Monday, December 10, 2007

A New Day Looks Back on the Nursery Cycle

I wrote this a couple of years ago. I was going to change it, but I have discovered that people needed to hear what I said then and is still true now. The rest I have changed and updated. Read on:

We are fooled by market cycles. In agriculture there’s the Hog or Cattle cycle. Outrageous Optimism and then dire despair reigns in the hearts of men. In the nursery business it’s even more pronounced. Every 9 years like a clock it turns. The time of the turn has much to do with the time it takes to produce a mature tree. When times are bad, no one has money to plant trees, it seems like a waste, so in 4 or 5 years there is a shortage of trees. Then times get better and people plant lots of trees, partly to offset taxes they would otherwise have to pay and partly because they are optimistic. So in 4 or 5 years there’s a surplus and prices go down. So people plant fewer trees then there’s a shortage and so it goes. The only ones who avoid this are those who plant the same number every year, and harvest the same number every year. They neither win big nor lose big.
The other thing that drives this voluntary insanity is the nursery market lotto winner who planted Widget Flame Blaze Maples (fictitious name) and sold 100,000 of them to a hungry market at $250 each. So every optimistic plunger believes he will be the next big winner. Winning the lottery is easier than hitting this elusive jackpot.

The problem is, those who now have these huge inventories coming on are about to be hung with them unless they get creative right now, marketing now, making it happen now. The surplus wheel is turning and in a few more years will be tremendous. That’s good for me as a plant seller and bad for the grower who waits too long. I talked to growers who believe in the face of the inevitable they will be exempt. I have never known an economic cycle to exempt anyone. They are the King’s and Queens of D’nile.

These prices on many trees have more potential downward pressure than up. That’s not true of all plants. Environmental issues Matter. Dutch Elm Disease killed the Elm Market. The Emerald Ash borer quarantines have all but eliminated the shipment of ash across state lines. Oak wilt has put a crimp in Red Oak sales. Maples have been suspect because of verticillium wilt. Every tree that is taken off the tree planting palate means we must be more creative about what we do next.

Two years ago we started to know of the Ash issues. Many people held off responding. Now the situation is becoming dire. You will have to be kept pretty warm to use those high priced sticks for firewood. Timing and knowledge are everything.

This market doesn’t care what you have in those trees, how much you paid for the liners, how long you have had them in the ground, or how much you got for them last spring. It only cares about how it wants to pay you right now. I have observed this inexorable cycle for 20 years. Those much longer in the business tell me it has been going on forever. You can run but you can’t hide. The wheel turns.

Those plants on the DOWN
There is a huge surplus of Autumn Blaze Maples on the market. Pears still are harder to sell. Crabs continue to be difficult. I have a friend who is selling any crab apple, number ones at any size dug and loaded for $50 each. I think that’s a smart sales move. They are surplus and weeping crabs in particular are hard to sell.
Some of the Norway Maples are soft.

Elms, hybrid and other, White Oaks (Bur, Chinkapin, Swamp etc), Hackberry, Carpinus, London Plane Tree, Ostrya, and others. I have favorites but I see these things more on the list than not.

New Sources
In the last few years I have come across some really good sources for both native plant material and cultivar landscape materials. I would recommend you contact us when you are looking for the hard to find. We are making new contacts every day. Of course we invite new inquiry all the time.

I am asked all the time where certain plants are grown. Many times they are grown out of our climate zone. This causes some concern by some people. There is a proper botanical and physiological perspective on this. If it is genetically adapted to our region it will grow and prosper virtually no matter where it is grown. If an Autumn Blaze Maple is grown in Florida and is planted early enough to go to sleep in the fall in the same time frame as all the other trees (this usually means spring dug, shipped in and planted later) it will do as well as a tree grown in North Dakota, shipped in and planted here. It’s all in the genes. If the genetics are right it’ll grow here. If the genetics are wrong it won’t. That’s why even some Rhododendron’s that are grown here don’t do well. They grow in a good climate but genetically are wrong.

The reputation southern grown material has to do with fall planted material in a meristomatic state (not yet dormant) that is forced to go dormant faster than it normally would. You end up with damage. Of course, 25 degrees in August can kill a tree or set it back even if it’s fully native here. There are some trees which are genus and species supposedly hardy, but which are adapted to their geography but don’t do well in ours. A prime example is Acer rubrum. A southern native seedling Rubrum will perform poorly in a northern Illinois climate. But a Red Sunset doesn’t care. It’s selected from stock hardy in IL. And, it’s a clone no matter where it’s grown. It’s all in the genes. OK??

This year we have targeted our own production to focus even more on native plants. A few contract growers for us in the Chicagoland area are conducting this. We are convinced that this market will continue to grow. In addition we are in communication with other native growers nationally and are finding additional producers of native product. This is a category that continues to expand. I have created a 100 variety xeric landscape planting in my own yard made up entirely of native plants. I challenge anyone to find it less attractive than any other landscape planting. The Byron Native Nursery button on the left is the Native Plant Production program and prices.

We always have specials. Deals, clearance nursery cleanups at nearly auction pricing; things need to be sold. Take a look at our specials button. We have some plants at prices that we know will work for you. If you want to be on our instant deals fax list let me know and you can access some short-term huge deals as they come up.

Legal and Technical Expertise
I am employed as a technical expert in horticulture by the legal community. In the last several years I have been called on to testify or arbitrate disputes regarding plant materials, valuation, plant health, plant salability, and plant quality . Mediation is my specialty. I offer my help in whatever way you desire. There is an hourly charge for this expertise but it’s worth what you pay for it. My BS degrees in both botany and horticulture from a university, post graduate work and decades of experience in horticulture both from a production and marketing standpoint make me uniquely qualified to help you settle those lawsuits that can torment you.

Nursery Planning
In view of all I have said what I am about to offer might be considered counter intuitive. In fact, when it comes to substantial returns on investment, when it comes to steady income, when it comes to a solid moneymaking opportunity it’s hard to beat the nursery business.

As a Business Opportunity there are few things you can do which offer a Quality of Life quotient much higher. Add to that the tax avoidance benefits of an agricultural enterprise and I challenge anyone to come up with a better way to make money and legally avoid tax burdens.
Of course its hard, it’s risky, it requires great knowledge, the knowledge is not readily available. But it is available from qualified people. And there are CD’s, books and DVD’s available to those who really want to know. Of course an experienced expert helps. I am one of those people. If you want to really know what could be done, the nursery business deserves a hard look. Don’t expect your future competitors to welcome you in with open arms. They won’t. If you want to explore the potential of growing your own in the nursery trade, Call me. I can help you.

Nursery Auction Alternative
Every year hundreds of nurseries have auction sales. The auctioneer sells the nursery stock for cents on the dollar and takes 15% of the gross sales as commission. The good news, in a nursery auction, it’s quick and painless. That counts only if you don’t care about money and want to get it settled right away. Your get your jolt, you get a check and it’s all over. You left thousands, perhaps millions on the table. But, you are out.

On the other hand, if money matters to you, let me offer an alternative.

I have a friend who’s nursery I helped liquidate in the last year. He did it right. In less than 18 months he sold a couple million dollars worth of nursery stock for 75% of market price. He still paid a commission to me to sell what I sold but he was far better off than he would have been with a liquidation auction. So if you are one of those who is now buried in nursery stock, call me, I am your auction alternative.

Contract Growing
 I arrange contract-growing arrangements. We do it every year. Tell us what you will need in the future, we will find someone suited to grow you a quality plant. You pay a little up front for materials, they grow it and you pay the balance upon completion. Your net cost can be as much as a third less than it would be if a normal nursery grew it and you just needed the plants from their inventory. All it takes is foresight. Have the plants on hand when you need them.

I am blessed of God to find myself in a business I love so much. My wish for you, be Blessed Yourself.
Gene Redlin