In Short Supply: Nursery Market Report

Here’s a question that most landscape installation or design/build contractors can already answer: What happens when an industry starts growing rapidly but the product it sells requires two or three years to be ready for use?

As has been widely observed across the country, demand for numerous nursery stock varieties has climbed steadily, faster, in fact, than growers can satisfy of late.

As a result, prices for many varieties have gone up in this seller’s market, and contractors continue to wonder when availability will increase. Unfortunately, the outlook from various nursery stock growers and suppliers calls for continued shortages in some varieties throughout 1999 with supply catching up with demand the following year.

OUTLOOK IMPROVING. “We’re coming off of a strong 1998 season and we see demand continuing to be strong in 1999,” observed Frank DeRosa, director of purchasing, Shemin Nurseries, Danbury, Conn. “While there will be spot shortages this year, I think they will be more specific to certain varieties than an overall shortage.”

“I see next year as the breaking point where supply will catch up with demand,” related Andy Hull, nursery coordinator, McGinnis Farms, Atlanta, Ga. “Last year, we had a better supply of some varieties than we’ll have this year, and vice versa. But all of this could change if there are any variations in what contractors and landscape architects are specifying on their designs.”

In particular, DeRosa said supply of some shade trees will remain below demand levels, along with some ornamentals and deciduous shrubs. At the same time, some varieties that have been hard to come by of late should be more readily available in 1999.

“It looks like cherry trees will be in short supply this spring, although there should be more than we had last year,” remarked DeRosa. “On the good side, we see the dogwood market loosening up a little bit through the smaller sizes, and we see rhododendrons staying more plentiful. Some hollies, particularly the upright ones, are more available in the 5- to 8-foot range, and the smaller birch trees should be more available this year.”

Hull also noted that the weather hasn’t helped growers augment their supply at all.

“It was pretty dry at times in the Southeast during the fall, so materials couldn’t be dug up, which decreased the window for shipping and keeping inventory of tree material,” he pointed out. “This created a lot of installation delays for contractors who were waiting for these trees.”

Some contractors have taken a different tack to augment the plant materials available to them.

“Shade trees have certainly been in short supply the last few years, so we’re seeing contractors purchasing the trees already coming into our yards earlier than normal so they know they’ll have them,” commented Mark Hixson, customer service and inside sales manager, Imperial Nurseries, Granby, Conn.

Hixson said that 85 percent of Imperial Nurseries’ stock for the Northeast for 1999 has already been sold, which is ahead of 1998’s pace, but bookings in other markets are holding steady from last year.

While contractors have loudly voiced their concerns about rising plant stock prices, growers and suppliers countered that prices overall haven’t varied much at all over the last few years.

“Yes, the prices will move up in areas where there is short supply, but the prices for products with more plentiful availability have gone down,” commented DeRosa.

“We’ve had contractors complain to us about some of our prices going up, but then they ultimately come back to us because they can’t find the same materials anywhere else,” commented Hixson.

Some suppliers also noted, however, that landscape contractors aren’t the only buyers creating greater demand for plant materials.

“We’re trying to get more plants in the ground, but the population continues to grow and we see more people taking up gardening as a hobby,” observed Hixson. “Plus, the mass merchandisers are trying to go beyond the average retail mix and offer a wider variety of materials, like local nurseries and garden centers do.”

“Landscape contractors aren’t raising their demand as much as these retail chain stores,” agreed Dorothy Garrity, availability operations manager, Hines Nurseries, Irvine, Calif.

The fact that such large stores potentially represent such large orders makes them highly desirable customers for the growers to cater to, further limiting plant availability to contractors.

“We’re seeing more contractors starting to buy plant material from the mass merchandisers,” Garrity recognized.

Ann Camp, president, Camp and Company Farms, Dacula, Ga., said she has also seen mass merchandisers work to expand their plant stock lineup, and this can mean trouble for anyone selling plants depending on how these stores market the plants.

“The prices these companies put on plants go a long way to setting the public’s perception of the value of flowers in general,” Camp stated, noting that her prices for annuals haven’t changed in 15 years. “Some mass merchandisers have begun to use more realistic prices, but when they use plants as loss leaders that’s what the public perceives they’re actually worth.”

OPEN TO OPTIONS. Shortages during 1997 and 1998 motivated some contractors to find creative solutions to plant materials shortages, but others are reluctant to shift from their initial design plans.

“Despite the shortages that exist, the good news is that there are probably equal plants to provide viable substitutions to offset the shortages,” noted DeRosa, who said contractors can usually find a satisfactory substitute plant that may just flower in a different color than the original or be a little smaller. “I’m not sure that all of the contractors recognize they have so many options, but I think it will be evident to them this spring.”

“We try to create a menu of plant items that will offer the same look,” agreed Hull.

All growers aren’t necessarily willing to make younger varieties of plants available for installations, however.

“Look at 2-inch trees, for example,” explained Hull. “A lot of contractors have been using 2-inch trees where they wanted 2½-inch specimens because the 2½-inch specimens weren’t available. So some of the future crop of 2½-inch trees was utilized before growers wanted to sell them, which keeps them in short supply.

“Or there are a lot of hollies, for instance, that aren’t available in bulk quantities because the nurseries want to grow them to a certain size so they can supply a variety of sizes to their customers,” Hull continued.

2000 & BEYOND. Suppliers of nursery stock are widely confident availability will increase beginning with the 2000 season.

“No one has a good crystal ball that works, and growers have to be sensitive to what sells and what doesn’t sell since they have a limited number of acres available to them,” Hull said. “Nursery supply works in a cycle where there is a glut of product and growers have product they can’t sell because production is too high or demand drops off. So everyone cuts back on production, and then we end up with a gap between demand and supply a few years later.”