What's in store for ornamentals production in 2017?

Rising overheads, exchange rates, export opportunities and labour restrictions.

Ornamentals: the prolonged 2016 season has helped to fuel optimisim for 2017 - image: HW
Ornamentals: the prolonged 2016 season has helped to fuel optimisim for 2017 - image: HW

Ornamental plant growers face continued overhead rises but have the benefit of imports costing more. This means exports are an option for some and there is less competition on price from imported stock, ranging all the way from poinsettia to trees.

After Brexit caused sterling to weaken by 20 per cent, Woodlark Nurseries' Colin Edwards says poinsettia is on a level playing field in price with Dutch imports for the first time, while Hillier's Jim Hillier says the grower is in a "coals to Newcastle" situation, by starting to export to Holland.

Simon Earley of Earley Ornamentals says Brexit means "it should be better for British growers, make exports easier and give opportunity. But success in 2017 still boils down to the right weather at the right time."

The British Protected Ornamentals Association's Simon Davenport suggested that growers could produce more poinsettia, for instance, in 2017, helped by exchange rates.

Kilworth Conifers' Derek Spicer says: "The exchange rate is helping with Ireland. We do a reasonable amount over there. We import a bit from Poland and Holland and we might now buy a bit less. This is curtailing Dutch imports."

New Leaf Plants' Andy Jeanes says the prolonged 2016 season has been great after a poor start, leading to optimism for 2017. "Exchange rates are limiting the supply of Dutch product coming in. A lot of buyers are now looking for the equivalent UK product."

Newey Group director Alex Newey says "our mantra is 'steady away' for 2017". The nation's biggest ornamental grower adds: "There is nothing groundbreaking planned for 2017, only to do what we do and do it better. We remain acquisitional and are actively looking for businesses." The group has restructured to try and get the right people in the right jobs. "There's lots of pressure on price," adds Newey. "We need to be as lean as possible. There's still no middle management in our group."

Competitive trading

David Ball of Britain's second biggest grower, Neame Lea, sums up the overall view aside from import-export: "Trading will remain extremely competitive, with the National Living Wage and the fall in value of the pound causing cost inflation with a reluctance of customers to increase prices.

"I'm expecting this to lead to further consolidation within the industry, as supply chains are forced to become more efficient and companies spread overheads across a larger production base. Continued investment in the industry will be crucial to maintain profit margins and keep production costs low."

Mark Taylor of Allensmore Nurseries says Brexit, the euro, potential changes to phytosanitary rules and possible restrictions on East European workers are growers' biggest concerns. "It's a worry what effect Brexit may have on East European workers. We hope that there won't be any restrictions on that."

The euro is a "conundrum" for many growers, says Taylor, and "stability" is the most important factor with exchange rates. He added that traded plants' prices could go up by 10 per cent but retailers expect growers to be more efficient so they can hold prices on home-grown plants.

On the amenity side, Majestic Trees reeled from the shock of Brexit in June 2016. The company's Steve McCurdy says Autumn 2015 sales were up 63 per cent, but later the daily deluge about the EU referendum started to take their toll.

"Dire forecasts by politicians created a lot of uncertainty prior to the June referendum and scaremongering became pronounced, with the IMF declaring that a vote to leave would be financial Armageddon. To the average person it sounded like a vote to leave would destroy our economy.

"The knock-on effect is that especially after the UK voted to leave many people put off major spending. This resulted in our year-on-year sales for July through September dropping by 27 per cent and we closed out our financial year in September one per cent lower than 2015 - not the 10 per cent plus growth we had planned on.

"Thankfully sales have really rebounded in October and November primarily as consumer confidence has rebounded, house prices primarily held firm, retail sales are up and the 'experts' including the IMF now say that the UK economy will still be the strongest-growth economy in Europe over the next 12 months.

"So I am fairly confident about 2017. The only problem we have to deal with is the exchange rate and the fact that at EUR1.16 to the pound it is not what it was in the spring. This is driven by currency traders who predicted parity. Some 98 per cent of the trades they make are based on speculation and not currency exchanged to pay for imports, but we will have to deal with it until the pound rebounds."

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