Nursery Report: Feb. 1999, Shortage Situation

As contractors know by now, the green industry has experienced a balled-and-burlapped plant shortage over the past two years and all indications are that this trend will continue for at least another year and perhaps longer.

The limited product has varied from year to year. Last year, we would have had a difficult time locating Zelkova’s, Hybrid Maples and Yoshino Cherries just to name a few. This year, the list consists of Willow Oak, Kwanzan Cherries and Hybrid Maples. Next year, much of this material will be more available in small sizes but not in larger sizes (i.e., 3 inches). Why has this occurred and how can we avoid these shortages in the future?

BEYOND OUR CONTROL. For the moment, let’s pretend that you are in the process of developing a competitive bid calling for the following plants: (200) 4-inch Willow Oak, (250) 3½-inch October Glory Maple and (150) matched 8- to 10-inch Nellie R. Stevens Holly.

Five years ago, you would not have been concerned about the availability of these items. Today, however, you would probably ponder this list and ask the questions: Who would have these available? If I found them, would the cost effect my competitiveness?

Sound familiar? Unfortunately, the landscape business is influenced by the economy and trends – two forces that are not only unpredictable but can change without much notice. Not only does a B&B grower deal with these forces, but this grower must try to forecast these forces several years (typically three to six) in advance in order to adjust the quantities and mix of product being grown.

Plant availability shortages, most frequently B&B products, have happened in the past. In fact, it is considered a phase within the plant production cycle. So, can we expect to be able to control this phenomenon? To understand where we are today, we must first understand how we got here to begin with.

The “plant production cycle,” for lack of a better term, goes through several phases. Like a proverbial snowball, once the process begins, the momentum carries it through to the end where it starts once again. What do these phases consist of? It’s basic Supply and Demand 101.

PHASE I (THE GLUT). In this phase, it appears that over production of a specific B&B product occurs. Certain contributing factors typically can be identified, including economic slow down and buying trends, both of which have been cited as difficult to predict.

The third factor, one that is more controllable than the previous two, is overproduction. Growers depend on historical sales to determine what they should grow. Many of these growers end up planting the same product in large quantities, thereby creating a “glut.”

PHASE II (THE RESPONSE). Many growers react to this “glut” of product by reducing the quantities they produce and/or by changing specific varieties in order to meet the changing trends.

PHASE III (THE HUNT). The effect of this reduction of B&B will not be felt by the market for three to six years, depending on the target size and variety of plant. Plants that once were a commodity product are now considered a premium product, and the prices reflect it.

These higher prices effect everyone in the supply chain and typically are passed on to the end consumer, homeowner or developer. Just think, if only you had planted 10,000 Nellie R. Stevens six years ago, you could easily pay for your kid’s college education. But, as the saying goes, “Hindsight is always 20/20.”

The duration of time that material will be in short supply depends on how long the growers stifle their production. In addition to closely monitoring demand trends, growers rely on tree liner sources to produce specific varieties and quantities of plants for their own supply, and it is common practice for the liner sources to require orders two years in advance.

Several years ago, the liner growers over produced products due to some aggressive orders. As a result, a “glut” occurred for the liner industry and they reduced their production. It has taken years for the supply of the liner products to return to the growers’ demand levels. Then consider the number of growers nationwide, and we have a prognostication nightmare.

PHASE IV (THE SURVIVAL). After approximately three years (again this would depend on the target size and variety of plant), specific plants will become more available. This increase of products will diversify as the larger and/or slower growing plants reach target size. But many growers decide to sell the product before it reaches the target size. They see an opportunity to create additional revenue or to pay off debt by selling product ahead of time, so pricing continues to remain high. And such selling of products before its time delays resurgence of product availability.

PHASE V (THE LIGHT). It is during this phase that trends and economy come into play. The current availability was planted three to six years ago. Were the projections that the growers made at the time of the planting correct or have the trends of buying habits changed? This question will be answered by what goes on the truck and onto the job site in the next year or two.

Meanwhile, the grower is measuring sales and adjusting new crop production based on present market behavior. Once again the question comes up, “Will the trends be different when the grower harvests this crop?” Who really knows? No one has found the crystal ball that works.

However, our industry has become increasingly proactive in the quest to elevate the perceived value of our service or product. In order for us to succeed, we must be able to market to the future trends and maintain a continuous research and development network. In fact, organizations throughout the United States have developed such a valuable network.

For example, the University of Georgia along with the Georgia Green Industry Association and McCorkle Nurseries have combined efforts to develop the Center For Applied Nursery Research, a multi-faceted evaluation program. Growers such as Shadow Nursery (bare root, container and B&B) and Frank Schmidt Nurseries (bare root and B&B), just to name two, have been evaluating new and, in some case, re-evaluating the not-so-new plant varieties. Obviously, the list of these proactive growers goes on and on.

As the plant availability cycle continues, the economic status during these phases will determine the intensity of impact. As we near the end (or is it the beginning?) of this “plant production cycle” pricing will continue to be a major issue. Until the quantities available justify commodity status, prices will remain high. For many of the remaining older crops available, quality may be affected. What remains today may be what contractors walked by in the fields a year ago. However, the light can be seen at the end of the tunnel. In fact, the current market situation is entering Phase VI.

PHASE VI (THE SUPPLY). As already mentioned, we can expect these shortages to continue for another year or two or until supply catches up with demand. Meanwhile, what is the industry to do?

For starters, we must become open to alternatives. Contractors can turn to the growers or rewholesalers of nursery products that they trust for alternative ideas. These sources have a broad knowledge of availability.

Once these alternatives are identified, growers must begin consulting with the people that specify this product, such as landscape architects, design/build firms and homeowners, and we must equip ourselves with the knowledge of today’s plant availability and educate the masses. This should not be considered a temporary effect only to be performed when we are experiencing such a shortage, but a continuous part of the way we do business. We are in an industry of constant change. Through new plant introductions and the increased awareness of environmental concerns, we have the right tools to make the difference.

The author is the nursery coordinator for McGinnis Farms, Alpharetta, Ga.

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