Countering Costs

By Delilah Onofrey|September 11, 2008

Reducing and recovering costs has become more imperative than ever for North America’s largest plug and liner producers. Rising input and fuel costs have put this highly competitive segment in a tighter squeeze than ever, but the companies you’ll find on our annual Top 25 Young Plant Growers ranking are top performers at the top of their game. Unlike our Top 100 Growers, which are measured by physical size, these companies are measured by sheer output – number of plugs and liners produced.

With the exception of ForemostCo Inc. at No. 4, you’ll notice the traditional seed-based plug growers dominate the top half of the list. Many of these companies have expanded into rooting cuttings and have become instant large vegetative players in the last eight years, but seed still dominates because it’s easy to automate and the input cost is low. And a lot of the cuttings coming into this country are bypassing rooting stations and going right to the finished grower customer.

Top 25 Young Plant Growers
Grower	Quantity Produced To Sell In 2008	HQ	Years In Young Plants
1. Tagawa Greenhouses and Ball Tagawa Growers	490 million	CO	41
2. Green Circle Growers	450 million	OH	40
3. Speedling Top Articles Read More Read More Read More Read More Read More The Latest on Peat Supplies and Alternatives	275-280 million	FL	40
4. ForemostCo Inc.	220-240 million	FL	21
5t. Plug Connection	200 million	CA	21
5t. C. Raker & Sons, Inc.	200 million	MI	30
7t. Knox Nursery	150 million	FL	45
7t. Wagner Greenhouses	150 million	MN	N/A
9. Bob’s Market & Greenhouses	126 million	WV	12
10t. Jolly Farmer Products	125 million	NB	25
10t. Kube-Pak Corp.	125 million	NJ	36
12. Van de Wetering Greenhouses	120 million	NY	19
13. Plainview Growers	110 million	NJ	18
14. Yoder Brothers	80-90 million	OH	88
15. Cal Seedling Co.	70 million	CA	15
16. Floral Plant Growers	66,304,705	WI	32
17. First Step Greenhouses	55 million	CA	12
18. EuroAmerican Propagators	53 million	CA	15
19. Van Wingerden Greenhouses	50 million	WA	28
20. Northwest Horticulture	41-45 million	WA	8
21. Four Star Greenhouse	41 million	MI	N/A
22. Wenke/Sunbelt Greenhouses	39,137,600	MI	15
23. Pleasant View Gardens	37 million	NH	32
24. Mast Young Plants	35-40 million	MI	27
25. Twyford International	22-25 million	FL	23

We’re always on the lookout for more companies that produce enough plugs and liners to be considered for this ranking. Additions this year include First Step Greenhouses in Temecula, Calif., producing 55 million plugs at No. 17. I was surprised to learn First Step sells 95 percent of its plugs directly to growers, not through brokers. Canadian young plant grower Jolly Farmer Products in New Brunswick also uses a direct sales model with 92 percent of its plugs and liners sold directly to growers.

With facilities in Michigan and Georgia, Wenke/Sunbelt Greenhouses is an overdue addition coming in at No. 22. Also in Michigan, Rick & Joyce Mast return to the rankings with Mast Young Plants at No. 24. Their previous company was Glass Corner Greenhouses, which ceased operations last fall. States most strongly represented in the ranking are California, Florida, Michigan, New Jersey, Ohio and Washington.

Keep On Truckin’

Most of the Top 25 Young Plant Producers prefer to deliver plugs and liners on carts or in pallets via truck than rely on carriers like Federal Express, DHL and UPS, although those carriers are an important resource and sometimes make the most sense, depending on the location of the grower customer and quantity ordered. Disposable one-way racks have become a cost-effective, hassle-free option. “Ninety percent of all our plug shipments are shipped via our new pallet shipper,” says Richard Gigot of Northwest Horticulture. “We’re able to ship more plants per pallet with the same shipping benefit of carts.”

For two years, Twyford International has been using disposable wooden racks for long-distance motor freight shipments. “This concept has enabled liners to be transported in an environment that enables them to arrive in fresher and less-stressed condition rather than being enclosed in a box for several days,” Twyford’s Joseph Gerek  says. “The racks are also recyclable.”

Young plant growers have had to  become true logistics companies to manage the rising costs of gasoline and transportation. The key is to recover costs without pricing themselves out of a sale. Strategies include:

• Raising freight rates.
• Adding fuel surcharges.
• Shipping full trucks.
• Working with customers to combine orders whenever possible.
• Offering an expanded truck delivery area.
• Using transportation software to optimize route efficiency.
• Negotiating shipping contracts with large carriers.
• Choosing the least expensive shipping method for the customer.

“We are passing surcharges onto customers,” says Peter Darrow of Jolly Farmer Products. “This is a variable amount per box, which is adjusted every couple of weeks to reflect the latest surcharges that FedEx and DHL are assessing us. Logistically, we have negotiated excellent rates with both FedEx and DHL and will use these services strategically to get the best service and rate to a given area.”

Boiling Point

To some extent, young plant growers absorb a portion of the energy costs for the rest of the industry. While finished plant growers have the option of delaying when they fire up greenhouses to avoid the coldest days of winter, this is peak season for young plant production, especially for spring crops. As a result, young plant growers tend to invest the most in energy conservation, especially in Northern climates.

Northwest Horticulture is installing heat curtains in seven acres of its Mabton, Wash., facility to capture day-time heat and reduce night heat loss. Gigot says he expects an excellent return on the investment.

Other strategies to cope with rising energy costs include:
• Closing off sections of the greenhouse and consolidating growing space to be high density.
• Upgrading poly roof coverings.
• Putting double poly on the end walls of greenhouses.
• Installing dual fuel systems (e.g. diesel/propane) to take advantage of dips in pricing for each.
• Installing biomass boilers to burn wood chips and other organic materials.
• Installing floor and bench heating.
• Negotiating fuel service contracts.
• Using Southern facilities more for high energy crops.
• Growing crops that require less heat.
• Raising prices

Jolly Farmer installed a biomass boiler when it built its range in New Brunswick, and then in 2002, installed a thermal storage and transfer system. Extra hot water produced by the wood boiler during the day can be stored and used at night. “This has reduced our dependence on oil to near zero,” Darrow says. “While we are mindful not to waste energy, we firmly believe cutting corners to reduce costs is counter productive. Producing top quality material is the first importance, because that is how we can best serve our customers.”

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