State Of The Industry: Survival Of The Fittest

State Of The Industry: Survival Of The Fittest

Do you expect your greenhouse operation to survive 2010? Odds are your answer is yes, judging from the responses we got from growers who took our survey on the state of the industry in November.

In fact, the overwhelming majority of growers (92 percent) anticipate their operation being around in 2011. Eight percent of growers, however, aren’t sure they’ll be around in another 12 months, and more growers are getting vocal about their uncertainty or displeasure over the state of our industry–and the direction we’re headed.

“There is too much competition driving the price down,” says Alice Longfellow, owner of Longfellow’s Garden Center, a small grower-retailer in Missouri. “There is a small selling window and if weather delays that, everyone panics and cuts their prices. Box stores are not doing anyone any favors.”

Despite the price cutting Longfellow describes, the overwhelming majority of growers have not lowered their prices in 2010 to compete with the box stores. Only 3 percent of growers report lowering prices for 2010, and 74 percent report keeping their 2010 prices about the same as 2009 prices. The other 23 percent of growers say they’re raising their prices this year.

Erik Jacobsen, owner of Parkway Gardens, a small Canadian grower-retailer, is one grower who’s raised his prices for 2010. The way Jacobsen sees it, there are too many input costs in production to do anything but raise prices these days.

“We have to be one of the most inflationary industries in a deflationary economic environment,” he says. “All our input costs–labor, energy, containers, steel, plastic–are increasing dramatically, while consumers expect price stability or reductions during the recession. This has the effect of squeezing our margins even tighter. This is a dangerous time for our industry, especially for small and medium enterprises.”

Stress-Inducing Inputs

Pricing is just one concern growers have entering Spring 2010. Weather is always top of mind for growers–and that’s no different this year. So aside from the weather, we wanted to know which challenges are the biggest growers are facing. Twenty-two percent say competition, another 22 percent say labor costs and yet another 22 percent say energy costs.

Input costs are the biggest challenge besides weather for 18 percent of growers, and the input cost weighing most heavily on growers is energy. Nearly half of all growers listed energy as the input that places the biggest burden on their business. Increasing costs of pots and trays is also becoming an issue, as 11 percent of growers listed it as the most burdensome input. Pots and trays were followed by soil and amendments (9 percent), fertilizers (8 percent), chemicals (7 percent), labels and tags (3 percent) and water (2 percent).

Even with energy as the most burdensome input, the majority of growers say it’s the input on which they cut back most in 2009. Growers attribute an assortment of ideas for the cash savings, including extensive greenhouse winterization, the application of new heating methods and the installation of new, more efficient boilers.

Production & Sales

Around this time last year, we asked growers how they expected their 2009 sales to compare to their 2008 sales. Growers were optimistic then, with the majority (26 percent) expecting sales to increase less than 5 percent over 2008.

This year, we asked the same question–instead pitting 2010 sales expectations against 2009 sales–and growers are even more optimistic now than they were one year ago. The majority of growers (26 percent) now expect sales increases between 5 and 10 percent, and 66 percent of growers expect some kind of sales increase. Last year, only 56 percent expected their sales to increase.

“Everything is cyclical,” says Pat Berry, owner of Vickery Wholesale Greenhouse in Texas. “I believe business will turn around some in 2010 and more in 2011. There may be fewer players, which will make it easier on the survivors.”

Tying right in with increased 2010 sales expectations is increased 2010 production. Forty-five percent of growers say they plan to increase production this year, and more than half of those anticipate sales increases of at least 5 percent.

So expectations and production are up in 2010. How about crops growers are optimistic about? We asked growers which crop they’re most high on for 2010, and herbs and vegetables (28 percent) and ornamental bedding plants (23 percent) generated the most support.

We also asked which crops growers are most pessimistic about, and trees (21 percent), woody ornamentals (15 percent), fresh cut flowers (13 percent) and flowering potted plants (12 percent) are generating the most concerns. Few growers are pessimistic about herbs and veggies (2 percent) and plugs and propagation material (2 percent).

“Being involved with crops that produce food, I’ve been made aware of the use of greenhouses overseas for growing food,” says Michael Wellik, owner of The Strawberry Store. “I think the industry needs to redirect its efforts to switch away slowly from growing ornamentals to growing food. My newest philosophy is don’t grow it if you can’t eat it.”

A complete shift away from ornamentals is a bit extreme, but Wellik is right when he says food crops are an opportunity. Many growers benefited from the veggie boom last year, and many who benefited increased their vegetable production this year believing they’ll capitalize on the crop again.

The Reality Is …

Those are the positives about the state of all things commercial greenhouse floriculture. But the state of our industry today, according to growers and others, isn’t all that rosy. As Marc Clark, executive vice president of Rocket Farms put it: The big growers are getting bigger, the mid-sized growers are struggling and the small growers will survive–if they have a good niche.

Clark’s industry description is a good one, but others express bigger concerns about the state of the industry.

“[Our industry] is in poor shape,” says Kurt Messick, vice president of sales for the California broker, Messick Company. “This is led by the structural change to marketing plants to big box stores. There are so few, but with such buying power, growers have little or no control over their own businesses. So many of the small independent retailers have gone out of business that there is too much power in the hands of so few, and they are using this power to dictate prices.

“Many don’t honor commitments, and this leaves all the risk on the growers with no margin to compensate for this extreme risk. This is (and has been) a recipe for disaster.”

Ric Stevens of Nash Greenhouses in Michigan agrees consolidation has stepped up a notch recently, and it’s hurting those small and mid-sized operations.
“There has been a lot of consolidation in the last 12 months,” Stevens says. “I think you will see a lot more of the smaller greenhouses go by the wayside. You have to know the costs of everything you do.”

Leave a Reply

16 comments on “State Of The Industry: Survival Of The Fittest

  1. I think any supplier greenhouse or otherwise should black list any grower who sells to the big box stores! For the health of the overall industry we cannot allow the likes of the Big box chains to take control. And that is certainly what is happening! If our industry leaders are smart they will distance themselves from the big chains. We as an industry need to persue other avenues for marketing our products!

  2. Anonymous, you are dead wrong.

    As an independent grower I have many disagreements with the chain growers, however, to “black list” all chain growers because of a few bad boys is not the way to fix the problem. Lets hear some real suggestions and not this garbage.

  3. Sorry but I agree with Anonymous. The pharmacutical companies sued the big box chains for under pricing their drugs and WON! Your box chains do not rely on the revenue of their pansy’s. They are undercutting the fair value of hard work and dedication to the smaller retailers by charging such a low price for their products. How many greenhouses have gone out of business because they are not paid for the pack of pansy’s until it scans. They don’t maintain the product all they do is buy it in at a price dictated by Walmart and your responsible for the rest. How do you compete and make enough money to justify your effort, money invested and time when you have to lower your prices just to compete with them.
    I see that you are a grower Kevin that gives you the abbility to make some money on walmart, but be careful, they pay for only what they sell and you are responsible for watering, and care of your plants. They can put you under in a heart beat!!!!!!

  4. e asked the same question – instead pitting 2010 sales expectations against 2009 sales – and growers are even more optimistic now than they were one year ago. The majority of growers (26 percent) now expect sales increases between 5 and 10 percent, and 66 percent of growers expect some kind of sales increase. Last year, only 56 percent expected their sales to increase.
    “Everything is cyclical,” says Pat Berry, owner of Vickery Wholesale Greenhouse in Texas. “I believe business will turn around some in 2010 and more in 2011. There may be fewer players, which will make it easier on the survivors.”
    free 3ds
    Tying right in with increased 2010 sales expectations is increased 2010 production. Forty-five percent of growers say they plan to increase production this year, and more than half of those anticipate sales increases of at least 5 percent.

  5. Every college works hard to tell you that they are the best, but how can you really know? The truth is, there is no simple way to find the best online colleges and universities. You can go by name and reputation, but that does not mean as much nowadays as a college that spends time developing classes that prepare students for real life. security+ braindumps

  6. I believe business will turn around some in 2010 and more in 2011. There may be fewer players, which will make it easier on the survivors.” free 3ds Tying right in with increased 2010 sales expectations is increased 2010 production. Forty-five percent of growers say they plan to increase production this year [http://abi.com|njo]

  7. I think any supplier greenhouse or otherwise should black list any grower who sells to the big box stores! For the health of the overall industry we cannot allow the likes of the Big box chains to take control. And that is certainly what is happening! If our industry leaders are smart they will distance themselves from the big chains. We as an industry need to persue other avenues for marketing our products!

  8. Anonymous, you are dead wrong.

    As an independent grower I have many disagreements with the chain growers, however, to “black list” all chain growers because of a few bad boys is not the way to fix the problem. Lets hear some real suggestions and not this garbage.

  9. Sorry but I agree with Anonymous. The pharmacutical companies sued the big box chains for under pricing their drugs and WON! Your box chains do not rely on the revenue of their pansy’s. They are undercutting the fair value of hard work and dedication to the smaller retailers by charging such a low price for their products. How many greenhouses have gone out of business because they are not paid for the pack of pansy’s until it scans. They don’t maintain the product all they do is buy it in at a price dictated by Walmart and your responsible for the rest. How do you compete and make enough money to justify your effort, money invested and time when you have to lower your prices just to compete with them.
    I see that you are a grower Kevin that gives you the abbility to make some money on walmart, but be careful, they pay for only what they sell and you are responsible for watering, and care of your plants. They can put you under in a heart beat!!!!!!

  10. e asked the same question – instead pitting 2010 sales expectations against 2009 sales – and growers are even more optimistic now than they were one year ago. The majority of growers (26 percent) now expect sales increases between 5 and 10 percent, and 66 percent of growers expect some kind of sales increase. Last year, only 56 percent expected their sales to increase.
    “Everything is cyclical,” says Pat Berry, owner of Vickery Wholesale Greenhouse in Texas. “I believe business will turn around some in 2010 and more in 2011. There may be fewer players, which will make it easier on the survivors.”
    free 3ds
    Tying right in with increased 2010 sales expectations is increased 2010 production. Forty-five percent of growers say they plan to increase production this year, and more than half of those anticipate sales increases of at least 5 percent.

  11. Every college works hard to tell you that they are the best, but how can you really know? The truth is, there is no simple way to find the best online colleges and universities. You can go by name and reputation, but that does not mean as much nowadays as a college that spends time developing classes that prepare students for real life. security+ braindumps

  12. I believe business will turn around some in 2010 and more in 2011. There may be fewer players, which will make it easier on the survivors.” free 3ds Tying right in with increased 2010 sales expectations is increased 2010 production. Forty-five percent of growers say they plan to increase production this year [http://abi.com|njo]

More From State of the Industry...
Pot Mum Combos (Syngenta Flowers)

February 8, 2016

Syngenta Has A New Buyer, Will Not Divest Flower Seeds Business

Syngenta has announced that it will likely approve an offer from ChemChina to acquire the company, which means it no longer plans to divest its flower seed business.

Read More
State of the industry 2016

January 21, 2016

Green Industry Is Set For Continued Growth In 2016

Economist Charlie Hall says the outlook for the green industry is promising despite the havoc wreaked on plant sales by the downturn in housing.

Read More
How will growers' production in 2016 compare to 2015

January 18, 2016

2016 State Of The Greenhouse Industry Numbers At A Glance

Greenhouse Grower‘s 2016 State Of The Industry Survey shows some promising trends for the new year. Here’s a look at the greenhouse market for 2016, in graphics.     For a more in-depth analysis of where the industry stands, read Greenhouse Grower‘s 2016 State Of The Industry article, “Growers And Suppliers Move Forward With Cautious Optimism In 2016.”

Read More
Latest Stories
Pot Mum Combos (Syngenta Flowers)

February 8, 2016

Syngenta Has A New Buyer, Will Not Divest Flower Seeds …

Syngenta has announced that it will likely approve an offer from ChemChina to acquire the company, which means it no longer plans to divest its flower seed business.

Read More
State of the industry 2016

January 21, 2016

Green Industry Is Set For Continued Growth In 2016

Economist Charlie Hall says the outlook for the green industry is promising despite the havoc wreaked on plant sales by the downturn in housing.

Read More
How will growers' production in 2016 compare to 2015

January 18, 2016

2016 State Of The Greenhouse Industry Numbers At A Glan…

Greenhouse Grower‘s 2016 State Of The Industry Survey shows some promising trends for the new year. Here’s a look at the greenhouse market for 2016, in graphics.     For a more in-depth analysis of where the industry stands, read Greenhouse Grower‘s 2016 State Of The Industry article, “Growers And Suppliers Move Forward With Cautious Optimism In 2016.”

Read More
Top Concerns sidebar

January 18, 2016

Growers And Suppliers Move Forward With Cautious Optimi…

A year of growth in 2015 also had its share of challenges, and as a result, growers and suppliers are a bit more guarded going into 2016. After a few years of extreme weather and drought, a massive ongoing labor shortage, a shaky economy, and increased government regulation, Greenhouse Grower’s 2016 State Of The Industry Survey shows growers and retailers are moving forward with cautious optimism. Greenhouse Grower’s 2016 State Of The Industry Survey included separate questions for growers and for suppliers. Of our 358 respondents, 103 were suppliers, 111 were grower-retailers, 109 were wholesale growers, and 35 were young plant growers. Among growers, 57% indicated their operations were small (less than 100,000 square feet), 21% were medium-sized (100,000 to 399,999 square feet), and 22% said they were large growers (400,000 square feet or larger). Sixty-eight percent of the grower respondents said their sales grew in 2015 over 2014, down […]

Read More
State of the industry 2016

January 14, 2016

Craig Regelbrugge Says 2016 Will Be A Year Of Waiting F…

The 2016 presidential election will make for slow progress on critical regulatory issues like health care, pollinator health, and immigration reform.

Read More

December 29, 2015

The Home Depot Says No To Neonics

The Home Depot plans to phase out neonicotinoids by 2018, according to a recent statement on the company’s website. The large home improvement retailer stated that its live goods suppliers have reduced the number of plants that they treat with neonicotinoids, and now more than 80% of all flowering plants sold at The Home Depot are not treated with neonicotinoids. The retailer said it will continue this decrease unless: Treatment is required by state or federal regulation, or Undisputed science proves that the use of neonicotinoids on live goods does not have a lethal or sub-lethal effect on pollinators Aside from these exceptions, the retailer has implemented a complete phase-out of neonicotinoid use on live goods by the end of 2018. Meanwhile, The Home Depot has required all of its live goods suppliers to label plants that have been treated with neonicotinoids. “The Home Depot is deeply engaged in understanding the […]

Read More
Pollinator-Conference-NC State

December 9, 2015

Pollinator Gardens Are On The Rise, Provide Opportuniti…

Thanks to the Million Pollinator Garden Challenge, enacted in June 2015 by the National Pollinator Garden Network, scores of new pollinator gardens to be planted over the next year and beyond will provide growers with ample opportunities to produce, promote and sell plants that are ideal for pollinator forage and health. And with research underway within the industry, we’ll soon have more knowledge about which plants are the most beneficial and attractive to pollinators. At Bayer’s Bee Care Center, the level of consumer engagement and interest in planting pollinator gardens is very high, Bayer’s Sarah Myers says. Bayer now has 73 local and industry partners and counting in its “Feed A Bee Campaign,” launched in March. Educating consumers about what they can plant to attract bees, and the impact they can have with even the smallest amount of space, is highly important, Myers says. It’s worth explaining to them that […]

Read More
foodscaping at epcot - Foodscaping Goes Big At Disney

December 9, 2015

Foodscaping Challenges Conventional Ideas About Landsca…

Conventional ideas about what a landscape should look like are being challenged left and right, from young homeowners like Sarah Baker of Baker’s Acres, who are standing up for their right not to mow their lawns, to Brie Arthur’s passion to start a movement to incorporate food with flowers throughout suburban and urban landscapes nationwide. As younger generations step up as consumers and industry leaders, these changes are likely to continue, and the horticulture industry, which has the most to gain, would be remiss not to embrace and influence them. Well known for her personal foodscape, which she has promoted across social media, and her annual tomato-tasting fundraising event benefiting the nearby J.C. Raulston Arboretum in Raleigh, N.C., Brie Arthur has also been working with schools and her local Homeowner Association (HOA) to challenge the traditional idea of the landscape to one that incorporates the growing of food with mainstream, […]

Read More

November 20, 2015

Lessons Learned From The California Drought

For those of us who live in the areas of the country that experienced harsh winters and significant rain over the past three seasons, water has become a nuisance in some cases, rather than a blessing. I can’t count the number of times I have wished to be able to send the snow or the rain to the West Coast, tied up with a big red bow. But think about how we’d feel if we didn’t have the snow and the rain, and we were experiencing the same dry conditions that the residents of California, Oregon and Washington have. With fresh water supplies dwindling in regions of the world, and the resistance of residents in states like Michigan to share water from the Great Lakes, it’s likely that the next civil or world war could be fought over our most precious resource. California’s epic drought should cause everyone to look […]

Read More
Kate Santos Operations Director Dummen Orange

November 18, 2015

Kate Santos Presents New Opportunities For The Horticul…

Dr. Kate Santos is a scientist, an artist, an advocate, a traveler, a dreamer, a visionary and a go-getter. Well-known for her work managing Dümmen Orange as Operations Director, Santos has taken on a new role as co-founder of Luxflora, an organization for women in horticulture.

Read More
MPS Sustainable Quality Logo

November 17, 2015

International Seminar Finds Broad-Based Need For Indust…

Achieving durability and maximum transparency is the responsibility of the entire floriculture supply chain, was the main conclusion of the seminar “Shaping the Future of Floriculture,” which took place on Monday 9 November on the S.S. Rotterdam in The Netherlands. With just under 300 participants, the seminar, organized by Union Fleurs, VGB and MPS, received plenty of attention.

Read More
Greenhouse Grower State of the Industry

November 11, 2015

Greenhouse Grower’s 2016 State of The In…

The State of the Industry report, which uses input from both growers and suppliers, is designed to help you understand this year's crop and sales trends, as well as the issues that keep you up at night.

Read More

November 11, 2015

Drought Has Triggered A New Normal For The California L…

California is now entering its fifth year of the worst drought in 500 years, with no end in sight. Weather experts predict the current drought will continue into 2016, despite optimistic projections of increased rain patterns this winter caused by a strong El Niño ocean current. Residents have fully bought in to the emergency, and embraced Governor Jerry Brown’s April 1 mandate to reduce water usage by 25 percent. Even after an above-average hot summer, the state has exceeded its goal, with a per-month average of 28 percent water reduction. Some of the ways homeowners are being encouraged to reduce their outdoor water use are concerning, but the good news is, drought-tolerant landscaping and awareness of water-wise gardening is on the rise. Cash For Grass Rebates Have Landowners Trading In Their Lawns When Governor Brown’s water reduction mandate was announced in April, consumer reaction was reflected in the sales at […]

Read More

November 3, 2015

Two Floral Industry Leaders Die

Katharyn Elizabeth “Betsy” Demaree, 77, of Syndicate Sales, Inc. passed away on October 26, and Yoshimi "Shimi" Shibata, 100, formerly president of Mt. Eden Floral Company, passed away on October 31.

Read More
Charlie Hall

October 26, 2015

Charlie Hall Says Landscaping Services Are Trending Up,…

Everyone listens to Dr. Charlie Hall, professor and Ellison Chair in International Horticulture, in the Department of Horticultural Sciences at Texas A&M University. And at his Cultivate’15 session, “The Future Value of the Landscape Services Sector,” attendees hung on his every word. According to First Research, the output of the U.S. landscaping industry is forecasted to grow at a compounded rate of 4 percent through 2016, indicating steady growth in the long term. In the landscape sector, regional firms are rapidly scaling up to achieve the economies of scale necessary to compete with the very large firms. Here are some of the points Hall made at the session where he projected his near-term forecast for the landscape sector: With 1.1 million housing starts now, the net demand is 1.5 million, and economists project there will be 1.2 million by the end of the year. That means, construction is behind in […]

Read More
cannabis

October 23, 2015

Consider Your Options With Greenhouse Cannabis Producti…

I’ve been thinking a lot about Cannabis. But wait, there’s more! All jokes aside, Cannabis is certainly a crop that comes fraught with controversy. Over the past few months, while we have been learning and reporting about the federal legality issues, financial risks and considerations and even the work and expense that goes into the application process to obtain a license to produce this crop, we have tried to remain as objective as possible. We’re not advocating that you produce Cannabis, nor are we opposing your choice to consider this crop as a future direction for your operation. Our goal in publishing eNewsletters and the print report found in the pages of the October issue of Greenhouse Grower, is simply to inform you of what production of this crop would include, from the challenges and risks to the opportunities. And no matter how you feel about the issue, as a business […]

Read More

October 21, 2015

First-Ever National Pollinator Protection Conference Co…

At the first National Conference on Protecting Pollinators in Ornamental Landscapes, in Hendersonville, N.C., October 12-14, 2015, attendees heard all sides of the pollinator health issue, from preliminary research findings on the effects of pesticides on bees, to the importance of urban gardens to pollinators, to the reasons why any changes to the availability of certain pesticides on the market need to be based on sound science. Co-organized by Michigan State University Extension and North Carolina State Extension, and sponsored by Bayer CropScience, Valent, Syngenta, Biobest, the American Floral Endowment and the North Carolina Nursery and Landscape Association, the conference drew several attendees from several different areas of the horticulture industry, including Extension agents, growers, plant protection companies and more. The conference kicked off with opening keynote speaker David Goulson of the University of Sussex in the United Kingdom. It followed with a day and a half packed with sessions […]

Read More

October 6, 2015

NASA Scientists To Discuss Indoor Agriculture Innovatio…

The University of Arizona’s Controlled Environmental Agriculture Center (CEAC) will host Dr. Jacklyn Green, CEO and founder of Agate Biosciences, and Dr. Roger Kern, president and founder of Agate Biosciences: Science & Systems Engineering, on October 30, as part of its seminar series. Both Green and Kern are former NASA scientists and engineers, and they will discuss their continuing efforts to develop technology and seek innovations to address issues concerning urban indoor agriculture, with a potential for application on Mars. Through the creation of Agate Biosciences LLC, Kern and Green have turned their attention to earth-bound issues of food production, to provide advanced technologies for plant nutrition, biosecurity and the undertaking of scientifically based research in greenhouse design and controls systems, and in plant health under controlled environment agriculture. A recent NASA news release reports that the Mars Rover 2020 mission is planned to deliver an extensive array of instruments designed to explore the habitability […]

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