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“Serving the Washington horticulture community since 1937.” |
Market Snapshot
Nursery/Greenhouse Market Snapshot
March 31, 2008. provided by Northwest Farm Credit Services
The nursery shipping season is off to a slow start this year and it's still too early to determine how sales for 2008 will compare to 2007. Harsh weather on the East Coast and in the Midwest contributes to some of the delay. Orders in the Northwest are up for the year, but shipments have slowed as retailers in other parts of the country are waiting for improved weather that will prompt people who work in their yards and gardens to buy product.
However, with oil prices recently at $110 per barrel, labor markets suffering from job cuts, and the housing industry in a tailspin, consumer confidence in the economy has been shaken in recent months. Consumers' appetite for spending has changed due to fears over the economy and managing debt incurred when credit was readily accessible. Although the eventual impact of consumer fears about the broader economic downturn on the nursery industry remains to be seen, experience within the nursery industry suggest that in 'tough economic times' consumers spend more time in their yards than they do on vacations.
Will consumers really spend more time gardening and landscaing this spring and summer? Nearly all producers report an increased push to market product in order to move inventory. Some of the major box stores are sending signals that demand for product this spring will be strong and that producers should ensure an adequate supply and variety of plant material will be available. Preliminary reports from producers of containers and field grown plant material stat that sales are good and prices are holding steady. It may be that the 'cyclical downturn' evident in the nursery industry during 2007 may be shifting as inventory surpluses are rapidly diminishing.
On the other hand, shade tree producers continue to experience sales at or below levels observed at this time last year. Most attribute this to overproduction in recent years, the downturn in the housing industry, and multiple options for buyers of trees. Additionally, many producers, in general, have experienced only tentative demand for product and some cancellation or orders. But, until weather conditions improve, overall sales of nursery and greenhouse products are, at best, a guess.
Nursery owners continue to hit the road to preserve customer relationships and explore new opportunities, as most producers are working harder to hold onto their customers and market share. While the overall financial position of most producers in this industry remains healthy, liquidity has dropped significantly. Higher input costs, an abundant supply of plant material, and competitive pressure on pricing continue to impact producer margins.
Those producers with a clear focus on marketing, timley service to customers, diverse product mix, and competitive pricing are emerging as the strongest contenders in a fiercely competitive and fragmented marketplace.
Disclaimer: This material is for informational purposes only and cannot be relied on to replace your own judgement or that of the professionals you work with in assessing the accuracy or relavance of the inforamtion to your own operations. Nothing in the material shall constitute a commitment by Northwest FCS to lend money to extend credit.
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Copyright © 2008, WSNLA. All Rights Reserved.
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