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Ag TRENDS Articles
March 29, 2024
posted by Dr. Dave Kohl
In 2024 and beyond the quarter-century mark, managing trends and disruptions will be a high priority when conducting strategic planning for ag operations.
January 24, 2024
Agricultural Economics and Finance: Views from the Rearview Mirror and Windshield
posted by Dr. David M. Kohl
People often say that time seems to accelerate as one ages. Of course, I can defend that comment because I am that age and demographic. The year 2023 has quickly gone by and movement towards the quarter-century mark is upon us.
October 04, 2023
Global & Domestic Economic Snapshot: Think Globally, Act Locally
posted by Dr. David M. Kohl
The phrase think globally, act locally has never been more appropriate in managing business, household and personal financial decisions.
Nursery/Greenhouse
- Strong purchase orders and plant growth
- Rising prices
- Rising existing home sales
Profitability
The nursery/greenhouse industry should be profitable over the next 12 months. Strong purchase orders and plant growth to date signal a favorable start to the season. Rising prices are offsetting increases in input costs. Existing home sales, a significant demand driver, appear to be rebounding.
Industry drivers
Purchase orders strong
Purchase orders are coming in strong, reflecting optimism among retailers. Most producers are optimistic about the 2024 season; however, some are concerned that persistently high inflation, among other economic headwinds, may lower demand later in the year.
Economic concerns grow
While 2023 has been a strong year, the industry is increasingly concerned that a weakening economy and housing market could lower 2024 sales. Rising delinquency rates on consumer loans and a falling savings rate suggest many consumers are financially stressed. Housing data is mixed, and while single-family home starts remain relatively strong, it is unclear how long this can last given persistently high interest rates. Further, existing home sales, an important source of nursery-greenhouse product demand, are falling. See the Quarterly Economic Update for more information on the economy and interest rates. Despite these headwinds, growers are generally well positioned for a downturn.
University of Michigan Consumer Sentiment Index
Source: University of Michigan
Consumer sentiment has gradually improved since mid-2022 and this may be supporting plant sales.
Plant growth strong
Nursery-greenhouse plants benefited from warm, sunny weather in March. A strong start to the growing season widens the timeframe for both plant growth and retail sales; however, it increases the risk of frost damage if cold weather returns.
Rising prices offset input costs
Input costs continue to rise across all categories, especially labor (see Crop Inputs Snapshot for more information). However, producers have been able to increase prices proportionally without experiencing pullback in consumer demand.
Existing home sales increase
Existing home sales have started to rebound (see chart below), suggesting strength in the housing market despite persistently high interest rates. Existing home sales are an important driver of nursery-plant sales.
Existing Home Sales and Price Index
Source: National Association of Realtors. Standard and Poor CoreLogic.
Existing home prices have started to flatten, potentially driving sales.
