Nursery industry makes a comeback
By DAHR FRY
For the Capital Press
There’s an old saying, “smooth seas do not make skillful sailors.” And for farmers who have survived the recession, this may ring truer than ever.
Of all agricultural sectors, nurseries were arguably hit the hardest. Earlier this year, the Oregonian reported that between 2008 and 2012 more than 35 Oregon nurseries filed for bankruptcy. Many factors contributed to this sudden downturn. During the financial crisis, residential and commercial construction came to a virtual standstill, and landscaping went right along with it.
As in any agricultural business, weather plays a major factor in the nursery industry, as well as the sheer number of inventory segments to manage, including perennials, annuals, shade trees, Christmas trees and many more. However, it wasn’t the weather as much as the unprecedented number of good years the nursery industry enjoyed leading up to the crash that created the perfect storm for the industry. When the economic downturn hit, it came when inventory levels and capital invested were at an all-time high for nurseries, new and old, which had expanded to meet what they thought to be an unending appetite for their product.
Fast forward to 2014 and we see a steady economic turnaround, demand for nursery products is returning, and farmers have loosened their purse strings a bit. Debt and problem loans are down, while working capital is up. Prices have rebounded, and operating lines are not being utilized as early as they were prior to the recession.
To stay competitive in this recovering economy, we advise clients to consider three crucial factors: demographic, operations and diversification. The demographics of the market have changed so it’s important to do some research and ask: How has my customer base changed? Are there products I’m not offering that would appeal to my target market? From an operational standpoint, consider making improvements that don’t require a cash outlay. There are ways to be more efficient, such as shifting certain operations or diversifying products that appeal to an eco-friendly customer or budget-conscious landscaper.
Nurseries and greenhouses remain as Oregon’s top agricultural producers, and in 2012 they generated more than $745 million in sales, according to the Oregon Association of Nurseries. Home building and construction present the biggest opportunity for this sector, and real estate is slowly yet surely making a comeback. And in the latest economic report from the University of Oregon “sustained expansion” is continuing across the state.
We are seeing steady economic improvement across the region, and farmers are only getting better at what they are doing. We have some of the most resilient farmers in the world right here in our backyard, and we’re proud that institutions such as Columbia Bank have continued to partner with farmers to help provide the expertise and support for sustainability and growth. Working together, we can continue to bring jobs and prosperity to our local communities, well beyond this recovery and into the future.
Dahr Fry is the senior vice president and manager of Columbia Bank’s Agricultural Department, and oversees Columbia’s agriculture teams throughout Southwest Washington and Western Oregon. For more information, visit www.ColumbiaBank.com.