The Ontario Greenhouse Floriculture Industry

Table of Contents

Sector Profile

Industry Overview

The Ontario greenhouse flower industry has had significant growth over the past 25 years. Based on farm gate receipts it is now the third largest agricultural sector behind dairy and swine. Since the early 1980s until recently (2004), expansion of the sector by more than 10% or more occurred each year even through times of recession in the rest of the Canadian economy. Most medium to large wholesale growers are a very dynamic, aggressive and technologically advanced sector of the industry and have been key to the success of the Ontario sector within the North American market.

The industry is diverse, made up of the following three broad production sectors; flowering potted plants, cut flowers and ornamental and vegetable bedding plants/spring container gardens.

In 2009 the industry reported employing over 10,000 people (6,300 seasonal and 4,000 full-time) with a gross yearly payroll of $154 million (Statistics Canada Publication 22-202). Floriculture production includes flowering potted plants, annual spring/bedding plants, container-grown perennials, spring flowering containers and cut flowers produced in heated greenhouses and freestanding hoop houses.

Value of the Industry

The 2012 farm gate value of the Ontario greenhouse floriculture industry as reported by Statistics Canada (Publication CANSIM Table 001-0050) was $710 million, an increase of 11% over 2008. In 2008 the farm gate value decreased by 21% compared with 2007 as a result of the North American recession and the rising value of the Canadian dollar negatively impacting exports. From the early 1990s until 2004 an average growth rate of over 10% had been recorded because of increasing exports and the sale of floral products by the mass market retail chains.

Export sales peaked in 2002. From 2003 through 2008, export sales to the United States steadily declined to $72 million representing a 45% decline. Since 2009 export sales have remained relatively stable with export value in 2012 of $73 million (Statistics Canada CANSIM Table 001-0050). Exports now represent 10% of total sales and are critical to the viability of the large wholesale growers located in Niagara and the surrounding regions. The dollar value of imports (cut flowers, bulbs and cuttings) ) totalled $164.5 million in 2012, a continued steady rise since 2002. The sector now has a negative trade balance of about $105 million (Industry Canada)

Ontario Industry in Perspective

In 2008, the Ontario industry represented 49.5% of the total Canadian farm gate receipts of $1.3 billion, increasing to 52% in over 2012. During this 5-year period the Canadian farm gate value has increased only marginally to $1.4 billion in 2012.

In Canada, the two other provinces with major production are British Columbia and Quebec. In 2012, the sector in British Columbia represented 22.6% of Canadian production and Quebec contributed 11.5%. Since 2008 the farm gate value of the sector in BC has increased while Quebec has decreased marginally. The sectors in both provinces, like Ontario, experienced considerable growth during the 1900s. Although the BC farm gate value dropped in the middle of the past decade, the decline has been less than that of the Ontario industry because of a lower reliance on export markets. The Quebec industry, primarily servicing the provincial market, has contracted marginally because of high fuel costs.

Expansion in the past by the Ontario sector was driven by the relative proximity to provincial and large US markets (eastern seaboard population), climate, and the concentration of larger, technologically advanced operations within a small area allowing for crop specialisation.

Among North American jurisdictions, Ontario remains the third largest producer of greenhouse floricultural products behind California ($985 million US) and Florida ($812 million US). Michigan, being similar in climate to Ontario, is the third largest US floriculture producer with $365 million US. In 2008 farm gate value dropped 2, 5 and 3% respectively for these three states. In 2011 and 2012 farm gate value in both California and Florida declined by 3% over the previous year. The total US greenhouse floriculture farm gate value in 2012 was $4.12 billion.

Production Area and Number of Growers

In 2008, Statistics Canada reported 885 growers with a total of 425 ha devoted to greenhouse floriculture production. By 2012 the number of growers had dropped by 25% to 660 (Statistics Canada CANSIM Table 001-0047) and with a production area of 385 ha (10% decrease). In comparison, the production area for greenhouse vegetables in 2012 was 829 ha, a 12% increase over the same period and 10% increase in number of growers. The greenhouse vegetable sector now has more than double the production area compared with floriculture. During the past five years, the greenhouse vegetable industry has continued to expand because of market demand in both the US and Canada for greenhouse vegetable products.

The commercial flower growers exciting the sector have been a mix of wholesale growers with older production facilities and smaller wholesale/retail growers. There are still many smaller retail-oriented growers operating successful operations, 5-6 months of the year, in non-traditional greenhouse production areas to service a vibrant local spring garden market. Statistics Canada survey results show average that the total months of operation across the floriculture sector has dropped by 30% during the past five years (Statistics Canada CANSIM Table 001-0047). Averaged over the number of growers in each of the sectors, greenhouse vegetable growers operate their production 11 months/year compared to 7.5 months of the year by flower growers. With changing consumer demands and purchasing habits, many flower growers do not operate large sections of their production facilities during the fall and early winter months when market demand is weak and energy demands are high.

In 2012, double polyethylene film (double poly), glass and acrylic were the three greenhouse coverings used in greenhouse floriculture with double poly representing 63% of the area and glass 30% of the production area. Double poly is typically preferred because of the lower heating costs and more diffused light during the summer months compared to glass. Glass has often been the preferred for high light requiring crops grown through the winter. The disadvantage of poly is the light reduction over time and the need to replace and recycle the poly every three years.

Location of the Industry

The majority of the Ontario production (75%) is situated in southern Ontario in the counties/regions located around the western end of Lake Ontario (Niagara and Hamilton) and the counties along the north shore of Lake Erie (Haldimand and Norfolk in particular). In southern Ontario, 50% of the growers and 60% of the production area is located in the regions of Niagara and Hamilton. During the past five years the percentage of production from these regions destined for the export market has declined. Between 2001 and 2006, the production area in Niagara grew by 31.5 ha but since that time it is estimated an equivalent area has been taken out of production. Essex in the 1980s and 90s was the second largest floriculture production area but since then the sector has declined dramatically over the past five years. This is because a higher percentage of the area was dedicated to cut flowers (rose, Alstroemeria, Chrysanthemum) and many growers were forced to leave the industry because of the inability to compete on price, the perceived quality of South American produced flowers and having older less efficient production facilities.

Size of Operations

The average operation in Ontario is just over 4000 m2 according to the latest agricultural census. However, the operations in the major production areas are much larger. In 2011, the average operation in southern Ontario was about 10,000 m2 compared with 1550 m2 (16,500 ft2) or less in non-traditional production areas of the province. These small family operations service their local market primarily with bedding plants, perennials and garden mums in the late summer.

Industry Trends

Crops and Production Highlights

Greenhouse floriculture is very diverse in the range of crops grown. Several thousand plant genera are grown as cut flowers, flowering and foliage potted plants, bedding plant/spring annuals and herbaceous perennials. The industry has historically been divided into 4 major sectors: bedding/spring plants, potted flowering and foliage plants and cut flowers.

Typically cut flower growers only produce cut flowers and specialise in one or two crops. Growers of cut flowers have experienced market changes that occurred at breath taking speed since the early 2000s. Since, by 2012, only a small group of growers each specialising in one or two crops remain, production numbers are not reported by Statistics Canada for confidentiality reasons. However based on knowledge of the industry the following observations or comments can be made:

  • Rose production is limited to one grower.
  • Chrysanthemum, alstroemeria, cut lilies and iris production declined by 60 - 75% in the early 2000s but has stabilised at the lower level of production since then.
  • Snapdragon and freesia production has remained steady.
  • Gerbera continues to be a popular cut flower with production showing modest annual increases during the past five years. Hydroponic cut tulip production has increased dramatically the past 5 years as a seasonal winter crop.
  • Lisianthus is a summer seasonal crop with many production challenges. Production has dropped because of a lack of demand during the summer for cut flowers when consumers tend to spend less time in their homes.
  • Numerous other cut flowers both year round and seasonal are being grown including anthurium, asters, hydrangea and sunflower.

Flowering potted plant growers are a diverse group with two main production strategies; those who specialise in weekly production of one to several key flowering crops such as Kalanchoe, Rieger begonia, mini-rose; and those who focus on holiday crops such as poinsettia, hydrangea, Easter lilies and spring flowering bedding plants. Market forces have triggered rapid and massive changes in the potted flowering plant sector. In 2008 compared with 2007, production of most potted plants declined by 20 - 60%; cyclamen 57%, kalanchoe 60%, chrysanthemum 48%, Easter lilies 21%. Since 2008 production of many of these flowering potted crops has dropped another 20 - 50%. Orchid production (primarily Phalaenopsis) has increased very rapidly but over the past five years has decreased by 75% due to imported flowering plants from the U.S. During this period, production numbers of poinsettia, lilies and gerbera have remained steady. Fall garden mums is the only crop where growth has continued. Bedding plant growers have traditionally focused on the production of spring bedding plant crops, flowering hanging baskets and zonal geraniums and garden mums grown outdoors during the summer for late summer fall sales. Since 2008 when the weekly demand for flowering potted plants began to decline, many of these growers switched to spring flowering crops including vegetable and herb transplants because of growing consumer demand. Since 2008 production of spring flowering annuals has increased by over 15% and vegetable and herb transplants by over 35%.

In the past decade there has been a plethora of new vegetatively propagated flowering annuals introduced into the spring market used primarily in mixed hanging baskets, window boxes and patio/garden containers. This change has resulted in a significant reduction in the production of seed propagated annuals particularly in the traditional cell pack format.

In recent years the distinction between these latter two sectors has become less pronounced because of economic pressures and where demand has been strongest. Bedding plant producers now produce a whole range of herbaceous perennials using bedding plant technology as well, partially in response to mass market buyer demands.

Many large bedding plant growers have become much more seasonal in their production in response to changes in sale patterns by the mass market chains. There are also many seasonal growers operating only 5-6 months a year. They are often retail oriented and are located in smaller communities across the province serving the local market.

In large urban centres, consumer preference for spring plant material has changed resulting in a dramatic increase in demand for larger container sizes of spring annuals, hanging baskets and value added products that result in instant colour and impact. Consumers are focussing on decorating with colourful plants to showcase their homes and patios more than gardening, in part due to time constraints in their lives.

Computerisation and automated technologies now play a vital role in maintaining the competitiveness of the industry including use of computerised climate/environmental controls. Automation including robots has become the standard in most operations and is used for seeding and transplanting bedding plants, pot filling, irrigation, harvesting and grading of cut flowers, and for some pesticide applications.

The adoption of integrated pest management principles is universal across the flower industry. Adoption of IPM strategies and detailed record keeping is essential for operations to operate under the Potted Plant Export Certification Programme put in place by the Canadian Food Inspection Agency (CFIA).

The use of biological control agents is now widely adopted by many flowering potted plant growers because of insect resistance issues (Silver leaf Whitefly Q bio-type, Western Flower Thrips, Foxglove Aphid). The lack of effective insecticides has resulted in serious crop losses. There are many challenges given the diversity of crops and production systems. Smaller bedding plant operations, in general, are less likely to adopt bio-control strategies because pest pressures are less because of their seasonal nature, reliance on seed propagated plant material, and distance from service providers for guidance.

Market Development - Domestic and Export

The strong growth in the wholesale production sector in both the domestic and export market occurred because of the involvement of the mass market chains, including discount department, home building and grocery chains in the sale of plants and flowers. Florist shops have maintained market share in the wedding and funeral sector of the retail market but have lost most of the flowering potted plant and bedding plants markets.

Beginning in the mid-1980s until 2003, growers particularly in Niagara, were successful in the development of an export market throughout the United States eastern seaboard, including destinations as far south as Florida and Texas and as far west as Chicago. The Ontario industry was initially successful in penetrating the U.S. mass market because of their investment in technology, product quality, diversity, specialisation and volume. The concentration of growers and wholesale distributors within a relatively small area was beneficial in being able to supply all the stores of a mass market chain within a specific region with a full line of floral product. It allowed individual growers to specialise in the crops grown. In addition, during the 1990s and early 2000s the exchange rate favoured Ontario growers and wholesalers.

According to Statistics Canada, International Trade Division, exports increased rapidly during the 1990s; from $63.3 million in 1991 to a high of $317 million in 2002. Export sales since then dropped dramatically for a variety of reasons including the rapidly rising value of the Canadian dollar, changing purchasing patterns by mass market buyers in response to changes in consumer purchasing patterns, the lingering North American recession of 2008 and high unemployment since. Export sales to the U.S. were around $130 million (Canadian) between 2008 and 2012.

For many years, Canadian greenhouse floriculture had a strong positive trade balance. Since 2008 a negative trade balance has continued to grow reaching $111 million in 2012 (Industry Canada NAICS 11422 - Floriculture Production). This has occurred because of less domestic cut flower production, lower exports to the U.S. of flowering potted plants, and spring plants, and the changes in production practices. Vegetative cuttings are almost exclusively imported from offshore countries with a better climate for cutting production and lower production costs.

The Challenges

Export Sales

The export market since 2003 has declined sharply for a variety of reasons. The rapid change in the exchange rate from average of $1.40 in 2003 to $0.99 in 2013 has reduced a key competitive advantage (March 2011 CA exchange rate $1.02 -1.03; March 2013 - $0.92). Expansion and modernisation by both large U.S. and Ontario growers resulted in an oversupply in the market place for weekly potted floral crops. The competitive and price point sensitive pricing by the large chains has resulted in unit plant prices being essentially flat lined for the past decade or more. Escalating transportation costs including fuel surcharges, growing containers and packaging costs (pot covers, sleeves and cardboard, all inputs that use energy to manufacture) have resulted in razor-thin production margins. As mentioned earlier, the U.S. 2008 recession also had a significant impact on export sales.

The Market Place

Home improvement, discount department and supermarket chains in the U.S. and Canada have changed their purchasing patterns to reflect consumer purchasing patterns with most now focused only on key holiday sales (Easter, Mother's Day, U.S. Memorial Day, Thanksgiving and Christmas) and most importantly the spring market since many of the chains experience high level of product loss (poor sell through) during the remainder of the year. Many chains now demand direct delivery of small shipments to individual stores instead of through regional warehouses. This change in focus has created challenges for growers from both a production and labour perspective.

Cut flowers and flowering potted plants are purchased by consumers using discretionary income. The consumer has many options where to spend their discretionary income when personal budgets are tight. Flowers are not a basic staple like food. Consumers must be inspired to purchase flowers and plants because of their beauty, ability to brighten one's surroundings and provide good value by having excellent shelf life.

The US consumer purchasing habits for floral product are different than European consumers who purchase cut flowers and or flowering potted plants almost weekly and annually spend 10 times more per person than North Americans. Canadian consumers purchasing habits fall somewhere in the middle but most purchases are flowering potted plants. Industry surveys show that most Ontario consumers only purchase cut flowers 3-4 times per year for themselves.

The introduction of UPC codes on most floral products and now Pay-by-Scan sales by some large mass market chains has been a challenge because many floral product UPC codes are specific to each company and can only be added when shipping orders are received. In addition, many Home Improvement chains with a garden centre have implemented a "lead vendor" policy that requires the lead vendor to take on much of the responsibility of maintaining plant material and setting up displays in the individual garden centres in order to increase the profitability and the sell through of bedding plants and other flowering potted plant material therefore reducing their losses. This has required growers to hire staff and or third-party contractors to monitor and maintain the plant material delivered to the individual garden centres potentially hundreds of kilometres away. Some view this as an opportunity to sell more plants given minimal increases in wholesale pricing and the perishable nature of the product.

The cut flower sector continues to struggle. It has become extremely difficult to compete with cheaper imported "bread and butter" cut flowers (rose, carnation, chrysanthemum, alstroemeria) from South America and Africa for use in mass market mixed flower bouquets and florist arrangements. These crops can be grown under high light conditions year round and ship well dry. Since January 2005, one leading domestic retail chain has been accessing pre-made supermarket mixed bouquets directly from South America, eliminating Ontario rose and chrysanthemum growers as well as wholesale bouquet makers from the marketplace. As a result the market price for domestic product has dropped dramatically. In 2002 over 34 million tea and sweetheart rose stems were produced in Ontario; in 2008 only 8.4 million were produced; a 75% reduction in six years and by 2012 only one Ontario rose grower remains. Much of this production area has been replaced by gerbera and snaps, two cut flower crops that do not ship as well over long distances. As a consequence, cut gerbera and snapdragon prices have fallen dramatically. Currently surviving on their equity, it is likely that additional cut flower growers will be forced out of business within the next few years.

Seasonal production (January to early May) of hydroponically grown tulips has continued to expand. Although production numbers are not reported for confidentially reasons, it is estimated that 90-100 million tulips are forced annually as cut tulips.

The few cut flower growers remaining are attempting to compete by growing only the latest novelty or non-traditional colours that the key producing regions will not produce until the demand becomes sufficiently large. The inability to access the latest cultivars of cut chrysanthemum developed in Europe because of an importation ban on cuttings to restrict chrysanthemum white rust means that they are unable to supply the local market with the latest cultivars. The remaining chrysanthemum growers continue to grow many cultivars that are now 25 - 30 years old.

Crop Protection

The availability of the same pest control products as their US counterparts continues to be a competitive disadvantage. The industry has supported the Canadian minor use program but requirements by the Pest Management Regulatory Agency for greenhouse-based dislodgeable foliar residue data and occupational exposure studies that are not generally required by the U.S. or other OECD countries, have been key stumbling blocks to achieving new product registrations. A more recent requirement that label expansion of new pesticides through the User Requested Minor Use Label Expansion Program must be within the same Use Site Category has been an additional obstacle in the registration system. The lack of new, effective, reduced risk products that are IPM/bio-control friendly continues to frustrate the industry. The adoption of bio-control programmes where feasible, has been a positive outcome to this dilemma. The Ontario industry is the leading jurisdiction in North America and Europe in the adoption of bio-control. However, for the adoption of bio-control programmes over a wide range of flower crops, registrations of reduced risk pesticides is an absolute necessity since the use of many existing active ingredients cause serious setbacks to progress. The successful adoption of bio-control programmes may be useful as a marketing strategy as consumers become more concerned about "Green" and "sustainability" issues. Flowers Canada Ontario, for the past decade, has funded a technical specialist to assist in the development of User Requested Minor Use Label Expansions applications.

Dollar Exchange Rates

Growers and wholesale distributors have experienced 'serious turbulence" because of the sky rocketing rise in value of the Canadian dollar relative to the U.S. dollar that began in 2004 and is now near par. Growers and wholesalers are focused on quality and service to retain their market share, although many chain store buyers put a greater priority on unit price.

Border Issues

Delays at the U.S. border due to increased security since 911 and numerous shipments being delayed for 6 - 12 hours or being turned back due pest issues have been costly. There is a perception in the industry that the border issues are functioning as non-tariff trade barriers. This has resulted in disgruntled U.S. retail customers who rely on "just-on-time" delivery of product to their distribution centres or individual stores.

"Country of Origin Labelling" is also an issue challenging the export of mass market cut flower bouquets and floral arrangements that contain both imported (typically South America) and Ontario-produced cut flowers; in part because Canada does not inspect cut flowers entering the country while the U.S. does. Industry has worked with both the Canadian Food Inspection Agency and U.S. government Plant Health officials to resolve this issue but with limited success to date.

Quarantinable Pests and Diseases

Japanese Beetle, Ralstonia, Phytophthora ramorum (Sudden Oak Death) and Chrysanthemum White Rust have caused many problems and cost the industry hundreds of thousands of dollars in lost sales during the past several years because of restricted international movement of both finished and propagative material. In 2005 and again in 2008, a new insect pest, Duponchelia fovealis, not previously known to exist in North America, and not reported in U.S. until 2010, but widely distributed in greenhouse operations in Europe, was identified as being present in several operations. Huge costs were associated with its eradication; however it is now confirmed to exist in more than 12 states in the U.S. since 2010. Considerable concern continues to exist within the whole greenhouse industry because of the reliance on the U.S. market as a destination for both flowers and vegetables produced in Ontario. Swede midge was removed from the quarantine list in 2009; however, most consumer vegetable transplant production to the U.S. had already been lost because of the inability of growers to meet certification requirements. In 2007, CFIA began consulting with the industry concerning pests of quarantinable interest and the impact on the industry. Currently, individual growers financially bear the cost of destruction and loss of sales whenever a quarantinable pest or disease has been identified. Flowers Canada Ontario has been examining the feasibility of creating an industry sponsored insurance program.

Environment

CITES, the international agreement to protect species of wild plants occasionally creates challenges when exporting flowering plants such as cyclamen, many cacti and orchids because the native genera are protected under the International Convention.

Water and nutrient management

This broad area is of major concern because of the intensity of modern production. Through normal greenhouse production practices, growers create leachate and rinsate that potentially contain nutrients, plant pathogens, traces of residual pesticides, sanitation materials and shading compounds that are typically discharged directly or indirectly to the environment through subsurface drains. Most bedding plant and soil-grown crops are grown in open systems with subsurface drains under the greenhouse to drain ground water or excess crop applied irrigation water. Because gutter connected greenhouses are considered permanent structures, the Ontario Agricultural Drainage Act does not apply to the subsurface drains under the greenhouse. The industry depending on the crop and economics has been pro-active since the early 1990s, installing recirculation systems (primarily sub-irrigation for potted plant production) to not only better manage and reduce water and nutrient usage when building new production areas or retrofitting older facilities but for labour efficiencies. However, cut flowers such as snapdragons, alstroemeria and chrysanthemums, crops traditionally grown in soil or containerised crops such as bedding plants continue to be produced in open systems. Management of storm water including rain water and greenhouse subsurface drainage is an increasing challenge because in many existing facilities the two are inextricably connected.

Waste Generation

Most of the newer production area has utilised an inflated double layer of 6 mil polyethylene (LDPE-#4) as the greenhouse roof covering of choice. This is in part because of initial investment costs but also because of the energy savings during the winter and the more optimal environment within the greenhouse (light and RH) during the summer for plant growth and production. Disposal of the poly, which must be replaced every 3-4 years because of reduced light transmission and brittleness became more difficult in the early 2000s as many municipal landfills no longer accepted it as a waste since plastic waste reduction from landfill was mandated by provincial regulations. Various grades of plastic are widely used in greenhouse production including HDPE(#2), polypropylene (majority of plastic pots) and high impact polystyrene (#6) used mainly for trays and cell packs.

Several recycling companies and horticultural plastic pot manufacturers now have well established programmes in place to bale and collect the poly when removed from greenhouse roofs. At both the greenhouse grower and retail garden centre level initiatives are being established to gather, sort and recycle the various grades of waste plastics in response to consumer concerns. Renewed interest in glass has occurred primarily in greenhouse vegetables for two reasons; a lifespan of 20+ years and the 30% higher light levels critical to crop quality and production during winter.

Cardboard is another major waste created because of shipping requirements and is now being recycled.

Crop Margins

Wholesale prices have remained static or dropped over the past few years while input costs such as labour continue to increase. Plastics and transportation (fuel surcharges by transportation companies) have increased by more than 30% during the past five years. To remain profitable in the past, growers attempted to become more efficient in production and management through a variety of means including focusing on one crop, economy of scale and technology. Crop specialisation has been associated with weekly production which has proven challenging over the past several years because of changes in consumer demand for flowering potted plants throughout the year. The use of European technology, primarily automated robotics, designed for weekly, year round production, is costly and not necessarily well suited for seasonal production systems that exist in North America.

Dramatic consolidation or strategic alliances on the supply side of the industry, both in seed/plant breeding, pots/containers and water soluble fertiliser manufacturing during the past couple of years has resulted in less competition and higher pricing.

Increasing the price of many floral products to reflect the rising cost of production has proven difficult when negotiating with mass merchandisers. Many in the industry see floral products as having become a commodity item with the profit margins now being "pennies per unit".

Energy

The price of natural gas rose rapidly between 2001and 2009. Since then prices have declined and continue to be at pre-2001 pricing per GJ because of the economic recession and the volume of natural gas currently available. Heating is a major input cost that has typically represented 20-35% of the total cost of production depending on the crop being grown. However with low pricing on natural gas, energy costs as a percentage of the production costs have dropped to 15 - 20%. The months of December - February typically represent 58% of the total annual heating requirements. Larger growers and The Ag Energy Co-Operative (mandate to bulk purchase natural gas) have cushioned some of the unpredictable pricing by volume purchases and long term contracts.

The industry has not widely adopted alternate energy sources. Some are using alternate fuel sources such as waste wood products. Other energy sources including, oat hull pellets and corn have been tested but often growers have not appreciated the many issues and the increased level of management required to operate boilers when utilising alternate fuels. Others are installing new boiler and computer technology that allows for greater energy efficiency. Others with older structures are shutting down parts of their operation during the coldest time of the year because of low product pricing and demand. A few larger operations may consider installation of co-gen units based on policy and pricing decisions, but most floricultural operations suggest that they are not sufficiently large compared with greenhouse vegetable growers to make it economical.

A couple of operations have invested heavily into anaerobic digesters developed using European technology and utilising organic wastes to generate methane to operate their boilers. One of the many challenges with this type of system has been the issue of odour.

Electricity costs in general, account for 10% of the total energy bill and the rapid increase in prices in 2002 following the deregulation of the Ontario market was a major concern for many growers. Use of high pressure sodium lighting has dropped significantly because of rising electricity costs (pricing during peak usage) and lower wholesale flower prices unless the operation has a co-gen unit that allows the business to generate its own electricity and use the waste heat to heat the greenhouse. A $0.01/kWh increase in electricity is estimated to increase cost of production by $2.25 million.

The industry as well as the natural gas supply companies (Union Gas and Enbridge) and Hydro One continue to support comprehensive audits of energy consumption (heating and electricity) to identify where savings could be achieved and provide incentives to make improvements. Some operations have changed from forced air ventilation to passive top ventilated greenhouses to reduce the number of motors required to operate during the summer months.

Labour

Finding and retaining qualified labour to manage crop production has become more challenging because of the increasing seasonality of the work in flowering potted and bedding/spring plant production. Statistics Canada (CANSIM tables 001-0055 & 001-0053) report that the yearly payroll increased by over 10% between 2008 and 2012 while the total employees declined to 8,500, a decrease of 16.5%. Labour costs typically represent 30 - 35% of the cost of production. Many operations with peak seasonal work are increasingly relying on the offshore agricultural labour programme to supplement their labour force. The number of permanent employees represents 40% of the total labour compliment. In potted plant production, technology, primarily robotics, is being incorporated where it makes sense, eliminating repetitive activities such as pot filling, seeding, and bedding plant transplanting and spacing while with cut flowers, automated grading and bunching machines are becoming more common now in the large operations. Utilising automated technology is proving difficult for flowering potted plant growers because of the vast array of pot sizes and shapes being demanded by the various chains as they attempt to differentiate themselves from the competition.

Postharvest/Crop Production Performance

Growers are now growing plant cultivars developed by plant breeders that are more compact and allow for more plants to be grown per unit area and with a shorter flowering response time. This allows for more "crop turns" per year but many struggle to produce the quality of growth and flowering during the low light levels of the year even when supplementing with high pressure sodium lighting. Unfortunately, in most cases, post harvest/consumer performance in response to changes in production practices has been the one critical piece of the puzzle not being evaluated primarily because there are very few researchers around the globe working co-operatively with production specialists to determine the impact. Consumers must perceive value and performance whether it is in their home or garden if they are to be eager purchasers of floral products.

Urban-Rural Conflicts

Conflicts with neighbours are more common than in the past. The issues include fan noise, tractor-trailer traffic, stray supplemental lighting and environmental concerns related to burning of alternate fuels, odours from anaerobic digesters and potential discharge of nutrients and pesticides. Increasingly government intervention in conflicts is occurring.

Marketing

Growers suggest that this is the biggest challenge facing the industry today. The dilemma is how to encourage consumers to purchase more locally grown floral products. Flowers are purchased using discretionary income. Consumers are being pulled in many directions by great advertising campaigns in print and media on where they should spend their discretionary income. Flowers must have perceived quality and value (freshness, performance, improved quality of life) and most importantly the "WOW" factor if consumers are to purchase flowers regularly. As higher percentages of crops are marketed through supermarkets and large box stores such as the Loblaw Group and Home Depot, medium and large wholesale growers are relying more on the large wholesale distributors to market the product because of their sales force and regular contact with consumers. Medium-sized growers can then rely on what they do best, grow quality product. The downside is less direct communication with the customer. Increasingly, the chains are consolidating the number of growers or suppliers from whom they purchase in a particular region of the country. Bankruptcy and consolidation of retail chains always puts a "chill in the air" for growers. The mass market chains expect growers to "grow with them" as they open more stores. In response to these kinds of demands, there has been a spate of corporate buyouts and amalgamations of numerous large growing operations by investment bankers during the past decade in the U.S. This trend has come to Ontario but many view this activity with considerable scepticism because a couple of large corporate interests in the U.S. have divested their production facilities after making greenhouse acquisitions.

Flowers Canada Ontario Inc. was successful in 2008 in being designated as the representative association for the industry through Section 12 of the Ontario Farm Products Marketing Act. This initiative now allows the collection of mandatory check-off fees to fund the organization, industry research and marketing/branding campaigns for locally grown product. With funding support from the Ontario Ministry of Agriculture, Food and Rural Affairs, Flowers Canada Ontario initiated "Pick Ontario", a branding campaign directed specifically at consumers.

Flowers Canada Ontario Inc. was successful in 2008 in being designated as the representative association for the industry through Section 12 of the Ontario Farm Products Marketing Act. This initiative now allows the collection of mandatory check-off fees to fund the organization, industry research and marketing/branding campaigns for locally grown product. With funding support from the Ontario Ministry of Agriculture, Food and Rural Affairs, Flowers Canada Ontario initiated "Pick Ontario", a branding campaign directed specifically at consumers.

Capital Costs

Modern, state-of-the-art greenhouses are costly to construct; $250 - $400 per square metre depending on the production technology incorporated inside the greenhouse. This is a barrier to new growers entering the industry. As a result, many of the existing family operations continue to expand as the next generation enters the family business. In the Netherlands, greenhouse production facilities are often considered obsolete within 10 - 15 years. Because of the importance of the sector in the Netherlands policies are in place to promote replacement of older facilities with newer state-of-the-art greenhouses.

Industry Associations

Flowers Canada (Ontario) Inc. is now the mandated organisation to represent the interests of commercial greenhouse flower growers in Ontario. Flowers Canada (Growers), the national grower division of Flowers Canada is also managed by the Flowers Canada Ontario office located in Guelph and represents Canadian growers on issues of national interest such as pesticide minor use issues, border issues, quarantinable pests and diseases and Ontario growers on provincial issues. Dean Shoemaker is Executive Director of both organisations.

The Ag Energy Co-operative, founded by both Ontario greenhouse flower and vegetable growers and also located in Guelph, purchases gas and electricity contracts on behalf of its grower members. Its natural gas purchases of long-term contracts represent a significant percentage of the greenhouse natural gas consumed in the province. Rose Marie Gage is the CEO.

The Ontario Greenhouse Alliance (TOGA) is a strategic partnership of the Ontario Greenhouse Vegetable Growers and Flowers Canada (Ontario) Inc. with a major focus being on issues common to the members of both organisations including energy and environmental issues. Mr. James Farrar is the managing Executive Director.

Flowers Canada Growers is a member of The Canadian Ornamental Horticulture Alliance (COHA) formed to further the common interests of Canada's floriculture and nursery sectors from a national perspective.

Summary

The industry sells lifestyle -- beauty, colour, and most importantly quality of life. Plants and gardening must bring both pleasure and fun! The typical North American family leads a hectic life style with little free time. Today's consumer has high expectations in terms of quality, price, accessibility and effort to maintain plants. This is driving the industry to evolve to meet consumer demands. Because the industry sells beauty and colour, growers must also be aware of colour trends and understand that the consumer grows tired of the "same old - same old" floral products. Growers travel to Europe to attend plant expositions at least annually looking for new plants to market in North America. Hence, growers must grow and market new and different flower and plant products tailor-made to meet consumer expectations or risk losing market share.


For more information:
Toll Free: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca
Author: Wayne Brown - former Greenhouse Floriculture Specialist/OMAFRA
Creation Date: 01 June 2003
Last Reviewed: 17 July 2014