Oregon nurseries' prospects stunted by recession

PORTLAND — Oregon's nursery and greenhouse industry, long the leading light of the state's agricultural economy, is in the depths of a historic downturn that is shedding jobs, causing bankruptcies and eroding the state's reputation as the best place in the country to grow plants, trees and shrubs.

A confluence of events — a slumping national economy, a dramatic drop in homebuilding, lack of access to credit and ruinous weather the past two winters — means many of Oregon's nearly 2,200 nursery and greenhouse operators aren't likely to survive what's shaping up as a rocky 2010, industry veterans say.

"It's terrible," said Scott Paul, who founded Alpine Nursery in Boring 33 years ago. "Worst I've ever seen it."

Paul views his own 50-acre operation as a snapshot of what the industry is going through.

Crews that worked six and seven days a week only two years ago harvesting and shipping conifers, shade trees and bare-root trees are now pared to two or three days.

Rising fuel costs over the past few years have forced Paul to dramatically reduce shipments to his prime markets in the Mountain States and the East Coast. Paul sees buyers in those markets turning to cheaper but lower-quality plants, grown closer to home.

Now, with the crucial shipping season just getting under way, orders that normally are pouring in are almost nonexistent.

"I hardly have any sales for spring, and I know I'm not alone in that," Paul said. "What can I say? It's not good."

It's a stunning turnaround for an industry that, starting in 1990, launched an 18-year run of escalating sales and revenues.

For more than a decade, greenhouse and nursery products have ranked No. 1 for Oregon agricultural products. In 1997, the greenhouse/nursery sector outranked No. 2 cattle and calves by $650,000 in annual receipts, a gap that widened to almost $500 million by 2007.

But in 2008, driven by a nose-diving national housing market, industry sales plummeted by more than 17 percent.

When this year's figures are officially reported next September, said John Aguirre, executive director of the Oregon Association of Nurseries, he expects to see a comparable or even larger decline.

Those disappearing dollars, he said, translate directly to escalating bankruptcy filings, with growers increasingly unable to secure or extend lines of credits. "We're talking about small, capital-intensive businesses with real seasonality to their cash-flow needs," Aguirre said. "Credit is absolutely critical and, unfortunately, not widely available right now."

Growers who expanded too fast or acquired expensive machinery and property are particularly vulnerable.

"As a creditor, we can't help everyone," said Bob Boyle, regional vice president for Northwest Farm Credit Services, one of the nursery and greenhouse industry's largest lenders. "But we're working hard to get existing customers through these difficult times."

There may be a rebound, Boyle said, but it's a ways off. If the nation's housing market begins to recover, as predicted, around the second quarter of 2010, new orders for plants and trees could start boosting industry sales by 2011, he said.

For some, including Jim Brown, owner of Wichita Nursery in Canby, that sounds like a long time to wait. The staff of 35 to 50 he usually has on this time of year is down to a handful. Though that's keeping payroll costs down, the savings are more than offset by a dearth of sales.

"We'll be down 50 percent this year, and I'm anticipating we'll be off another 25 percent from that in 2010," said Brown, whose nursery produces 2,600 varieties of plants. "This is taking a real big toll on everyone."

The recent cold snap, coming one year after heavy snows crushed thousands of greenhouses around the Willamette Valley, illustrated that farmers can do everything in their power to run sound businesses and still come out behind.

With overnight temperatures dropping to near-single-digits, a lack of available workers meant that many operations couldn't roll out the plastic sheeting necessary to keep certain bulbs and plants from freezing. So even if dahlia tubers, for instance, end up being in high demand next spring, a number of nurseries won't have any stock on hand to capitalize.

"Every time you turn around, it's something else," Brown said. "I hate this."

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