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Five to One Odds Against You
| Chris Beytes
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>> Published Date: 6/25/2012
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 By all accounts, we just enjoyed one of the best seasons in many years. It started early for some, and May was record setting for many. Granted, April was cool and June got hot. But all in all, most of you are in a good mood as we head into the summer.
And why are you in a good mood? Because you rolled the dice and your bet paid off: You filled the greenhouse to capacity and prayed for great weather and sold it all at a good price and didn’t lose your shirt on the dump pile.
But wait: Is this a smart way to do business?
To find out, I did an informal survey among a few growers. I asked them to estimate how many great, average and poor seasons they get per decade. My guess was two great, six average and two poor, and that’s just about how the responses came back. (One optimist said four great, one good, two mediocre and three horrible.) Either way, we’re talking a best-case scenario of 50%, to a more realistic figure of an 80% chance that next spring is going to be average or terrible. That’s five to one against us!
Yet with those kind of odds, why do we continue to build our business models—production, pricing, facilities, labor—around the 20% odds of a great spring? Why don’t we instead plan that 2013 will be average, and determine production and pricing based on profitability under those conditions? That way, under every situation except a truly miserable spring, we should come away as happy as we are now. And even a bad spring won’t hurt quite as much.
There are a few reasons why this is easier said than done. The first is our farming history. A farmer plants all his land and prays for favorable weather because seed is cheap, and if you didn’t produce all you possibly could, you went hungry. That agrarian philosophy followed us into the greenhouse, where benches were meant to be filled. Aisles, too.
The second reason is that dump used to be cheap. Hefty profit margins made speculation worth the bet. Today, those margins have shrunk to almost microscopic, yet we’re still placing the same bet every spring.
A third reason is retailer demand. “Comp up!” is the battle cry of the chains. Big boxes expect 10% increases every spring and accept no excuses, so big-box growers have to increase production and hope for the best.
These growers have found one way to reduce their risk: regional diversification. If the Southwest stinks, maybe the Northwest will make up for it. This can be an effective strategy, but it also has the opposite effect of dragging down good-performing regions, so the end results are always a bit mediocre, unless every market does well … and the odds of that happening are even longer than five to one.
Back to the idea of planning for profits during the average years: First, even average springs are each a bit different. You can’t know which weekend will be good and which will be rainy. Or even which month. So while you can cut back production numbers, you still have to schedule that production to be ready over a 12-week
period.
One answer might be taking steps to ensure your crops last longer if they have to stay on the bench. For instance, if you’re growing less product, you can give it more space. My friend Bob Frye, former owner of The Plantation in Nebraska, used to RAISE his prices as the season went on simply because his geraniums grew bigger and more beautiful.
You could modify your container sizes for more longevity on the bench and at retail. The bigger the container, the less likely you’ll have to dump the crop.
You could also use a water-holding polymer in your potting mix to help maintain plant quality. I’ve bought bedding flats from Bob’s Market in West Virginia; they use it in all their mix and their plants hold up spectacularly well, especially under tough conditions.
One ironic aspect of planning for an average season? If you did it for 2012, this would have been a “bad” spring, because you’d have run out of plants early and not sold all you could have. But then again, 2011—by all accounts one of the rotten years—would actually have been a good spring.
And so would 2010, and 2009 and 2008 and 2007 and …
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