Taking chances: Year in review, opportunities ahead
COVID created challenges but it also revealed opportunities. What might 2021 have in store?
By Greta Chiu
2020 was characterized by struggles with uncertainty. No matter the crop, greenhouse operators were tasked with staying on top of rapidly changing regulations, updating pertinent protocols and ensuring the health and safety of their staff with limited information and resources at hand. The pandemic highlighted weaknesses in the supply chain, but it also forged opportunities and expedited ongoing change.
A forgotten sector
“The biggest challenge out of the gate was the lack of access to concrete information,” says Michael van den Hoek, co-owner of Lowland Gardens in Great Village, N.S. As vice-president of the industry association Greenhouse Nova Scotia (GNS), van den Hoek and GNS president Cathy Oulton worked with their team to lobby for clarification on what was deemed essential, eventually creating guidelines and best practices to ensure their industry could operate safely amid the information vacuum.
Meanwhile, the same questions echoed across the country. The essential status of ornamental farms and independent garden centres was up for debate depending on the region in Canada.
“We were looking at a farm gate loss of $100 million,” recalls Dejan Kristan, marketing director of Flowers Canada Growers (FCG). The national estimate was initially generated based on affected sales around Easter, Mother’s Day and the spring planting season in 2020 – periods that usually account for about 60 per cent of the floriculture industry’s annual sales.
“Some provinces were easily able to correct themselves due to being defined as essential, whereas other provinces like Ontario were slower to achieve that,” says Cary Gates, pest management director at FCG. Not being a food crop, ornamentals have been differentially perceived by the public and by policy makers, often left out of agricultural considerations.
“I can’t stress how important it was that they were identified as essential. If they were not, the impacts would have been considerable,” says FCG executive director Andrew Morse. The losses started when North American retailers prioritized food, household and sanitation – items consumers were looking for. “Many grocery stores were working with a fraction of their staff, and the florist section requires specially trained employees… It became a lower priority for many retailers, resulting in a significant number of cancelled orders.” For some growers, adds Kristan, product that took months to produce were turned away in transit or even at the door.
Now with a second lockdown in effect in some areas, Gates notes how IGCs are once again relegated to curbside pick-up, online orders and shopping by scheduled appointments. In late November, Manitoba banned the sale of non-essential products, including flowers and plants, even within essential establishments. “Any producer that had been planning to ship to that province or produce there will have to think about what this looks like come Spring,” says Morse.
Many were expecting a strong poinsettia season in 2020, but then the U.S. retail environment shifted, with large-scale stores opting out of floral Black Friday sales and little notice given to producers. Some tried to find alternative avenues. “If Manitoba locks down, can you find homes for poinsettias meant for that province? Maybe. Expand that to all of Canada – it’s a lot harder. Expand that to the States? It becomes impossible,” says Kristan.
Producers with specialized foreign equipment may have a hard time finding someone to do the repairs. “Right now, there are exemptions for entry for specialized workers that have been contracted prior to the pandemic,” says Morse. The caveat? It only applies to services for infrastructure that has been deemed essential on a national level, and ornamentals aren’t on the list. “As a result, we’ve seen some farms refused access to those specialized workers, with or without quarantine.” As many greenhouses employ European technologies, growers needing repair services from a foreign specialist will be hard-pressed to find them. “As the pandemic continues, we see ongoing restrictions to entry, and this has the potential of becoming a bigger issue. As time goes on, the likelihood of a failure goes up,” says Morse.
A banner year for some, but not all
Though there have been recounts of tremendous growth for ornamentals in 2020, Morse emphasizes that not all growers were able to recoup their losses from the initial inability to move product. “For some of the larger farms that were able to adapt and continue to sell, there was a very strong [extended] bedding season… a lot of them were able to sell well later into the year than they might typically do.” COVID’s impact on other nations also created short-timespan opportunities, such as a void in cut flowers from traditional foreign suppliers. “But for [smaller] farms that really focused on only Easter, they have not recovered.”
With social distancing in effect, the Easter market was particularly difficult because floral purchases are often bought as gifts, notes Québec greenhouse consultant Michel Senécal. The province also saw a brief closure of ornamental production and garden centres before reopening to high consumer demand. “Because of the confinement, consumers have used their discretionary money to decorate or renovate their homes instead of going out to restaurants or travelling, for example.”
With perceived shortages in the food supply chain, consumers flocked to vegetables and herbs in an effort to achieve food autonomy, adds Senécal. But generally, plants were in high demand. Tropicals, succulents, houseplants and decorative patio options were all welcome.
For growers who could and did take the gamble, this was good news. “There was so much demand for [garden] products that you couldn’t keep it in the greenhouse unless it was nailed down,” says Morse. “If the demand is similar to last year, then there’s opportunity,” but it depends on the state of the market, lockdown restrictions this winter and the availability of a vaccine.
When it comes to taking chances, young plant grower Michiel Verheul sees opportunity in his neck of the woods. Located in Sturgeon County, Alta., he foresees the return of at least 50 per cent of COVID gardeners. “For 10 to 15 years….the industry has written about how we’re going to get the Gen X and Y, and especially the millennials, to buy. All of a sudden we have a willing audience that showed up on our doorsteps.” This is a key opportunity to teach consumers how to garden and maximize sales in the process.
With product sold out two to three weeks sooner in 2020, his grower customers have been ordering one to two weeks earlier at volumes 10 to 25 per cent higher than before. Verheul himself put in earlier orders for cuttings and found certain items to be sold out at off-shore farms. “When COVID hit, these suppliers were already planning for 2022 and 2023… There’s only so much mother material.” Those who haven’t yet ordered may be faced with substitutions, less ideal shipping weeks or no product at all.
Edibles and vegetables seeds are must-have items, but above all, Verheul emphasizes the importance of having enough product to satisfy the loyal IGC visitors. Because product emptied more quickly than normal in 2020, regular customers may have showed up during their typical May/June timing, only to find the shelves bare. “If you don’t take the opportunity to serve them, then you’re eventually going to discourage your customers from coming [back].”
Cathy Oulton of GNS and owner of Bloom Greenhouses and Garden Centre in Hammonds Plains, N.S., couldn’t agree more. Not wanting to be remembered as a garden centre without product, she recalls how they sourced from every possible avenue and approached local farms when seed suppliers ran out. Some spring hard goods were delayed or just didn’t show up. And with a later gardening season compared to some other regions of Canada, Oulton says supply can get sparse by the time they’re ready to open, even in a non-COVID year.
With the uncertainty of the market early on, they chose not to grow to capacity – a decision that Oulton felt was right for the moment, but regrets slightly in hindsight. “By June 1st, I had empty benches in my retail greenhouse, and I filled it with tropical plants because I had nothing [left] to sell.” For IGCs in Nova Scotia, the first weekend of June is the biggest one of the year. But even then, she says they accommodated a good amount of sales from their inventory and were able to turn their greenhouses three to four times – an unprecedented year. It also points to opportunities for tightening up their business practices.
Finding local labour
One downside to having more business than normal was the inability to access emergency federal payroll support. Since Bloom’s don’t normally open until the first of April, even a small bump in revenue during this period made them ineligible. “I don’t know how that’s going to be solved next season,” Oulton says.
Like most of the ornamental industry in Canada, growers typically have a hard enough time finding employees to work a seasonal job, much less during a pandemic. “Most of us had to hire extra staff to deal with sanitation and enforcement of government policies,” van den Hoek says of GNS members. For their own grower-retail operation at Lowland Gardens, they’ve hired the equivalent of two full-time staff just to handle sanitation and traffic flow. To address staffing concerns, they offered employees the choice between maintaining their regular wage and having no public contact, or taking a wage increase to remain in customer-facing roles.
Even if a viable vaccine becomes available, van den Hoek says they’ll continue to assume all health, sanitation and safety protocols. “We’d rather be on top of things than trying to play catch up.” Even if a vaccine rolls out, he envisions challenges in distribution and resistance that normally accompanies the exercise of individual human rights.
Sell early and online
“Most of our members, ourselves included, are very focused on that in-person customer service,” says van den Hoek. Prior to COVID, options for e-commerce and curbside pickup were very foreign. “Many of us built e-commerce platforms from scratch in the middle of our normal work as a backup, to be able to serve our customers in the event we weren’t able to physically open our doors.” That was a large source of stress, because the majority of their members are not equipped with the knowledge to set up digital platforms.
With 14 greenhouses at Lowland’s, the process of picking different items was a significant challenge and resulted in a large cost increase. In hindsight, they should have charged for the additional labour, but had simply wished to help customers access the needed plants and avoid being mistaken for price-gouging. Their prices remained unchanged even though the costs of running the business went up.
“We wanted to make that e-commerce option available for curbside pick-up only for [consumers] with significant health risks or concerns about physically coming into the store,” says van den Hoek. In many cases, they found that consumers would go into the store after picking up the item they ordered. To avoid saddling staff with the added responsibilities, e-commerce will be a last resort.
For Bloom Greenhouses, Oulton sees digital platforms as both an opportunity and a challenge, particularly for smaller businesses like themselves. Without a dedicated marketing person on staff, they found themselves taking orders through Facebook and Instagram rather than completing transactions online. They’ve recently put up their online store for 2021, she says. “Because if people aren’t comfortable shopping in person, you need to be able to help them in another way.”
“Perfect your online store and the system of getting [product] ready,” offers Verheul. He sees e-commerce as a way to sell early, gain operating capital, and draw customers even on a cold or snowy day. “An online store post-COVID can still be a very good money maker… You can draw people in over a longer period of time, especially in a short selling season.”
On foreign labour
“The absolute largest challenge we had in 2020 was labour,” says Linda Delli Santi, executive director of BC Greenhouse Growers’ Association (BCGGA), “and it’s going to be our biggest challenge going forward this year.” Though many of the association’s members already had their workforce in place by lockdown in mid-March, there were side issues. “In Mexico, the offices that process visas shut down more than once,” she says, while other worker-originating countries closed down their airports. Her members needed special permission to land partially filled charters, amounting to three or four times the price of a regular plane ticket.
An evolving situation is whether countries feel comfortable sending workers. “There continue to be travel disruptions and we expect that after such a tumultuous year, some employees might opt to stay in their home countries for 2021,” notes Ontario Greenhouse Vegetable Growers’ (OGVG) general manager Joe Sbrocchi and science & government relations manager Dr. Justine Taylor.
With the introduction of ArriveCan in late 2020, the onus is now on foreign workers to fill out details of their COVID status online, prior to their flight to Canada. Problem is, many do not have access to internet or credit cards and face potential language barriers. The employer can complete it on their behalf but there‘s a fee, says Delli Santi. At time of writing, it was unknown whether the fee would be recoverable if the worker were unable to fly.
The pandemic raised sensitivities around the seasonal agricultural worker program (SAWP), about what it means to access labour and the current state of local availabilities, says Niki Bennett, science coordinator at OGVG. Following a period of heightened public attention, the federal government opened a consultation window in late 2020 with the intent of generating recommendations for living and housing conditions. “But the actual implementation comes down to each individual public health unit and local municipality who each have their own set of housing criteria and requirements,” notes Glen Snoek, marketing & economic policy analyst at OGVG. “There are a number of [operators] who want to undertake fairly significant housing projects for their workers but are very cautious right now because of the state of what rules may be.” Currently, housing and workplace inspections are taken on by six different individuals from differing institutions on separate visits. “We’re looking for ways to streamline the inspection process,” says Bennett, who would also like to see minimized risk to workers and crops
Because the SAWP program does not allow workers to arrive prior to Jan. 1, Delli Santi says some of their members have turned to the agricultural stream of the Temporary Foreign Workers Program. This will allow workers to quarantine for two weeks in late December before starting in 2021.
While the BC provincial government mandates quarantining of workers in government-managed accommodations, greenhouse operators in other provinces must look for available short-term rentals at a rate at which they’re needed. This is often a struggle for rural areas where farms are located. And with construction projects on hold across many parts of the country, housing will prove to be another hurdle for 2021.
“As it is now, the largest risk to most farm operations is the introduction of the virus into a congregate living situation, resulting in a large-scale outbreak,” notes Sbrocchi and Taylor. Grateful for the sacrifices made by agri-food workers, accessing quick tests and vaccines remain top of mind for the organization. They’re working to ensure that critical workers have early access to COVID vaccines for worker safety and the health of the supply chain.
“No one has a pandemic book to guide them through this process,” says Bennett. “Necessity breeds ingenuity, and we saw a lot of it.” The pandemic has expedited the process for adopting more automated solutions and unlocking greater potential in leveraging data. “How can we reduce our manual labour needs and transition those into jobs that more Canadians would be interested in holding?” This could be the start of a new era.
Amid the fluid COVID situation, the greenhouse vegetable sector continues to be occupied by another pathogen – the tomato brown rugose fruit virus (ToBRFV).
“The fact that the fruit has to be virus-free when shipped across the [Canadian-US] border,” says Delli Santi, “that will be an ongoing challenge.” Breeding for resistant varieties has been a common technique for dealing with greenhouse vegetable diseases in the past, but with this regulation, even the fruit of resistant varieties cannot enter the U.S. if tested positive for rugose. “The resistant plants can have the virus, they just don’t succumb to it,” remarks Delli Santi.
“We’re looking to have Canada, the U.S. and Mexico potentially align in not just how they regulate this virus, but how they detect it,” offers Bennett. This way, a positive in one country is a positive in another. Currently, there are no official international protocols. “The fruit pathway is deemed by many countries around the world as very low-risk,” she says, and few countries are regulating this pathway, with the US being the most prominent.
As OGVG and the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) continue to trial disinfectants against ToBRFV, Bennett reveals that they’re also in the midst of testing new technologies to detect the virus. This could be a gamechanger, reducing sampling and testing costs, and could potentially be expanded to detect other viruses, both in and out of the greenhouse.
Markets and trade
“The market was very strong,” says Snoek, reflecting on 2020. “There was a brief interruption due to COVID for about three weeks from the end of March and into April, but once the lockdowns began and people bought food to eat at home, the prices began climbing.” The additional revenue was much needed to help soften the blow of greenhouse modifications required to handle COVID. “With the dramatic reduction in the amount of air freight, there were very low levels of greenhouse produce coming in from international markets, especially from the Netherlands and Spain into the U.S.,” he says. Combined with reduced production in some U.S. regions, especially in the summer, all this contributed to heightened demand.
Prices were uncharacteristically high, and particularly for tomatoes. “Wholesale markets ended up very tight throughout the summer, with pricing sometimes triple the normal rate – values you don’t expect to see, especially for an extended prolonged summer season,” says Snoek. “Growers themselves didn’t experience the same gigantic pricing swings, and this was offset by struggles with maintaining normal production quantities, but the sector saw healthy revenue compared to prior years. It was a truly unique marketing environment, and I don’t know if we’ll ever see that again in our lifetime.”
At time of writing in December 2020, both the BCGGA and OGVG were made aware of a protective U.S. trade action investigating extra peppers being imported into the U.S. “It has the potential to come into force if it is approved by the incoming president,” says Snoek, “around the time when our growers would start shipping to the U.S.” If approved, this could have a potential impact through tariffs or quotas on peppers going into the U.S. from every country in the world.
During this 90-day monitoring period, Delli Santi says members across the supply chain will be involved in hearings and interviews. Snoek adds that investigators will likely be looking for growth over the last five years and the potential for harm occurring to the sector. Looking at their export volumes, he does not believe that Canada is the primary target. “It’s hard to justify a trade action against Canada when greenhouse peppers ship into the U.S. for $1 to $1.50 higher per kilo than their domestic market. We’re actually raising the average selling price.”
Editor’s note: This article was written in mid-December for the January 2021 issue of Greenhouse Canada. Stay tuned for changes to evolving situations.