The signs are small, but they are real. The housing market is beginning to tick upward in both new housing starts and increasing value. In many areas, the jobless rate is starting to show improvement as well. There are still many challenges, but for an industry that has been finding its way through a long-term recession, the worst may be behind us.
There were indications of this in the responses to our 2013 State of the Industry Survey. Many growers are looking ahead at new opportunities, and projected sales, prices and production numbers are higher compared to the expectations in the 2012 survey.
We surveyed nearly 300 readers online late in 2012 to find out what challenges they’re facing and what their plans are for 2013. Nearly a third of those who responded were from the Midwest, but we also heard back from readers from all over the U.S. and a few from Canada. They were a mix of grower-retailers, wholesalers and young plant growers. Thirty-five large growers, defined as having 400,000 square feet or more under cover, responded; the rest were a mix of small (less than 100,000 square feet) and medium-sized growers.
Increased Production Is A Sign Of Optimism
An encouraging number of respondents said their 2012 sales volume had increased from 2011 levels, with nearly 17 percent saying sales had grown more than 10 percent. Close to 25 percent say sales were up less than five percent, and 23.2 percent experienced increases between 5 and 10 percent. Nearly 40 percent of respondents plan to keep production levels the same in 2013, and 30.8 percent plan to grow more plants — with 11.7 percent intending to increase production more than 10 percent.
Herbs and vegetables, potted flowering plants, container perennials and ornamental bedding plants are the categories in which the most increases are projected. Medium-sized growers (almost 60 percent of them) plan to grow more in the potted flowering category in 2013, perhaps reflecting a shift in consumers’ desire for convenience. Nearly 43 percent of large growers plan to produce more plugs and propagation material, and 38.7 percent are also planning to grow more flowering potted plants.
The highest area of projected increase for small growers is herbs and vegetables, with 40.9 percent of respondents saying they plan to follow this trend. Small growers also plan to increase production of container perennials (35.5 percent), ornamental bedding plants (30.9 percent) and flowering potted (29.1 percent). Large and medium-sized growers also plan to increase production in these categories. Many growers plan to grow fewer woody ornamentals. This isn’t a surprise, given the higher price point and dependence on the housing market, which is showing signs of life but is not anywhere near previous levels.
What Excites Growers About 2013
Some growers are most excited about offering new products in 2013. “We’re excited about the opportunity to offer our customers a tremendous selection of herbs and vegetables,” says grower Paul Hutcheson of Windmill Heights Garden Center. “We have more than doubled the number of varieties of edibles we are growing. We asked customers what varieties they wanted us to grow, we listened, and now we will have them!”
Other growers are seeing improvements in their sales and business.“We have successfully increased business with long-time customers, essentially winning business away from competitors,” says Mark Dunlop of Speedling. “Any time you can increase business in an economy like this, you get excited.”
And Keith Scheiderer of Scheiderer Farms expresses the eternal optimism essential to being a farmer of any kind. “Planning and planting for the next season is always the most exciting thing about the next year. We are trying to communicate and connect with our customers more every year.”
It’s Still The Economy
Even with this increased optimism, the list of challenges facing growers is a still a long one and features the usual culprits. The economy is the biggest concern again this year. While it has been four years since the housing bubble burst, worries about the economy have only increased. Nearly 57 percent of survey respondents said the economy was their chief concern — slightly more than in two years ago in 2010. This may indicate a weariness and a bit of pessimism that wasn’t there a few years ago; many growers mentioned frustration with the government in their responses.
“Without a strong, thriving economy people will have less disposable income, and those who do have disposable incomes will hold onto it,” says Steve Free of Grass Creek Greenhouse. “This will obviously have a continuing negative impact on our ability to stay solvent. We, as an industry and as a nation, need an administration that understands how economies are driven.”
“I can do everything right, and if the economy is not improving, it means nothing,” says Christopher Ruske of Cumberland Nurseries. “I also do not trust that the people running our country can work together to solve the problems.”
Weather, Customers, Government And Expenses
Much of the U.S. experienced a long-overdue sunny, warm spring with good weather on the weekends, which boosted sales and optimism. However, the severe drought and hot weather that followed in many areas dried up some of those hopes. When asked, “What keeps you up at night?” worries about the weather ranked No. 2 among small- to medium-sized growers. For large growers, the weather dropped to No. 6 from its No. 2 place in 2011. Almost 47 percent of large growers ranked government regulations as their No. 2 concern. A changing customer base was next for 39.3 percent of large growers, followed by immigration issues and succession planning.
“Customers have reduced loyalty and are not transparent in buying practices,” says John Weigel of Weigel Farms. “This makes it increasingly difficult to forecast production for the upcoming season.”
Small- and medium-sized growers are also concerned about government regulations, which ranked third on their list of concerns after the economy and the weather.
David Holley of Moss Greenhouses is concerned about regulations. “Specifically, [I’m concerned about] health care reform and what that will mean to our business and how we operate,” he says.
Energy costs are the second biggest worry among growers overall, with small growers expressing the most concern. Labor costs were ranked third, and finding good, quality workers was a frustration for many respondents.
“It takes two to do what one should be able to do,” says Janet Schmock of The Green Spot, LLC. “The work ethic is not there anymore. There are too many cell phones and too much texting at work. I’ve had to ask some employees to leave their cell phones in the office during working hours.”
Medium-sized growers are especially worried about the lack of consumer demand for plants, and all groups are worried about competition from other growers. For some large growers, transportation costs loomed large, even trumping labor; 20.6 percent of large growers listed transportation costs just after concerns about energy costs.
Pests and diseases, pricing products competitively, retail customer demands, access to consumer credit and transportation costs, in that order, were listed as concerns for all growers.