Posted: Thursday, May 03, 2012 10:47 AM
Mitch Lies/Capital Press
Workers load plant material on a truck at Fisher Farms in Carlton, Ore. Plant movement is about double what it was this time last year, according to owner Bob Terry. Last year, Terry says, ÒWe couldnÕt give product away.Ó
Harsh recession punished industries tied directly to housing market
By MITCH LIES
CARLTON, Ore. -- From his office overlooking his 120-acre Carlton nursery, Bob Terry, long-time owner of Fisher Farms, has seen a steady stream of trucks pulling up to the loading dock this spring.
Workers load between 5,000 and 10,000 plants on each truck bound for retail nurseries in the Midwest and Eastern United States.
The dozen or so trucks moving through the loading docks each day are half of the number that moved daily during the nursery industry's peak in 2006 and 2007, but double what was moving through his nursery a year ago.
Profit margins also are slimmer than they once were, but Terry, like nursery farmers throughout Oregon, is enthused this spring as the industry appears to be emerging from what many call its worst downturn ever.
"I've been in the business 45 years," Terry said. "This was the worst I've seen. It was a real trough."
While many agricultural commodities suffered through the Great Recession, nursery and grass seed -- two prominent Oregon industries whose fortunes are tied directly to the housing market -- took huge hits.
According to USDA data, nursery sales dropped from $988 million in 2007 to $676 million in 2010, as a housing bubble fueled by risky loans burst.
The industry bottomed out in 2011 at $662 million in sales, according to Oregon State University data.
Grass seed sales, meanwhile, plummeted from around $468 million in 2008 to around $228 million in 2010, according to the OSU Extension Service.
Acreage in grass seed also dropped, from 528,000 acres in 2005 to 373,000 acres last year.
Barns were stuffed with seed when the recession hit in September 2008. They were not cleared out until this spring.
"The situation is tremendously improved from the last couple of years, in terms of amount of inventory sitting around," said Kevin Doerfler of Doerfler Farms in Aumsville Ore., one of Oregon's leading grass seed growers.
If strong movement continues, grass seed insiders believe seed inventory will be slightly below normal by the fall, which could help drive up prices next spring.
And Terry believes nursery growers will ship existing inventory by the end of the year.
But the impacts of the Great Recession will linger well beyond 2012, and Oregon's world famous nursery and grass seed industries may never be the same.
For one thing, they will be smaller.
In 2008, 4,323 licensed nurseries operated in Oregon, according to the Oregon Department of Agriculture. Today there are 3,872 as the industry lost hundreds of smaller operations, and several large ones.
The industry also lost thousands of employees.
At Fisher Farms, which operates out of three locations, Terry said he's cut employee numbers in half, dropping from 180 employees in 2008 to about 90 today.
"You just learn how to do things smarter," he said.
Nursery growers said they also are keeping tighter controls on supply.
"We are definitely looking at our inventories a lot tighter than we did in the past," said Doug Zielinski of Alpha Nursery in Salem.
Grass seed growers, who once planted upwards of 500,000 acres in Oregon mainly to tall fescue, perennial ryegrass and annual ryegrass, today are more diverse and have scaled back their reliance on grass seed.
"The last few years, we've grown a lot of wheat," Doerfler said. "That seems to have helped the situation. We're trying to keep the wheat acres steady."
Doerfler said he's cut his tall fescue acres in half. "And I don't intend on ever going back to my previous (tall fescue) acres," he said.
Statewide, tall fescue production dropped from 174,000 acres in 2008 to 106,500 acres last year, according to the OSU Extension Service.
Perennial ryegrass production dropped from 192,000 acres in 2005 to 93,700 acres last year.
The reduced acreage helped growers clear out inventories that amassed when movement stalled beginning in 2008.
"In 2008 and 2009, we had two or three years of supply," said Roger Beyer, executive director of the Oregon Seed Council. "This year, I expect us to be on the low side of average."
Industry insiders attribute this spring's improved grass seed and nursery movement to an economy that appears to be recovering. Equally important, they say, was outstanding spring weather in the East.
Terry said his movement has more than doubled from last year, when rains doused planting intentions back East. "We couldn't give product away (last year)," he said.
Alpha Nursery's Zielinski said he's moving about a third more product than he was a year ago.
Doerfler said his farm's grass seed movement picked up last fall and strong movement has carried into the spring.
Whether grass seed's strong movement continues is anybody's guess, said John Thyssen, CEO and president of Barenbrug USA, but odds are sales will slow until next fall.
"It was an early spring, but it is not going to be a long spring," he said. "We saw it start three weeks early, and we're seeing it end three weeks early."
There are questions about whether the export market, which helped stabilize Oregon grass seed movement the last two years, will remain strong.
"We hope it is going to be as strong as last year, but we'll have to wait and see," Thyssen said. A weak U.S. dollar helped move exports into Europe last year, he said, and European grass seed farmers were fighting weather problems, which reduced their production.
Even with the strong spring movement, nursery and grass seed growers say margins aren't what they once were. Growers, anxious to move nursery product, are willing to take lower prices, Terry said, and increases in the cost of fuel have raised the cost of production and transportation.
"In 2006, we were getting some decent margins," Terry said. "This year, the dollars aren't there."
Still, Terry said, he's happy to be moving product.
"We're certainly moving a lot of plant material, and that is covering our overhead," he said.
Jeff Stone, executive director of the Oregon Association of Nurseries, said it may take a year or more before the industry fully emerges from the downturn.
"I would love to say all will be well in three months," Stone said. "I would say it is going to be probably 12 to 18 months.
"But we will come out of it and I think we will be hungrier and stronger and a lot wiser," Stone said.
Beyer, the seed council executive, said grass seed growers this year are "basically are at the break even point right now."
But Beyer sees better things ahead. "I think 2012 is going to be a good year but not a great year, and 2013 will be better."