Gazing into the Crystal Ball

James E. Faust

Assistant Professor, Clemson University, Clemson, S.C.

About 12 years ago, I heard Michigan State professor Dr. Will Carlson argue for regionalization of floriculture research. He suggested that we don’t need to be duplicating efforts at state universities that are just a few hundred miles apart. Instead, he proposed that we develop regional programs that would focus on different aspects of floriculture relative to the local industry and climate. In reality, it would require an act of God to get neighboring states to cooperatively share resources, so this proposal never got off the ground. However, regionalization has occurred nonetheless, with the driving force being attrition rather than cooperation.

Many state university floriculture programs have not experienced any growth since the last economic downturn in the late 1980s, and prospects for increasing many state budgets over the next few years looks bleak. For example, my university is looking at a 25-percent reduction in state funding over 2001-02; however, we are fortunate that greenhouse and nursery research has been targeted as a priority area within agriculture in South Carolina (thanks to the lobbying efforts of the growers in the state). So, we will get banged-up some over the coming year, but we’ll survive. Other universities are not as well-positioned.

Floriculture teaching is surviving at many institutes because the student numbers in horticulture are relatively high. But strong floriculture research and extension programs are only surviving at the institutes that have 1) successfully lobbied their state political leaders and 2) experienced considerable success generating funding from industry groups.

Regionalization of floriculture programs has happened, but it has occurred through the process of survival of the fittest. The next few years of struggling state budgets will result in the continued demise of the weaker programs.

As to what I see for growers, look for increased use of Ethylbloc in shipments of offshore unrooted cuttings. This product helps reduce the impact of ethylene in the box during shipping. Comparisons between treated and untreated boxes of cuttings reveals a tremendous benefit to the postharvest performance of certain species.

Wal-Mart Super Stores are being built next door to a lot of traditional supermarkets. These supermarkets typically pay higher prices for higher-quality flowering plants than the big box stores; however, the Wal-Mart Super Stores are making the supermarkets more price-conscious. Flowering potted plant growers will be squeezed to offer lower prices to the supermarkets but still maintain quality differences from the box store products.

Jack Williams

Product Manager, Paul Ecke Ranch/The Flower Fields, Encinitas, Calif.

2002 is going to be an interesting year! The events of this past fall have made us all reevaluate the course of our lives, our businesses and our industry. As we enter the New Year, we will all be watching with interest.

Growers are reacting to the current uncertainty by reducing speculation in production even though history has always shown strong sales during adverse times. Retailers are reducing preorders and have even been reported requesting new price quotes and additional rebates. Knowing this could result in shortages; some growers will take the risk and produce more this year, enjoying the payoff when shortages are experienced! New plant introductions will also slow down as growers will be less willing to dedicate space to unknown or unproven crops, making 2002 a year of using what we know works and sells!

An overall climate of caution will exist. From retailers to growers alike, only a few will get outside the box (no reference to “big box” retailers intended) and push new programs. Branding programs will be implemented with caution Á and close scrutiny to determine how much value they actually bring. Growers will also be cautious about any changes in their businesses. We have already seen too many of our friends go through downsizing, reorganization and even closing of doors that taking risks will be less common than ever. Growers will need to be sure results can be quantified and justified — for themselves and their customers — before taking on new or different strategies.

The reaction I anticipate during the second half of this year is recovery. As the economy and businesses once again become stable, optimism will once again fuel the way to change. Prices may just be the factor that benefits most, allowing all levels to realize much-needed increases. We are not talking price gouging, but realistic increases to the value of what we grow and sell.

2002 will prove how strong we are as an industry and as individuals. Hopefully, it will also reaffirm our commitment to what we do. Our products enhance the lives of so many people, beautifying their homes and gardens. Now more than ever, we should appreciate this. Take a look around; floriculture makes a contribution to the quality of life we all enjoy. That is worth the effort alone!

Rick Schoellhorn

Floriculture Extension Specialist, University of Florida, Gainesville, Fla.

Being new to the savant business, I’m a little nervous about this undertaking, but I will give you my best prognostication anyway.

I believe that emphasis in research will move toward the landscape side of our industry as the need for accurate, localized information grows. We should soon start seeing more information about using a particular plant in a particular region instead of general guidelines for usage.

The economy looks bad, but I think we will see very little effect on our industry as a whole. Though people will be spending more time at home, which means more households putting money into our market, they will be spending less of their overall income, which means fewer dollars per household spent. I think the two patterns should balance out with regard to plant purchases.

I expect growers to see increased demand from their larger, mass merchandiser-type accounts. The major mass marketers will eventually start demanding increased quality to compete with independents, as well as refined purchasing procedures.

We will see continued growth of the larger nurseries, with big growers getting bigger and bigger, and pressure on mid-size farms, which I believe will result in the proliferation of mid-sized, niche producers. This has already started happening over 2001 and will only become more pronounced in 2002.

The trend for new and better should continue. I expect to see continued pressure by consumers for something new and different in crops. Our consumers are learning quickly and will pressure the industry to keep pace, which means we will have to keep generating new plants and learning how to grow them.

Bob Frye

Grower, The Plantation, Lincoln, Neb.

As our Special Ops in Afghanistan are now cowboys with laser guns, our breeders with gene guns will soon bring us into a new age of floriculture.

If you want to crystal ball the future, just check the history of the large, row crop breeding companies. We will go through very similar stages; the similarities will be glaring. Even though our breeder/distributors are now playing this branding name-game, you’ll begin to notice their refocusing on substance.

What will allow this transition? Number one, the breeders will come to understand which way the wind blows. They will realize the futility and lack of permanence of the name-game when product integrity to the consumer can’t be guaranteed. Number two, biotech is no longer a long shot. Fewer secrets exist now. The path, in many ways, has been blazed and is becoming Á affordable for smaller-dollar crops. As an example, Bt technology is nearly becoming a curriculum rather than a crapshoot. Ask any gene jockey. As GMO technology becomes less mysterious, more understandable and more commonplace, it becomes more affordable, requiring smaller gross returns.

In the most immediate future (this next year), you’ll see even more plants at the big box stores ready for trash or triage. There is no incentive for the big producers to provide anything other than lower quality at yet a lower price. This concept is no mystery and understood by all — even the consumer.

I’ll continue to grow expensive, fancy plants and “retail-away.” My business will improve because even more consumers won’t want to continue to accept the responsibility of being plant doctors in order to save the big box junk. The big box stores will continue to be my best ally by direct, vivid comparison. I’ll probably raise my prices, depending on just how much and how bad the junk is. Thanks Wal-Mart. Thanks Home Depot, Thanks KMart. Thanks Martha.

Ann Chase

Plant Pathologist/President, Chase Research Gardens, Mt. Aukum, Calif.

When Bridget, GPN’s editor, asked me to consider contributing to the annual “Crystal Ball” issue she said it was supposed to be fun. She wanted each of us to think about our specialty. Mine is plague and pestilence.  I ask you — what is fun about disease? Except for a few University types — NOBODY thinks disease is fun.

What’s going on with downy mildew? Looks worse every season. A disease that once occurred routinely only along the Pacific Coast on pansies and snapdragons and once in awhile on roses has become the scourge of the ornamentals industry throughout the country. Our weather patterns are changing and apparently favor these diseases. It also seems likely that we are seeing changes in the populations of the fungi that cause downy mildew diseases. The astronomical cost of energy will simply make matters worse, since lowering the thermostat will promote downy mildew. So my first prediction is that downy mildew on bedding plants, cut flowers and perennials will continue to expand in scope and incidence. My second prediction is that sales of fungicides that are effective for downy mildew control will increase. That was an easy one — no?

What other disasters can I guess at? The sudden emergence of poinsettia scab in 2000 reminded some of us that old diseases can become new ones if we forget they exist. In addition, if a disease is found anywhere in the world, we are likely to see it on our shores sometime in the next few years. We saw a previously quarantined rust on daylily turn from a first report in Florida in the fall of 2000 to a multi-state problem last year. With the unbelievable mobility of the horticultural industry, this trend will no doubt continue and probably be more of a problem with each passing year.

Another trend in disease will continue in the realm of new viruses. We are adding new perennials and cutting propagated ornamentals at an alarming rate to satisfy a bored clientele. These new plants are not well-understood, and the diseases that frequently come with them are almost certainly unknown. Viruses account for many of these new diseases since they can now be found with molecular techniques. However, the meaning of a “new virus” disease will be uncertain since the symptoms caused, importance to the crop, spread to other crops and steps to control it will require many hours of research.

Speaking of research, my final prediction concerns the continued dismantling of the university system as we know it. Fewer research and extension scientists are employed by land-grant universities than we need to solve our horticultural research and extension needs. This sad trend started at least 20 years ago. Using the Internet and any other electronic mass media communication will help in some situations. However, they will not replace the benefits of hands-on, old-fashioned extension visits. Not everyone is a computer-lover. This will lead to a real opportunity for private industry to step in and supply research and extension. As the saying goes, “One man’s loss is another’s gain.” Á

James Barrett

Professor, University of Florida, Gainesville, Fla.

Looking into a crystal ball for the future of the floriculture industry is easy — it is reading the tea leaves for the future of an individual business that is difficult.

The industry’s future will put enhanced pressure on each operation and make business survival more difficult. The industry as a whole has a strong future; total sales at both wholesale and retail levels will continue to increase. While this growth is occurring, the trends of industry consolidation, importance of big box retailers and tight margins will continue. We have been on this path for 10 years or more. Some might even point to industry events in the late 70s and early 80s that foretold today’s situation. I do not see fundamental changes in these industry trends.

The important changes occurring in the industry are at the management level of individual companies. This is true for companies at all levels of the industry — breeder/supplier companies, distribution companies, large wholesale growers and smaller retail growers. It is even true for universities that too many thought were insulated from market forces (but that is an editorial for another time).

In five years, there may be 10-20 percent fewer companies than we have today. The successful operations will be those that are making the best business decisions today. These operations are being managed first as a business and second as a plant producer. Successful businesses in all industries take risks. The trick is to take the right risk at the right time. If management is sitting tight and not taking risks, then they are taking the bigger risk of not changing with a changing market.

In some cases, companies are deciding to hook their wagon of success to an individual retailer and expand rapidly to meet the needs of that customer. This may result in one customer being 60-80 percent of a company’s business; the risk here is obvious. However, it can be very profitable, if the relationship and market situation are right, if debt loads are handled well, if management can handle the increased logistical and production problems, and if...

On the other hand, some companies with a high percentage of their business with one or two customers are deciding for various reasons that they need to reduce this exposure. Some will accomplish this by taking the risk of expanding production in other markets.

Most medium and large wholesale operations have been growing for several years as the industry has grown and markets have been strong. We are now entering a period where being a medium-size grower that sells to chains will be very precarious. These operations will have to make some well-calculated strategic decisions to survive.

This year, a couple of our trend-setting retail companies have had difficulties. However, the future of independent garden centers is very strong. In the right location, upscale retail nurseries will be very profitable. In the upscale world, price is not the issue; sales are based on how excited and happy one can make their customer.

The successful mid-level independent retailers will be those that differentiate themselves from the large retail chains. Independents should not complain about the quality of the plants sold by the chains or how poor the service is. The bigger the chains become and the more they define themselves, the easier it will be for independents to create a better image in the minds of potential customers.

Brands — we have seen a rapid increase in product brands. Will we have more brands? Yes, but that is not the issue. The issue is how brands will be used. In general, branding or anything else that allows a company to create an image of value is good for the industry. We are going through a phase where everyone is branding their product and often trying to use the brand in multiple markets. My prediction is that the situation will evolve so that national brands will be important in independent garden centers, but will be less important to nonexistent in chain stores. Some chains will likely develop their own store brand.