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 suggestedthat we don’t need to be duplicating efforts at state universities thatare just a few hundred miles apart. Instead, he proposed that we developregional programs that would focus on different aspects of floriculturerelative to the local industry and climate. In reality, it would require an actof God to get neighboring states to cooperatively share resources, so thisproposal never got off the ground. However, regionalization has occurrednonetheless, with the driving force being attrition rather than cooperation.
Many state university floriculture programs have notexperienced any growth since the last economic downturn in the late 1980s, andprospects for increasing many state budgets over the next few years looksbleak. For example, my university is looking at a 25-percent reduction in statefunding over 2001-02; however, we are fortunate that greenhouse and nurseryresearch has been targeted as a priority area within agriculture in SouthCarolina (thanks to the lobbying efforts of the growers in the state). So, wewill get banged-up some over the coming year, but we’ll survive. Otheruniversities are not as well-positioned.
Floriculture teaching is surviving at many institutesbecause the student numbers in horticulture are relatively high. But strongfloriculture research and extension programs are only surviving at theinstitutes that have 1) successfully lobbied their state political leaders and2) experienced considerable success generating funding from industry groups.
Regionalization of floriculture programs has happened, butit has occurred through the process of survival of the fittest. The next fewyears of struggling state budgets will result in the continued demise of theweaker programs.
As to what I see for growers, look for increased use ofEthylbloc in shipments of offshore unrooted cuttings. This product helps reducethe impact of ethylene in the box during shipping. Comparisons between treatedand untreated boxes of cuttings reveals a tremendous benefit to the postharvestperformance of certain species.
Wal-Mart Super Stores are being built next door to a lot oftraditional supermarkets. These supermarkets typically pay higher prices forhigher-quality flowering plants than the big box stores; however, the Wal-MartSuper Stores are making the supermarkets more price-conscious. Flowering pottedplant growers will be squeezed to offer lower prices to the supermarkets butstill maintain quality differences from the box store products.
Product Manager, Paul Ecke Ranch/The Flower Fields, Encinitas,Calif.
2002 is going to be an interesting year! The events of thispast fall have made us all reevaluate the course of our lives, our businessesand our industry. As we enter the New Year, we will all be watching withinterest.
Growers are reacting to the current uncertainty by reducingspeculation in production even though history has always shown strong salesduring adverse times. Retailers are reducing preorders and have even beenreported requesting new price quotes and additional rebates. Knowing this couldresult in shortages; some growers will take the risk and produce more thisyear, enjoying the payoff when shortages are experienced! New plantintroductions will also slow down as growers will be less willing to dedicatespace to unknown or unproven crops, making 2002 a year of using what we knowworks and sells!
An overall climate of caution will exist. From retailers togrowers alike, only a few will get outside the box (no reference to “bigbox” retailers intended) and push new programs. Branding programs will beimplemented with caution ç and close scrutiny to determine how muchvalue they actually bring. Growers will also be cautious about any changes intheir businesses. We have already seen too many of our friends go throughdownsizing, reorganization and even closing of doors that taking risks will beless common than ever. Growers will need to be sure results can be quantifiedand justified — for themselves and their customers — before takingon new or different strategies.
The reaction I anticipate during the second half of thisyear 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 factorthat benefits most, allowing all levels to realize much-needed increases. Weare not talking price gouging, but realistic increases to the value of what wegrow and sell.
2002 will prove how strong we are as an industry and asindividuals. Hopefully, it will also reaffirm our commitment to what we do. Ourproducts enhance the lives of so many people, beautifying their homes andgardens. 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 isworth the effort alone!
Floriculture Extension Specialist, University of Florida,Gainesville, Fla.
Being new to the savant business, I’m a little nervousabout this undertaking, but I will give you my best prognostication anyway.
I believe that emphasis in research will move toward thelandscape side of our industry as the need for accurate, localized informationgrows. We should soon start seeing more information about using a particularplant in a particular region instead of general guidelines for usage.
The economy looks bad, but I think we will see very littleeffect on our industry as a whole. Though people will be spending more time athome, which means more households putting money into our market, they will bespending less of their overall income, which means fewer dollars per householdspent. I think the two patterns should balance out with regard to plantpurchases.
I expect growers to see increased demand from their larger,mass merchandiser-type accounts. The major mass marketers will eventually startdemanding increased quality to compete with independents, as well as refinedpurchasing procedures.
We will see continued growth of the larger nurseries, withbig growers getting bigger and bigger, and pressure on mid-size farms, which Ibelieve will result in the proliferation of mid-sized, niche producers. Thishas already started happening over 2001 and will only become more pronounced in2002.
The trend for new and better should continue. I expect tosee 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 growthem.
Grower, The Plantation, Lincoln, Neb.
As our Special Ops in Afghanistan are now cowboys with laserguns, our breeders with gene guns will soon bring us into a new age offloriculture.
If you want to crystal ball the future, just check thehistory of the large, row crop breeding companies. We will go through verysimilar stages; the similarities will be glaring. Even though ourbreeder/distributors are now playing this branding name-game, you’llbegin to notice their refocusing on substance.
What will allow this transition? Number one, the breederswill come to understand which way the wind blows. They will realize thefutility and lack of permanence of the name-game when product integrity to theconsumer can’t be guaranteed. Number two, biotech is no longer a longshot. Fewer secrets exist now. The path, in many ways, has been blazed and isbecoming ç affordable for smaller-dollar crops. As an example, Bttechnology is nearly becoming a curriculum rather than a crapshoot. Ask anygene jockey. As GMO technology becomes less mysterious, more understandable andmore commonplace, it becomes more affordable, requiring smaller gross returns.
In the most immediate future (this next year), you’llsee even more plants at the big box stores ready for trash or triage. There isno incentive for the big producers to provide anything other than lower qualityat yet a lower price. This concept is no mystery and understood by all Ñeven the consumer.
I’ll continue to grow expensive, fancy plants and”retail-away.” My business will improve because even more consumerswon’t want to continue to accept the responsibility of being plantdoctors in order to save the big box junk. The big box stores will continue tobe my best ally by direct, vivid comparison. I’ll probably raise myprices, depending on just how much and how bad the junk is. Thanks Wal-Mart. ThanksHome Depot, Thanks KMart. Thanks Martha.
Plant Pathologist/President, Chase Research Gardens, Mt.Aukum, Calif.
When Bridget, GPN’s editor, asked me to considercontributing to the annual “Crystal Ball” issue she said it wassupposed to be fun. She wanted each of us to think about our specialty. Mine isplague and pestilence. I ask youÑ what is fun about disease? Except for a few University types ÑNOBODY thinks disease is fun.
What’s going on with downy mildew? Looks worse everyseason. A disease that once occurred routinely only along the Pacific Coast onpansies and snapdragons and once in awhile on roses has become the scourge ofthe ornamentals industry throughout the country. Our weather patterns arechanging and apparently favor these diseases. It also seems likely that we areseeing changes in the populations of the fungi that cause downy mildewdiseases. The astronomical cost of energy will simply make matters worse, sincelowering the thermostat will promote downy mildew. So my first prediction isthat downy mildew on bedding plants, cut flowers and perennials will continueto expand in scope and incidence. My second prediction is that sales offungicides that are effective for downy mildew control will increase. That wasan easy one — no?
What other disasters can I guess at? The sudden emergence ofpoinsettia scab in 2000 reminded some of us that old diseases can become newones if we forget they exist. In addition, if a disease is found anywhere inthe world, we are likely to see it on our shores sometime in the next fewyears. We saw a previously quarantined rust on daylily turn from a first reportin Florida in the fall of 2000 to a multi-state problem last year. With theunbelievable mobility of the horticultural industry, this trend will no doubtcontinue and probably be more of a problem with each passing year.
Another trend in disease will continue in the realm of newviruses. We are adding new perennials and cutting propagated ornamentals at analarming rate to satisfy a bored clientele. These new plants are notwell-understood, and the diseases that frequently come with them are almostcertainly unknown. Viruses account for many of these new diseases since theycan 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 willrequire many hours of research.
Speaking of research, my final prediction concerns thecontinued dismantling of the university system as we know it. Fewer researchand extension scientists are employed by land-grant universities than we needto solve our horticultural research and extension needs. This sad trend startedat least 20 years ago. Using the Internet and any other electronic mass mediacommunication will help in some situations. However, they will not replace thebenefits of hands-on, old-fashioned extension visits. Not everyone is acomputer-lover. This will lead to a real opportunity for private industry tostep in and supply research and extension. As the saying goes, “Oneman’s loss is another’s gain.” ç
Professor, University of Florida, Gainesville, Fla.
Looking into a crystal ball for the future of thefloriculture industry is easy — it is reading the tea leaves for thefuture of an individual business that is difficult.
The industry’s future will put enhanced pressure oneach operation and make business survival more difficult. The industry as awhole has a strong future; total sales at both wholesale and retail levels willcontinue to increase. While this growth is occurring, the trends of industryconsolidation, 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 toindustry events in the late 70s and early 80s that foretold today’ssituation. I do not see fundamental changes in these industry trends.
The important changes occurring in the industry are at themanagement level of individual companies. This is true for companies at alllevels of the industry — breeder/supplier companies, distributioncompanies, large wholesale growers and smaller retail growers. It is even truefor universities that too many thought were insulated from market forces (butthat is an editorial for another time).
In five years, there may be 10-20 percent fewer companiesthan we have today. The successful operations will be those that are making thebest business decisions today. These operations are being managed first as abusiness and second as a plant producer. Successful businesses in allindustries 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 thebigger risk of not changing with a changing market.
In some cases, companies are deciding to hook their wagon ofsuccess to an individual retailer and expand rapidly to meet the needs of thatcustomer. This may result in one customer being 60-80 percent of acompany’s business; the risk here is obvious. However, it can be veryprofitable, if the relationship and market situation are right, if debt loadsare handled well, if management can handle the increased logistical andproduction problems, and if…
On the other hand, some companies with a high percentage oftheir business with one or two customers are deciding for various reasons thatthey need to reduce this exposure. Some will accomplish this by taking the riskof expanding production in other markets.
Most medium and large wholesale operations have been growingfor several years as the industry has grown and markets have been strong. Weare now entering a period where being a medium-size grower that sells to chainswill be very precarious. These operations will have to make somewell-calculated strategic decisions to survive.
This year, a couple of our trend-setting retail companieshave had difficulties. However, the future of independent garden centers isvery strong. In the right location, upscale retail nurseries will be veryprofitable. In the upscale world, price is not the issue; sales are based onhow excited and happy one can make their customer.
The successful mid-level independent retailers will be thosethat differentiate themselves from the large retail chains. Independents shouldnot complain about the quality of the plants sold by the chains or how poor theservice 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 ofpotential customers.
Brands — we have seen a rapid increase in productbrands. Will we have more brands? Yes, but that is not the issue. The issue ishow brands will be used. In general, branding or anything else that allows acompany to create an image of value is good for the industry. We are goingthrough a phase where everyone is branding their product and often trying touse the brand in multiple markets. My prediction is that the situation willevolve so that national brands will be important in independent garden centers,but will be less important to nonexistent in chain stores. Some chains willlikely develop their own store brand.