Illustration by Vanessa Dell

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 kvarga@gie.net 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.

Shifting concerns

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