Adapt to survive

Jack Robert Photography

John F. McMakin, Jr. grew up watching his grandfather and his father farm on the South Carolina property that had been in their family since the 1700s.

He always wanted to farm the land like them, but agribusiness had changed. The rules favored the economies of scale of corporate farms, and many small farmers were squeezed out. The McMakin family land had been used for row crops until the 1980s, and it was just no longer possible to farm row crops profitably on a comparatively small parcel.

When John graduated from Clemson University in 1994 with a degree in wildlife biology and forestry, the job market was tight in those fields. So he continued the self-employed landscape work he’d been doing in school. He started handling residential and commercial installations and developed his grand plan of adding a tree farm to supply his clients.

Planting the seeds

In 1999, John’s grandfather, William Frank McMakin, sold him 176 acres of the family’s land. Around the turn of the century, he started the transition from landscaping to the beginnings of a tree nursery.

That was when McMakin Farms, Inc., as it is today, was born.

As a landscaper, John knew there was a need for high-quality field-grown ornamental material in his region. His goal was to produce enough material to fill that need for his own landscape jobs, then sell the excess. High-value ornamental crops could also be profitable in a way that the row crops farmed on that land generations ago could not.

“We chose the tree farm because you could produce more revenue per acre,” John says. “Our planting density on shade trees and evergreens is about 700-800 plants per acre. And we can generate more income doing that than we can producing soybeans or corn on the same given acre.”

Over time, McMakin was able to purchase some surrounding properties and currently has 200 acres in production. He continued to landscape through 2012 before closing that section of the business to focus entirely on the tree farm.

McMakin Farms’ top-selling shade tree, by far, is the red maple. John says the nursery sells a lot of varieties of oaks, elms and crape myrtles, as well. He also sells a wide range of evergreens, which have been in high demand lately for use as screens. Land developers who purchase commercial zoned properties near residential areas have been required by city and county authorities to build “buffer yards” that use different varieties of evergreens and deciduous trees. It’s a trend that has been good for McMakin’s business, of course, but it’s designed to protect residents from noise, light or air pollution that might come from a neighboring industrial property. But it doesn’t stop there.

“If a building is too large, and they can't get enough trees to put back on the building site or the parking lots, then a lot of these cities are making the businesses plant trees in other areas of the city or purchase property to replace that lost green space,” John says. “That's really created more revenue for our industry.”

McMakin Farms is located in Lyman, in the Greenville/Spartanburg area of upstate South Carolina. It’s one of the fastest-growing areas in the Southeast. John knew there was next to no chance of finding more property that was contiguous to his farm at a reasonable price. About five years ago, he started looking for ways to increase the company’s revenue on the same footprint.

McMakin started growing bareroot liners to sell to other nurseries. The liner experiment was another venture that started small but turned out to be a huge help with cash flow.

“With our conventional planting structure, we can get 700 trees per acre,” he says. “But with this structure we can average about 5,000 trees per acre. And we sell them in a 12- to 18-month time frame. So we have a quicker turnaround and more plants per acre.”

McMakin only produces one liner variety, Lagerstroemia indica, but the nursery sells them all along the Eastern seaboard from Florida to Maryland. Most go to other nurseries that either plant them in the field or in containers. This year, a lot of McMakin’s crape myrtles went to Texas to replenish those decimated by the February freeze.

It’s been a successful approach. John says they’ve been able to sell all of their product every year they’ve grown the liners. It diversifies his customer base, and those customers are happy to cut their own turnaround time down.

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Solving problems

There are challenges to running a liner production operation and B&B tree farm concurrently.

First is labor. Trees produced in a shorter window require more input in the summers that they are growing to make sure they are ready on time.

“A lot of the tasks overlap,” John says. “That's why we need more labor help at certain times of year than we have in the past. The liner part of it is very time critical. If you don't do certain tasks at the right time, you're not going to be able to sell that plant in 18 months.”

Most of McMakin’s liners are pre-sold on contract before they’re ready. Nurseries don't wait until they need them to buy liners. They order those starter plants far in advance to make sure they reserve what they need.

“You don't want to wait until they're finished and then try to sell 30,000 trees,” John says.

The spring is especially hectic because you have to harvest your B&B trees at the same time that you're harvesting your bareroot liners.

“We have to make sure we don't let anything slip by,” John says. “Our winters are really wet, which condenses our timeframe down to a more narrow window. You just don't want to have a bad production day. You want to make sure you have everything you need to keep that crew going, like backup parts for your machines that could break down, because a day can cost you a lot.”

Like many growers, the South Carolina nursery has had challenges finding enough hands to do all the work that needs done. John and Julie have two teenage children, Jack, who is studying agricultural mechanization at Clemson, and Meri Cole, who is a senior in high school. Both of them have helped with many tasks on the farm. Jack has been mostly involved with planting and spraying while Meri Cole does mostly propagation in the greenhouse. McMakin Farms propagates 85-90% of the crape myrtles used in liner production. Jack and Meri Cole have even helped to recruit other students who were looking for jobs and wouldn’t mind hard work. Nursery work is hard, no question, and many of John’s hires couldn’t stick it out.

“You give them a set of pruners and that 90 degree heat and they’ll be back in the office in 30 minutes,” he says.

McMakin Farms used the federal government’s H-2A program to bring in supplemental labor for the first time in 2021. When fully staffed, they have 10 employees.

The nursery has studied ways to lighten the load with automation. Jack wants to focus on smart farming and has brought back some approaches that work for the family business. Some of the tactics are geared more to large farms on the flat ground of the Midwest. However, McMakin Farms has adopted some wireless irrigation practices that help them remotely control valves from their cell phones. Conventional irrigation systems require underground wires, and John says those wires were constantly getting damaged from tillage or even worse, lightning strikes.

“We've had it blow a pipe completely out of the ground,” John says. “We have a high-tension power line that comes through our farm. Lightning hit one of the towers on that high-tension line one day and it came down to the ground and it found where our main line crossed it, blew a hole in it and it blew several valves. It did a good bit of damage in one strike.”

Some of the conventional controllers were about $1,000 a piece and a valve that got damaged was close to $100 to fix. The strikes wouldn’t always take out a controller, but they did happen several times a year. If your irrigation system has 50 zones, that’s 50 wires running through your farm back to the pump station. That’s a lot of valves to potentially replace. Eliminating that danger by going wireless was a huge improvement on its own, and the ability to control the system from a cell phone was the icing on the cake.

“I tell people I used to get a lot more done when I didn't have my phone in my pocket,” John says. “Some days it's a lifesaver, other days it's a hindrance. But overall, you've got a lot of power in that phone and you can control a lot of different automation things if you're willing to spend the money on them.”

Supply chain crisis and the inflation effect

While labor is always a challenge, the biggest issue facing growers right now is supply. John says getting materials has gotten tougher and tougher as the year goes on. Anything that has to do with resin, like plastic containers or metals, including B&B wires, is hard to source. Fertilizer is not hard to find but has become expensive.

“The stuff that’s not hard to get is getting expensive, but some things we just can’t get at any price,” John says. “We were short a lot of chemicals this time and we hear they’re going to be short again next year. So we have to ration and don’t waste anything, and we don’t use anything unless it’s absolutely necessary.”

In 1999, when John first started selling trees, the average catalog price for a 2-inch red maple was $120. That price stayed remarkably constant from 1999 to 2009. Growers might drop the price 10-20% if selling high volume. However, when the Great Recession hit, tree prices dropped precipitously.

“If you wanted to sell a tractor trailer load of trees, that tree was worth 35 bucks,” John says. “That’s not even worth the cost of planting it.”

It’s been a tough climb from the depths of the recession to today, but that 2-inch red maple that cost $120 in 1999 now sells for $140. The problem is that everything else is more expensive. John wants to price his trees to account for inflation. He’s paying attention to the growers out there that have raised prices correspondingly to inflation and wants to follow that example, but too many other growers in his regional market are underselling themselves.

So what can a small nursery do? John has a few ideas.

“They need to really pay attention to their input cost and track their costs,” he says. “Most farmers and most landscapers don't have the time to analyze a lot of jobs that they're quoting. They're understaffed, so they're having to wear many hats.”

It’s vital that every step in the industry supply chain charge more for their labor – especially while business is booming. If that happens, John says, there will be a domino effect.

“If everyone doesn't start paying closer attention to their input costs, we go into a recession in the next several years, then the people who haven't been able to save money or are borrowing money to operate are going to be in a world of hurt.”

He’s not aiming to project doom and gloom while the industry seems sunny and rosy. He just wants people to be aware of what it was like during the last recession, which put many nurseries out of business.

“It was awful,” John says. “From 2008 to 2009, we lost 50% of our gross sales in one year. The next year, we lost another 50%. The year after that, we lost another 45%. It was a hard time.”

One area John suggests growers track carefully is fertilizer and chemical costs. Fertilizer and chemical costs were up in 2021 by at least 35-40%. More fertilizer leads to accelerated growth, of course, but how much do you really need? John audited his fertilizer costs against the benefits provided. Then he was able to make a decision based on whether the benefits outweighed the costs. For instance, is it worth it to a grower to spend 40% more for additional growth, or would you be better served saving that money or spending it elsewhere?

John came to the conclusion that McMakin Farms was using more fertilizer than it needed and decided that practice should stop.

He drastically cut back on liquid fertilizer in 2021 and used more granular fertilizer. He also rations the fertilizer he uses more carefully. If a product already meets the size it should be, then the fertility level can be lowered to save money.

Another input cost McMakin Farms tracks is the cost of each individual liner. John says he could spend as little as $12 on a starter tree up to $40 for a larger tree. The larger liner needs less production time and will be ready to sell sooner. They look at their inventory gaps and decide which size liner would be a better choice financially.

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“I'm cutting out pretty much a whole growing season by spending extra money but if I don't need to spend that extra money, then I need take that money and save it.”

John keeps a sharp eye on his market so he’ll know if there’s a need for that particular tree at that particular size. He talks with other growers and knows what they have, he talks to customers to find out what they need. If the market’s caught up and there’s a surplus of trees at that size, there’s no need to spend more money on a larger liner. Instead, he’d buy the smaller liner and reduce his input cost.

Even with all that, there will be events no one could foresee, like the Texas freeze. John says there will be gaps caused by that freeze and growers like him will step up to try to fill them.

“We don’t have a crystal ball, but the biggest thing that you need to do is just pay attention to what’s going on in our industry,” he says.

He’d be remiss not to give credit to his wife, Julie, who left her corporate job as an accountant in 2001 when the couple had their first child and helped her business owner husband make sense of the financials.

“That helped me a lot, having her here to help with everything behind the scenes,” John says. “It let me go out and wear more hats in the field than in the office. There is not any way we could produce the volume of sales we do without having Julie in the office. We make a good team, especially when I stay out of the office.”

Above all, John hopes nursery owners start taking the time to understand their costs and consider them when they set their prices for the year.

“It’s time for people to watch their costs,” he says. “Think about those costs when you turn in pricing. You’re always going to be able to buy cheap plants, but one of the reasons I got into this industry was to give people a good plant at a fair price.”

For more: www.mcmakinfarms.com