Plant Supply was Drying Up 10 Years Before Pandemic

By Becky Garber-Godi, ALCC communications director, retired

Five Nursery Pros Share the Backstory

Republished with permission from Colorado Green. Originally published by the Associated Landscape Contractors of Colorado, VOL 38, NO 4, July/August 2022.

The diverse plant palette you once enjoyed with consistent availability and a range of sizes may not only be up in the air this year, but for years to come. What to expect going forward depends on more complex scenarios than how rising fuel costs in 2022 drove up freight costs and then plant costs.

Behind-the-scenes insights came from two reps for wholesale plant growers and the owners of three wholesale nurseries along the Front Range:  Wholesale grower reps Kent Broome (Rocky Mountain Horticulture Services), and David Dickey (DWD Plant Sales) joined Front Range nursery professionals, Dan Wise, CCNP (Fort Collins Wholesale Nursery), Stanley Brown, Jr. (Alameda Wholesale Nursery, Englewood) and Matt Edmundson (Arbor Valley Nursery, Brighton) to share perspectives.

What’s up with supply?

Wholesale growers and nurseries have risk-taking in their DNA. They live or die by the weather as it’s either their best friend or their worst enemy. As Stanley Brown notes, “Hail and drought will always be factors beyond our control. Hail can destroy an entire operation in an afternoon.”

Then there’s demand. Wholesale growers say they do their best to assess future demand and plant trees and shrubs accordingly. And sometimes information they get changes. “There is a disconnect between the supply side and the demand,” shared Matt Edmundson. For example, “Cities wanting more diversity in their tree canopy specify trees and after those trees are in the ground for a while, they change from one oak variety to another. We growers can’t hit a switch for instant change.”

Dan Wise agrees, “It’s rare we get information on future demand more than one year out. But we field grow 2- to 5-year crops so we must take the risk.” He knows growers need to get closer to demand.

While growers work to meet demand, they and their plant supply are always vulnerable to the economy. When the economy unexpectedly tanks as it did in 2008 or plant demand bounces high as it did during the pandemic, growers end up either overstocked or undersupplied to meet demand.

By 2014, David Dickey reports, “There was a backlog of conifers when trees planted pre-recession were coming online, but not selling. Edmundson pointed to the disparity between time to grow a conifer and deciduous tree. “A 2-inch tree from seed to sales is about seven years. The conifer can take up to 12 years to reach the 8-12 feet that customers want.”

Those extra years growing create more risk. Now most growers don’t want to grow past 6-7 feet. Economic undulations and unwanted risks changed grower behavior several years ago and that impacts plant availability today.

Dickey also noted that “Wholesale growers who do $30 million per year typically had 8-10 pages of shrubs listed in their availabilities. Now they have only 1-2 pages.” He predicted early in 2022 that container shrubs would be in short supply.

“For me as a buyer,” Wise shared, “I must order 12 months out and even then, availability is getting slimmer. We try to hold plants as long as we can, but customers still ask for plants that have been sold out for months.”

Kent Broome, Rocky Mountain Horticulture Services

Fewer nurseries to grow now

“Demand for nursery stock is up—to the same level or more than before the recession–but now there are fewer nurseries,” reports Dickey. Edmundson adds, “Fifty percent or more of nursery growers have gone out of business since 2006 and 80% of those remaining are owned by boomers and older folks without succession plans.”

“Boomer nursery owners are retiring and for many, their kids don’t want to take over,” says Kent Broome. Their only option is to sell off everything and then sell the land to fund retirement.

Then there’s Oregon. Its growers supply 20% or more of plants sold in Colorado, primarily broad leaf evergreens and conifers. But since the recession we are told, Oregon has lost 30% of its growers. That, too, has impacted Colorado.

Wise points out when all these factors combine, “It’s now a seller’s market.” Edmundson believes the nursery segment should do a better job of informing their customers about these deviations from what many think is still the norm.

Labor shortage hits nurseries too

“One major wholesale grower could easily expand by putting 500 to 1,000 more acres into production,” reports Dickey. “But there is no labor to take care of it now that the six pruning crews they need have fallen to three.” He warns of a tight market the next 2-3 years.

Where are the new start-ups?

Unfortunately for the nursery industry, starting a business requires more investment than starting a landscape company. One person can still launch a landscape business with a pickup truck, tools and basic equipment, but not so for a start-up nursery.

What’s the difference? The cost of land. Says Broome, “Now land is valued more than the nursery is worth and it’s happening in Colorado.” Dickey echoes, “Fifty years ago many wholesale growers were located beyond or at the fringe of urban areas. Now growth has expanded, and their land is worth millions.” Nurseries that try to sell can’t find buyers when their land is worth more than the business. The land goes to developers who can afford it and this won’t stop.

Even for those who might find affordable land, banks won’t be down for the deal. “They aren’t interested in loaning money when the ROI is several years out while waiting for trees to grow,” notes Edmundson.

Among our insiders, Brown’s operation now in its fourth generation of family employees, remains an exception as one of those country nurseries gone urban that is still going strong with a succession plan in place. When his father started the nursery in 1945, It was at the edge of town with agricultural fields right across the street. Now the nursery is surrounded by miles of urban development.

What’s ahead?

Our nursery insiders say what seems like a perfect storm pounding their industry means changes ahead, but they do not see gloom and doom. “Disruption prompts change–if you stay in the old mindset, you won’t stay in business,” says Edmundson. All five foresee ongoing stability, new customers emerging and better financial management.

Unlike other segments of the green industry undergoing consolidation, these insiders do not expect corporate or private equity buyouts. Dickey shares, “Investors tried it and it failed.” The nature of the business, though risky, seems to maintain its stability. Brown states, “A nursery business is a substantially harder business than, for example, an irrigation business. Shrubs and trees can’t be re-ordered as easily as an irrigation part.

New customers 

“The younger generation has finally come to shop. A burst of new customers was an unexpected consequence of the pandemic,” shares Dickey. In pre-pandemic days growers and garden centers worried about customer decline as their baby boomer base dwindled. “Yet 2020 brought a 20-30% rise in new customers and in 2021 they still chose to garden. Overall demand is now the same or more than it was pre-recession,” he explains.

More than plant geeks

These insiders agree that back in the day, growers were often plant geeks more than savvy business owners. They got excited about new plant varieties and their passion was growing them. Many felt guilty raising prices. Broome points out that today’s generation says, “This is a hot plant, but can I make money growing it?” What moves the industry forward, say all our insiders, is keeping it vibrant, financially healthy, and consequently, more attractive to potential employees.

Says Dickey, “We have more management in place than ever before. We’re starting to charge what the product is worth.” Broome adds, “That’s good because our industry is not known as being high paying. This is a whole new dynamic that’s changing the direction of our industry.”

Brown learned that increasing the starting wage and offering health care benefits attracted not only more but better employees. “It was worth it to get past the inefficiency of things not getting done.”

Management strategies also addresses inventory, and both Wise and Edmundson believe the industry needs to manage inventory like other retailers do. Wise says, “If we bring in five new plant varieties, we should let go of five. There should be an upper limit of how many varieties of potentillas you offer.” Edmundson adds, “Plants become fashion and instead of eliminating some, we just add more. We don’t need 50 shades of blue!”

“Five years ago, contractors told us ‘No substitutions on size or variety,’” says Wise, “but as inventory changes, they are starting to realize how our expertise can help them get closer to what they wanted even with limited supply.”

Satisfying lifestyle

All five of our insiders exude love of their industry, accept disruption as opportunity and are grateful to be in careers they love. Broome summed it up for all, “I’m doing horticulture because it’s been financially rewarding and one of the best lifestyles you can have.”