Growth Or Contraction?

Growth Or Contraction?

If you study our Top 25 Young Plant Growers list closely and compare it to last year’s list, you’ll find our Top 25 report growing 76 million more plugs and liners this year than it did one year ago.

Unfortunately, production is actually down slightly for our Top 25 as a whole, and it’s down significantly for three of the top five growers on last year’s list: Tagawa Greenhouse and Ball Tagawa Growers, Foremostco and Plug Connection. The three greenhouse operations are still producing more than 820 million young plants between them, but they’re respectively producing 6.1, 21.7 and 6.3 percent less young plants than they did in 2008.

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So why the decline? If you’re Tagawa or a grower in its shoes, you’re starting to feel the domino effect Walmart started after it most recently reduced the number of growers supplying its stores.

“The biggest chunk of reduction we had was consolidation of Walmart suppliers,” says John Miller, Tagawa’s sales and marketing director. “They went through another round reducing the growers at Walmart stores. We had quite a few growers who were plug customers who were (Walmart) growers in 2008 who were not in 2009.”

So what happens to propagators like Tagawa, ones that serve the growers serving Walmart? The well has already dried up for many of Walmart’s one-time direct suppliers. Who’s to say propagators are immune from some kind of downward business effect?

If you’re a propagator whose business relies heavily on the growers Walmart cast out of its network, growth opportunities may be hard to find with those grower customers.

Just look at the one-time Walmart growers. Some are scrambling to recreate old business opportunities with independent retailers, many of whom slam the door in their faces the way those same growers did to them just a few years ago.
Learn from those growers’ misfortunes, consider who you’re serving and look at the impact Walmart or other factors may have on their business. Remember, their misfortune can ultimately be yours as well.

Forecasting 2010

So 2009 was a tad down. What should young plant growers expect in 2010?

Tagawa’s Miller has an idea. “There’s a lot of optimism among our representatives in the Midwest,” he says. “I think some of our customers in that neck of the woods are going to be a little bullish in 2010. I think they all recognized they missed opportunities and sales because they had pulled back 10 or 20 percent this year.”

Vegetable starts are another opportunity for 2010, just as they were this year. Because of big gains some growers saw this year, it’s unfortunate vegetables don’t represent a bigger portion of some businesses. Still, take veggies and run as far as you can with them.

“We had gains in vegetables this year and would expect gains next year in vegetable sales and orders,” says Bobby Barnitz, Bob’s Market & Greenhouses. “However, veggies are a small percentage of total plug sales.”