Full speed ahead for Oregon's top agricultural industry

It's not easy being ranked number one, but it sure beats the alternative. Heading into 2002, that's one way to describe the attitude of Oregon's greenhouse and nursery industry — the New York Yankees of the state's agriculture. While other commodities have suffered, at the very least, some inconsistent profits, the $642 million nursery industry keeps on trucking' — literally — as products far and wide reach domestic markets here and there. Also, prospects are bright for export of a commodity that heretofore has not needed to expand its reach. You might think nursery growers are without any serious challenges. You would be wrong. Sometimes you have to work even harder than the others in order to maintain your top ranked status. That's exactly what the nursery industry intends to do.

Growing Plants and Profits

It was the first and, so far, only Oregon agricultural commodity to crack the half billion dollar mark in value of production. If any ag industry is going to topple the one billion dollar mark, it will be greenhouse and nursery. Since it continues to do well despite uncertain economic times, it is attracting many other farmers who are trying to find a crop they can count on.

"I think the industry growth is going to continue, but there will be a lot of increased competition within the state," says Clint Smith, nursery grower in Canby and member of the State Board of Agriculture. "As row crops in the valley change over into nursery stock, all of those folks are going to have to find their place in the market."

Nursery production is unlike most other agricultural endeavors. Instead of processors dictating how much a producer will be paid for what they grow, the nursery operators themselves can set the price. That comes with the responsibility of doing market research and discovering what the consumer wants as well as how much they will pay. Johnny-come-latelys to the nursery business would be well served to not think of their new commodity as a silver bullet to all their farming woes.

"There is a danger switching to nursery crops and thinking it will be a savior," says John Aguirre, executive director of the Oregon Association of Nurserymen. "If you go into the business thinking it will save the family farm, then it's too late. If you are a solid producer who is looking to diversify, the nursery industry may be attractive for the right reasons. But you've got to be a good producer and you've got to have the money to get into the business."

Many farmers in Oregon just don't have a lot of experience in marketing a product, even though they can do a great job of growing it.

"It's no easy matter to line up a series of garden center retailers on the East Coast to buy your product or to find the person at Home Depot who will be interested in your production," says Aguirre. "And, of course, you then need to be able to satisfy all of their requirements."

So is the established industry trying to discourage newcomers? The old timers say they don't have to. It may take up to five years for a new producer to actually turn some serious profits. The ones who can't wait that long will get out early or not even start. The ones who can't grow a quality product will be weeded out at the marketplace.

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The Recession Blues

Not even the mighty giant of Oregon agriculture is immune to the economic recession. A decline in commercial construction translates into less demand for landscaping at banks, stores, offices, etc. Certain segments of the vast nursery industry are seeing softer sales than others. But with home ownership at an all time high, there is potential for more brisk business in the coming year.

"Even with the economy taking a dip, the fact that so many people own their homes provides some continuity in the marketplace for us," says Aguirre. "If you purchased a home two years ago, you may have spent money early on to fix up the interior. Now you still want to focus on the yard and beautify the landscape."

More challenging to the nursery industry than the recession are transportation and labor. Early this year, growers had to deal with a shortage of trucks to carry the plants throughout the U.S. With shipping season approaching, Oregon's nursery industry is promoting itself to motor carriers in the hopes of convincing truckers they can make a good profit in moving plant material. Steps to make loading easier and more efficient will reduce the amount of time truckers are left idling while in Oregon.

On the labor front, nobody knows more than nursery operators that without skilled labor, it won't matter how good the product is. Since so many workers come from south of the border, the industry supports congressional efforts at immigration reform with the hopes that a new law will provide a more permanent and reliable work force.

The Envy of Other States

Only California and Florida produce and sell more nursery stock than Oregon. But there are plenty of other states that think they can match what is done locally.

"The key to our future is not that you might see a dramatic drop in demand for nursery and greenhouse plant material," says Aguirre. "The greatest danger may be excess production. States like Tennessee, North Carolina, Michigan, and Ohio are working to improve their quality and have a decided advantage over Oregon in terms of transportation. They are also closer to the markets."

But a little competition never hurt anyone, especially Oregon. Not when you can boast of the best climate, the best soil, and a great supply of experienced growers who know how to maximize the growth potential of each and every plant. Nursery operators also count a strong regulatory program as a plus.

"Competition from other states is always a concern," says Smith. "But the Willamette Valley has the climate, the conditions, and the best inspection force that we can possibly have. We have the Oregon Department of Agriculture working for us as part of a team. These are all factors that none of the other states have. Until they do, I don't see them as a viable threat or competition."

With almost 75% of all production leaving the state, it is essential that it get a clean bill of health from ODA's 13 nursery inspectors. They provide certification that the product is free of pests and disease. Oregon's strong reputation for a clean and quality nursery product is upheld, in large part, because of the inspection services, which is paid for through license fees assessed to growers and retailers. It is rare that agricultural producers actually like seeing any government inspector come around, but ODA inspectors are nearly always welcome.

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Expanding the Exports

ODA has also sought to assist the nursery industry through its international connections. Supplying the domestic marketplace has been the focus and successful formula for years. But in a hedging of the bet, the forward-looking industry has planted seeds overseas — actually fully grown plants that have found willing customers in Japan.

In conjunction with the Washington State Department of Agriculture as part of a project funded by USDA's Market Access Program, ODA began doing market research a couple of years ago on the prospects for Pacific Northwest nursery stock in Japan. The project has matched up local suppliers with Japanese buyers — some of whom have come to Oregon to see the industry for themselves. While annual sales to Japan are roughly a modest $140,000 or so, the demand seems to be growing, according to Patrick Mayer, an international trade manager with ODA.

"The gardening boom and the interest in plant material by Japanese consumers is somewhat related to the economy there," says Mayer. "People are spending more time at home and in their yard because it doesn't require spending as much money as it would to take a trip to Hawaii or Australia. The Japanese are doing things closer to home. I think that bodes well for us in terms of future demand."

Oregon's principal competitor in Japan is the Netherlands. But while the Dutch are long time traders of plant material, Mayer believes the quality of nursery stock and the ability of it to survive in Japan tips the scales towards Oregon.

ODA and the industry are currently involved in educating Japanese customs inspectors — who fastidiously guard against the introduction of foreign pests and diseases. The Japanese have a zero tolerance for imported soil. That has limited Northwest nursery suppliers to bare rooted plants. However, convincing Japanese officials that plant material shipped in soil-less media — primarily various sized particles of bark — is safe and approved, will greatly expand the amount and types of nursery products that Oregon can send.

Exports will never be as important as the domestic demand, say industry officials. But for some producers, they will be a desirable means of diversifying the customer base and managing risk in the marketplace.

Topping the Billion Dollar Mark?

"That's a great target to shoot for, but we might first want to aim for three quarters of a billion," says Aguirre.

When you consider that the sum total of Oregon's agricultural production is well under four billion dollars, having one industry account for nearly 20% is remarkable in a state so diverse in its agriculture.

Aguirre says the nursery industry is diverse in itself, and that some sectors are seeing a softening of sales. Consumers are tightening the belt as well.

"The consumer in this economy isn't going to demand plant material as large or expensive as they have in the past," he says. "When they go to their garden center, are they going to pay $200 or more for a large tree? Are they going to demand that kind of tree from a landscaper? Probably not."

Even though the high end market may soften, an overall decline in sales is not anticipated in 2002. While things may level off a bit, the industry is optimistic that the $750 million mark is attainable within the next few years.

Oregon's nursery industry — boldly going where no other commodity has gone before.

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