Rising costs and a poor harvest have created challenging conditions for the growing media industry in 2017, according to the UK-based Growing Media Association. Many manufacturers reported having only harvested 60% to 0% of their budgeted peat volumes. Dry weather in spring followed by increasingly wet summer weather during July and August made harvesting more difficult than usual, driving the use of more expensive materials.
Cost Increases Affecting All Businesses
Plastic bags have been affected particularly by polymer (Platts) pricing rises, seeing record highs over the past 18 months and forecast to further increase during 2018. Environmental costs are on an upward trajectory with preparation for licensing under way in Ireland with new tougher targets on water quality.
Freight costs, which account for up to 30% of the cost of a bag of compost, are also rising. There is also ongoing uncertainty around Brexit, and the weaker sterling is leaving a 22% difference between now and the 2015 average Euro rate, and a 13% difference between the current rate and the 10-year Euro average.
“We have experienced rising costs throughout our business and expect more significant increases in key raw materials for 2018,” says Sheila Hill, General Manager of Scotts Miracle-Gro. “Specifically, raw materials such as peat and plastic packaging costs will increase by double digits. This is a significant challenge on top of the impact of currency we have absorbed this season.”
“Manufacturers are finding themselves under increasing pressure, during a period where costs have risen significantly and millions of pounds have been poured into developing new products to reduce the demand for peat,” says Steve Harper, Chair of the Growing Media Association.