Turfgrass Council of North Carolina – 2019 Sod Producers’ Report for North Carolina

July 16, 2019 | Turfgrass Council of North Carolina | PODCAST

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North Carolina Turfgrass – Grady Miller, Professor, Crop & Soil Sciences / AG-809 Publication date: April 2019

In March 2019, North Carolina State University conducted the fifth annual survey to examine inventory and pricing of North Carolina sod.

Overview

• Supply of bermudagrass sod is similar to 2018, with most suppliers saying they have adequate supplies for their expected demand in 2019. There still may be some shortages.
• Supply of zoysiagrass and St. Augustinegrass are expected to be better in 2019 compared to 2018.
• Shortages for tall fescue and Kentucky bluegrass sod were predicted for 2019.
• This was the second consecutive year that producers predicted they could have shortages of centipedegrass sod.
• There are expected price increases for all the turfgrass species in 2019. Of the actual prices reported for early 2019, St. Augustinegrass, zoysiagrass, and centipedegrass had the greatest increases.
• There was a 10% increase in growers reporting that they grew certified sod.
• Production acreage has slightly increased over 2018.
• The primary markets for North Carolina sod producers are landscape contractors.
• There was an uptick in sales to the sports/athletic field sector of consumers in compared to previous years.

Survey Details

Twenty-two producers representing the following farm sizes completed the anonymous online survey:

• less than 200 acres (10 participants)
• 201 to 500 acres (five participants)
• 501 to 800 acres (four participants)
• more than 800 acres (three participants)

North Carolina Sod Producers Association (NCSPA) records suggest the number of completed surveys represents about 55% of the sod farms in North Carolina.

Inventories

We obtained inventory estimates for bermudagrass, zoysiagrass, centipedegrass, St. Augustinegrass, tall fescue, and Kentucky bluegrass as well as a tall fescue/Kentucky bluegrass mix. This was based on estimated sales and the availability of sod as being excellent (more than 10% of demand), adequate (equal to demand), or poor (more than 10% shortage).

Pricing information included the farm price as well as the price for truckload orders delivered to the closest urban market or within 100 miles of the farms. All costs were reported as price per square foot of sod.

Bermudagrass is being grown by 19 (90%) of the surveyed producers. Fifty-two percent of these producers rated their inventory as adequate this year; 21% indicated their inventory was excellent. For 2019, 26% of all bermudagrass producers projected having less than adequate supplies. Projected inventory levels of bermudagrass have improved over the last 5 years (Figure 1) after significant shortfalls were predicted for 2015.

Zoysiagrass is being grown by 14 (70%) of the surveyed producers. Seventy-one percent of these producers rated their inventory as adequate this year and 14% indicated it was excellent. For 2019, 14% of all zoysiagrass producers projected shortages.

Of the producers surveyed, 15 (71%) are growing centipedegrass. Seventy-three percent of these growers reported they had adequate to excellent inventory. Twenty-seven percent of all centipedegrass growers anticipate a shortage during 2019.

Six (28%) of the surveyed producers are growing St. Augustinegrass. Eighty-three percent of these growers reported they had adequate to excellent inventory, and 17% anticipated a shortage during 2019.

Of the producers surveyed, four (19%) are growing tall fescue by itself. Seventy-five percent estimated they would have adequate inventory and 25% anticipated a shortage for 2019. Over the last five years, most producers (>60%) have indicated their tall fescue sod supply was adequate to meet the demand (Figure 1).

A mixture of tall fescue and Kentucky bluegrass is being grown by (38%) of the surveyed producers. Fifty percent of these producers rated their inventory as adequate to excellent this year, and 50% anticipate a shortage during 2019.

Two producers surveyed (9%) reported growing Kentucky bluegrass by itself. Of the group that responded to this survey, 50% anticipated adequate supply during 2018, and 50% anticipate a shortage during 2019.

Pricing

Table 1 provides a sod price perspective for all grass species in 2019.

The average price per square foot for a truckload of bermudagrass sod at the farm was $0.28 and delivered to the closest urban market or within 100 miles of the farm averaged $0.33. The farm price ranged from $0.21 to $0.38, whereas delivered prices ranged from $0.21 to $0.50. The average on-farm price of bermudagrass was the same in 2018.

Zoysiagrass prices were among the highest of all turfgrasses. The average price on the farm was $0.44 per square foot (only St. Augustinegrass was greater at $0.45) and ranged from $0.35 to $0.59. The average price delivered to an urban market or within 100 miles of the farm was $0.50 and ranged from $0.37 to $0.64. The average on-farm price of zoysiagrass increased by nearly 8% from 2018.

Centipedegrass prices in 2019 ranged from $0.19 to $0.36 per square foot and averaged $0.27. The price, when delivered, ranged from $0.18 to $0.38 and averaged $0.29. The average on-farm prices for centipedegrass increased about 12% compared to 2018.

St. Augustinegrass prices in 2019 ranged from $0.36 to $0.55 per square foot and averaged $0.45. The price, when delivered, ranged from $0.38 to $0.59 and averaged $0.48. St. Augustine on-farm prices were 36% higher than last year’s.

Tall fescue prices in 2019 ranged from $0.26 to $0.40 per square foot and averaged $0.33. The price, when delivered, ranged from $0.31 to $0.39 and averaged $0.36. The average on-farm price of tall fescue was the same as last year.

The mix of tall fescue and Kentucky bluegrass sod prices in 2019 ranged from $0.26 to $0.37 per square foot and averaged $0.33. The price, when delivered, ranged from $0.31 to $0.39 and averaged $0.35. The on-farm prices increased by 14% compared to 2018.

Kentucky bluegrass sod price in 2019 ranged from $0.32 to $0.35 per square foot and averaged $0.34. The price, when delivered ranged from 0.35 to $0.38 and averaged $0.36. This is an 8% decrease in the on-farm price compared to 2018.

Figure 2 provides a five-year perspective of sod prices showing fluctuations of particular species since 2015. Except for St. Augustinegrass sod prices, there have been no major fluctuations over this period of time.

Projected Price Increases

All the surveyed growers forecasted sod price to remain steady or increase in 2019. The majority of sod producers predict that sod prices will remain steady in 2019. A few producers predict price increases for particular grasses. The percentages of producers with expectations for price change in each grass is as follows:

• Bermudagrass — 24% expect increases, 76% remain steady, none expect prices to decrease
• Zoysiagrass — 8% expect increases, 92% remain steady, none expect prices to decrease
• Centipedegrass — 7% expect increases, 93% remain steady, none expect prices to decrease
• Augustinegrass — 13% expect increases, 87% remain steady, none expect prices to decrease
• Tall fescue — 33% expects price increases, 66% remain steady, none expect prices to decrease
• Tall fescue + Kentucky bluegrass — 36% expects price increases, 63% remain steady, none expect prices to decrease
• Kentucky bluegrass — 29% expects price increases, 71% predict prices to remain steady, none expect prices to decrease.

Proprietary Grass

In 2019, 47% of the surveyed growers reported that they grew some proprietary grasses on their farm. This is similar to the response recorded in previous years. The average percentage of their grasses that were proprietary was 30% with a reported range from 0 to 70%.

Certified Grass

In 2019, 68% of the growers surveyed grew some certified sod. The average amount of certified grass reported by these farmers was 55% of their total sod acreage. Fifty-six percent of these producers charged more for certified grass—$0.02 to $0.10 more per square foot.

Freight

Delivery charges are based on a flat rate for 37% of respondents and a per mile basis for 63%. Freight rates per mile shipped to the closest urban market ranged from $2.00 to $4.40 per mile and averaged $3.58 per mile. Six sod farms reported flat freight rates of $100 to $300 per shipment (mean of $208), though these rates could vary depending on other factors. Thirty-two percent of the respondents indicated that freight prices are included in price quotes to customers whereas 68% invoiced freight separately. Ninety-four percent of respondents indicated they did not charge an unloading fee. One sod producer charged a $75 unloading fee. Ninety percent of respondents indicated they make additional drops on loads. The low-end charge for additional drops on a load was $30 and the high-end charge was $175. Two respondents reported $50 and two reported $100. Several reported that the charge was dependent on the distance between drops and that charges may be divided between buyers. Some also added a minimum drop fee (e.g., $35) plus a mileage rate (e.g., $4.00/mile). The average cost for additional drops was $87.

Fuel Surcharge

No producers indicated that they add a fuel charge. In the previous year, 8% of surveyed producers indicated that they add a fuel surcharge. It appears that fuel prices may be rising, so a mid-year rise in fuel costs could result in significant increases in production and delivery expenses.

Price Changes

When asked how often producers adjust their sale prices, 53% indicated they adjust their prices yearly whereas 47% make adjustments when needed. No respondents indicated that they adjust prices monthly or quarterly.

Credit Card Convenience Fee

A survey question related to credit card sales was added after some respondents had already completed their survey. Of the nine producers who responded after this question was added, none reported that they charge a credit card convenience fee.

Sales by Industry Segments

Table 2 provides an indication of the industry segments where sod is sold. Surveyed producers estimated that landscape contractors (64.7%) constituted the largest segment. The next highest group was sports/athletics with nearly 15%, followed by homeowners at 10.3%. Golf courses were just under 5% with brokers at 3.7% and retail garden centers at less than 2%. The largest changes compared to previous years are the increase in sports/athletic turf sales.

Acreage in Production

Of the survey respondents, 16% indicated that they reduced sod production acreage during 2018. The average decrease was 11%. No respondent indicated that they would have a reduction in 2019. Seventy-four percent indicated that they had increased acres during the last three years. The average percentage increase was 17%.

Several questions related to employee numbers and sod sales were added to this year’s survey for the second year. These data were collected as a requirement for the North Carolina Department of Agriculture and Consumer Services grant that was awarded to NCSPA.

Employees

The average number of full-time employees at these sod production operations was 13 employees. Of the 18 operations that responded, the number of full-time employees ranged from one to 62. The average number of seasonal employees ranged from zero to 18, with an average of four.

Total Sod Sales

Total sod sales for the 15 operations that reported data ranged from $75,000 to $6 million. The average sod sales were $1.76 million (a 27% increase from 2018 mean sales). The mean value was influenced by a few larger operations. There were three operations with sales greater than $3 million and four with annual sales less than $600,000. Twenty-six percent of the producers indicated their sales increased in 2018, whereas 26% had a decrease and 47% reported sales stayed the same. Several respondents commented that damage from tropical storms significantly decreased fall sales.

Summary

With five years of data, this year provided an opportunity to look at price trends for each of the turfgrass species. Following several years of reducing acreage due to poor sod sales (largely due to minimum new construction), the last five years have been years for good growth in production, which has allowed some increases in sod prices. Annual weather events also can impact regions, such as the heavy rainfall that occurred over parts of North Carolina following tropical events in 2018. A few producers commented that their sales time was cut short due to fall storms and resulting damage to their turfgrasses. Annual data provides some indication of sod supply and price in the near future. The total acreage of sod seems steady with a small amount of growth. Most grasses seem to be in good supply for 2019; however, there are potential shortages of some grasses. The bulk of sod sales (>64%) are to landscape contractors. It may be important to provide sod supply and relative pricing information to this group, especially in years when supply is limited or prices are expected to increase.