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Too Big to be Small, Too Small to be Big

This week I had a really interesting conversation because we were able to bring our different perspectives and reach a new understanding. The cross-pollination of ideas is what makes cities so powerful. The so-called spillover effect. You have an idea you run into someone with a different point of view and they accidentally give you an interesting solution.

The size of greenhouses and farmers is something that Peter has thought a lot about. He loved having a successful spring and summer. One of the marks of the success was discussing with his father whether or not it was time to put up another greenhouse. When you sell out it's time to get bigger, right? Plus bigger operations have more specialization. There is a head grower that specializes in making sure the plants grow as well as possible. There is a bookkeeper that can drill into the numbers. There might be a marketing person that promotes your business. Those specialists are hopefully better in their specific area than the farm owner who acts as a generalist. The problem with a bigger operation is that the owner might not get to work in the greenhouse anymore.

In many ways, big and small businesses are the same. Peter likes to point out that big farms are the same as little farms, they just have more zeros in each line item of their budget. I enjoyed talking about that point too. In some ways it's true. There are more zeros. In other ways it's different. When a small operation grows the owner might have to take on more tasks or work longer hours. A big operation has employees it has to think about. Large operations might invest in assets that continue to push them bigger and require them to work with more buyers.

This conversation takes place with the backdrop of COVID-19. Peter is worried that we will see another round of consolidation as we saw in 2008/09 when 4,000 greenhouses went out of business in the United States alone. Will more growers go out of business? I think there is a chance this trend doesn't repeat itself. This time, consumers, businesses, and regulators are asking questions about the resiliency in our system. The resiliency comes from more growers and less concentration. It's even possible we see some expansion.

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