The take-home message that Matt Mika, vice president of advocacy and government affairs at AmericanHort, gave to the hundreds of attendees at Cultivate’s annual State of the Industry address, was to get engaged to move issues forward.

Mika was speaking specifically about the progress – or lack thereof – when it comes to the Farm Bill. This year’s election cycle will likely slow or even halt any forward momentum on that front.

But “get engaged” was also a directive from Dr. Charlie Hall, AmericanHort’s chief economist. That’s what those in the horticulture industry need to do with their customers to remain profitable.

In Hall’s yearly address, where he touches upon changes from the last year and what those changes may mean for the future, he noted that compared to YTD 2023, even thirds of the industry are doing worse, even and better in 2024. The number of units sold from January to June in 2024 is mostly even with the number sold in that same timeframe in 2023.

Profits thus far in 2024 have been highly dependent on two issues. “We’ve seen mixed profits based on where they’re selling – the region and the weather are major influences,” Hall said.

He stated that regions are not created equal. The hot spots this spring were the Mountain region of the West and the upper Northwest.

The biggest declines were seen in the South Central and Southeast regions. Midwest revenues are down 4.5% YTD; Mid-Atlantic revenues are down 7.4%; and the Northeast is down 7%. “When there’s better weather, there’s better revenue,” Hall said.

And that’s true of no matter who growers are selling to. Surveys found that 23% of growers serve independent garden centers; 24% are landscape service providers; 20% are re-wholesalers; 14% serve box stores/mass merchants; and 11% serve municipalities/institutions. Only 3% are direct-to-consumer (and the remaining 3% serve other markets).

Regardless of where they’re buying, though, Hall reported that inflation “is still biting into consumers’ discretionary spending.” A lot of the plant care/landscaping that took place during the height of the pandemic has calmed down.

The continuing increase in labor/wages and shipping/freight are going to most impact costs this year. Hall said most businesses need to have raised their prices at least 21% since 2019 to stay profitable.

There’s a silver lining to the shipping information, however: the global supply chain is back to normal. And labor force participation is almost back to pre-COVID numbers.

Set up scenes that show how your plants can be used. Engaging your customers will be critical to continue earning their dollars. Photo by Courtney Llewellyn

In neutral news, Hall reported that sales of flowers, seeds and potted plants this spring were flat with last year – “so think about strategy,” he said.” What can you offer besides products?”

Overall, the chief economist is seeing mixed performance across the industry. That’s why engagement is going to make a difference going forward.

Hall’s take-home tips:

  • Manage your working capital – use customer profitability analysis.
  • You must track customer analytics to have better information for strategic decisions.
  • Use stock-keeping unit (SKU) rationalization – focus on your value proposition.

Your value, whether real or imagined, is what will keep your customers engaged – and your business profitable.

by Enrico Villamaino