Central American production impact

There has been a rapid shift away from U.S. growers maintaining their own stock plants to a large portion of key bedding and potted crops being produced in off-shore stock blocks. The Paul Ecke Ranch in Encinitas, Calif., at one time produced all of its poinsettia stock plants outdoors. These plants were then shipped as dormant plants to U.S. growers to produce their own cuttings. In the early 1960s Ecke’s stock plant production moved into greenhouses grown domestically to offshore cuttings purchased by growers for finishing. Today the majority of the Ecke’s geranium, New Guinea impatiens, poinsettia and vegetative spring annual cutting production is done at offshore facilities.

Poinsettia stock plants in Guatemala.Rethinking production
At the Ecke Ranch, management realized in the mid-1990s that it was critical to the continued success of the company to re-think how stock plants were produced. The company was seeing a rising demand for specialty annuals as well as growth in the poinsettia and geranium markets.

Domestic costs for construction and rising fuel costs were important considerations for moving to offshore production. Many assume that a move to offshore production is driven by a need to lower labor costs. In Ecke’s case, labor cost was one component, but not the driver. Moving offshore lowered the company’s energy expenses by 80 percent. Also, offshore construction costs ran about one-eighth what they would have been in the United States.

Construction of the company’s first farm in Central America began in 1995. At the Ecke farms in Guatemala the company maintains about 1 million stock plants just for spring vegetative annual cuttings for the U.S. and Canadian markets.

A look at USDA floriculture statistics data and application of some simple math suggests there are well over 10 million stock plants being grown off-shore for cutting importation to the United States. Add in the cuttings exported to Europe and the number of off shore stock plants could be as high as 20 million plants.

Most U.S. growers in the past produced some stock plants of key annual bedding crops, poinsettias and some other potted crops. Reasons for maintaining their own stock plants included having sufficient greenhouse space and labor, avoiding having to buy more expensive rooted cuttings, the flexibility it provided in production planning and in some cases it was the only way growers could produce some of the less common varieties that they or their customers liked.

Changing markets
In recent years, most growers have shifted the way they look at their production. Evaluating whether to produce their own stock plants and cuttings, growers have had to consider new marketplace realities. These include maintaining disease- and virus-free stock programs, lowering input costs, introduction of many new “specialty” varieties that sell for higher prices, and efforts by grower and retailers to lengthen and expand selling seasons.

Stock plants need to be produced in highly sanitary and controlled conditions to ensure clean starter material and finished plants.Maintaining clean stock
It has always been a challenge to maintain “clean” stock plants of high-end bedding plants. The development of new fragile plant species, new disease pathogens and pesticide-resistant insect pests has made plant hygiene a critical issue. Today’s typical grower’s product mix includes vegetatively-propagated geranium, fuchsia, petunia, calibrachoa, bacopa and other annuals. Some of the new crops are extremely susceptible to Tospoviruses and other significant diseases.

The old production practice of carrying over a few plants for next year’s stock increases the chances of encountering disease-related problems. In today’s demanding environment of supporting retailers to sell-through plants to consumers, selling virus-contaminated or diseased plants is not an option. Stock plants need to be produced in highly sanitary and controlled conditions to ensure clean starter material and finished plants.

Lowering input costs
Even if growers supply independent garden center retailers, the reality is that all consumer purchases are influenced by big box retailers. Consumers shop and react to products differently than 30 years ago, including products offered on-line. There has been a great push to lower all possible production costs while looking for ways to add more value for consumers whether they are purchasing electronics or petunias. Growers today look at production space more critically and there is increased pressure to turn that space as frequently as possible while lowering input costs.

If stock plants must be held in screened and disease-free zones, it becomes increasingly impractical from a cost perspective to produce stock plants domestically. This is especially true if that same greenhouse space can be used to generate more retail sales. Production costs can be lowered in several ways, including: by pushing all the forecasting inventory risk to off-shore suppliers; by being able to bring in larger starter material to reduce production time; by being able to focus work flow on fewer tasks; and by taking advantage of pricing that reflects lower production costs in Central America.

New specialty annuals
Higher end annuals including agyranthemum and calibrachoa are examples of quality genetics that are only available as vegetative cuttings. These plants should be sold at higher retail prices as they offer greater consumer value. They carry value for retailers and consumers who are selling and purchasing the newest garden plants. The value for the growers is receiving higher dollars per square foot of bench space.

Many of these new vegetative plants have gone through an extensive selection and disease- and virus-cleaning process. Higher retail and wholesale prices allow for the use of vegetative material and generate more dollars per square foot for the grower than other bedding items.

By working to extend the selling seasons for these vegetative plants in early spring and into summer both finished growers and retailers are looking to more frequently turn bench and shelf space, respectively. This results in less idle production space for stock plants.

Expanding offshore production
Ecke Ranch initiated a major expansion to its farms in Guatemala. To expand production the company will add offshore capacity building a new farm to support increased demand.

The initial greenhouse expansion phase at new Farm 3 will cover approximately 250,000 square feet. The new farm is adjacent to Farm 1, which allows for efficiencies of scale and management functions. The new space will be used during the summer 2011 shipping season.

The new greenhouses will be an all-metal design from Crider Americas. Also, half of Ecke’s poinsettia ranges in Guatemala will be recovered with new plastic to raise light levels.

Ecke Guatemala is in its 14th year of operation. Ecke Ranch has over 5.4 million square feet of company owned and contracted greenhouse space offshore.

Advantages of offshore- and grower-produced cuttings

Advantages of offshore cuttings:

• Lower production costs
• Access to the newest cultivars
• Less disease pressure
• Eliminate costs, time, labor, greenhouse space to produce and maintain stock plants
• Allows growers to focus on flowering, finishing plants

Advantages of grower-produced cuttings:

• Flexible for labor scheduling
• Control of cutting quality specifications
• Control of harvesting, planting cuttings
• No risk of transportation loss
• Improved cash flow since growers build inventory and cost of production over time rather than having one large invoice for cuttings due at one time.
   

Andy Higgins is president, Paul Ecke Ranch, (760) 753-1134; www.ecke.com.