Industry updates

In opening his State of the Industry address at Cultivate’23, Dr. Charlie Hall poked fun at himself.

At Cultivate’22, Hall said there was a chance of recession in the next year. That, to date, has not happened. So, as Hall put it, his prediction was technically correct.

“Last year, I stood in this exact same spot,” he said. “I predicted a 50% probability of a recession occurring, which by definition means there was a 50% probability of a recession not occurring. And I’m pleased to report that I was 100% correct.” Here are three takeaways from Hall’s presentation. For those who couldn’t attend and want to see his full presentation, email Hall (charliehall@tamu.edu).

1. Most growers reported increased profits in the first part of 2023

According to Hall, sales were generally strong in the first half of 2023. Seventy-six percent reported increased gross sales year over year. Sixty-nine percent of growers reported net profits this year vs. last.

The 31% of growers who didn’t report increased profits, Hall said, could have been facing increased input costs that cut into profit and/or growers not raising prices enough (or at all) to stay in line with rising costs.

He also noted that labor costs continue to rise. Non-agricultural wages are up 18% since 2018 nationally. By comparison, agricultural wages have risen 25% over the same period.

2. 25-35 year-olds are a potential boom market

According to Hall, there is a “historical amount of 25-35 year-olds in the country now.” That, he said, is a potential market to drive new plant sales, provided they begin purchasing homes.

The next step, then, is for the supply of homes to meet possible demand on top of interest rates settling in at a level that makes mortgages more affordable. (Interest rates going down, Hall said, will be a “shot in the arm for home sales.”) On the supply side, the number of permits for new builds is increasing nationally — an indicator that the housing market could head in a direction that is good for the green industry.

3. A recession isn’t imminent

Toward the end of his presentation, Hall answered the question he joked about at the beginning: Is a recession coming or not?

Various economic indicators, Hall said, indicate that there’s over a 50% chance of some kind of economic downturn. In his own projections, he’s come to the same conclusion. However, he says, that doesn’t mean a full-on recession is coming.

Instead, Hall said, there’s “a high probability of a mild, short-lived downturn” during the first quarter of 2024. From there, he said, business should kick back up once the busy spring season drives sales.

The importance of relationships

During his opening speech at the State of the Industry presentation at Cultivate, AmericanHort president and CEO Ken Fisher stressed the importance of maintaining relationships in the green industry. Specifically, he said, it’s important for the industry members to maintain in-person relationships that span years, if not decades.

The speech, given on Monday, July 17, featured Fisher noting that there are industry members who have attended Cultivate (or a previous version of the event before the formation of AmericanHort) for 40-plus years. Those relationships, Fisher says, are a big part of what makes the green industries special.

“It’s easier and easier, unfortunately, to let go of personal relationships,” Fisher said, noting that his concern stems from a generational shift and the ease of communicating digitally.

“It takes a long time to grow an old friend,” Fisher said. “Our industry won’t be as strong tomorrow as it is today, I have concerns, if we don’t continue to invest in our friends in this industry.” He noted that it will be a priority for AmericanHort to provide in-person events that can help foster long-lasting bonds.

Fisher also made his case for growers to advocate on behalf of the industry. Fisher, along with AmericanHort senior vice president Craig Regelbrugge, spent time discussing ongoing labor concerns and the need for H-2A and H-2B reform. Fisher advocated for industry members to work with their congressional representatives and push past politics to make the case for what the industry needs. That could be by directly contacting elected officials and/or working with AmericanHort in their efforts to lobby elected officials on various topics.

“We can’t hope that regulatory issues will skip us or get taken care of by someone else,” he said. “... We have to demonstrate, as an industry, our strengths to protect our weaknesses.”