Greenhouse Production Costs Keep Going Up, So Why Are Prices Staying the Same? [Opinion]
The cost of doing business continues to increase for grower operations, and unless something changes and soon, it’s going to drive more horticultural businesses out of the game. Input prices are rising, including growers’ largest and most important production cost — labor, which they can’t currently afford to do without. But for many operations, wholesale prices have remained stagnant for years, and costs — like labor — are eating up their profitability, or they’re going into the red just to keep the doors open.
Some of the answers to Greenhouse Grower’s Top 100 Growers Survey this year really drove home the general sentiment that the industry’s product pricing structure needs to be reevaluated to better match the trend toward rising costs.
Unfortunately, many large growers are at the mercy of retailers who will not pay increased wholesale prices yet continue to expect more from the growers who serve them. Growers are struggling with this, because they don’t want to lose the business, but they also need to be able to pay competitive wages and salaries to the people who keep their businesses running.
In the Top 100 Growers Survey, we asked growers if our industry pays enough, in their opinion, and how we can improve our industry’s perception when it comes to competitive salaries and hourly/living wages. Here are a few anonymous comments from growers who are dealing with this issue directly.
• “We can’t increase the selling price enough to cover the higher wages and benefits that we are now paying.”
• “We pay what we can afford to pay. We need more money for our product.”
• “Wages have improved drastically over the years, but still are below what they should be, due to the pressure to keep product pricing down by the retailers.”
• “We need higher prices for our product. The 6-pack has the same price it has had for the past 35 years.”
• “I believe that we have to start looking for crops that give better margins because we won’t be able to pay enough to keep our good people.”
But retailers aren’t entirely to blame. Our collective industry needs to do its share, as well. In addition to adjusting prices to make up for rising costs, we need to invest in consumer education and do a better job marketing our products to improve the value proposition for consumers. Ultimately, increased consumer awareness should help drive up our prices, and allow us to improve pay, raise profits, and remain financially sustainable, other growers said.
• “We would like to be able to pay more. We have to get our prices up, so we can afford to pay more. We have to work on our perceived value to the end consumer.”
• “We spend a ton of time and resources today researching what consumers want, and what gardening/live goods looks like in 10 years. Consumer education and ‘making it easier’ is a MUST in our industry, and we are only scratching the surface right now.”
It’s a tricky issue. Current industry promotion efforts underway should help improve consumer awareness and promote our products in the long-term, but growers also need to continue to control costs and drive profitability by becoming as efficient as possible with fewer employees. We’re seeing this happen currently among the Top 100 Growers. What are you doing to improve your operation’s profitability?