UK horticulture sector worth €1.58bn could be wiped out by Covid-19 claims HTA
Around 650 businesses across the UK produce ornamental crops which contribute €1.58bn (£1.4bn) in total to the country’s GDP annually and employ over 15,000 people directly and almost 30,000 indirectly.
7 April 2020 | 0
A major part of the UK’s gardening industry worth €1.58bn (£1.4bn), which includes hundreds of family businesses, could be destroyed following the UK coronavirus shutdown, claims the Horticultural Trades Association (HTA).
Peak season has only a matter of weeks left for the horticulture sector. It includes the ornamental crop sector, which grows bulbs, bedding plants, cut flowers, pot plants and stock mostly sold through garden centres, supermarkets, florists and DIY stores.
Around 650 businesses across the UK produce ornamental crops which contribute €1.58bn (£1.4bn) in total to the country’s GDP annually and employ over 15,000 people directly and almost 30,000 indirectly, said the HTA.
The perishability and seasonality of plants means that an estimated €226.5m (£200m) of seasonal plants will have to be scrapped across the ornamental horticulture industry, said the HTA.
Since Mother’s Day weekend when demand is typically high but people were beginning to self-isolate, sales dwindled dramatically, while lockdown means that there is unlikely to be any sales through to the May bank holiday, the busiest trading period of the year, said the HTA.
“This spring could well bring about the end of British horticulture as we know it. Hundreds of nursery owners and growers are facing huge losses of plants and revenue simply because the stock they have spent many months nurturing for the spring market – their peak season – will have to be destroyed since garden centres and other outlets are closed for business. This means not only a loss of billions of pounds to the UK economy and of thousands of jobs but, more than this, it will decimate an industry that will be unable to recover for the foreseeable future.” said Alan Titchmarsh, MBE.
“We have hit a perfect storm in the UK. The seasonality and perishability that is unique to our industry means that growers are potentially facing stock losses on an ever-rising scale as each day passes. Stock is one of the biggest components of asset value in the sector – stock write offs will destroy the balance sheets of many and make it impossible for them to continue.”, said James Barnes, HTA chairman.
Barnes continued: “We are calling for the government to work with the HTA, as the industry’s representative body, to come up with a financial support scheme to help those businesses which have had to scrap perishable stock and are facing a huge financial crisis.
“For those that can stay in business, there are also significant longer term issues as growers may not have time to plant next year’s crop, leading to a two year supply hit on the whole industry including retail, which will severely impact the availability of British grown seasonal plants and flowers.”
The HTA claims that while the UK government’s financial measures related to the agriculture and horticulture firms are welcome, in many cases they are not suitable for ornamental businesses. Investment in stock means that many nurseries do not have the reserves to take on the debt of a government loan, and often fall out of the scope of any support scheme due to EU state aid rules.
The HTA estimates that a minimum of a third of UK ornamental producers may fail in a matter of weeks, leading to a loss of around €283m (£250m) in direct GDP contribution to the UK economy annually. Allowing for a 2.4% per annum growth factor, the value of this lost contribution to GDP over five years would be £1.34 billion.
Around 70% of bedding plant sales are made between March and the end of May. Many of these growers are facing huge difficulties and a near complete loss of income due to the coronavirus.
Porters Fuchsias is a family run wholesale bedding plant grower based in Merseyside, that needs urgent action now or the family risks losing their livelihood.
Natalie Porter, who helps run the business, said: “The uncertainty surrounding the length of the coronavirus crisis is hindering the industry’s ability to make quick and efficient decisions to save businesses like ours. Time is running out. Most of our summer stock has already been planted and will be ready in three weeks. Our remaining stock due to be planted will be ready in five weeks and go to waste in eight.
“We are facing a potential write-off of £350,000 in the next three weeks due to perishable stock. This would jump to £200,000 per week thereafter.”
In the likely event that the impact of coronavirus continues beyond three weeks, the outlook for Porters Fuchsias looks bleak. Porter continued: “In this case, a loan becomes unfeasible. Even if the payback deadline were extended, it would mean writing off many, many years of future potential profits.”
Kernock Park Plants
Kernock Park Plants based in Cornwall has traded plants for nearly 40 years. The firm produces up to 12 million plants per year and the turn of spring would normally be the start of peak season, however when the Covid-19 pandemic was announced and subsequent measures enforced across the UK, the business had to prepare for uncertain times ahead.
A specialist provider of carpet bedding the firm also produces a vast range of ornamental plants including herbs and vegetables. “The recent fall in sales and mass cancellations from hundreds of our customers is extremely worrying, as we are now nearing full capacity with approximately seven million unsold plants on the floor.”, said Bruce Harnett, managing director of Kernock Park Plants.
Like thousands of nurseries up and down the country, Kernock is now faced with the difficult decision of closing its doors, resulting in a massive revenue hit and numerous job losses.
Kernock fears for the garden and plant industry and calls for a form of scrappage compensation, to help cover the costs of plants that will inevitably have to be destroyed.
“We have already paid and produced for the inputs and the labour to create the products for nearly all of our sales, catering for the peak demands in spring and summer. We can’t simply shut the doors and struggle through waiting to reopen. I can only hope that we can continue trading in some way and secure some sort of compensation for our unique sector.”, he said.
Alex Newey is Managing Director of the Newey Group based in Chichester and agrees that the ornamental growers’ sector is particularly unique: “I can’t think of another sector which invests throughout the year for such a short sales window to recoup the costs. . . we need to access funding immediately to avoid a catastrophe. This pandemic is hitting our industry at the worst possible time. We have made all the investment but have made virtually none of the sales. It is a low margin sector and, with all sales outlets closed, the costs will swamp businesses very quickly.”
Newey continued: “Our problem is not one of freezing fixed costs or even controlling staffing costs but of the massive amount of money already sunk into the crop. This is crop that is perishable and will very soon be completely unsaleable.”
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