The past 12 months have been eventful for the greenhouse industry, with both positive and negative influences shaping the way that growers do business. We’ve seen the bankruptcy of several greenhouse companies, including a few larger operations, genetics controversy with the discovery of foreign genes in orange petunias, legislative changes with a new federal administration, continuing challenges with labor and rising shipping costs. However, we've also seen plenty of new, innovative varieties, technological developments and opportunities for growth. Growers have been balancing the good with the bad and persevering, which has led to their continued success.
The average age of our respondents’ greenhouse businesses is 26.7 years old.
While the year isn’t over yet, and the outlook may be affected by the severe weather hitting the southern part of the U.S., 2017 has been another stable year for the greenhouse industry. Ninety percent of growers expect flat or increased sales this year, and 88% expect a positive net profit. Fifty-one percent of growers project increased profits in 2017 compared to 2016. Of note this year is a slight decrease in both edible crop transplant and finished produce production; this category seems to be leveling off.
This year, the average age of the greenhouse businesses that responded to our survey was 26.7 years old. Thirty-five percent of the growers reported having operations that are more than 30 years old — that’s a lot of collective experience. And we’ve tapped into that knowledge base again this year by getting perspectives from growers on the current state of the industry. Greenhouse Management’s Chris Manning and Patrick Williams chatted with growers from all over the U.S. and Canada about their successes, challenges and thoughts on the future. You’ll find their commentary throughout the section. If you’d also like to weigh in, we’d like to hear from you, too. Drop me a line at firstname.lastname@example.org with your comments.
The data on the following pages was collected by Readex Research via an online survey from August 2 to 15, 2017. The survey was closed for tabulation with 751 responses. To best represent the audience of interest, the results in the report were based on the 621 respondents who indicated that they own/work for a greenhouse.
The margin of error for percentages based on the 621 usable responses is ± 3.8% 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.
Responses that do not total 100 percent are due to rounding and/or no answers. — Greenhouse Management
an optimistic year
Growers have enjoyed fairly stable sales again this year, according to our research. Only 10% of growers expect decreased sales by year’s end, with 62% expecting an uptick, and 28% projecting flat sales. In contrast, in 2011, 37% of growers reported decreased sales over the prior three years. In 2017, 32% of growers projected revenue increases of at least 10%, while in 2011, that number was only 13%.
Profits have also remained stable over the past few years, with 88% of businesses turning a profit this year. Although 28% percent of growers expect flat sales and 41% didn’t raise plant prices this year, they’re still finding ways to be profitable.
It’s always interesting to look back several years to see how growers’ perspectives have changed in that time. While we’ve had a bit of fluctuation in the past six years, growers’ confidence in the industry’s growth is much stronger now than it was back in 2011, when a whopping 47% said they were “not confident at all” regarding 2012 growth. This year, only 4% chose that answer, and only 14% total were less than “somewhat confident.” In other words, 86% of growers are at least “somewhat confident” in the industry’s next 12 months.
Renewed focus on annuals
ANNUALS/BEDDING COLOR beat out edible crop transplants as the top crop being produced for the first time since 2015. Both edible crop transplants and finished produce were down slightly from previous years, which could be a sign that the edibles craze of the past several years has calmed. On average, their edibles production is 69% transplants and 31% finished produce. 41% of growers said that all of their edibles are transplants, while 12% reported that their edibles are all finished produce. Still, perennials have remained consistent as the third crop produced by more than half of growers. Patrick Williams takes a deeper look at perennials here, including coverage from this year’s Perennial Plant Association Symposium in Denver.
Again this year, 27% of growers said they expected the biggest increase in 2017 production to be in annuals/bedding color. Perennials followed closely behind with 25%. Looking forward to 2018, growers said they plan to increase production in both of these categories. While 20% of growers are still planning to increase their edible crop transplant production, that percentage has been trending down in recent years; each year there are fewer growers planning increases. We also saw a small uptick in growers planning to increase production of cannabis and cut flowers in 2018.
Growers and laborers in high demand
As we talk to greenhouse operations throughout the year, labor always seems to come up in the conversation, with hiring growers and laborers topping the list of challenges. On average, greenhouse operations ranked finding high-quality hires for open positions a 3.7 out of 5, with 5 being “very difficult” — the highest it’s been since we first asked the question in 2014. They find filling growing/technical positions the most challenging, followed closely by laborers. In fact, 45% ranked finding growers and other technicians a 4 or a 5, and 42% ranked finding laborers a 4 or a 5. In contrast, only 21% ranked finding drivers or salespeople that high. Greenhouse operations reported limiting new hires not only because they did not have a current need (39%), but also because they couldn’t hire new workers because of lack of availability (30%) or financial limitations (25%). Will the number citing financial limitations increase as wages rise and plant price increases fail to keep pace?
Social media is still the key way greenhouse operators are reaching out to younger professionals. We see fewer greenhouse operations using trade shows and internships to connect with potential new employees, and slightly more using paid recruiting services, up 4%.
Only 26% of growers increased their annual salaries this year, while 50% have increased hourly rates. Is this drastic difference due to the required minimum wage increases in parts of both the U.S. and Canada? Growers may be holding back on salary increases as they adjust to their workers’ new wages. On a more positive note, just 1% reported decreases in hourly rates and annual salaries, respectively.
Improvements & future plans
Most of the aspects that growers would like to improve have stayed consistent over the past three years. Marketing efforts and reducing energy consumption have been trending down, even though the former still ranks No. 1. However, for the first time in the past three years, finding qualified labor edged out the economy as the biggest challenge to growing the business. This year also showed an increasing concern about declining customer bases.
Slightly fewer growers reported plans to retire or sell their greenhouse business in the next five years, accounting for about a quarter of all respondents. Of those 24%, only about one out of every five has a succession plan in place, while nearly half say they don’t have one yet, but will. Nearly 30% say a succession plan isn’t necessary.