The UK's Horticultural is worth ₤1.4 Billion sector cold be wiped out in just weeks

A major part of the UK's gardening industry worth ₤1.4 billion, which includes hundreds of family businesses up and down the country, 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 which has formed an essential part of British life for over 350 years. 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 ₤1.4 billion in total to the country's GDP annually and employ over 15,000 people directly and almost 30,000 indirectly. Many of these jobs form a vital lifeline for rural communities.

The perishability and seasonality of plants means that an estimated ₤200 million of seasonal plants will have to be scrapped across the ornamental horticulture industry.

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.

Alan Titchmarsh MBE said:- "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. Our gardens and green spaces; the very things that provide spiritual and physical sustenance at times like this; will no longer be able to call upon the variety of plants that are currently available; a range that has taken decades to develop. Without some form of rescue package, we are destined to see our gardens and public open spaces decline as growers find it impossible to recover from unsustainable losses. Businesses will disappear overnight in a situation that will take many years to reverse. I urge the Government to put in place a rescue package which will enable British horticulture to survive. Without it, our gardens and open spaces; a vital source of solace and nutrition to those at home; will suffer irreparable damage."

Speaking on behalf of the HTA, Chairman James Barnes said:- "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 1 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. 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 2 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 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 ⅓ of UK ornamental producers may fail in a matter of weeks, leading to a loss of around ₤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 2020. Many of these growers are facing huge difficulties and a near complete loss of income due to the Coronavirus.

Horticulture not only provides a great deal of grow your own produce, but also contributes to positive physical and mental wellbeing and serves some 23 million gardeners in the UK. The longer term impact from the failure of the UK businesses will be significant. The wipe out of British commercial growers will increase the volume of imported plants, raising the risk of Britain being hit by plant pests and diseases, undermining efforts by the garden industry and the Government to manage the nation's biosecurity strategy.

A good example is Porters Fuchsias is a family run wholesale bedding plant grower based in Formby, 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 5 weeks and go to waste in 8. 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 3 weeks, the outlook for Porters Fuchsias looks bleak. Natalie 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."

It is not just in the North West that is affected, Kernock Park Plants, who are 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. Managing Director Bruce Harnett said:- "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."

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.

Bruce fears for the British 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."

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 are about to lose an entire industry which will severely impact the availability of British grown seasonal fruit, vegetables, plants and flowers. "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. Our problem is not 1 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."

Banks are still not helping small businesses and the self employed

WE have been trying to find out what is being done about the UK Banks, who are appear to still be refusing to give businesses loans or putting blocks in place when it comes to getting cover to fund the gap until the Government support comes through. For many small businesses, the UK Banks are not lending!

This week we also put this to the test and contact Barclays, they say that:- "CBIL is not available for loans under ₤25,000 at Barclays. We have a range of ways for you to borrow if you need less than ₤25k - change your call back reason to 'New lending request' and we can discuss them." When you ask for help they then do not get back to you. This is a very bad situation and we are told other banks are also doing the same.

We also contacted HSBC about the Government Loan Guarantee is:- "viable business with a sound borrowing proposal" and offers "incorporated entities - Available for sums of ₤10,000 to ₤5,000,000" but only offers "sole traders and partnerships: Available for sums of ₤25,001 to ₤5,000,000."

Why can't businesses take out what they need, like ₤10,000, especially if sole traders? If sole traders can get lower amounts, it makes it viable to take out the CBIL, so why are they blocking this?

Many of the questions being asked by banks and the demands are setting the requirements way to high for many small businesses and self employed. Also, if we are looking at what the Government keeps saying, the words:- "viable business" raises more problems, again this closes most options, especially for those who do not have a good credit score or any business that doesn't a high turn over.

Michael Sandys, FSB Merseyside and Cheshire's Area Leader for Liverpool City Region, has also stated that:- "A lot of members approaching banks about emergency loans are met with one of two issues. Either lenders are trying to push them towards standard, expensive products; demanding personal guarantees; or the banks are simply not responsive: they say they'll call back and the call back never comes."

The idea that you can repay early without loan arrangement fee or loan prepayment fee means it will help tide over the gap, when it comes to waiting for wage support and other help, we are meant to get. So why say "viable business" when they know they will be getting the cash in?

We asked both Bill Eesterson MP and Damien Moore MP for comments:-

Bill Eesterson MP's teams reply was:- "Many thanks for your email. Bill is doing all he can to make these loans easier for businesses to get. He wants to see all businesses get the support they need. Bill has asked the Minister to comment on the issues you have raised. It can take up to 20 working days to receive a reply. I will forward the response to you when Bill has received it."

Damien Moore MP's team commented:- "You might have now heard, that the Chancellor has reworked the Coronavirus Business Interruption Loan Scheme to make it more accessible to businesses.

1) Applications will not be limited to businesses that have been refused a loan on commercial terms, extending the number who benefit. However, the Treasury has not capped the interest rates banks can charge.

2) Banks will be banned from asking company owners to guarantee loans with their own savings or property when borrowing up to ₤250,000.

This should help take some of the power out of the hands of the banks to take advantage of the situation as people who want to access credit will have the ability to walk away from whatever the banks offer.

Please take a look at this Gov.UK...

I hope this goes some way towards helping local businesses?"

Please can you let us know if you are having problems with the Banks and can't get help for your businesses? We would also like to hear from sole traders on this topic so we can forward your views to the MP's within the Liverpool City Region and also to groups like the Federation of Small Businesses (FSB) so we can get things moving faster. Please email us to:- News24@SouthportReporter.com with your thoughts on this pressing financial topic.

In our view, the longer this takes to sort out, the closer businesses get going under!