Features Business Trends
‘… and the survey says’

There’s a lot of optimism for the coming year, according to respondents in the first annual Greenhouse Canada Grower Survey.
Growers are in the mood to expand, invest and sell more in 2012.

Last fall, we e-mailed some 2,569 invitations to the survey, with 111 growers responding, reflecting a response rate of about 4.3 per cent. Given this was the survey debut, we feel we will build on those numbers next year.

Some 38 per cent of respondents were wholesale growers, 34 per cent were retail growers, 22 per cent were in vegetable production, and about five per cent were young plant growers. (In this feature, all figures are rounded off and the totals won’t always add up to 100.)

Geographically, the regions with the largest representation were Ontario (58 per cent), British Columbia (14 per cent), Alberta (12 per cent), and Quebec with four per cent.

Pete DeVry (at left) of DeVry Greenhouses won a tablet, his name drawn from among respondents.

LARGE PERCENTAGE OF SMALLER GROWERS TOOK PART
Almost half of those responding have greenhouses with less than 50,000 square feet of production. The next largest size categories represented were 50,000 to 100,000 (14 per cent), over one million (10 per cent), 500,000 to one million (eight per cent), 350,000 to 500,000 (just over seven per cent), and 100,000 to 200,000 (just under seven per cent).
Given the number of retail growers responding to the survey, it was no surprise that “your own retail shop” (35 per cent) led responses to the question, “who is your primary customer.” Other leading markets included mass merchand-
isers/box stores (14 per cent) and supermarkets/grocery stores, also at about 14 per cent. Independent garden centres (13 per cent), other growers (11 per cent), and farmers’ markets (11 per cent) were other leading customers. Independent retailers/florists (four per cent) and auctions (less than one per cent) rounded out the responses.

WHAT WAS PRIMARY CROP AMONG OUR SURVEY RESPONDENTS?
To the question, “which is your primary crop; choose only one,” ornamental bedding plants led the way with 39 per cent, followed by greenhouse vegetables (24 per cent), flowering potted plants (16 per cent), perennials (nine per cent), and trees (three per cent). Fresh cut flowers, woody ornamentals, tropicals, herbs and vegetables as bedding plants and in containers, and plugs/propagation material rounded out the responses.
Secondary crops grown are as follows:

• Herbs and vegetables as bedding plants or in containers, 20 per cent.
• Perennials, 15 per cent.
• Flowering potted plants, 14 per cent.
• Ornamental bedding plants, just over 10 per cent.
• Greenhouse vegetables, just under 10 per cent.
• Foliage, just under 10 per cent.
• Plugs and propagation material, eight per cent.
• Wood ornamentals, six per cent.
• Trees, six per cent.
• Fresh cut flowers, two per cent.

The survey represented a broad cross-section of industry players by sales volumes. The largest group represented in the survey were those growers with sales of less than $50,000 (23 per cent), followed by these ranges:

• $100,000 to $500,000 (15 per cent).
• Over $5 million (14 per cent).
• $500,000 to $1 million (13 per cent).
• $50,000 to $100,000 (11 per cent).
• $1 million to $2 million (eight per cent).
• $2 million to $3 million (eight per cent).
• $4 million to $5 million
• (six per cent).
• $3 million to $4 million (three per cent).

On the question of support programs, some 64 per cent of those in such programs are in the AgriInvest program, with the remainder in AgriStability.
So, just how was 2011 for those in the survey? It was a better than average year for most, and that reflects the “coffee shop” and convention aisle banter we’ve heard.

About three in four growers said they had at least held their own in 2011, or had increased sales.

HOW DO YOUR 2011 SALES COMPARE TO 2010 RESULTS
True, slightly more than a quarter of respondents (28 per cent) said there was no change in sales between the two years, while 23 per cent had increases of between five and 10 per cent, while 14 per cent had increases of more than 10 per cent, and 11 per cent saw increases of five per cent or less.

On the negative side, 11 per cent said they experienced decreases of between five and 10 per cent, six per cent had decreases of less than five per cent.

WAS YOUR OPERATION PROFITABLE IN THE PREVIOUS FISCAL YEAR? WHAT WERE YOUR PROFIT MARGINS IN THE PREVIOUS FISCAL YEAR?
For those posting profits, or at least avoiding losses, the majority had margins of five to 10 per cent (24 per cent). Some 18 per cent had margins of 11 to 19 per cent, the same percentage as those with less than five per cent margins. About 15 per cent posted no profits, while 11 per cent had margins over 20 per cent. The remainder indicated they “don’t know.”

WHAT WERE YOUR PROFIT MARGINS THREE YEARS AGO?
If anything, the industry has been stable the past few years, with no wild swings in year-end statements.

• Over 20 per cent, 15 per cent.
• 11 to 19 per cent, 16 per cent.
• 5 to 10 per cent, 23 per cent.
• Less than five per cent, 16 per cent.
• None, 14 per cent.
• Do not know, 15 per cent.

WHAT ARE YOUR SALES FORECASTS FOR 2012 COMPARED TO 2011?
The toughest part of business is projecting sales, and in this retail market, the challenge is even greater. The overall economy is showing some positive signs, especially south of the border, and that augurs well for 2012.

About 30 per cent of growers are anticipating flat sales this year – no growth. Some 17 per cent are budgeting for increases of less than five per cent, 27 per cent foresee increases of between five and 10 per cent, and 23 per cent are eyeing increases of more than 10 per cent.

Only a few respondents – less than three per cent – expect reduced sales this year.

PESKY PEST PRESSURES
Our survey asked growers to recall pest pressures through the four seasons of 2011.

Early season (January to March) problems were about the same in 2011 as they were in 2010 for 62 per cent of respondents. Some 25 per cent said there were fewer problems, while the remainder said there were more.

For the spring (April through June), 21 per cent said pest pressures were lower last year than in 2010, while 17 per cent said they were higher.

The summer (July through September) was quite good, with 19 per cent finding fewer pest issues than in 2010 and 13 per cent finding more of them.

For the fall, 22 per cent of growers found fewer pest problems, while 16 per cent said they found more.

Looking at disease problems, 27 per cent said 2011 was better than 2010, while 12 per cent said it was worse.

WHICH INPUT COST ROSE THE MOST IN 2011 COMPARED TO 2010?
No surprises here. It’s been heating (26 per cent of respondents) and labour (26 per cent) leading the way for many years.

Other rising costs include electricity (17 per cent), pots and trays (nine per cent), marketing/sales (five per cent), containers/labels four per cent), plant material (three per cent), and taxes (property, payroll, environmental, permits, etc.) gaining three per cent of the votes.

Other inputs receiving votes were growing media (two per cent), biocontrols (two per cent), chemicals (one per cent), and fertilizer (one per cent). Among write-in inputs were delivery costs, which makes sense given rising transportation fuel costs, and the initial cost of the greenhouse and getting started.

NO SURPRISES IN SURVEY ON PRIMARY HEATING FUELS
Again, no surprise here. Natural gas (50 per cent) has been the industry choice of fuels for many years. Oil weighs in at number two (14 per cent). But the fuels to watch for, as they gain market share in the future, are wood (10 per cent) and renewable fuels (biomass, geothermal, biogas, etc.), also at 10 per cent.

It will be interesting to see the response to this question in about five years, when we expect wood and renewables each to have about doubled from current market share. We’ve been enjoying unusually low natural gas prices for the past few years, but history suggests it will soon start trending upwards. Enjoy the relatively low prices while you can!

EMPLOYMENT IN 2011 COMPARED TO 2010
There wasn’t a lot of expansion in the industry last year, but employment did rise a little, at least on the farms reponding to the survey.

• Increased by more than 10 per cent – 11 per cent.
• Increased by five to 10 per cent – 21 per cent.
• About the same, 58 per cent.
• Decreased by five to 10 per cent, eight per cent.
• Decreased by more than 10 per cent, three per cent.

Most of our respondents rely on local labour only, with only 24 per cent employing offshore labour. And of those with offshore workers, local employees still represent 20 per cent of the total workforce.

Looking ahead to this year, 74 per cent of growers expect no change in employment compared to 2011. About 11 per cent are expecting the increase employment by five to 10 per cent, while 10 per cent expect to cut back by five to 10 per cent.

DID YOU EXPAND/BUILD IN 2011?
There wasn’t a lot of activity last year, and most we did hear about was in the veg sector. Some 73 per cent of respondents had no construction, while 14 per cent added less than 5,000 square feet. About nine per cent added between 5,000 and 50,000 square feet. There were a few larger projects.

However, there appears to be more expansion on the horizon. About 14 per cent expect to grow by less than 5,000 square feet, with a further 14 per cent looking at 5,000 to 50,000 square feet in expanded facilities. A couple of respondents indicated projects greater than 100,000 square feet.

This isn’t to say the industry is standing pat. There was a lot of investment in new technology in 2011.

Though a third of growers said they didn’t buy anything last year, there were many other growers apparently studying new product/system manuals. Other spending ranges included:

• $1,000 to $5,000 (23 per cent).
• $10,000 to $25,000 (10 per cent).
• More than $100,000 (10 per cent).
• Less than $10,000 (nine per cent).
• $25,000 to $100,000 (nine per cent).
• $5,001 to $10,000 (eight per cent).

DO YOU PLAN TO INVEST IN NEW EQUIPMENT IN 2012?
Most growers, according to our survey, will be touring trade shows this year with chequebook in hand. While 32 per cent have no plans for new equipment this year, the remainder will be studying catalogues, websites, trade show booths and magazine ads.

Some 24 per cent will be spending $1,000 to $5,000 this year, with 15 per cent eyeing purchases between $25,000 and $100,000. Eleven per cent will spend $1,000 or less, nine per cent are budgeting $10,000 to $25,000, five per cent are looking at more than $100,000, and a futher five per cent are planning on spending $5,001 to $10,000.

GOOD BUGS VERSUS BAD BUGS
More and more growers are incorporating biocontrols into their IPM programs.

While 42 per cent of respondents said there was no change in biocontrol usage in 2011 compared to 2010, 31 per cent said they had increased their reliance on them. Eight per cent said they decreased usage, while about 20 per cent said they didn’t use biologicals at all. (I’m sure this latter number will decline within our next survey or two.)

So that’s it – our snapshot view of the industry. How do you compare? Where do you fit in with the responses? Send comments on the survey results, along with suggestions of questions for next year, to greenhouse@annexweb.com.