10 Insights From Charlie Hall’s State of the Industry Update at Cultivate’23

There’s perhaps no one who can make agricultural economics analysis as interesting and engaging as Dr. Charlie Hall, AmericanHort’s chief economist and Professor & Ellison Chair in the Department of Horticultural Sciences at Texas A&M University. During Charlie Hall’s State of the Industry keynote presentation at Cultivate’23, which he shared with AmericanHort’s Ken Fisher and Craig Regelbrugge (watch for updates from their presentations later this week), Hall provided a largely optimistic tone – with some cautionary notes –of the green industry as it shifts from 2023 to 2024.

Here are a few takeaways from Hall’s presentation.

• By almost all accounts, Spring 2023 was a success for many. Results from Hall’s benchmarking survey of the industry show that 76% of the industry saw higher sales in 2023 compared to 2022, and most also said sales were up from 2019’s pre-pandemic numbers. Most sales declines were attributed to weather issues.
• About 69% of the industry also said net profits were up from 2022. The only reason this number is not higher is due to rising input costs.
• At retail, while the average sales figure per customer was down slightly in 2023, the number of overall transactions increased. What does this mean? “We are doing well in retaining the new consumers we gained during the COVID-19 pandemic,” Hall says.
• The supply chain is mostly back to normal, with fewer delays and costs coming down. “We can’t blame the supply chain any more,” Hall says.
• On the labor front, unemployment numbers have dropped to historic lows, but wages remain a challenge. Since 2019, wages in non-agricultural jobs have increased 18%, while wages for ag jobs have risen 25%.
• At the beginning of 2023, Hall predicted an increase in input costs of 3% for the year; he has since revised that figure to 1.9%. The news is even better for 2024, when he predicts a rise of just 1.6%, which would be back to pre-pandemic levels of growth.
• Hall notes that growers have certainly felt the pinch of input cost increases, which have risen 22% overall over the last four years. “Hopefully your prices have increased at the same rate,” he says.
• There’s great news when it comes to the housing market, with new home sales and building both on the rise, and lumber prices falling to more typical levels. “We should see nice results from all this as an industry,” Hall says. ““Even better, there’s a huge number of potential home buyers coming soon.”
• What about the possibility of recession? “Last year I stood here and said there was a 50% chance of a mild recession in 2023, so either way I was right,” Hall joked in kicking off his presentation. “Moving forward, the consensus among the three economic indicators I follow is that there’s a high probability of a short downturn in the first quarter of 2024. The good news is, it shouldn’t take a big hit on spring sales next year.”
• Hall closed with his usual three reminders for the audience, and the rest of the industry, on how to face any challenges: “Resist irrational exuberance. Manage your working capital. And focus on the value of your team and your products.”

For those who missed Hall’s presentation, send an email to [email protected] and he can provide a copy his PowerPoint slides.