164 J.E. FAUST, J.M. DOLE, AND R.G. LOPEZ
ownership of the genetics (patented plants) and thus the control of the
industry now rests in a relatively small number of businesses. The pri-
vate equity investors have little to no history with floriculture or agricul-
tural operations and anticipate little to no involvement into the future.
Their mission is simply to increase the profitability of the purchased
businesses and resell them after several years to another investment
group. The consequences of this new ownership remain to be seen,
whether positive or negative.
Most propagation continues to be done by independent greenhouse
businesses, although the clear trend over the past several decades has
been in the direction of fewer-numbered and larger-sized greenhouses,
some of which specialize as propagators. These propagators then supply
rooted cuttings for wholesale growers to flower and sell to the retailers
or to produce finished plants for their own wholesale market.
C. Risk Assessment
Risk assessment is an integral component of the floriculture cutting
industry, especially due to the fact that the industry has entered a
mature market phase over the past decade. Profit margins are relatively
low, so production costs must be tightly managed. There is little room
for losses due to crop failures. Also, a maturing industry is driving
industry consolidation, so now fewer facilities handle an increasingly
large proportion of the products available internationally. The result is
that the margin for error is very small.
The primary risks for cutting producers arise from pathogens and
natural disasters. In recent years, stock plants infected with Tobacco
Mosaic Virus andRalstonia, a bacterium, have created great upheaval
in the marketplace due to cancellations in the supply chain. Stock-
plant growers address these issues by implementing strict protocols for
preventing infections, planting multiple blocks of stock plants to cre-
ate redundancy, performing extensive testing for potential pathogens,
and labeling all cutting packages so that any infections can be traced
back to the specific stock plants from which the cuttings were har-
vested. Balancing the risk associated with pathogens with the cost of
prevention is an ongoing challenge. Natural disasters, such as volcanic
eruptions and hurricanes can cause severe disruption to the supply
chain. This has become especially concerning since industry consol-
idation has focused stock-plant production into a few geographical
regions of the world. Also, the floriculture cutting industry is highly sea-
sonal, so 1 week lost out of a season has significant impact on business
profitability.