As the calendar turned to 2021, the green industry was busy making plans and predictions. During last year’s pandemic gardening frenzy, many growers dipped into their stock earmarked for 2021. As pundits were forecasting another strong sales year for plant material, the supply chain was pondering how to reconcile industry-wide plant shortages.
Then winter storm Uri dumped record snow and damaging ice from coast to coast February 12-16. The storm was followed by the coldest temperatures in decades in the south-central states. Temperatures across Texas didn’t climb above freezing for several days. Most of the state experienced negative temperatures for the first time in 60+ years, with areas like Dallas-Fort Worth and Tyler dropping below zero. For some perspective, cities like Dallas have average February temperatures between a low of 41°F and a high of 61°F.
Extended freezing temperatures killed or badly damaged shrubs, trees and perennials in nurseries, garden centers, greenhouses, and landscapes throughout the state, in turn exacerbating the existing plant shortages.
“The green industry will experience increased labor, fertilizer and other costs as part of the price of replacing the plant material that was lost during the winter storm,” says Marco Palma, horticultural marketing expert in the Department of Agricultural Economics.
Palma said AgriLife Extension and the Texas Nursery and Landscape Association (TNLA) are awaiting responses from their statewide-loss assessment survey before venturing an estimate of green industry losses.
“It will take some weeks before we get a full picture of the immediate losses, but they will easily be in the tens of millions and probably in the hundreds of millions of dollars,” he says.
Amy Graham, president and CEO of TNLA, says much of the severe damage occurred in the larger metropolitan areas such as Houston, Dallas, San Antonio and Austin. While the green industry will be able to recover and provide replacements for some of these plants, there likely will be a shortage of landscaping trees for some years to come, she says.
“Another consideration is that growers won’t be able to determine the extent of the damage, including root damage, to a large number of their plants until we get warmer weather.”
Adrian Muehlstein, chief operating officer at Southwest Wholesale Nursery in Carrollton, Texas, says he’s confident that their operation can serve its 2021 wholesale landscape plant customers. It’s when you start projecting out past the current year that keeps the operations manager up at night.
“This is going to have a long-lasting impact on Texas horticulture, I don’t think we’re going to be able to get out of this as far as recovering from an inventory standpoint across the board,” he says. “Going into the season we already were facing COVID shortages on many plant materials, now you compound that with the freeze that we had here as well as in Louisiana, I just don’t see this plant shortage fixing itself anytime soon. It’s looking like a three- to five-year process right now.”
Southwest Wholesale was able to react before the storm hit and saved much of their inventory.
“Luckily, we saw this thing coming in advance,” he says. “At the time we were in the stretch of some nice mild weather, so we were taking steps to increase our inventories and we certainly have those capabilities as far as having enough greenhouse structures is concerned.”
Muehlstein had a simple yet clear directive for the nurseries’ staff: pack every single inch of those greenhouses with plant material.
“I told them ‘I don’t want anyone to be able to walk a single foot in those greenhouses,’ he adds. “I wanted those greenhouses crammed full of plants, and in the end, we were able to save a ton of material.”
His crew moved all of the operation’s 3-, 5- and 7-gallon materials inside the greenhouses, and even the nursery’s large 30-gallon specialty materials were accommodated inside.
Muehlstein has heard from neighboring growers that can’t source the plant containers they need to put in a crop this season, which could hamper the recovery process for many growers. Panic buying of any and everything plant-related among horticultural operations is already taking place, he says.
“This is an opportunity to educate our customers about a different plant or a different variety that they might take a look at, if we do end up running into some walls on certain species of plants this spring,” he says. “Just be creative, that’s what’s going to get us through this pivot. To me, that’s the beauty of our industry. There are just so many plants and varieties that are out there that are untapped, that people should be trying out.”
Growers in Texas and Louisiana are adapting to what the storm left in its wake, says Brett Jones, Senior Director of Category Management-Nursery at SiteOne, a national landscape supply company.
“For some growers, it means a complete change to their schedules, product offerings and/or availabilities, while for others it means moving ready dates, shearing and cleaning crops ahead of the next flush, and sourcing replacement material,” Jones says. “One common theme throughout is the ‘we need to wait and see’ mentality. There is one thing that is true for all; not one grower in Louisiana or Texas was unaffected. The only difference is the level of impact on the different operations. The best growers are finding supplements for their now depleted inventory and offering substitutes for the products they currently do not have.”
In the wake of the freeze, items such as loropetalum, hawthorns, wax leaf ligustrum, palms, tropicals, citrus, pittosporum, gardenias, oleanders, live oaks, crape myrtles, agave, and aloes are some of the main plants that took the biggest hit.
With the market experiencing elasticity of demand, growers should be raising prices, says Charlie Hall, ag economist and Ellison Chair in International Floriculture at Texas A&M University.
His advice: Raise prices and don’t apologize for it. Besides the supply and demand side of the equation, the cost of doing business is rapidly increasing. He predicts a 5.24% increase in the cost of inputs this year.
“I expect to see a similar boom this spring and the buying frenzy will likely extend into the summer, but the industry can’t count on the same increases as last year,” Hall says. “The industry is planning for increases, but there are still a lot of unknowns.”
Jonathan Saperstein, CEO of Everde Growers based in Houston, has witnessed plant price increases in some markets.
“I expect to see plant prices go up unevenly and sporadically throughout the year and going into next year,” Saperstein says. “I say sporadically because it’s not the typical ‘I’m going to raise my prices to start the year’ plan, it’s because growers are seeing the losses and movement of inventory and nurseries are making adjustments.”
Covering plant losses, the increasing cost of inputs and surges in shipping prices are all reasons to increase plant prices, Saperstein adds.
“If a nursery lost 5% of its crop for the year, why not go up on pricing and make up for that? Couple that with the prices of raw material going up of late in the 5% to north of 10% range and it’s the right scenario to raise prices,” he says. “And if you’re pulling inventory forward, you still have to spend the money to replace that.”
Ben Van Wingerden, founder of ColorOrchids in Nocona, Texas, also expects to see price increases.
“There was already a large disparity between supply and demand right now in our industry, so any additional shortage will just widen that gap, and it should drive prices up,” he says. “If I had to make a prediction, I would say the retail stores will continue this trend of increased sales of everything plant-related, and these stores will be searching high and low for product to put on their shelves. Growers and the stores themselves will need to adjust their prices accordingly.”
Current and future impact
The availability of ornamental trees and nursery plants for landscape and retail markets in Texas and the Southeast United States will continue to be in short supply in 2021 and for the foreseeable future, says Timothee Sallin, co-CEO of Cherrylake Co. in Florida.
“There will likely be an acute shortage in the spring of 2021 due to the sudden and unexpected reduction in supply and a likely increase in demand resulting from the Texas freeze. While the freeze is anticipated to have a significant impact on availability in the months ahead, the industry was already in a shortage situation prior to this event,” he adds.
The impact of the freeze will affect both sides of the supply and demand equation, he explains.
“On one side, a spike in demand for landscape material is expected as property owners seek to replace a substantial amount of cold sensitive trees, palms, shrubs, and tropical materials which froze in the landscape. On the other side, nurseries and tree farms in Texas have likely lost a significant amount of inventory to the freeze, and they will need to rehabilitate cold damaged material prior to shipment, resulting in a lower supply of plant material available. But it’s difficult to assess how these impacts will be felt, as well as how deep and long lasting they will be.”
Despite not knowing how much the pandemic gardening trend will continue to climb this year, it is clear “that in the short and medium term, the additional spike in demand coming from this phenomenon will have an immediate and significant impact on the market for ornamental trees and plants,” he says. “Our assessment is that we are in the middle of a decade-long cycle of undersupply. We expect very strong demand this Spring, resulting from the combination of strong housing markets, robust garden center and retail sales, and an extraordinary demand resulting from the freeze. Purchasers should expect price increases ranging from 5-25% and significant shortages of material.”
Sallin recently released a detailed market update. Read it here: cherrylake.com/spring-2021-market-update.
There are three significant occurrences from winter storm Uri that must be evaluated, says Jones.
“One, the local grower base went into a stall. They had to evaluate and see what damage occurred. Crops can be damaged, but not show anything for weeks. You can’t rush to ship questionable material. Two, in many cases the wholesale yards were less equipped or capable of weathering the effects of the storm than the growers were. This was due to the lack of facilities, bringing in product from places like California where the material was already flushing, and the types of material that customers have been buying the last 5-10 years. Some of this material’s hardiness wasn’t the best for this kind of weather event. All of this culminated in major losses for the wholesale yards. And three, the end consumer’s yard took a beating. The losses are significant and create an urgent need for material to be replaced immediately,” Jones explains.
These factors create a significant shift in buying strategies.
“With the local growers not sure of how much they’re affected, there is an immediate need to find material outside the impacted regions. In many cases, that means finding alternative products. The focus has shifted to areas like Florida, Alabama, and California to find similar products that are immediately available to satisfy the customers’ demands. This, combined with last year’s robust selling season, has further taxed the already low spring inventory. The buyers that continue to support and bring in material from local suppliers when available, while also maintaining bookings and relationships with the local growers, will be the ones to succeed overall.”
David Kirby, executive vice president at Everde Growers, expects plant shortages to persist and demand to be higher than inventory for three to five years.
There’s a shortage of 5-gallon trees in the Texas market, as well as a shortage of the traditional 2- and 3-inch liners, Kirby says.
In Texas, Kirby is seeing buyers look far outside their typical sales channels for material, such as Florida, Georgia and even the Mid-Atlantic. There may be some shipping cost sticker shock, as well.
“The nursery industry is competing with other ag producers for common carriers and trailers, and now we’re competing with FEMA to get goods shipped throughout the country. Expect to see pay more surcharges during the shipping season this year,” he adds.
With the industry looking to other markets for plant material, there is a concern about creating surplus.
“People have to be smart about treating this situation correctly,” Saperstein says. “Growers need to build inventory appropriately and treat this as a one-off thing and pull back down to a more normalized planting rate in the future.”
The shortages will no doubt carry over into 2022, but the strain will certainly be felt at the end of spring going into June thanks in part to the freeze, Saperstein says.
“The industry really doesn’t know what the total impact of the freeze will be. We’re not seeing the replacements going into the Texas landscapes yet, but when we do, it will pull inventory in a way that people haven’t seen in a long time, or ever,” he adds. “There are losses felt by growers, but the actual impact on the landscape damage driving demand can’t be understated right now.”