October 2003

NEWS on the GROW

Numbers Rise for Farwest Show

The Farwest Show, produced by the Oregon Association of
Nurseries, had a stellar 2003 show. Held in the Oregon Convention Center,
Portland, Ore. August 21-23, the show made a few changes, which may have played
a role in the attendee increase for both the trade show and seminars compared
to 2002.

Trade Show

Trade show attendance at 14,025 was up by around 1,000 from
last year. Not only were there more attendees at the trade show, there were
more exhibitors. A new section, not used in previous years, was opened up and
utilized to fit the growing number of exhibitors. The number of exhibitors
expanded from 625 in 2002 to 870 this year, expanding the spaces from 872, 10-
x 10-foot spaces to 1,365, 10- x 10-foot spaces.

Seminars

Another addition to the show was the expanded seminar
line-up sponsored by GPN, Lawn & Garden Retailer and Proven Winners. The
seminars began a day earlier than the trade show and continued through the end
of the show, allowing attendees to get both events into their schedules. There
were 50 hours of seminars, featuring 43 speakers — some of the industry’s most
respected. An improvement was made in the organization of the seminars. This
year the seminars were divided into tracks — landscape, greenhouse, retail and
nursery — touching on important topics, such as growing greenhouse nursery
crops; controlling pests and diseases; retail merchandising solutions;
improving your bottom line; nursery soil; and more — allowing attendees to sit
in for all that apply. Attendance for the sessions totaled 1,426, an increase
of at least 200 attendees from last year.

Demonstration Stage

A demonstration stage, sponsored by Proven Winners, outside
the trade show allowed attendees to rest and learn at the same time. Josh Schneider,
national spokesperson at Proven Winners, gave demonstrations every two hours on
a variety of topics from new varieties to container gardening. Some attendees
sat and took notes, while others were intrigued enough as they walked by to
stop for a few quick tips.

Talk On The Floor

I talked to quite a few people who expressed their delight
in how much bigger and better the show was this year compared to last. The
expanded seminars, extended trade show floor and the fact that there is a long
waiting list to exhibit caused people to realize what a good, must-go show this
is. Those in the West don’t have a big show such as the OFA Short Course or the
Southeast Greenhouse Conference. So, this fits the bill. It is also at a
convenient time — after the spring season and at the beginning of poinsettia
season.

Don’t miss next year’s show, expected to be even bigger and
better. Dates have been confirmed as August 26-28, 2004.

—      Carrie
Burns

Kmart Reports Loss for 2nd Quarter

Kmart has reported a net loss of $5 million per share for
the 13 weeks of their second quarter that ended July 30, 2003. However, the
loss was significantly less than 2002, where the net loss was approximately
$293 million for the same time period.

There was an $8 million loss on income before interest,
reorganization items, income taxes and discontinued operations for 2003, which
is also a large difference from the $264 million loss for the second quarter in
2002.

The current net sales for Kmart in the second quarter of
2003 were a little over $5 billion making it a decrease of approximately 21.3
percent from $7 billion in 2002. There was also a 5.4 percent sales decline on
a same-store basis in 2003 compared to 2002.

Despite the losses, Kmart is happy with the current progress
it is making to work out financial problems from the past. As of the end of
July, the corporation has about $1.2 billion in cash and cash equivalents as
well as a borrowing capability of over $1 billion on its $2 billion credit
facility inclusive of outstanding letters of credit. Currently the company is
looking for ways to reduce the cost of its Exit Financing Facility.

The second-quarter gross margin went from $1.3 billion in
2002 to $1.2 billion in 2003 but as a percentage of sales, the gross margin
increased 21.8 percent from 17.7 percent in 2002 due to the decrease and
improvement in the company’s sales organization.

In other mass merchant news, Home Depot has reported their
second-quarter earnings of $1.3 billion, which is an increase from the 2002
totals of $1.2 billion. According to Home Depot, the rise in earnings is based
on the updated look of their stores, adding more employees and adding better
products to their store. At the same time Lowes has reported a 28 percent jump
from $487 million in 2002 to $597 million in the second quarter of 2003.

Alternative to Methyl Bromide

In an effort to develop something that will have the same
effects as the widely used chemical methyl bromide — a chemical that has
caused recent controversy because of it being bad for the ozone — Auburn
University plant pathologist Rodrigo Rodriguez-Kabana has developed sodium
azide, a chemical used as the inflation-triggering agent in automobile airbags,
into a highly effective, environmentally friendly agricultural pesticide that
will give farmers a viable alternative to methyl bromide.

Rodriguez-Kabana claims the liquid formulation of the
chemical, currently named SEP-100, significantly outperforms ozone-depleting
methyl bromide in controlling weeds, diseases and harmful, root-eating nematodes.
He also says that liquid sodium azide, which is applied to soil before planting
through drip irrigation systems under plastic tarps, enhances the environment
as well.

"As sodium azide decomposes in the soil, it breaks down
into fertilizer and leaves the soil healthier than it was before the sodium
azide was applied," Rodriguez-Kabana said. Furthermore, he said, while
methyl bromide kills all "good" and "bad" nematodes and
insects in the soil, sodium azide does not harm beneficial nematodes and insects.

Methyl bromide, which is injected as a gas into the soil
before planting, is a broad-spectrum soil fumigant used by growers for decades.
Before the phase-out of methyl bromide began in 1998, U.S. farmers were using
an estimated 21,000 tons annually to fumigate soil before planting crops. The
chemical will be banned in the United States Jan. 1, 2005 and could possibly
cost U.S. growers almost $500 million a year in lost production unless a
replacement is found.

Zelenka Nursery Files for Chapter 11

Zelenka Nursery, Grand Haven, Mich., has recently filed for
Chapter 11 in an effort to reorganize and protect the company from creditors.
This event follows the problems they have with its current lenders, Bank One,
Comerica, Fifth Third Bank and Standard Federal. Because of the financial
problems, lenders pulled their support from the nursery, forcing more than 500
workers to be laid off suddenly. The lenders also pulled all cash from the
company accounts for liquidation according to The Holland Sentinel.

Workers were informed that their recent paychecks are of no
value, leaving many people in dire straits. However, many migrant groups are
attempting to help the workers with the current problem. The Holland Sentinel
also stated that several were asked to come back a few days later for
irrigation purposes but feared that they would not get paid.

One of the reasons the nursery has been closed is because of
its financial problems after two of its biggest clients, Kmart, who also filed
for Chapter 11, and Target who eliminated all of its garden centers last year.

Lawyers for Zelenka went before a federal judge asking for
money to pay workers and to bring them back to the fields in order to save the
current crops they have. There are still many orders that need to be delivered
and many potential customers who are interested in its product. In
mid-September the judge granted the funds to allow all but about 25 employees
to return to work at Zelenka to finish all of the orders that are currently
contracted. 

U.S. Senate Blocks Overtime Rule

Against President Bush’s ruling, the U.S. Senate voted
against the new rules that govern overtime pay. According to USA Today, many
labor leaders and other opponents stated the ruling would take away millions of
people’s extra pay.

The ruling came as a large blow to the Bush administration
and efforts to regulate American workers. A similar type of ruling was also
voted against by the House of Representatives earlier in the year as well.

The current blocked vote overjoyed many American workers but
angered a number of businesses and associations as well. Also according to USA
Today, currently, employers are required to pay workers 11/2 times their normal
rate for any hours that are worked over 40 hours a week.

The changes include raising the current salary requirement
from less than $155 per week to $425 per week to get overtime pay. This means
more than 1.3 million extra low-income workers that are currently exempt would
be eligible for overtime pay, making this the largest increase since the
original law passed in 1938, according to USA Today.

The ruling is revised to say the employee only needs to hold
a position of responsibility instead of specifying what duties qualify.
Anywhere from thousands to millions of white-collar workers would lose overtime
pay under the job duty revisions.

Greenhouse Destroyed

On Thursday September 11, 2003, a greenhouse in Bangalore,
India, belonging the Monsanto Company, was destroyed by a riot of farmers.
Police arrested 29 farmers after the group injured two workers and damaged the
greenhouse, which was part of a Monsanto research facility.

The rioters threw stones and stormed the facility according
to the Associated Press. Valuable plant material and research was destroyed,
forcing researchers to start everything all over again.

The protesters claimed that the genetically modified seed
that Monsanto developed is environmentally hazardous and could possibly
contaminate genes of other natural crops through cross-pollination, according
to the Associated Press. The aggression was meant to bring attention to the
people attending the World Trade Organization meeting in Cancun, Mexico.

Unemployment Claims Drop

In the middle of September, according to the Dow Jones
Business News, the number of U.S. workers filing for first-time applications
for unemployment benefits fell a significant amount, making it the first
decline in the benefits in more than a month.

In the week that ended September 13, 2003, unemployment
claims decreased by 29,000, making the total around 399,000 according to the
Labor Department. These numbers came as a big surprise to many economists who
estimated the fall would only be around 12,000 claims. It is also said by
economists that claims above 400,000 signify a weak labor market, but anything
below that indicates that there may be some stabilization in the making.

According to the Dow Jones Business News, the economy grew
3.1 percent during the second quarter of 2003 making the totals more than twice
than in the first quarter. With the upcoming Á holidays, the end of the
war with Iraq and the new tax relief, the economy is expected to improve in the
third quarter.

However, there are still problems in the labor market. For
the seventh straight month, employers are still cutting a number of jobs. While
California reported the largest decrease in unemployment claims, Pennsylvania
reported the largest increase.

Container Stock Inspections Postponed

The Pennsylvania Landscape and Nursery Association (PLNA) and
the Pennsylvania Department of Agriculture (PDA) have decided to postpone
container size enforcement until April 1, 2004, which is five months later than
the previous enforcement slated for Nov. 1, 2003. Since there are so many
containers in warehouses and circulation that are labeled incorrectly, the PDA
has agreed to hold off, allowing businesses the time to meet the requirements
of the Pennsylvania law and regulations.

Pennsylvania regulations require that container
advertisements and labels must accurately reflect the true measure of the
actual container volume. This includes references to "gallon" or
"quart" nursery containers and other pots using Imperial measures
that do not actually contain that measure.

Departmental regulations also set forth that a pot, which is
advertised or labeled by linear measure (i.e., a "41/2-inch pot"),
must measure 41/2 inches on one of its sides if it’s square, and 41/2 inches at
the top of the inside diameter of the pot if it’s round. In measuring diameter,
the inside diameter of the pot should be used, regardless of the shape of the
pot. Containers do not have to contain a label; however, if it does, the label
must indicate the correct measure or volume of the container.

PLNA and PDA are working in conjunction to resolve issues
surrounding the sale of the containers along with the amount of stock they
hold. Both organizations realize that this matter must be confronted so that
businesses are able to meet the requirements of Pennsylvania law and
regulations. For more information go to www.pda.state.pa.us.

NRF Anticipating Healthy Holidays

After a number of ups and downs in the past year with retail
sales, the National Retail Federation (NRF) reports that there may be a
significant increase for the holiday season. The NRF has projected total
holiday retail sales to grow by at least 5.7 percent over the 2002 holiday
season, bringing holiday spending to an estimated $217.4 billion. Raised sales
in November and December for retail stores in the GAFS category (general merchandise
stores, clothing and clothing accessories stores, furniture and home
furnishings stores, electronics and appliance stores, and sporting goods,
hobby, book and music stores).

"After several strong months of retail sales growth, it
seems clear that the economy is picking up momentum just in time for the
holidays," according to Rosalind Wells, NRF chief economist. "Retail
sales gains for the 2003 holiday season will be far better than the meager
increases retailers experienced a year ago." Holiday sales in 2002
increased 2.2 percent to $205.6 billion.

Some of the reasons for the sales growth prediction are: low
interest rates, low inflation, rising equity markets, mounting consumer
confidence and more of a disposable income resulting from the withholding tax
cut and child tax credit checks.

Businesses are also spending more on equipment and software,
by 8 percent at an annual rate in the second quarter. Which will help in the
long run for easier checking out and general sales especially, if the holiday
season turns out as large as predicted.

Full results and analysis for the first installment of the
2003 NRF Holiday Consumer Intentions 
Actions Survey will be released on Tuesday, October 21.

Ag Producers Apply for USDA Value-added Grants

The Agricultural Marketing Resource Center (AgMRC), a
virtual library of specific agricultural commodity, business development and
consulting resources for producers involved in value-added agriculture, is
assisting producer groups in applying for the USDA Rural Business-Cooperative
Service (RBS) value-added agriculture grants currently available.

"There is a direct link on the home page of the site to
take producers directly to the federal notice of funds available, a USDA
value-added grant template and tips on writing grants," said Mary
Holz-Clause, co-director of AgMRC. "Additional resources for producers to
develop their business or to find a new market opportunity for an existing
business are also available." o:p>

Producers can investigate specific commodity information on
many different niche opportunities and can locate specific laws, consultants
and individual contacts within each state to assist them in the grant
application process.

Recently it was announced that there was $27.7 million
available in competitive grant funds for fiscal year 2003 to help independent
agricultural producers enter into value-added activities. The grant will fund
one of the following two activities:

*                    Developing
feasibility studies or business plans (including marketing plans or other
planning activities) needed to establish a viable value-added marketing
opportunity for an agricultural product; or

*                    Acquiring
working capital to operate a value-added business venture or an alliance that
will allow the producers to better compete in domestic and international
markets.

Value-added products are defined as follows:

*                    A
change in the physical state or form of the product (such as milling wheat into
flour or making strawberries into jam);

*                    The
production of a product in a manner that enhances its value, as demonstrated
through a business plan (such as organically produced products);

*                    The
physical segregation of an agricultural commodity or product in a manner that
results in the enhancement of the value of that commodity or product (such as
an identity preserved marketing system).

Value-added also includes using any agricultural product or
commodity to produce renewable energy on a farm or ranch.

Applications must be completed and submitted to the
appropriate State USDA Rural Development office as soon as possible, but no
later than 4 p.m. on Oct. 20, 2003. For more information go to www.agmrc.org.

Peat Prices on The Rise in Canada

Due to problematic weather conditions in Canada, Canadian
peat moss prices have risen.  The weather
has resulted in a difficult harvest for peat producers this year, especially in
eastern Canada. According to the Canadian Sphagnum Peat Moss Association, as of
Aug. 31, 2003 only about 73 percent of this year’s requirements have been
harvested.

However, weather was not the only factor that contributed to
cost rising. The recent energy crisis is weighing heavily on transportation
costs that have resulted in rising equipment costs and driver shortages.
Another reason is the rising insurance costs for peat processing plants and
extreme differences in the changing value in the Canadian dollar.