As we go into part two of Growers Speak Out, it’s time to explore the next concern facing growers today. According to Ban Ki-moon, “sustainable development is the pathway to the future we want for all. It offers a framework to generate economic growth, achieve social justice, exercise environmental stewardship and strengthen governance.” So how can we continue to strive for these ideals while the economy seems so unstable? In this blog, we will dive into the economic concerns facing growers in the greenhouse industry and see if we can rise above them to remain competitive in our market.
PRICE VOLATILITY
Agriculture is known as one of the most difficult industries, despite being one of the most highly subsidized industries. Volatile prices and supply, low income for farmers and the environmental costs of intensive farming, create barriers for those in the industry. Volatile prices in agriculture are due to the price being inelastic in the short term, with crops taking an average of a year to grow. The demand in price is also inelastic. People will always need food and usually do not care if the price goes up. However, problems can arise when a farmer has a good harvest. This higher supply will lead to a drop in prices, which cuts into the revenue of farmers. Volatility can affect price and supply for many years after any specific incident. Low income is another major concern for farmers. As the economy grows, they do not see a similar increase in income. People do not usually spend more of their disposable income on food as their wage increases. This is why many developed economies advocate for subsidies for farmers to protect their incomes.
BABY BOOMERS SET TO RETIRE
The baby boomer generation has many challenges as many of them are reaching retirement age. It is estimated that one in every four greenhouse owners will be leaving the industry in the next few years. This uncertainty of owners in the industry may make them hesitant to take on any new growth opportunities, which can halt economic growth. There is definitely a shift happening between the old ways of doing things versus the new. Many in the younger generation are coming in and adding value to a successful operation that has been around for decades. Social media, digital marketing and a revamped image truly sets a company apart from their competitors and helps them grow in ways that have been untapped before. It’s important to look at your market and make the necessary investments before your competition gets a jump start on taking the lead in your market.
GREENHOUSE SOLUTIONS
With fewer growers operating, there is more opportunity now than ever before. Don’t let concerns about the economy keep you from making strategic growth decisions to capture the market share. The greenhouse industry is a very exciting alternative for growers who are trying to make sense of the economic obstacles plaguing the industry. There is a broad incentive to greenhouse farm, because products can be grown on land that is less suitable for in-ground agriculture. This gives you a predictable crop at a predictable cost with an unblemished appearance, which leads to the perception of higher sanitation. Although the investment in a greenhouse if considered costly, high productivity provides an acceptable return on your investment. Lower labor costs ensue with greenhouse automation, which makes up for the high initial development costs.
We are hopeful despite the unpredictable economy and concerns facing growers today. Although the concerns are valid, we are entering into new territory in the greenhouse industry. The old ways of doing things will continue to be our backbone as we explore new ways to cut costs, improve efficiencies, and catapult this industry into the future. As always, feel free to reach out with any questions about how Cherry Creek Systems can help your operation!