John Murphy, owner, and operator of Annaveigh Plants and leading tree expert provides a fascinating insight into the costs of tree production and factors influencing end prices in Ireland
Over the past 35 years, I have watched plant prices rise in the Spring only to fall back to where they were the previous Autumn when the new crops come online. This trend began to change about three years ago and in the case of trees and transplants prices have continued to rise on a yearly basis. So what are the underlying causes?
Land, Labour, and Capital as factors of production were originally identified by the early political economists such as Adam Smith and Karl Marx and they still apply. During the early 2000s, as nursery prices remained static and production costs rose, many smaller nurseries in Holland, Germany and Belgium realised the return from investment was not worth it and began leaving the business. Many of these operations were family businesses and with younger people not interested in ‘dirty hands working’ so they had no succession. The outcome was Europe came out of recession with a reduced production base.
As we came out of recession, demand and prices increased and with a lack of product, prices did not fall back as normal. Then in 2016, the Chinese arrived in Holland to buy trees. Their wish lists were immense with numbers up to 30,000 of some varieties in 8-12cm girth and they have continued this purchasing year on year. The result is that planting stock, now reduced due to the retirement of many of the producers, took a sharp rise in price.
So we arrive at today and many EU countries in Eastern Europe such as Poland and the Czech Republic are feeling the benefits of membership as they undertake large infrastructure projects with hefty plant demand. The Chinese are still in the market, the number of growers is reducing, and wage costs are rising. If it was any other market everyone would be planting trees. But what is happening is the growers are unable to get Labour and with the milk quota change the availability of land has decreased due to the demand from the dairy sectors.
I carried out a brief survey with six Dutch tree growers based in Opheusden asking them were they going to expand production; and while they all expressed a desire to plant more trees, they all cited the lack of labour and the fall-off in young people entering the business as the reason not to expand. As a result of all the above factors, tree and transplant prices throughout Europe are at an all-time high and not expected to fall in the near future. The situation for shrubs is a little different with production being ramped up in Holland and Belgium it is predicted to follow the old trend in 2-3 years with prices falling back somewhat.
SO HOW DOES THIS IMPACT THE LANDSCAPE SECTOR?
The companies involved in the larger infrastructure jobs would normally take into account when pricing, the fact that it may take up to three years before they are on site. The inclusion of a figure to cover inflation is somewhat a guessing process and as the price of trees over 18cm girth is forced up over the coming years care needs to be exercised and not to just ‘throw a figure at it’. Landscapers not involved in competitive tendering need to be aware of the recent price increases and not to be pricing off the top of the head using historic prices. To avoid problems, the landscaper should check with the supplying nursery to see if they can stand over the prices originally quoted, especially if the time frame is over a month.
Just to give some examples of tree prices on the open market today: An Acer campestre ‘Elsrijk’ 12-14cm R/B x3 transplanted is €72.00 delivered. Three years ago, the same tree would have been €48.00. Quercus robor 8-10cm B/R x2 transplanted €22.50, 3 years ago €15.50. This trend has been most noticeable in the 6-16cm girth trees, but upwards pressure from more expensive planting stock will push through to the 16-25cm girth very quickly.
There are a number of other factors that can impact on both tree and transplant prices. Many projects do not consider the life-cycle of plants and have handover times all year round. A job originally quoted rootballed and/or bare root now requires potted trees for summer handover, this will increase the price by approximately 50% per tree and availability can be an issue as no grower can afford to produce the full range in all sizes. Delays to jobs are common and we find ourselves with more and more coco fibre rootballed trees to tend each year. This also comes with a cost for at least €25.00/tree depending on how long they remain in the nursery.
People responsible for specification have a large influence on total tree costs. Specifying a bare root 8-10cm Betula or an 18-20cm rootballed tree is obviously going to increase the job price, but we often see rare items being used in places where a cheaper alternative more suited to the location could be used. If we had a better level of communication between the Landscape Architects and producers then projects could be run more efficiently with the products freely available on the market. The market knowledge of the producers is not being exploited and as a result, we are rushing around Europe trying to find this year’s trendy plants.
Some of the most successful projects we have been involved in during the past years have been ones where we were brought on board at the beginning with the landscaper, the architect and the client. Suggestions were made, compromises reached, and the projects delivered on budget.
One other item that must be touched upon is transport costs. When specifying very large trees over 45cm the cost of transport becomes an issue. Most of these trees we import are from Germany and a truck is approximately €3,000, so this can add up to €600.00 per tree depending on the variety. Even within Ireland, our transport costs have risen 8.5% over the past 5 years and according to our haulier, they are set to rise further.
The term Contract Grow has always been bandied around and while it makes sense in the right situation, it has always been looked upon to reduce costs. The cost reduction may have been applicable when prices were depressed, but my take on this system is to ensure quality plants at the time required. The process of end-users buying directly or on the contract has come into the business in recent years and is seen as a cost-saving method. The major problem here is that the chain of responsibility is disrupted and leaves a situation where neither the supplier nor contractor will take responsibility if things go wrong. It also raises the question of biosecurity when we have end users importing directly from overseas especially plants like Olives from Italy which are the root cause of the Xyela outbreak.
In this uncertain tree market, a landscaper or architect is better off starting with a budget and trying to work in the right tree sizes and varieties to suit rather than picking out the usual suspects and then discovering the project is 50% over cost. Use the market knowledge of your suppliers and if necessary let them find alternatives to an expensive product. ✽
 JOHN MURPHY – owner and operator of Annaveigh Plants is one of Ireland’s most experienced and respected nurserymen. For more information visit www.annaveigh.com |
