Will consumers continue to spend on lawn and garden products and services at the same elevated level they did during and immediately following the pandemic? It’s the wildcard nursery and greenhouse owners and operators can only watch and wait to see how it plays out.
“Will consumers still be willing to buy a flat, or will they be satisfied with a few plants?” asks Sara Trattles, vice president of commercial lending for GreenStone. “Will two hanging baskets do instead of four?”
The industry has benefited since 2020 when Covid-19 forced people to stay home, creating a surge in lawn and garden spending. As most of the country shut down, garden centers (after some legislative debate) were allowed to open. Working from home, consumers had a larger discretionary income amplified by government stimulus money.
Now post-pandemic, rising inflation continues to carve out more and more of consumer discretionary spending. Will that drive demand as consumers look to grow more of their own food, or will it hurt demand as flowers and shrubs may seem less essential.
“All the growers I’ve talked to are pretty optimistic for this year,” Trattles says. “I do think consumers are dialed-in on how much they are spending, so growers are looking for cost-effective ways to provide the same product, whether that be in adjusting containers or other inputs. It’s hard to say what consumers will do… they are finicky.”
While the pandemic shifted consumer mindset, spending and ultimately increased demand in the greenhouse industry, the shutdown also created a supply fiasco. “Growers had to have containers, plastic, dirt, etc.,” Trattles says. “If you don’t have dirt or a container, you're not going to be able to start the seedling and have a plant to sell when the consumer wants it. It forced some stockpiling – buying more inventory at a higher price. We’ve worked through most of that now, which is providing some relief for growers.”
According to a study by Axiom Marketing, a Minneapolis-based marketing firm serving horticultural, agricultural and home improvement markets, there were meaningful increases in time and money spent on gardening in 2023 and planned gardening activities for 2024, especially among Gen Z and Gen Y gardeners. Gen Z – deemed the “foodie” generation – is propping up vegetable plant sales, which will likely remain strong as food costs continue to rise.
According to GlobeNewswire, the greenhouse horticulture market was estimated at just over $32 billion in 2022, and is projected to grow to over 65 billion by 2030.
Michigan’s greenhouse industry, which largely consists of annual bedding plants – pots, flat containers and hanging baskets – is dominated by wholesale sales through brokers who supply retailers.
Wisconsin greenhouse growers focus more on regional, retail sales. But some Michigan growers ship to northeast Wisconsin.
Michigan is the third largest producer of floriculture crops and the largest young plant producer in the United States with a total crop value of $711 million, according to U.S. Department of Agriculture, National Agricultural Statistics Service, 2022. The state also ranks third in the U.S. for Christmas tree production and 16th in national nursery stock sales (2019), bringing the total combined value of all ornamental crops to $850 million.
Horticulture production in Wisconsin, which includes greenhouses, nursery, and floriculture production, is composed of some 1,508 enterprises distributed across the state, according to Steven Deller, Department of Agricultural and Applied Economics, and the Center for Community Economic Development at the University of Wisconsin—Madison. Total sales in 2017 was about $195.6 million employing 2,000 people with total payment to workers (inclusive of proprietor or owner income) of $112.9 million. Most are smaller or mid-sized operations, with 55.2% having sales of less than $50,000 and only 6.2% have sales of greater than $500,000.
Labor concerns
Greenhouse operations produce a labor-intensive crop in a short, calculated window. One of the main concerns with growers across the board is available, qualified workers willing to work. As a result, Trattles notes, more companies are switching to H2A, a federal program that allows foreign workers into the U.S. for agricultural work.
“More than 50% of the growers I work with use H2A at least in some part, and if they use H2A, the rest of their workers have to be given that same wage, which is $18.50 now,” says Trattles.
While Greenhouse growers are complimentary of H2A workers and how much work they put in, she says, the last two years have been really rough on growers with substantial wage increases. “It’s not so much availability of labor – they can get the labor – it’s the cost. And, then most hire H2A contracting companies, at an additional cost, to provide transportation and housing that’s required to use that program.”
With increasingly thin margins, growers continue to seek methods to decrease input costs, increase energy efficiency, decrease plant losses, diversify their cropping systems and look for new markets, according to Michigan State University (MSU) Extension ornamental horticulture team.
Specialty cut flower production is a small but thriving niche industry in Michigan. As of 2017, Michigan ranked seventh in the nation for cut flower production with total sales coming in at just under $10 million (USDA NASS, 2017). Although the state has a rich history of bedding plant and nursery production, the MSU team reported a vibrant cut flower sector provides direct benefits to the broader floriculture industry by elevating public awareness and providing additional options for consumers.
As with other industries, technology is playing a key role in the economic growth of the greenhouse industry. Technology works to combine heat and power systems, provide strategic shading and cool systems digitally, and is continually being developed and improved to make greenhouses operate more efficiently and with lower costs.
Sustainability and good stewardship are front and center, Trattles points out. “They are looking for the next thing… whether it be controlling energy costs with solar panels or other sustainable projects or practices.”
Southwest Michigan, particularly the Kalamazoo area, has seen some transitions and growth, as older owners and operators are either selling or transitioning to the next generation, she adds.
