2015 Spring Crops Report: Rain Soaks Spring Sales
Rain, rain and more rain. That was the story this spring for the large majority of growers across the U.S. And where it wasn’t too wet, it was too dry. Drought conditions cut sales in the West and Southwest.
But it wasn’t all bad. Eighty-nine percent of respondents to Greenhouse Grower’s 2015 Spring Crops Survey declared the season a success, despite its challenges. They said beautiful weather in April and excited consumers who were ready to spend got the season going early, but then cool temps and rainy weekends throughout May and June caused confusion over when and how much to plant.
Of the 189 respondents to Greenhouse Grower’s 2015 Spring Recap Survey, 53 percent identified themselves as grower-retailers, 34 percent were wholesale growers and 13 percent said they were young plant growers.
Most responses came from the Midwest (27 percent), Northeast (18 percent) and Southeast (16 percent), but also represented the Southwest (10 percent), West (8 percent) and Northwest (5 percent). Another 16 percent came from readers located outside the U.S.
Consumer Confidence Is High And Sales Were Up
Growers reported in Greenhouse Grower’s 2015 State Of The Industry Survey in January that they were very optimistic for the coming season, because of the improving economy and increased consumer confidence.
Their expectations weren’t unfounded. Despite the rotten weather this spring in many parts of the U.S., sales exceeded expectations for 2015 for 54 percent of respondents, met expectations for 24 percent and fell short of expectations for 12 percent of those surveyed.
“Consumer confidence seemed to be higher than previous years,” said a Midwestern grower-retailer. “Customers had money to spend and bought what they liked.”
Sales were great in 2014, but they were even better in 2015, as 67 percent of growers reported increases over 2014 this spring. Sixteen percent of survey respondents said sales remained flat over last year, and sales dipped for 17 percent. Seventy-four percent said they grew enough to meet demand, while for 26 percent, demand was higher than supply.
Where The Growth Is Happening
Again this year, respondents said they saw the most sales growth at their own retail shop (40 percent). Landscapers were the next largest growth area (25 percent), followed by other growers and independent garden centers (19 percent). Farm markets (11 percent) and events or fundraisers (10 percent) were also good sources of sales growth this year.
Ironically, these same areas showed the largest sales declines, especially independent garden centers (23 percent), landscapers (16 percent) and growers’ own retail shops (15 percent). Other growers (10 percent), mass merchandisers (12 percent) and supermarket chains (11 percent) were also areas of sales decline this year.
“Pay by scan is a killer in our market with the weather we had,” said one wholesale grower from the Southwest. “Customers still insisted on product without the customers to buy the product.”
Weather, Labor Remain Toughest Grower Challenges
This spring, 49 percent said weather was the biggest challenge to their business — not surprising, considering the very wet weekends in many areas throughout the U.S., and dry conditions in the West and Southwest.
“Fort Smith, Ark. set a record for the wettest May ever. Heavy rain and flooding in Arkansas, Oklahoma and Texas shut down sales in May,” said one grower. “Our local landscapers are really hurting as are others in other areas.”
“Rain here and drought in California really hurt our companies’ business,” said a grower from the Southwest.
Overall, though, 62 percent of survey respondents rated the weather as cooperative, compared to 38 percent who said it was uncooperative.
“Here in the Pacific Northwest, anyone who didn’t have an awesome year had better take a long, hard look at what they are doing wrong, because the weather was as good as it gets,” said a grower-retailer.
Weather is always the biggest factor in spring sales, and there isn’t anything growers can do to change it, but there is something the industry can do to spread the risk. Survey respondents said changing growers’ dependence on spring sales would help.
“Spring is still Christmas for the horticulture industry, but we have done such a good job focusing on spring that we have neglected other seasons,” said a wholesale grower in the Southeast. “Having so many eggs in the spring basket is dangerous. Fall will never be what spring is, but having a solid second season is in our best interest. We should work as an industry to make fall more than an afterthought season. We need to spread our risk.
Another wholesale grower from the Southeast agreed, saying, “It was a great spring, but the key is to put plans/investments in place to assure we continue the momentum into fall and into 2016. Precise forecasting for 2016, continued focus on developing/training people, and continuing to invest in innovation are keys. No time to celebrate — now is the time to drive more growth with great planning and execution.”
Labor is a perennial problem for growers and this year it was the second largest challenge. According to several grower anecdotes, securing enough seasonal help is a problem that’s getting worse every year.
“Where we have always been able to hire a large group of temporary labor in the past, there were not any available this year,” said a grower for a municipality in the Midwest.
One wholesale grower in the Southeast said, “It’s tougher each year to find seasonal labor willing to put the effort in.”
He’s employing new techniques to drive better performance including offering a 50-cent raise after 30 days for perfect attendance and no disciplinary issues, using the operation’s website and a staffing agency to increase applicants, holding job fairs at churches and community centers, drug screening all applicants and requiring day-long orientations before employees start to acquaint them with the demands of the job.
As a grower-retailer in the Northwest bluntly put it, “I believe if we do not solve the immigration ‘politics’ we are all going to be in deep (trouble). I don’t know how much the lack of help cost us this year; I would estimate at least $250,000 in lost sales. If we can’t find more bodies soon, we will lose a lot of our next year’s shrub crop, which is sitting here waiting to be planted.”
Sales Increase Across All Categories In 2015
Growers received increases in sales for all crop categories we asked about in the Spring Recap Survey, but more growers said they would increase production of annuals and edibles in 2016, based on sales in 2015. This is the third year in a row that growers reported they would grow more annuals and edibles.
Annuals continue to perform in the spring, with 53 percent of growers reporting increases over 2014, though this is down from 2014 when 61 percent of growers reported increased sales. Twenty-three percent said sales remained steady and 15 percent reported a decrease in sales.
“Finished containers continue to grow in popularity over flats,” said a grower-retailer from the Midwest. “Consumers seem to lack confidence in their ability to grow and finish their own containers.”
Edibles are holding steady as a hot sales category. Forty-eight percent of growers who produced edibles reported sales increases over 2014, while 23 percent said sales held steady and 12 percent said sales decreased.
“We started growing fresh lettuce, kale and chard in aeroponic grow towers, and offered them to our customers to buy,” said a grower-retailer from the Midwest. Another grower had success selling veggie transplants to field vegetable growers.
Flowering potted plant sales were up for 48 percent of growers, while 21 percent said sales were flat over 2014, and 11 percent reported decreased sales.
Surprisingly, the smallest percentage of growers reported increases in container perennial sales (41 percent). Seventeen percent said sales were the same as 2014 and 19 percent reported that sales decreased this year.
“Since we have to heat our retail to 35°F to keep the water lines from freezing, we overwintered our perennials, so we had big, beautiful perennials ready by April 1,” said a Midwestern grower-retailer. “They were perfect for the great early weather and more importantly, we didn’t have the 50-plus percent loss like the last several years trying to overwinter outside.”
Landscape solutions were a big hit for many growers, including those that didn’t fit in the crop categories we asked about.
“Being a specialty nursery of cacti, succulents and Mediterranean Climate plants, we were well positioned to market that we were the source for garden solutions with the ongoing drought,” said a grower-retailer in the West.
Planning For 2016
Although weather was again growers’ biggest challenge this spring, looking forward to spring 2016, weather is only the number two concern, eclipsed by worries about adequate staffing.
In the western states, growers are challenged with reinventing their crop offerings for areas affected by drought, and improving their water use efficiency.
“We are urban growers on city water; new mandatory water restrictions have us dropping thirstier crops and investing in upgrading our irrigation systems,” said one grower.
Securing enough trucks and drivers is an ongoing challenge for many growers.
“Drivers are difficult to secure for our short season. We’re looking at more contract carriers for next year.”
Increased costs across the board are making growers finally raise their prices.
“It’s primarily healthcare and other onerous regulations,” a grower-retailer from the Midwest said. “We increased prices to cover our cost increases, and we had no push back from customers.”
Securing adequate financing has growers looking beyond banks for help.
“My banks are looking much more cross-eyed lately at my business, but my understanding is they’re doing it to the industry, not just me,” said a Midwestern grower-retailer. “I’m asking and getting terms from my vendors and using credit cards.”
As for the many growers who said they had a great spring in 2015, they’re hopeful that their success continues into next year.
“Best spring in 20 years,” said a grower in the Northeast. “Let’s hope the industry does not go crazy with increased production next year.”