April 16, 2024
Farm Credit East recently hosted a webinar with Dr. Charlie Hall, of Texas A&M University, to review green industry (including nursery, greenhouse and sod industries) operational and financial performance in 2023 and provide a 2024 outlook. Read on for the key takeaways from this webinar.
A look back to set the stage
The green industry experienced strong growth and high profits in 2021 due to the pandemic, but input costs like labor also increased significantly. In 2022, profits declined due to higher input costs and unfavorable weather.
Retail sales were relatively flat in 2023 compared to 2022, but still well above pre-pandemic 2019 levels, indicating consumers are still spending on discretionary items like gardening despite economic concerns.
2024 Green Industry Forecast
- Housing market demand is projected to drive continued demand for nursery products through 2030 due to the large millennial population entering prime home-buying years.
- Inflation appears to be declining and the Federal Reserve is expected to start lowering interest rates in 2023, providing some economic relief.
- Fuel prices in 2024 are projected to average around $87 per barrel for Brent crude oil, which translates to around $3.45 per gallon for regular gasoline at retail. This is slightly down from 2023 levels.
- Natural gas prices are expected to increase in 2025, especially in the Northeast U.S. He recommends Northeast growers look at futures contracts to mitigate the risk of rising natural gas costs.
- Despite mixed economic signals, Dr. Hall estimates a 40-60% chance of a recession.
- Dr. Hall believes the green industry's spring 2024 season should be relatively strong based on continued consumer spending trends.
Preparing for the season ahead
While dealing with challenges like inflation and input costs, the overall outlook conveys cautious optimism for the 2024 green industry backed by positive consumer spending and housing market fundamentals. Dr. Hall recommends maintaining pricing discipline, managing efficiencies and working capital, and aggressively pursuing emerging opportunities related to climate change initiatives, such as agroforestry and government tree planting programs.
Further analysis
To dive deeper into the above topics, review the 60-minute webinar recording along with the presenters’ PowerPoint slides, or read Dr. Hall’s 2024 Green Industry Outlook.
Read the 2024 Green Industry Outlook Report
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