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Supplying Demand :: Bill Calkins
Published:1/1/2006
How will the hurricane damage and subsequent cleanup in Florida impact the foliage market this year? Expect shortages and price increases—but if you’re flexible, there’ll be plenty of opportunities to capitalize on.
When hurricanes tore through the Gulf States region during the second half of 2006, they took a lot with them. Lives, homes, and businesses were lost. But hope was not, and the area is currently doing what it can to recover and move forward. For a few, the most recent hurricane season was the final straw, convincing them to relocate to lower-risk areas. But for many others, it’s rebuilding time.
Hurricanes Katrina and Wilma both produced winds of up to 175 mph. Although the speeds weren’t that high when the storms hit the major foliage growing areas of Homestead and Apopka, Florida, 130 mph winds damaged most of the shade structures and quite a bit of plant stock. Because the two storms struck only two months apart, many nurseries had been working around the clock cleaning up from Katrina just to be leveled again by Wilma. Call them resilient or maybe crazy, but they’re in clean up mode once again. And although contractors and supplies are scarce, many nurseries are back in some state of “up and running.” Still, full recovery is a ways off.
Bill Moore (www.billmooreco.com), who brokers young plants for growers and has been working with the Florida foliage industry for three decades, says there was so much damage that many growers are still trying to evaluate the conditions of their facilities. “One grower I work with said his generators worked just like they were supposed to and his facilities held up, but he lost more than 60% of his irrigation system,” Bill says. It could easily take a year or more to recover, he adds.
With dozens of stories like this throughout Homestead and Apopka, it shouldn’t be a surprise that there will be foliage shortages this year. And with shortages come price increases. No surprise there, either. But how much of a shortage and price hike should we expect? Distributors agree that it will be tough to know the answers to those questions until the shipping season really gets rolling—in February for Florida consumers, March for Georgia and April for northern markets like Chicago. Preliminary reports are bad, but not terrible. And believe it or not, there may be ways to find a silver lining among the grey clouds of a foliage shortage.
“Foliage is going to be in short supply, especially 14-inch and larger material,” anticipates John Mendozza, president of Morning Dew Tropical Plants (www.morningdewtropical.com), Delray Beach, Florida, “But expect shortages to let up by June, providing we don’t get a freeze in Southern Florida.”
Lynn Griffith, president of A& L Southern Agricultural Laboratories in Pompano Beach, explains the smaller material shouldn’t suffer from availability issues. “The small foliage that can be rooted quickly will rebound quickly,” he says. He adds that some seasonal patio crops, such as hibiscus and mandevilla, should be okay, because they were planted after the hurricane season. But Lynn points out that if everyone replants at the same time it might result in a glut of 6- and 10-inch material next summer.
Doug Lane, owner and president of Select Tropicals (selecttropicals@bellsouth.net), just moved back into his Delray Beach office after weeks without phone service, although he’s been in contact with many of his suppliers learning about damage and availability. “My personal opinion is that there won’t be enough to go around,” he says. “I’m concerned that in January there will be major shortages, and many of our crops take more than six months to grow.” He says that some growers are planting back up quickly, while others are still waiting for insurance settlements or deciding if they really want to rebuild. One nursery he deals with was hit with about $2 million in damage. With a $600,000 insurance deductible, it’s going to be a while until they’re back on their feet.
Retail resilience
As indicated earlier, it will be difficult to quantify the damage this latest round of storms inflicted on the foliage industry until the shipping season starts, but retailers are already encountering increased prices when sourcing material for their first orders.
Spencer Porteous, manager at Horizon Nursery in Vero Beach, says he deals with about a dozen nurseries in areas hit hard by he hurricanes. Most are back up and running. But it’s been tough to get foliage plants, he says. “As far as foliage goes, you have to take what you can get. Everything’s on the small side, but [it’s] looking better week after week.” Spencer says he’s paying a bit more, but he has no choice, because his customers want the product. He’s charging more, too, but he made sure his staff was armed with answers for price-sensitive customers. “My people are on the same page as far as what to say to the customers, explaining the situation about the shortage,” he says. But overall Spencer is optimistic. “Things are getting better, and we have to keep moving forward. We all worked from sun up to sun down to get the place back in shape.”
Price pressure
As garden centers and big box stores begin placing major spring orders, it looks as though price increases between 10 and 35 percent will be common. Prices have to go up. With costs such as insurance, fuel, fertilizer, pots and shadecloth skyrocketing 50% or more in the past year or two, the hurricanes, however impactful, are only one of many challenges for foliage growers. Most involved in the industry feel the time to raise prices is long overdue, evidenced by the shrinking number of growers in traditional production areas such as Homestead and Apopka. If prices can be raised to a level where more nurseries can remain profitable, the market will remain attractive for growers.
The demand for foliage is rising, yet the number of foliage growers is shrinking. Mendozza believes this trend can be reversed. “As prices go up and nurseries are able to make a profit, I think we could see a jumpstart in the number of nurseries getting into foliage. They’ll move deeper inland where there’s not a housing boom.” To illustrate his frustration with current pricing, John explains that in 1984, a 10-in. spathiphyllum sold for about $10. “We’ve been selling them for less than that ever since,” he says loudly. “The foliage industry is due for a price increase. Demand is up and supply is down—It’s simple economics.”
The distributors we talked to expect that even chain stores won’t be able to escape the price increases. There’s simply no way growers can continue to hold to current prices in the wake of hurricanes and rising costs.
It’s natural that hurricane devastation and the subsequent disruption of the supply chain would convince a number of growers to just hang it up and sell off their land. And, there are plenty of stories of this happening. Bill Moore says he has three or four customers getting out of the business this year. Lynn Griffith says there’s no doubt a lot of growers who were hit by the hurricanes have the philosophy of “one more and we’re done.” It certainly doesn’t hurt that land prices have approached $250,000 per acre in some of those areas.
At the same time, there will definitely be opportunities opening up for foliage growers who decide to stick it out in Florida. A shortage of interiorscape and florist-quality foliage will be an issue for the next few seasons. Growers who are able to meet a portion of that demand could find themselves picking up new accounts. New relationships, along with higher prices, could result giving some nurseries just the push they needed to take their businesses to the next level. There will certainly be opportunities for those who rebuild quickly. It will be interesting to follow this story into the spring to see how everything shakes out.
…and for 2006
What can the industry expect from Mother Nature this year? No one knows for sure, but forecasters believe hurricanes occur in 20-year cycles, says Lynn Griffith. “We’re just hitting the peak of the cycle, which is pretty scary,” he points out.
A recent report by Colorado State University hurricane forecaster William Grey indicates that there could be above-average hurricane activity this year, but it’s highly unlikely the effects will be as destructive as they’ve been the past two seasons. For 2006, Grey predicts 17 named storms, nine of which could become hurricanes and five of which are expected to develop into major hurricanes with sustained winds of at least 111 mph, he told the Associated Press.
SIDEBAR:
Flexibility = Opportunity
We asked some foliage distributors to offer advice for retailers concerned about plant supply this spring. They all seemed to feel the same way: As long as retailers work with their suppliers to choose the best plants they can get, even if they’re not the exact plants ordered, no one will have bare shelves this season.
Be flexible with what you want and be willing to explore substitutions. Explore plants you may not have tried before. Know your growers or distributors and stay in contact with them. You might not get exactly what you want, but your suppliers can guide you to the best available product to fit your needs.
- John Mendozza, Morning Dew Tropical Plants
Garden centers and interiorscapers will have to be flexible. There has always been somewhat of a sliding scale when it comes to foliage quality. But now more than ever it would be good to ask for digital photos of the crop before buying. Fortunately, technology makes this pretty easy.
- Doug Lane, Select Tropicals