Each year’s State of the Industry Report yields a representation of what’s on growers’ minds, in the form of statistics and year-over-year trends. This picture helps us to gauge the overall health of the industry, and where greenhouse operations’ pain points lie. This year, the two biggest pain points were clear — labor and trucking. Labor has been a challenge for several years, but this year’s report shows that the problem is exceeding previous levels. And with the recent implementation of the electronic logging device (ELD) mandate, many growers found themselves scrambling to find drivers and trucks to transport their plants to market.
In addition, the early spring showers we’ve come to expect came in an unanticipated form — snow and freezing temperatures for many growers. This resulted in a backlog of plants across U.S. and Canadian greenhouses in March, April and, in some parts, May. Some growers were able to ship the plant material once the weather broke, but many weren’t able to get their cool-season crops out the door in time.
However, in spite of these challenges, most growers — 65% — said that they expected sales to be up compared to last year, and the market has stayed relatively stable. “Our spring was intense!” said Barbara Jeffery-Gibson, president of Jeffery’s Greenhouses in St. Catharines, Ontario. “We couldn’t sell pansies in April, but we could have sold anything in May. … Product sold faster than we’ve ever seen. The high temps continued into the summer months and summer sales were steady into late June.”
Again this year, we spoke with growers like Jeffery-Gibson throughout the U.S. and Canada to put faces to the statistics that we gathered. We learned about their challenges, successes and outlook for the coming years, among other aspects of their businesses. Their commentary is included throughout the research. If you’d also like to weigh in on the state of your business or the horticulture industry, we’d like to hear from you. Drop me a line at firstname.lastname@example.org with your comments.
Patrick Williams and Chris Manning also contributed to this report.
A slow start
Weather can be a fickle friend, and this year was no exception. Growers in many parts of the U.S. and Canada experienced a cold and sometimes snowy March and April that hindered early season plant sales. However, many growers reported being able to make up for slow or no sales in April and May as soon as the weather broke. Last year, about 37% of growers were negatively affected by the weather, and 37% were positively affected; 33% said it didn't affect their business. However in 2018, 7% more growers said that the weather hurt their business, and 17% fewer growers reported that the weather helped their business. About 4% more growers ranked themselves right in the middle.
Net profits stayed fairly consistent this year, with exceptions being in the 15-19% profit (up 3%) and less than 3% profit (down 3%), which is a shift in a positive direction. Overall, net profits appear to be trending in the right direction as growers look to the future. Four percent fewer growers predict flat profit for 2019 than they did for 2018, while 3% more predict increases.
More growers raised plant prices this year, mainly in the 1-4% range, which saw a 4% uptick. Five percent fewer growers opted to keep their prices the same this year, which is good news as costs continue to rise.
Growers’ confidence appears to have been shaken a bit compared to last year, with growers ranking their confidence at a 4 or 5 decreasing by 6%; those ranking their confidence at a 1 or 2 were up by a combined 12%. This seems to be in part because of a tough start to the season and other reasons we’ll examine more closely later in the report.
Indoor is up, veggies are down
Most crops in the list on page 20 have maintained consistent numbers over the past few years, especially plants that are destined for a consumer’s living room or kitchen such as cut flowers, indoor foliage, potted flowering plants and herb plants. Succulent production was up by 4%, and the indoor foliage plant category has been slowly, but steadily increasing over the past several years. In 2017, Derek Barlow of Hendrik’s Greenhouses in Ontario had commented that “Overall, houseplants are coming back,” a statement that still rings true this year.
The annuals/bedding plants category was also relatively stable, with about the same number of growers producing these plants this year compared to previous years. However, about 5% more growers plan to increase production of this category in 2019. Looking at specialty crops, several growers wrote in to say that they are specifically growing natives and/or orchids, and 7% more growers are producing drought-tolerant plants this year.
We did note that 20% fewer growers are producing edible crop transplants and finished produce, respectively, this year, part of what seems to be an overall decrease in edible crops since their peak a few years ago. Significantly fewer growers plan to increase production of edibles in 2019. In addition, some growers wrote in to say that they would not be increasing production levels for any crop, ornamental or edible.
Over the past three years that we’ve asked about cannabis, the number of respondents growing it jumped from 1% to 4%. Five percent of respondents said they plan to increase cannabis production — or perhaps begin producing it — next year, more than double last year’s number. It’s likely that this percentage will continue to rise as more states legalize the cultivation and sale of this crop.
Lastly, we’ve seen a shift in the direct-to-consumer markets growers are selling in: a 9% reduction in farmers markets, — perhaps related to the edibles decrease — a 3% reduction in other direct-to-consumer markets, and a 4% decrease in retail.
Over the past several years, we’ve noted several shifts in the challenges faced by growers. As we distance ourselves more and more from the trials of The Great Recession, the economy has become less of a concern for growers, declining from 16% in 2015 to 11% in 2018. Meanwhile, the number of respondents selecting “declining customer bases” as their biggest challenge has been gradually increasing each year, up to the second biggest challenge this year at 14%. The biggest increases we saw this year were finding qualified labor; freight/shipping costs and logistics; and increasing labor costs — each up by 4%. Among the fill-in “other” answers, several growers mentioned their age or health as a challenge to expanding their business.
Marketing and social media presence were the two aspects that growers would like to improve that saw the biggest decreases this year (12% and 10%, respectively). Facebook is still the most popular social media site for greenhouse growers, and its usage is up 10% this year compared to the past two years. Instagram usage has also nearly doubled since 2017, and has more than doubled since 2016. YouTube use is up about 3%. Consumers are voracious consumers of multimedia content; YouTube boasted 1.5 billion monthly users in 2017 and is the second-biggest social media platform, according to TechCrunch. About 15% of respondents said that they don’t use social media. Others said that they rely on word-of-mouth or their website.
Among the greenhouse owners that plan to retire and/or sell their business in the next five years, it’s good to see that the number of those who have a succession plan in place has risen by 11%. We also see that 3% fewer of those folks see a succession plan as unnecessary, which is also positive news.
Help wanted — and not found
While slightly more than a third of growers said that they didn’t have a need for additional labor, another similarly sized group said that they’re still unable to find qualified labor in their respective markets; 6% more growers said they can’t find the right person for the job this year. The vast majority of growers — 79% — still consider finding high-quality hires to be difficult, a result that has also been supported anecdotally through conversations we’ve had with them throughout the year.
Growers also seem to have figured out the best way to maneuver through the recent health care reform; half as many people reported it as a roadblock to hiring this year.
In general, greenhouse operations either maintained or increased hourly rates and salaries this year. Eight percent more businesses increased hourly rates, and 2% fewer maintained those rates. Fifteen percent more greenhouse operations increased annual salaries and 8% more stayed the same. Fortunately, we’re not seeing too many salary and hourly rate cuts.
In most job categories, greenhouses are having about the same or slightly less difficulty finding employees as last year. However, the difficulty of finding drivers increased from a 2.6 to 2.7 average. With the implementation of the electronic logging device (ELD) mandate this year, the availability of drivers has decreased, and demand for drivers has increased.
Growers are upping their game when it comes to the tactics being used to recruit younger professionals. We saw an increase in each tactic being employed, with the most significant being a jump in social media — from 24% in 2017 to a whopping 57% in 2018. The next two biggest increases were in offering internships (up 12%) and attending trade shows (up 10%).
“We have needed more help all year. Difficult to find appropriate help.” — From the survey
“We actually can’t find enough employees.” — From the survey
“Insufficient labor of any kind” — From the survey
Perennial Plant Symposium 2018 recap
2018 State of the Industry Report - Perennials
This year’s event featured recognition of the next generation, insightful tours at leading local growers and an inside look at how Amazon has embraced horticulture.
This past July, the Perennial Plant Symposium was held in the Raleigh, North Carolina area for the first time since 1997. During the event, which took place from Monday, July 30 through Friday, Aug. 3, both established professionals and the next generation were recognized, Amazon’s lead horticulturist presented information about the retail giant’s plant-oriented space in downtown Seattle and attendees toured several prominent local growers and landscape operations.
Award-winning horticulturists across the age spectrum
In its 21st year, the Perennial Plant Association’s scholarship program offers college students enrolled in a two- or four-year program a $1,000 stipend, full access to the annual symposium and time to network with industry professionals. This year’s winners were as follows:
Phyllis Daugherty, Alamance Community College
Lynn Lorio, Cincinnati State Technical & Community College
Olivia Fiala, University of Nebraska-Lincoln
Kayla Goldstein, Community College of Baltimore County
David McKinney, Colorado State University
Markis Hill, Kansas State University
Christian Jay Moore, The Ohio State University
Bruce Moore, Kansas State University
Additionally, several industry professionals were recognized. Hoffman Nursery led the way with three different awards. John Hoffman, the business’ owner and founder, received the Award of Merit, and John and his wife/co-owner, Jill, were jointly honored with the Grower of the Year award. Their son, David, was also recognized with the Young Professional Award, which honors a student or newcomer “based on their involvement in the PPA, has contributed to the success of their company, and has portrayed a positive image of the perennial plant industry to the public.”
To hear more from John about this year’s event and his busy summer, read Three Questions. For the full list, visit of PPA award winners, visit here
A look inside Metrolina Greenhouses
On the first day of the event, a group of attendees visited Metrolina Greenhouses in Huntersville, North Carolina. In Huntersville — one of two locations where Metrolina grows annuals, perennials, mums and other crops — the grower has 170 acres of production space in glass greenhouses. And it plans on expanding in the next few years.
According to Mark Yelanich, Metrolina’s director of research, and Ivan Tchakarov, Metrolina’s director of growing, the business is planning on adding 40 acres of production space over the next five to eight years. Currently, the plan is to build the expansion five acres at a time until completion. And each of the five acres will be constructed in the same way. First, concrete is poured and set to establish a solid base for the facilities. Then, the rest of the greenhouse is constructed piece by piece. Once one five-acre section is completed, the process restarts with the next five acres.
According to Tchakarov, this expansion will present some problems that must be strategically solved. Currently, he says Metrolina employs 625 full-time employees and 800 to 1,000 seasonal employees depending on the time of the year. Adding more space will only increase a need for a labor, and Tchakarov is unsure how robust the local labor pool is.
However, both Tchakarov and Yelanich noted that automation will play a big part in managing labor needs. While noting that it can be complex to manage and organize this automation properly, they believe that it leads to increased efficiencies in the greenhouse during the busiest times of the year. If additional labor is not as readily available as Metrolina might need, automation will likely play a big part in solving the problem.
Sustainable, local lilies
Located near several old tobacco farms in Durham, North Carolina, Sarah and Michael’s Farm, operates a bit differently than its neighbors and sells an entirely different crop.
A lily grower primarily selling to Whole Foods, Sarah & Michael’s Farm plants around 5,400 bulbs a day in the spring. Due to the North Carolina heat, owner and head grower Michael Turner says the business specializes in Asiatic and Oriental lilies that can better handle the hot climate. At PPA, Turner also gave a presentation about the business’ use of biological controls instead of chemicals for aphid management in the greenhouse. He says that since he started using biologicals, aphids have not been an issue for his business.
Additionally, when some attendees toured his greenhouses, Turner showcased how he grows differently than his tobacco-growing neighbors by being more environmentally conscious. At Sarah and Michael’s Farm, lilies are grown in coconut coir imported from Sri Lanka. According to Turner, he decided to grow with coir because it is reusable even though shipping it to his facility takes longer than other growing media options.
To re-use the coir, it is steamed to remove any leftover old bulbs or leaves, which are then moved to the compost pile. The steamed coir is then reused, and reused again, until it is no longer useful. Turner says that this process is not only good for the Earth, but is financially responsible.
Additionally, Turner grows bulbs in the same crates they arrive in and steams the crates afterwards to protect against diseases and weeds before being reused. Bulbs, which are only used once because Turner says it is more economical to buy new bulbs since the second flowers from bulbs are often smaller, are perhaps the only item Turner doesn’t find a way to re-use.
Amazon puts plants on display
2018’s Perennial Plant Symposium was a homecoming of sorts for Ron Gagliardo. Before he moved into his current position as Amazon’s senior manager in horticultural services — and Amazon’s first horticulturist — in 2014, he worked for Tony Avent, a local PPA committee member, at Plant Delights Nursery in Raleigh.
Primarily, Gagliardo works on The Spheres, the online retail giant’s take on an urban office combined with biophilic design, which means designing spaces that play to humans innate desire to interact with other life forms. He and other members of the Amazon horticulture team sourced plants from botanical gardens, private gardens and universities across the globe. The Spheres are in the heart of downtown Seattle and are accessible to the public. The overall design of the project, he says, was based on research that indicates that being around nature can improve humans’ brain functionality and boost creativity.
The Spheres project took months of planning and research to find the right plants for the facility, according to Gagliardo. The first plant grown for the plant collection was Herrania balaensis, an Ecuadorean cacao species that produces pods that are often used to create high-quality chocolates. The space is divided into several collections, ranging from the vertical gardens of the Canyon Living Wall to a fernery space. A full overview of the plants at the sphere can be found at seattlespheres.com/the-plants
But despite the large scale of the facility, and the unique plants inhabiting it, the success of The Spheres is founded in traditional greenhouse growing. In order to grow new plants for the facility, and to have a safe space for plants that need to be rotated out, Amazon purchased a greenhouse in Woodinville, Washington — a 51-minute drive from Seattle, according to Gagliardo, to help supplement The Spheres.
An evolving market
2018 State of the Industry Report - Nursery Growers
Closures and acquisitions in 2018 have changed the face of the nursery market.
Despite a fairly steady nursery market, 2018 saw some high-profile closures and bankruptcies. However, two heavy hitters in the market — DCA Outdoor and TreeTown USA — have been acquiring operations across the nation this year.
In June 2018, Gardens Alive! announced that it was seeking a buyer for its wholesale nurseries in Cornelius, Ore., Sims, N. C., Smithville, Tenn., and Grand Haven, Mich. Formerly known as Zelenka Farms, Gardens Alive! grew some 5,000 container shrubs, trees, perennials, roses and groundcovers each year for big-box retailers.
Zelenka Farms was founded in 1993 under the name Berry Family of Nurseries. LM Farms, LLC (dba Gardens Alive!) acquired Zelenka Farms out of Chapter 11 bankruptcy in 2016.
This fall, Rio Verde Holdings, LLC purchased the 300-acre Oregon farm from Gardens Alive!. Rio Verde Holdings, LLC is owned by a green industry investment group which will run the business as Rio Verde Plantas. DCA Outdoor will manage operations of the nursery.
Earlier this summer, DCA Outdoor purchased Oregon’s Fishback Nursery, as well as Valley Hill Nurseries, a 350-acre operation based in Kentucky.
Also this summer, TreeTown USA, in coordination with Wells Fargo’s acquisition of Color Spot Holdings, acquired the Hines division of Temecula, Calif.-based Color Spot Nurseries, Inc. for an undisclosed amount. The division has three facilities totaling more than 2,000 acres located in California and Oregon. Color Spot had filed for Chapter 11 bankruptcy in May.
This spring marked the final bare-root season for California-based L.E. Cooke Co. After nearly 75 years, the company ceased its bare root nursery division due to the challenges of producing a large, diverse blend of varieties; selling that product to a declining independent nursery market; and regulatory issues like the state of California’s water use limitations in the wake of the post-recession drought.
Kelli is the editor of sister publication Nursery Management. email@example.com
Craig Regelbrugge on labor concerns after the Corso’s raid
2018 State of the Industry Report - Labor
AmericanHort’s senior vice president says green industry businesses need to be aware of three key factors when guarding against potential labor-related legal issues.
At Cultivate’18, AmericanHort’s senior vice president Craig Regelbrugge met with the Corso’s Flower and Garden Center management team to discuss how the business was faring after the June 6, 2018 raid at the Sandusky, Ohio-based business. Regelbrugge called the Corso’s team’s mood “somber” and said that it reminded him how business owners in the 1990s reacted when they were raided.
“The emotional toll I saw back then plays out in every one of these situations,” he says. “And Corso’s is no different. But I sensed that they are very resilient people and they’ll grit their teeth, put one foot in front of the other and get through it.”
In a post-Cultivate’18 interview with Greenhouse Management, Regelbrugge gave the following guidance to growers on what plans they should have in place when taking stock of their potential liabilities, and how to prepare themselves for a potential raid:
“The basic advice remains the same. I did have a chance at Cultivate to sit down with the Corso’s management team. We had been in touch with Corso’s immediately when the news broke and linked them up with the legal and related resources. We have kept a low profile talking about their case because obviously there’s an [ongoing investigation] and I would reiterate something that we’ve said before, that nearly any company in the industry could face this challenge. And companies that have prepared as best as they can and are diligent in their I-9 practices are likely to fare well in respect to an investigation.
Every good sermon has three points. … The first point is it’s wise to be prepared, to have a plan in place and to have a look at your I-9 practices. The things to think about preparation-wise in case it does happen are No. 1, knowing the legal guidelines and resources you have available. Point No. 2, and this is especially critical in horticultural operations the day after something like this happens, because [the] plants need attention, [is to ask yourself] if you have a plan in place in case you have a severe labor interruption. And No. 3, and this is going to vary company by company and based on the focus of the company, is reputation management. As we saw in the Corso’s case, the AP wire reporters had been tipped off and were present when this [story] broke. The administration was clearly looking for a high-profile media event and I think, given the rhetoric around the issue at this point, that’s not going to go away. Maybe a company doesn’t prioritize that, but I think a company — at least internally — [should] at least think about how they want to position [themselves], how do we want to message in our community versus simply deferring to allowing the federal agencies to be the messenger. So the community relations and management pieces are something that have to be given thought to. And if they want to be proactive in that way, they need to develop a communications plan.”
For the full interview — featuring more information on labor, November’s midterm elections and more — with Regelbrugge, click here.
IGCs playing catch up
2018 State of the Industry Report - Independent Garden Centers
After a rocky start to the 2018 spring season, independent garden centers have shown promising signs of growth.
An unusually cold, snowy April for many garden centers across the country led to a very condensed spring selling season in May, with many retailers playing catch up and hoping to make up for losses.
April 2018 was one of the coldest on record, and some areas had record-breaking snow accumulations, as well. According to an article on The Weather Channel, there were 40 locations in 13 states in the Midwest, Northeast, Plains and even the South that experienced record-breaking cold when compared to past Aprils, after the official start of spring.
But May was a completely different story, as retailers from Seattle to St. Louis told Garden Center magazine that they had some of the strongest sales in history during the first few weekends of the traditionally busy month and completely made up for lost time in April. Others said customers were still coming through their doors in June.
Garden Center magazine is still compiling data for its annual State of the Industry Report, published in November, but sales volumes reported by its Top 100 Independent Garden Centers were higher than last year in most cases. In 2017, the 100th garden center on the list reported $1.5 million in sales volume. This year, the lowest number on the list was $2.1 million, with promising signs of growth for retailers of all sizes.