CA Power's High Costs Means Flowers Soon Lost
California's natural gas industry probably shouldn't expect any flowers in sympathy anytime soon. The California Cut Flower Commission said last week that some of the state's growers have begun laying off workers and even sacrificing their Valentine's Day crops because they can't afford to heat their greenhouses.
"Some California cut flower growers will be forced to close their greenhouses altogether if relief from soaring natural gas prices is not found --- and soon," said Lee Murphy, president of the CCFF, based in Watsonville. "Heating bills are reaching $500,000 a month for some growers, as compared to $100,000 a year ago. Growers simply cannot continue operating with those exorbitant costs. The profit margins in our industry are tight enough as it is, and with nearly a 600% increase in heating costs, growers may simply have to close their doors."
Already announcing cutbacks in recent weeks because of the high natural gas prices are U.S. natural gas processing plants (see Daily GPI, Dec. 11). The usually more expensive gas liquids now cost less than the raw natural gas, and buyers looking for propane, butane, isobutane and chemical feedstocks may have to look a little longer and spend a little more than they did a month ago.
For California growers, the skyrocketing cost of natural gas could not have come at a worse time, especially for the state's rose growers. December is the month when buds form on rose plants to produce the critical Valentine's Day crop. That February holiday accounts for as much as 30% of a rose grower's annual sales.
Murphy said that the government might need to step in to help the state's $300 million-a-year industry through the current crisis. "The skyrocketing cost of natural gas is equivalent to a major natural disaster for our industry," he said. "Without some form of relief the future looks very bleak." Growers usually qualify for assistance when a crop is lost however, in this case, Murphy said compensation will be "desperately needed for crops not brought to harvest for Valentine's Day" and for those crops that sell below the high production costs.
About 60% of domestically grown flowers are produced in California, and 15% of the fresh cut roses sold in the United States are from the state.
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