The protected ornamental crops sector does not have to look for issues to contend with: high energy bills, rising staff costs and low plant prices are not going to go away soon. At the same time, high-volume, low-cost imports from the Continent continue to gain market share.
To compete, the UK industry will face pressure to consolidate, creating a clear differentiation in the market between bulk growers and specialist nurseries growing high-value niche products. Medium-sized generalist nurseries will find it hardest to compete. Yet many growers in the industry remain cautiously upbeat. “Who knows what’s around the corner? But for now, I’m positive about the future,” says one.
Size of the industry
Pinning a number on just how many glasshouse growers there are is notoriously difficult — the HTA admits it has “no idea” how many there are. The HDC’s database lists 497 pot and bedding growers. But there are many small operations, often run by semi-retired enthusiasts, and also edible crop growers who dip into ornamentals for some or all of the season, to complicate the picture.
The rise in low-cost, impulse-buy bedding and container plants in the past 20 years may not yet have peaked.
The latest DEFRA figures (see Protected bedding plant production in England and Wales) show an eight per cent rise in the number of bedding plants being produced between 2003 and 2005.
However, the long-term trend (see Fig 3 UK Ornamentals: value 1994-2004) shows that the value of these crops is growing very slowly compared to hardy nursery stock. Fig 1 Bedding imports shows the real beneficiaries have been the Dutch, whose sales of bedding to the UK rose 52 per cent by value over the same period.
The total value of imported ornamental plants nearly doubled between 1994 and 2004, from £458m to £884m — a sharper rise than for fruit and vegetables.
But Holland is also faced with higher costs, particularly for labour, and is passing increasing numbers of its young plants to Eastern European nurseries to grow on before re-importing them and selling them as “Dutch”.
And plants that are considered British products are now being propagated in places as far afield as Romania and Israel. When a plant is labelled “British”, there appears to be no strong preference among UK customers for a home-grown product.
The NFU remains enthusiastic about an overarching assurance scheme like its red tractor logo for British produce. But NFU horticulture adviser Dr Chris Hartfield says: “We have to educate them about what that means in terms of quality and sustainability. It has to represent a set of core values.”
Exports of bedding plants from the UK were worth barely £2m last year, though this figure has risen by 70 per cent since 2003. The Irish Republic accounted for three-quarters of sales. It is believed that UK firms earn more from royalties on their plants being grown abroad than from exports of actual plants.
As for what is being grown, Protected pot plant production in England and Wales (below)?shows the impact of higher energy prices already taking effect, with sharp downturns in higher-temperature crops including Begonia and poinsettia.
The rise of so-called “patio plants” offers higher-value returns from customers looking for more unusual products, but these may or may not be raised under glass.
While some local councils have cut back on bedding orders in response to anticipated water shortages, the impact on retail sales has not so far been as great as first feared.
If parts of the country are heading for generally lower rainfall — and it remains an if — other means of supplying water, such as desalination through reverse osmosis, will become more attractive for growers. Many are investigating the viability of abstracting their own water supply via boreholes.
At local level, cost and restricted supply are more likely to lead growers to think first of all of collecting site run-off, or tapping into a neighbouring stream. Even nearby sewage works may become a viable source, given suitable treatment — which nurseries often have to do to mains water anyway.
Water use consultant Francis Richardson of Flowering Plants says: “You can save over 70 per cent of your water costs with a rain capture system if you get it right. But you can lose a whole crop if you get it wrong.”
The buoyant UK labour market, and horticulture’s generally poor public image as a car-eer, have meant a shortage of new recruits to the sector. This has been compounded in the commercial sector by the decline in commercial horticulture -college courses.
Given the highly seasonal nature of much of the work in protected crops, the accession to the EU of Eastern European countries with low-wage economies — and the resulting arrival of many short-term, eager workers — has been a boon for growers.
A small ancillary industry has grown up, recruiting and providing such workers to the agriculture and horticulture sectors. This presents an obvious communication issue because many workers do not speak much English. The solution adopted by many growers is to recruit groups of workers of whom one has sufficient knowledge of English to act as an intermediary. The grower’s workplace health and safety obligations have been met in many cases by translating documentation into a number of languages.
Divisional director John Giles of consultancy Promar International says: “There can be a significant increase in labour costs in those countries over the next 10 to 15 years without them coming close to UK wage rates. Coupled with continuing high unemployment in countries such as Poland, the economic rationale to seek work in the UK will remain. If there is a danger, it’s that they will be tempted to work in tourism and hospitality, rather than horticulture.”
With the accession to the EU scheduled for January 2007 of Romania and Bul-garia, where wage rates are especially low, the pool of low-cost labour travel-ling to the UK looks set to grow even further.
But anecdotal evidence suggests there are regional differences in the labour market. Some areas have sufficient local pools of casual labour to tide firms over the seasonal peaks, whereas others are almost entirely reliant on migrants.
Energy and fuel
The UK gas index showed prices in the first quarter of 2006 averaged 70p per therm — more than double the figure for the same -period last year. Meanwhile, crude oil prices have doubled over the past two years.
As a high consumer of energy, the glass-house sector has been particularly affected. “Growers are examining what they’re doing in terms of product, market and the source and quantity of energy they are using,” says horticulture consultant Chris Plackett of energy specialist FEC Services. “It’s much easier to persuade them to take energy-saving measures than it was five years ago.”
But while the use of renewable fuels such as woodchips, straw and bio-ethanol is likely to increase, growers are unlikely to move en masse away from oil and gas.
“There’s more involved in changing fuel sources than meets the eye,” says nursery consultant John Adlam. “Modern energy sources make life easy — you only need to give up a few hours a year to maintain them. But with wood-based fuel, you have to co--ordinate deliveries, check the quality and so on — it takes much more time.”
After the Government imposed the Climate Change Levy (CCL) on businesses’ energy use in 2001, a scheme was brought in entitling growers to a 50 per cent rebate on the levy if they introduced efficiencies in their energy use and were able to prove this by providing usage data.
In April this year, the rebate rose to 80 per cent, and over 200 firms have now registered, though Hartfield says: “If you grow cold, it’s not likely to be worth joining.”
There is ongoing research and development in glasshouse design in energy supply systems, particularly in Holland. Plackett adds: “In terms of energy use and ventilation systems, we are going to see a very different glasshouse in use in 10 years’ time.”
The rising price of oil is having an effect on the cost of products that use oil-derived chemicals, such as plastic pots and labels, or that require large amounts of energy to produce, such as fertilisers — which, as a bulky and heavy product, also incurs higher costs for transportation.
Meanwhile, British growers — unlike their Continental competitors — are under pressure to find alternative growing media to peat. “The demand for peat-free plants is coming from environmental groups such as the RSPB, rather than being market-led,” says Adlam. “Growers are experimenting with growing media and embracing change. But it does mean higher costs — and growers are not able to put prices up.”
The modern trend of increasing restrictions on the use of pesticides and other horticultural chemicals continues.
“We are always losing pesticides, for good reasons and bad,” says Adlam. “But we can’t live in a pesticide-free industry.”
The option of controlling several problems with one knockout product, as in the past, is generally no longer available. As pesticides are more targeted to a single pest, this means more work for the grower to achieve a broad spectrum of pest control.
This has been compounded by the increased use of biological controls. “They can be very effective and there are few ornamental growers that don’t use them,” says Adlam. “But they do require more skill to manage.” However, they can offer cost savings, and have the added advantage of not being hazardous to workers.
Integrated pest management, which seeks to maximise the effectiveness of both pest control systems in tandem, has recently become more prevalent.
Another alternative to pesticide use is pathogen-antagonistic fungi, but these will have to gain regulatory approval before they can be made commercially available.
Meanwhile, the end-point of current restrictions on runoff is the closed-system model — widespread in Holland as a result of its geographical situation — whereby there is no runoff of pesticides and fertilisers from the site. This is likely to lead to greater use of controlled-release fertilisers, which do not leach out as readily.
“Glasshouse technology moves faster than electronics,” according to Richardson.
And while growing technology has never stood still, the industry appears to be entering a period of intensive development as pioneering techniques enter the mainstream (see Innovations below).
The benefits are clear. Increased mech-anisation allows vast areas of crops to be controlled by one or two people, while sensors monitoring everything from light intensity to leaf temperature allow consumption of resources to be minimised.
But with a few exceptions, British growers continue to be hamstrung when it comes to tooling up, compared with their -Continental counterparts, as a result of the relatively small and fragmented nature of the sector.
The Dutch model of individual growers focusing on high volumes of a few specialist crops to be sold on to a wholesaler yields economies of scale which are not likely to be replicated in the UK any time soon. A general lack of capital available for such investments has not helped.
But with dissemination of new tech-nologies comes greater affordability — a process that shows no signs of abating.
Adlam, for one, is glad. “I hope we never get to the stage of not pushing growing technology forward,” he says.
Technologies to watch
Intelligent use of coloured polythene film Blue, red and green light affect plant growth in subtly different ways. In future, coloured light is likely to be used on different crops at different growth stages, forming part of an integrated, computer-managed growing regime.
Mounted on the irrigation gantry, infra-red cameras detect the crop’s water needs. Plants cool them-selves through transpiration, so the warmer their leaves, the greater their need for water.
Can be used to restrict plant height on plants such as Chrysanthemum, taking the place of growth regulators.
Regulating plant growth through controlled --under-watering is another alternative to growth regulators.
View from the front
Duncan Taylor, director, Arden Lea Nurseries, Lancs
Crops “This has been our best year for hanging baskets. But the season’s late start created problems with throughput and cash flow.”
Water “Two of our nurseries are self--sufficient in water. The other two use mains as a top-up, but we’re looking at collecting the top-glass runoff.”
Labour “The village nearby is a good source of supervisors and managers, and we have many Poles and Latvians here seasonally. They have an excellent work ethic and are a pleasure to -employ, and I can see that continuing. EU expansion has meant things are better than they were five years ago.”
Energy “Cutting back energy use can be a false economy. If you have a crop you know you’ll sell, you’re not helping yourself by turning down the heat — you just increase your plant losses.”
Technology “We have already got a lot of mechanisation in place for storage and transportation. But we are always open to new ideas.”
Consumables “On peat, we are being responsible, but it means we have a higher hurdle to get over than our European competitors. We are using 40 per cent replacement with coir and bark, which are more expensive.”
Sarah Fairhurst, quality control manager, Porters Horticultural, Merseyside
Water “We are looking at all the -options, though we are too close to the coast to bore for our own water supply. One site has a -lagoon and we may install water butts at another. We’re mostly on mains-metered water.”
Labour “We use a number of seasonal migrant workers, mostly Polish, who we hire through an agency. That’s likely to continue for the next couple of years at least. They’re incredibly hard workers.”
Energy “We are signed up to the NFU climate change scheme, which can give a rebate of up to 80 per cent. But, as with water, energy efficiency is good practice anyway. A few years ago, we looked into installing a combined heat and power system, running off an energy crop. It wasn’t cost-effective then, but we may look at it again. We also considered a wind turbine, but our site wasn’t windy enough.”
Technology “There are always new ideas coming along. One light-sensitive system automatically slides open panels when the light levels are high enough. It’s not cost-effective now, but it may be in the future.
“Mechanisation is always developing and the only manual task which cannot now be mechanised is taking cuttings — it’s too delicate an operation.”
Consumables “You’d have thought that oil prices would have driven up the cost of plastic pots, but they seem to be fairly static right now.”
Patrick Bastow, managing director, Yoder Toddington, West Sussex
Water “Our new bore-hole has been a lifeline. Previously, we spent £20,000 a year on mains water. That’s the same amount as the borehole cost and the water quality is better, too.”
Energy “Bills are up considerably — it’s affecting our Chrysanthemum customers. If things continue as they are, there’s a troubled future for growing plants at 19ºC.”
Technology “Ours is an old nursery and it needs investment. We would like to mechanise more through using conveyor belts. We’re also considering putting in thermal screens to allow us to grow frost-free without heating.”
Labour “At our peak, we have around 100 Polish and other Eastern European workers, some of whom are now integrated into the full-time staff, while others come back in successive years.”
Chemicals “We are trying to move away from preventive towards reactive treatment. It’s more about catching up than trying anything new.”
Will Lamb, managing director, Baginton Nurseries, West Midlands
Labour “Our staffing costs are up because the AWB is on a sloping increase above the national minimum wage.”
Energy “We have manipulated production by starting later, missing out January and most of February. We have also insulated what we can, repaired broken glass, and put in thermal screens in many of the glasshouses, which can make substantial savings.”
Technology “We made huge investment this year in the production line, from tray dispensers and fillers to conveyors and transplanters. We needed a new line where everything talked to each other, as well as giving higher productivity and versatility. It should mean we need fewer staff.”
Chemicals “We use no persistent chemicals and less and less pesticide, though we still use fungicide. We have used biological control agents for 12 years. It is getting better — you build up a background level of friendly pests in the hedgerows nearby.”