increasingly positive. Here’s where things may be headed as we move toward the fall elections.

Read More
Practical Software Grower Vertical

June 18, 2016

Practical Software Solutions Increases Accessibility, E…

Practical Software will demonstrate Grower Vertical, its customizable and scalable enterprise management system for the horticulture industry, at Cultivate’16 in July.

Read More
Battlefield Farms Company shot

June 14, 2016

Battlefield Farms Is A Finalist For 2016 Operation Of T…

Battlefield Farms in Rapidan, VA, is one of three finalists for Greenhouse Grower’s 2016 Operation Of The Year award and winner of the Excellence In Innovation award for 2016.

Read More

June 7, 2016

Ball Seed Offers Full Mobile Ordering Capabilities With…

The latest update for Ball Seed’s WebTrack To Go mobile app now includes full ordering capabilities for the industry’s largest assortment of seeds and plants. App users can also complete order fulfillment via seed count or package size, find product substitutions, get personalized “contact us” information, request plant tags, and more. “Upgrading WebTrack To Go to the full suite of ordering and management tools is where we’ve always wanted to be,” says Mark Morris, Director of IT for Ball Seed. “With this new roll-out, we’re keeping up with our customers on-the-go and providing them the information and access they need –- even while away from their desks.” The Ball Seed WebTrack To Go app lets customers: Check order status and shipment tracking 24-7 Access up-to-the-minute product inventory from hundreds of suppliers Place orders by seed count, packet size, and more Find product info, culture and photos when and where they […]

Read More
Gotham Greens Atrium Style Greenhouse Chicago

May 23, 2016

What’s Good For The Environment Is Good For Business [O…

Investing in technology to become more sustainable “always goes hand in hand,” says Abe VanWingerden, co-CEO of Metrolina Greenhouses. “If it is good for the environment, it normally is good for business over the long term.” That connection was abundantly clear in the responses we received to this year’s Top 100 Growers Survey. VanWingerden points to three investments Metrolina has made as good examples of how technology can reduce an operation’s carbon footprint and pay dividends financially. Its biomass system burns locally sourced waste wood — a renewable resource; its ozone water treatment system cleans irrigation water, reducing the need for fertilizers and pesticides, and improving plant quality and precision growing; and electrostatic sprayers reduce water and chemical use, and provide more targeted chemical applications. Other Top 100 Growers have found VanWingerden’s theory to be true, as well. Costa Farms’ investment in solar energy panels on three buildings at its […]

Read More
Petunia 'Supertunia Violet Star Charm' (2015 University of Georgia Field Trials)

May 10, 2016

New Southern-Centric Ornamental Production Conference T…

The 2016 Academy of Crop Production is dedicated exclusively to sharing information on advanced ornamental crop production and business management techniques for ornamental producers.

Read More
University of Florida Online Greenhouse Training Courses

April 25, 2016

University of Florida Offering Online Training Courses …

There will be five courses offered, with the first starting on May 30. Courses are available in both English and Spanish and range from beginner level to advanced education.

Read More
Sanitation programs are essential to preventing and removing food safety concerns.

April 7, 2016

USDA Launches GroupGAP Program For Fruit And Vegetable …

The new certification program is designed to help small and mid-size growers, including greenhouse vegetable producers, comply with new food safety regulations.

Read More
Young Plants Farm North Carolina

March 15, 2016

Young’s Plant Farm Obtains MPS-A Qualification

MPS, an organization that develops and manages certification for companies in the horticulture industry, has awarded MPS-A certification to Young’s Plant Farm in North Carolina and Alabama.

Read More
Charlie Hall Feature Image

March 14, 2016

Dr. Charlie Hall Will Offer Keynote Address At Farwest …

The Texas A&M economist will discuss factors affecting short- and long-term demand driving the future of the green industry.

Read More
Seed Your Future Logo

March 8, 2016

Longwood Gardens And American Society For Horticultural…

Under the direction of co-chairs Paul B. Redman of Longwood Gardens and Anna Ball of Ball Horticultural Company, the “Seed Your Future” initiative is designed to combat declining awareness of horticulture while promoting it as a viable career choice.

Read More
[gravityform id="35" title="false" description="false"]