The economy has fluctuated over the years, and the green industry is very familiar with these changes. Dr. Charlie Hall, a professor in the department of horticultural sciences at Texas A&M University, recently gave his annual report on what has happened in the green industry over the past year.

“One of the only sets of data pertaining to the green industry that the government (the Bureau of Economic Analysis) publishes … is the flower, seeds and potted plants expenditures by the end consumer since 2016,” Hall said. From the end-user perspective, “this is what they’re spending on those particular categories.”

Before 2020 and COVID, the green industry as a whole was growing very slowly. After the pandemic, the “sales of flowers, seeds and potted plants started going up, and going up considerably.” The slight decrease seen in 2022-23 is assumed to be related to the weather at that time.

Although this graph’s data were adjusted for inflation to see the overall trend of the expenses throughout the year, Hall is unsure “how much of this growth … is related to units versus sales price increase.”

Looking at the net profit of the green industry, 2021 was the most successful year so far. Currently, if there was no money coming into the industry, the average business could “go 126 days without any injection of sales or any capital from anywhere and survive,” Hall said.

(This is an average, with some smaller retail grower firms being able to go a whole year and other big box store growers that would last less than 45 days.)

For growers, it’s important to take into consideration input costs. For the past five years, labor costs have weighed about 35% of the growers’ costs, which has gone up by 25% since 2019, whereas the labor for non-agricultural farms went up by 18%. At this point in time, Hall cannot confidently predict what will happen to input costs for the remainder of 2024, but he plans to make an estimate come June.

The value of flowers, seeds and potted plants adjusted for inflation. Image courtesy of Dr. Charlie Hall

(Editor’s note: Those attending the State of the Industry address at July’s Cultivate’24 in Columbus, Ohio, will see all of Hall’s details broken down in illuminated slides.)

At the retail level, “gross sales were up 35%” from 2019 to 2023 but had a 1.5% decrease from 2022 to 2023. Hall pointed this out to show we shouldn’t panic about this decrease “because if you look where we’re at today in comparison to 2019, we’re still ahead.”

These same trends can be seen with customer count, gross margin and labor dollars. “Customer count was down (1.5% from 2022 to 2023) but compared to 2019, it was still up 9.4%,” Hall said. “Gross margin was down 2% (from 2022 to 2023) but compared to 2019 it’s still up (39.1%)” and labor dollars were up 24.3% from 2019.

Looking to the future, there are three factors that will impact the green industry going forward: the overall growth of the economy, the performance of the supply chain and labor availability and cost.

Overall, Hall recommended growers use a long-term perspective on the success of the industry and their business in general. Manage your efficiencies and working capital internally, hold the line of pricing and focus on your value proposition.

by Kelsi Devolve