2015 State of the Industry Report: New neighborhoods, New opportunities

Features - Cover Feature

A steady expansion of the housing market is bolstering the industry.

September 30, 2015
GM Staff

2015 was a good year for the housing market, and the economy has continued its recovery, but perhaps not as quickly as some would like. Overall, we’re seeing that these trends have impacted the horticultural industry in a positive way, and most growers anticipate future growth.

Over the following pages, we share the results from this year’s State of the Industry Report research, coupled with articles that will help you improve your business for a strong finish to 2015 and start into 2016. On page 20, investment expert Will Kain shares pointers on obtaining the financial support you need to expand and improve your business. Marco Palma, associate professor and extension economist at Texas A&M University, sounds off on the economic outlook on page 26, and we get the inside scoop on the landscape market on page 32. Rounding out our report, we take a look at a system for estimating production costs on page 34, and a grower who’s passionate about making his business more sustainable on page 38.


Survey says…

The data on the following pages was collected by Readex Research via an online survey from August 5 to 17, 2015. The survey was closed for tabulation with 374 responses. To best represent the audience of interest, the results in the report were based on the 328 respondents who indicated that they own/work for a greenhouse.

The margin of error for percentages based on the 328 usable responses is ± 5.3% at the 95% confidence level. That is, 95% of the time, we can be confident that percentages in the actual population would not vary by more than this in either direction. The margin of error for percentages based on smaller sample sizes will be larger. –Greenhouse Management


Revenues: What do the numbers say?

This year, about two-thirds of growers reported increased sales, a sign of the continued growth of the industry. Although this is just below last year’s numbers (70 percent), only 8 percent of growers reported decreased sales, which is on par with 2014, and we see more growers reporting flat sales. The combination of flat and increased sales still totals about 90 percent, which bodes well for the industry. To give a bit of perspective, only 51 percent of respondents said their sales were up in 2012, and we’ve seen steady growth since then.

Interestingly, despite steadily rising shipping, input and other costs, we still aren’t seeing growers raise plant prices in 2015 much more than last year. Slightly more growers raised their prices in the one to 4 percent range this year, but slightly fewer raised them at the 5 percent or higher levels.

Leslie’s take
Severe weather this year had a big impact on the entire green industry. All the rain that didn’t fall in California this year landed in Texas. The unusually heavy rainfall and flooding in parts of the south left some growers, landscapers and retailers knee-high in water and over-booked crops and delayed jobs, while the water deficits in other areas have forced business to scale back or retool their operations. However, some of you experienced wonderful spring weather and booming sales. While many landscape contractors were put on hold in some areas through spring, the second the flooding stopped, they were off to the races to play catch-up. According to most landscapers I’ve spoken to recently, they are as busy as can be. The 11 percent who feel weather didn’t affect them at all are a lucky bunch!

Leslie’s take
It’s great to see such strong confidence in growth for this year, which does fall in line with positive economic trends for the entire green industry at the moment. Despite the strong influence of weather extremes, the strong housing market in many areas has afforded growers, landscapers and homeowners to keep growing, literally.

Leslie’s take
I’m sure you’ve noticed that vendors have been raising their prices at a pretty good clip. If you’re in the business of growing and selling plants, then you’re probably spending more this year on your key supplies. Growers who are raising their prices an average of 5 percent are probably at least keeping up with their supply cost increases. Vendor pricing increases are a result of high-profile issues such as transportation costs, labor, water supply concerns and competition. If as a grower you’re not raising your prices at all, then perhaps you’re in an area where your vendors are keeping prices flat, you’re smartly forecasting and booking early to take advantage of early-bird or volume incentives or you could just be losing margin. With the plant supply chain continuing to tighten, demand should also be driving your prices up. With almost 40 percent of respondents not raising prices, there could be profits left on the table.

Profits: Promising profits, but wavering confidence

Many growers came back with higher profits this year than last year, with 48 percent reporting net profit levels above 10 percent, compared to 39 percent last year. However, we’re also seeing double the number of growers with negative profit levels, 6 percent this year compared to last year’s 3 percent. While still a relatively small number, it means that for some growers, changes need to be made at their operation to get their numbers back in the black, because as we see in the overall positive picture of the industry, opportunity is there.

As we take a look at overall sales and profits, it’s interesting to note that for the third year in a row, growers aren’t confident in the upcoming year’s net profit in spite of reporting back continued increases. We do see that growers are slightly more positive about the growth of the greenhouse industry than last year.

Leslie’s take
A majority of growers projecting growth for 2016 is a positive sign. Are you projecting net profit growth through price increases, better marketing endeavors, better buying practices or simply an overall sales increase? I wonder, are the same 40-ish percent not raising prices the same 40-ish percent who are also projecting flat net profit for 2016?

Leslie’s take
It’s interesting; a majority of respondents project an increase in sales growth and net profit for 2016 for their own business, but far fewer are confident in positive growth for the industry overall. With a number of large growers going out of business it’s only prudent to have concerns about the future growth of the greenhouse growing industry. And again, we’re back to that same 40-ish percent who’s feeling flat about growth and profit. However a smaller number of suppliers does mean opportunity for those still strongly in the game and those looking to grow.

Leslie’s take
With the top 55 percent of respondents stating net profit projections of 14 to 18 percent, I’d say the overall health of participants is pretty solid. Those reaching 20 percent net profit targets are definitely doing things right. With only 6 percent of respondents claiming losses, we’re looking at a pretty good year for growers.


Crops & Production: Perennials and edibles and drought-tolerant plants

As we compare last year’s results with current figures, we can see that edibles remain a strong category for greenhouse growers. This shouldn’t come as a surprise, as we’ve been seeing corresponding demand in the consumer market in recent years. A steady number of home gardeners are growing their own fruits and vegetables, and non-growers are desiring greater numbers of locally grown, high-quality produce. Most growers surveyed are growing edible crop transplants, perennials and annuals/bedding color, the three most popular categories at retail. However, herbs have been rising to greater prominence recently, with just more then 50 percent of growers producing them and about a quarter of them planning to increase production of the category in 2016.

This year, we split out the edibles category into edible crop transplants and finished produce to obtain more specific data. Last year, 43 percent of growers projected vegetable plants to be their biggest growth area in 2014, whereas that number (edible crop transplants and finished produce combined) dropped slightly, to 37 percent in 2015. We aren’t seeing a drop in demand for edibles, but perhaps more of a leveling off. Perennials and annuals/bedding color demand and production are up this year and seem to be making a bit of comeback.

Water has been a topic of increasing importance in recent years across the country, although it’s not the first time. We see about a third of growers upping their production of drought-tolerant plants and about half either employing drip irrigation and/or changing watering times to conserve this precious resource.

Leslie’s take
Sustainability issues such as drought, wildlife gardening and landscape restoration seem to be driving the demand for tough perennials. Herbs continue to grow in sales and we’ll see demand for herbs in the next few years. If you lump edible transplants and herbs together, edibles remain a massive driving force in the market.

Leslie’s take
Edibles have been a strong driver of sales and profit for a while. That they are topping this list with such a strong percentage speaks to the power of the urban farming movement. I don’t see any significant decline for edibles in the near future. However I do see annual color giving edibles a run for its money in 2016, which is most likely a result of the growth of the strong real estate markets. Perennials tie with annuals in production, which speaks to the steady and growing power of perennials across the market.

Leslie’s take
As stated above, demand for annuals picked up the pace this year.  While edibles still remain strong, some growers will be shaving a bit off of their edible crops to make room for more annual color and perennials. I’m happy to see perennials almost tieing with annual color, which I think speaks to the move toward more sustainable gardening practices amongst homeowners and landscapers.

Leslie’s take
Glad to see IGCs still topping this list. However, I suspect the mail order figures will continue to rise over the next few years as more growers improve their online presence and choose to go around retailers to drive quicker product turns. If retailers want to get ahead of this game and sell more of your product faster, they should be aggressively embracing the online sales capabilities. Yet, I don’t see that happening in a significant way. My sense is that growers will be quicker to adapt and use technology to retail more of their product directly.

Leslie’s take
Some traditional plant growers have jumped into the finished produce game in a big way. Many are still dabbling. Depending on your region, finished produce can be a great way to supplement the shoulder seasons if you do it right. These days, the number of local farmers markets popping up around the country have outpaced the supply of available fresh produce. Restaurants are also having trouble sourcing fresh local produce in the quantities they need. I still see plenty of opportunities to meet a growing demand for produce.


Management and Marketing: Know your business

When it comes to improving and marketing a growing operation, no one solution will work for all growers. As we saw in our research, growers want to improve many aspects of their businesses, especially in the areas of marketing and pest and disease control. However, when it comes to the biggest blockers to success, the answers were across the board with no single challenge dominating. As with any aspect of your business, finding the social media platform, pest management plan or production solutions that fit best with your needs is key to finding success in the present and strengthening your business for the future. 

Leslie’s take
I’m encouraged to see marketing improvements topping the list here. Growers have a significant opportunity to take the wheel when it comes to direct marketing efforts. IGCs are notoriously tight-pursed when it comes to spending on marketing and advertising. And based on a previous question, IGCs make up 35 percent of your customer base. Yet, much of the burden of marketing efforts is left up to the retailers. Landscape contractors certainly aren’t spending to market any of your specific products. You’re better off investing in your own marketing efforts to improve sales at retail and with contractors. That means you’re going to have to raise your prices.

Leslie’s take
I expected staffing to rank above pest and disease control in the previous question about the most important improvements to your businesses, however it ranked second on the list. Yet, only 5 percent of respondents to this question stated that pest and disease problems were a challenge to growing their business. So, does that mean you want to make improvements for other reasons such as sustainability? Or are regulations a bigger factor?


Leslie (CPH) owns Halleck Horticultural, LLC, through which she provides horticultural consulting, marketing strategy, digital content creation, branding design, advertising and social media support for green industry companies.  www.lesliehalleck.com



Finding a financial foothold for future success

Take these points into consideration as you seek capital to fund your greenhouse improvements and growth.

By Will Kain

“How do we make our business run better?”

In my experience, this is a universal business question. Irrespective of size, location, industry, structure or any other major business characteristics, owners, managers and operators everywhere ask themselves, and each other, how to improve operating results every day. I’ve found the greenhouse/Controlled Environment Agriculture (CEA) space to be no exception.

As any manager knows, the good news is that there is no shortage of purported options or ideas for how to enhance the performance of a business. The bad news is that a large swath of those options or ideas are often not very good. It’s therefore the job of a leadership team to evaluate the most reasonable, achievable and, most importantly, affordable of the various options in front of them to invest in and grow the business.

Affordability, however, is not often simply assessed. Of course, at its most basic, the question of how to afford something is not difficult: is there enough money available to pay for this? But that is only a surface-level analysis of the issue. More nuanced questions abound:

  • What is the value proposition of the proposed solution or investment? How, specifically, will the business benefit?
  • What’s the likely return on investment that comes from implementation of this solution? How long will it take for the business to generate additional profits that equal and exceed the invested amount?
  • Risk assessment: how difficult is it to implement the proposed solution, and what’s the likelihood of challenges to achieving the desired benefit?
  • What are the available sources of capital to fund a new solution or investment?
    • Cash on hand: scarce resource; What does the opportunity cost?
    • Credit/Debt: interest rate, term of borrowing, collateral required.
    • Investor(s): What returns does an investor expect and what ownership stake in the business will an investor need?

Having looked at investment opportunities both as a company manager and a potential investor, I believe that each of these questions requires a good deal of thought and consideration.

Value proposition
As I see it, a business needs to be able to answer “yes” to one (or more — more is always better) of the following key questions relating to value proposition before making an investment:

  1. Will our revenues go up?
  2. Will our costs go down? (revenues up + costs down would be great)
  3. Will we be able to meet a regulatory requirement faster/ cheaper/easier than otherwise?

Without an affirmative answer to one of these three issues it would seem to be difficult to justify expending valuable resources on something new. Further, if you can’t demonstrate a tangible, economic business benefit, then attracting outside capital, debt or equity will be extremely difficult. This is a simple matter of dollars and cents — if you’re going to spend money, be very confident that you’ll be making more money in the future as a consequence.

Return on Investment
Return on investment (ROI) measures the amount of return on an investment relative to the investment’s cost. It’s a great tool for both managing internal evaluation processes and communicating with potential sources of outside capital.

When considering a number of investment opportunities for your business, ROI is an excellent part of the scorecard by which you can compare options. All else equal, a cost-cutting solution with the shortest time frame to pay back the invested capital to implement those cost savings would appear to be the best option, for example.

Of course, we know that all else is rarely equal, though. As such, ROI needs to be considered in the appropriate context, allowing for size of investment, time and risk of execution, among others. As you look outside your organization for capital, having a good understanding of the ROI of your solution will be important.

Risk assessment
Another useful exercise for both internal investment review and discussions with external capital sources is an honest assessment of the risks associated with installing a new solution to foster growth in a greenhouse business. There are no guarantees in matters of business, so having a good understanding of where the potential weak spots are in the plan is a critical piece of the puzzle. Understanding the risk points and overall level of risk will dictate much about whether to make an investment and where the needed capital could come from.

Sources of capital
The value proposition, ROI and risk assessment serve to build up to what the potential options are for raising the funds necessary to invest in a new solution to grow your business.

Funding improvements out of cash on hand is a decision that any business (with cash on hand) must consider carefully. In addition to value proposition, risk and ROI considerations there are a whole host of decision points that are unique to the particular company.

For the purposes of this discussion, we’ll focus on sources of capital that are external to the specific greenhouse or CEA operation. In this field of view there are only two types of capital: debt and equity, which can certainly be used in combination.

Oftentimes, the sources of debt and equity can be the same, so the approach to attracting debt or equity can be quite similar — a focus on what the economics of a new investment look like and how the sources of capital can participate in the benefits of the new investment. Whether debt or equity is most appropriate for a given solution, will be determined by the specific value proposition, ROI and risk of implementation.

Many equipment-based solutions — such as buying a robot to speed up harvesting and/or reduce harvesting costs — are often good candidates for debt financing as they provide ready-made physical collateral and the returns are frequently easy to forecast. In many cases, equipment vendors will provide supplier-financing schemes based on the reliability of the forecasted benefits to customers. Banks are good debt-financing partners, and many have USDA-backed loan guarantee programs that can make the process and costs of borrowing less onerous to greenhouse operators.

More speculative options, and those without hard assets associated with them, can be significantly harder to finance through debt. Not only is the risk higher when buying a software algorithm that optimizes watering and fertilizer, for example, but there is no physical asset to act as collateral. In that specific instance, raising equity is most likely the best option for that particular greenhouse operator.

Finding the right equity partner is an important strategic decision for any company. In a very real sense, it’s the closest thing to marriage in the corporate world: decision-making power gets split between you and your investor(s), communication is critical and strategic direction has to be agreed upon. As such, it is frequently advisable to find an equity partner with more than just a financial interest in seeing you succeed, but also with strategic value and an understanding of your business. Perhaps a multinational seed supplier, a large equipment partner or distribution channel has capital available that could be put to work in growing both your business and, as a result, their business.

Depending on the size of the investment you seek, local “friends and family” are sometimes options for investment capital, as well. The critical point to remember, though, is that you’re sacrificing a stake in your business in exchange for an equity investment. You have to be comfortable both with that concept and with the counterparty providing the capital.

Whatever the case, though, potential investors (and lenders) are likely to pose the same broad set of questions as you seek their support for improving your business operations. What am I investing in? What is the plan to achieve the benefits that you believe come with improvements to your business? What is the risk associated with implementing and achieving your plan? How do I get paid back and generate returns on this investment?

The more detail you are able to provide to potential capital partners about the value proposition, return on investment, risk of implementation and the plan to bear each of those out, the more likely it is that you will arrive at the right solution.


Will is currently Senior Vice President at Rusheen Capital Partners, a technology commercialization and investment platform focused on energy and resource-based businesses, based in Santa Monica, Calif. Will was also a speaker at the International Congress on Controlled Environment Agriculture in Panama City, Panama, in May 2015.



Economic Outlook

Bears, bulls, greenhouses – oh my

Understanding the economy can be tricky. But it can also help growers plan their year and protect themselves against market downswings.

By Chris Mosby

For those watching the economy, the past few months have induced some fear. In early August, the world’s second largest economy, China, devalued its currency (the Yuan). When that first domino fell, it seemed it would cause a cascading series of consequences. The global markets sputtered for a bit, with European and domestic markets dropping as a result. But then the panic levelled off, the markets balanced and business seemed to be restored.

This all left a single question in the air. How should growers understand the ever-changing economy?

We spoke to Marco Palma, associate professor and extension economist at Texas A&M University, to get his take.

Greenhouse Management: What indicators of the economy should growers be paying attention to?

Marco Palma: Some of the things that people may want to start looking at is the number of housing starts. You can also look at the existing home inventory, for example, and you can see certain cycles in terms of the number of existing houses. What you can see lately is that we’re probably, at the start of the year, a little over the 2 million mark in terms of existing home inventory. Over the past year or so we have been between that mark and the two-and-a-half million houses mark, with some fluctuations over time. Certainly, that’s way lower than it was back in the thick of the recession, from 2008 through 2011.

You can also look at things like the existing home year-to-year inventory and how many months of supply we have. Back in 2008, there was probably about a five-month supply of existing houses. It has been going down for a while, which means that we’re starting to see some activity in terms of moving those existing houses and selling those. So that’s an interesting trend.

GM: Are there other housing-related statistics growers should pay attention to?

MP: You can take a look at the number of one-unit structures that are being built. That’s usually an indicator that some of these houses will need landscaping activity, and typically that’s associated with an increase in overall activity, within a few months, for the green industry.

There is an architecture billings index. It’s the leading economic indicator of construction activity, and it reflects an approximate nine- to 12-month lag between the time of the architecture billings and actual construction spending. That gives you a margin of about a year before construction starts. And then you can look at the housing market, for example, to look at the activity that is taking place. And then within a few months of that moving into construction, you can expect to see some increase in the green industry.

GM: What are the indexes saying? Will the housing market improve this year?

MP: Housing prices are expected to grow in 2015 anywhere between 3 and about 4 percent. Fannie Mae goes as far as saying that they might even increase to about 4.9 percent. But if you take an average of the expected price activity, we are probably in the range of about 3 percent. I don’t know where we are right now in terms of closing in the third quarter, but that’s probably a good indicator.

GM: Where should growers go to find good housing indexes?

MP: If you want to look at the housing forecasts and housing starts, I think that different groups have different forecasts. You can look at the Fannie Mae, Merrill Lynch, Wells Fargo and Zillow’s indexes.

GM: What about more traditional economic indicators? Should growers watch the stock market?

MP: There’s two answers to that. Yes, that’s something that you need to keep an eye on. But what’s more interesting is when you’re looking at some of the housing markets, you will see fluctuations through the year. While you have fluctuations, it’s important to look at the overall trend, is it going up or down, because that’s a signal of activity in the near future.

[The stock market] indicators include a lot of the different financial markets, including banking. It also includes, of course, real estate. But it includes many other things such as oil and other commodities that do have an influence in the industry. Cheaper oil prices typically mean reduction in some of the input prices, which might not be entirely bad. If you see a reduction in overall economic activity, that’s not desirable of course, because that means that there might be a reduction in consumer activity.

Any time you see the housing market expanding, it means that there is planting and landscaping activities that comes along with that. The same with the remodeling activity.

GM: How much should housing indexes and economic factors play a role in yearly planning for growers?

MP: I think they should be a very important consideration, but you should also look at the historical numbers and many other sources. For example, growers should be talking to their customers and looking at what happened to prices or relative prices and anticipating the demand based on what their clients are asking. Maybe looking at the overall general trends within the industry in terms of plantings and things of that nature. I think these are factors that help you out in terms of the big picture.

General economic trends will provide some guidance as to the direction of the overall market. But if they go back home and think that the state of the economy means that the industry is going to be increasing, but they do something that affects the quality of their plants — even if the industry is growing — and they decrease the quality of their product, that might seriously affect their competitive situation in the market.

These are things that they can look at, but they also need to concentrate on the things that they can control. And the things that they can control are the quality of their plants, which plants they grow, when they grow them and which markets they’re trying to sell those plants into.

GM: Looking at all of these factors, how are you feeling about the economy and the industry right now?

MP: Well, I think that we are looking at a period where the industry is starting to grow again. After the recession, I think it took a bit of time to see some traction in the growth of the industry. It’s also interesting to see that even through the recession, there were a few firms that were still growing, so clearly they were doing something well and different than others.

We saw a big shakeout in terms of the landscape industry. I think that during the recession, about 50 percent of firms were in the small-scale category of $250,000 or less. That’s pre-recession. Post-recession, we’re probably at 60-something percent of the operations that are small-scale. So we see that a predominant number of firms are within the small sales category. Yet, all of those firms combined represent a very small portion of total sales for the industry.

We have a structural industry where there are very few extremely large firms. The predominant majority of people, I would say, are in smaller sales categories, and the market strategies for selling their product are very different. If you’re a large firm, you’ll want to compete in price and be one of the low-cost operators. But if you’re a small guy — and 60 percent of the growers out there are small guys — maybe they should look into different selling strategies for differentiating the products. Try to get higher prices for their products by increasing the quality, increasing the value they provide to their customers.


This interview has been edited for length, flow and accuracy.


State of the Landscape Industry

Landscape contractors nationwide still bottle-necked by a lack of good help.

As landscapers finish up the 2015 season, they’re experiencing one of the best years since the Great Recession. Across the country, contractors report spending by customers is back on the rise, especially on outdoor living areas like patios and water features. A full-service model still dominates for the average landscaper: maintenance services (mowing, trimming and edging) make up 43 percent of the average company’s top line revenue, with a mix of design/build and lawn care services rounding out the top three. But as the economy and business has bounced back, landscapers have been limited by the lack of good help: A quality labor shortage is cited as having the biggest impact for the next three years by Lawn & Landscape readers. – Chuck Bowen, editor of Lawn & Landscape

Lawn & Landscape’s State of the Industry report will be published in its October edition.




Map it out

Michigan State University Extension has developed a spreadsheet tool for small- to mid-size growers to help calculate costs from previous years and project into the future.

By Cassie Neiden

When it comes time to sit down and crunch the numbers for your business, the task can seem daunting. Depending on the size and type of your operation, you may do things differently. But when you want to analyze the big picture of your business — maybe it’s to increase the price of one of your crops, or add something new to your repertoire —there’s a tool that’s now available for free that can help.

Michigan State University Extension has released a production spreadsheet system fittingly named “Estimating the Production Costs of Greenhouse Crops” that can help you evaluate your financials line by line, all in one place. 

“The spreadsheet pulls together all the grower’s financial records, say from the previous year, and then they can use those to develop a current projected cost,” says Thomas Dudek, senior extension horticulture/marketing educator at MSU.

And the numbers derived from the production tool can be used for multiple purposes.

“We can look at economic production costs in three different ways: the total economic cost per plant, maintaining your net worth and meeting the cash flow demands — and those all are important when you look at the economic viability of your business,” Dudek says.

The tool can be found here


Step by step
The tool, at first glance, is a bit complex. That’s why MSU Extension has recorded an hour-long video, with two of its leading researchers, to help break down the spreadsheet system and provide tips on how to fill it out page by page. The link to the video can be found at vimeo.com/122686823

Take your time
Dudek warns that the process will be time consuming, but it will be well worth it once you have the numbers in front of you. And it’s better to fill out the spreadsheet completely and have accuracy, than to give yourself a false idea of your bottom line, or what may or may not be feasible.

“You’ve got to have your records pulled together so you’re not jumping around once you sit down. Have your file drawers close at hand that carry all your purchase records, your tax records, your labor/payroll issues,” he says.

Growers may also have to stop to think about factors such as the number of laborers doing transplanting, or expenditures on pesticides and fertilizers, to get the entire picture.

If you need assistance, Dudek says to contact him, or Roger Betz of district farm management at MSU, and they’ll help you through it. Tracking your numbers will help you have that competitive edge, whether that be competing with a neighboring operation or when it comes to selling to big-box stores.

“I think people that have utilized it are finding that there is some benefit to having a better understanding of their financials,” Dudek says. “And that’s key in this industry anymore to staying competitive — is understanding costs.”



Benchmarking green goals

D.S. Cole Growers makes itself more sustainable through a certification process that quantitatively tracks its improvements.

By Cassie Neiden

When it comes to heating your greenhouse, things can get pricey, so conserving as much energy as possible will benefit your bottom line. When it comes to deploying chemical agents, using them wisely will make your practice more sustainable, putting you in better standing with both the industry and your community. No matter how you slice it, reducing your dependence on resources is a win-win.

Doug Cole, owner of D. S. Cole Growers in Loudon, N.H., realized that he could make his operation more sustainable after networking with European growers in the mid-2000s. At that time, most large European stores required growers to obtain an MPS certificate with a high rating, Cole says. The rating tells the consumer that the plants were grown at a highly sustainable level.

MPS, an international, independent certification process headquartered in the Netherlands, evaluates the usage of crop protection agents, fertilizers, energy, water and recycling practices to give greenhouse operations quarterly qualifications, as well as an overall A, B or C rating that can be viewed on MPS’ website.

The goal is to promote environmentally friendly and sustainable practices, and provide a quantitative system through which growers can be evaluated.

Cole is an advocate for the MPS certification because of its ability to track true metrics of a greenhouse operation, and environmental progress it is making.

“It’s not a feel-good thing about writing notes, essays about what we’re going to do. They’re measuring everything,” Cole says.

And those benchmarks and qualifications can resonate positively within growers’ communities, according to Arthij van der Veer, MPS’ general international coordinator for Latin America and North America.

“As MPS, our mission is to help growers put the information back to the general public, showing that really they are conscious, they are working sustainably and they are working 24 hours a day to deliver a quality product to the market,” van der Veer says.

The certification process holds growers accountable by keeping track of their practices on a 4-weekly basis or daily basis, whichever the grower opts to do. Greenhouses are also audited annually on-site, and the audits are occasionally conducted as surprise visits. Growers are then given a quarterly evaluation, and a letter grade of A, B or C, based on the amount of points they earn. In 2015, MPS also introduced a new tier, MPS-A+.

Growers can also participate in MPS GAP (Good Agricultural Practices) certifications that delve further into employee management and safety.

MPS, which now certifies 3,500 greenhouse operations internationally, tried something new when they worked with D.S. Cole Growers. Cole’s was the first United States grower to complete MPS certification, so the international metric measurements had to be converted to U.S. systems, i.e. ounces, fluid ounces, pounds.

“In the beginning, [Cole] had to register everything based on the European scales, so he had to register everything in kilograms and grams and milliliters,” van der Veer says. Now, six years later, 39 growers in North America are certified and can benchmark their progress in U.S. units. Some recent MPS-certified growers include Green Circle Growers in Ohio and Center Greenhouses in Colorado.

Leslie’s take
It’s really encouraging to see recycling, biocontrols and composting top this list with such large percentages. With water being such a huge issue for our industry, I would expect the numbers on water-related practices to grow as we head into 2016. I’d lump topics such as rain collection, water reclamation and permeable surfaces into the same group, essentially when it comes to water management and conservation. Ongoing drought is forcing many growers to innovate using these practices when it comes to water-usage, so I’m a bit surprised not to see bigger numbers on the water-related items. But then again, that is influenced by the location of most of the respondents. It’s only a matter of time before competition for water rights and regulation force growers across the country to get much more creative and conservative about how they use and manage water.


Practical measures
D.S. Cole Growers currently carries an A rating, but Cole continues to look for ways he can be even more sustainable in his practices.

One major factor into his ABC score is crop protection usage, which he monitors closely. The agents are labeled in colors by MPS, determinant of their active ingredient. Agents that are labeled black are not permitted. These include DDT and methyl bromide, van der Veer says. White agents are biologicals, which do not count against the grower.

Green, yellow and red-colored agents follow a traffic-light model. The closer to red an agent is, the “higher the impact on the environment is,” he says.

Van der Veer says the benchmark tool allows them to look back on their practices and ask themselves Why are we using a lot of certain crop protection agents? Can we reduce them?

“And step-by-step, they look at the other categories, and that’s how we help growers really look at their sustainability footprint and start improving themselves,” he says.

Cole also realized he could capture some of the heat that was going up the chimney of his boilers by purchasing a new gas-fired boiler with a condenser as part of the system.

The condenser, purchased from Netherlands’ VB Greenhouses in 2014, takes the water that’s returned to the boiler from throughout the greenhouse and pumps it through coils in the chimney stack. The coils pick up waste heat from the boiler exhaust, and pass that heat along to the water flowing through to the boiler. Utilizing the condenser reduces the amount of fuel needed to fire the boiler.

In other words, “I’m taking the waste heat that goes up the chimney and trying to suck all the BTUs out of it,” Cole says.

Cole is also installing floor heat in a new, 1-acre glass structure. The temperature of the water in a floor heating system is typically cooler than the water that runs through radiant steel pipes. Because the return water in the floor heat is cooler, it is the perfect source of water going directly to the condenser, he says. The lower the water temperature passing through the condenser, the more efficient the condenser is in passing BTU’s to the returning water. This process will significantly reduce the energy cost for D.S. Cole.

Although Cole will not receive a direct reward for implementing the new condenser in his facility, the decreased BTUs in his reports will raise his MPS score.

Cole has also strengthened his relationship with MPS by becoming GAP certified. Van de Veer calls this certification “rigorous,” and Cole was also the first in North America to earn it.


Weighing the advantages
Becoming certified requires work. It requires time to accurately report data to MPS, and in some cases, initial upfront costs, which begs the question: Is becoming certified worth the effort?

Cole says yes.

“Someone who is a naysayer is going to say, ‘Yeah, but we all do that. We all try and cut down.’ But this way, with it quantified, you really are able to see it better, watch it better,” he says.

Not only does it help him improve his operation, but it is one of the factors that opened the door to selling his herbs to supermarkets, as most grocery outlets now require a form of GAP certification from their producers.

And Van der Veer says that although most of the sustainability hype with consumers concerns edible products, the category that logically follows is ornamentals. As more pressure for sustainable practices is being put on the retail end, he believes measuring sustainability and continuous improvement will have a “big impact on the sector in coming years.”