Although the “green industry” is the fastest growing sector in U.S. agriculture and the second most important in terms of economic output, it often is overlooked, a Rutgers University professor and farm management specialist says.
“The U.S. leads the world in the production and marketing of these floriculture and nursery crops,” Robin Brumfield, said at USDA's annual Agricultural Outlook Forum at Arlington, Va.
But, he says, after a decade of rapid growth, “a phenomenal 10 percent per year in the 1980s and about 5 percent in the 1990s,” it appears the industry is now “in a mature market, with slower growth.”
Even so, “Tremendous opportunity for growth still exists in the green industry. Unlike other agricultural commodities, which are limited by the size of the consumer's stomach, the growth potential for the green industry is almost unlimited.” In 1997, consumers spent $16 billion retail on floriculture, the 12th highest in the world in terms of per capita expenditures ($59).
Americans are by far the leading consumers in the world of outdoor landscaping plants, in 1997 spending $37 billion on nursery crops ($138 per capita).
The green industry, which includes a wide variety of plants, shrubs, trees (including Christmas trees) and transplants for commercial truck crop production, has represented 11 percent or more of gross cash farm receipts, and despite a slow economy, the wholesale value of these crops has managed to grow ($14.2 billion in 2001).
Additionally, a University of Georgia study shows, the industry is a major employer, second only to the combined crop sector that includes vegetables, fruits, tree nuts, and hay/pasture in person years.
Many of the industry's problems, Brumfield says, relate to economic and environmental constraints, including water/soil quality, weather/pest-related stresses, aesthetic/biological requirements, equipment/labor/chemical costs, and demand for plants.
“Another important consideration is the comparative advantages of producers in some regions of the U.S.”
The leading 10 states' percentage of total grower cash receipts for greenhouse and nursery crops has remained stable, at between 65-70 percent, over the last 40 years.
Production has increased at a faster pace in the West and the South. Currently the top four states — California, Florida, Texas, and North Carolina — account for half the wholesale cash receipts in the green industry. California is by far the leader, with 21.3 percent.
“Unlike farmers growing field crops, greenhouse firms bear the entire price, market, and production risk, since these crops have no government support programs,” Brumfield notes. “The shift from a production-driven economy has resulted in numerous niche markets, which can be exploited by local producers.
The number of U.S. floriculture producers reached a peak of 12,713 in 1997, declining to 10,965 in 2001, attributable to consolidation in the industry, the slow economy, and downward price pressures from “big box” retailers in mass markets.
Nearly 60 percent of growers had sales of less than $100,000 and accounted for only about 18 percent of the total growing area.
“The green industry is clearly still a bright sector of U.S. agriculture,” Brumfield says. “It has shifted from a producer-driven sector to a consumer-driven sector.
“The world is a global marketplace, and competition from other countries with lower costs or more favorable exchange rates, is putting downward price pressure on products.
“In an age of surpluses rather than shortages, producers can no longer grow the nursery and floriculture crops that they like because they are easy to grow and profitable. They have to take into account consumer demands for quality, convenience, service, and low prices. Many produces are farmers at heart and have a hard time thinking of marketing from a consumer perspective.”
But, Brumfield says, the industry is becoming more market-oriented and producers are now developing their own Web pages, creating value-added products, considering direct retailing to capture more of the consumer dollar, and moving toward year-round production.
National branding and advertising campaigns within the industry to promote national brands have helped create premium markets. Additionally, many growers have successfully promoted their own brands or formed alliances with other growers to do so.
“Producers are becoming more segmented between those producing for the big chain stores and those who direct market or sell to independent, upscale garden centers.
“Growers who want to survive the tough competition in this market are putting employees in the stores to maintain plants and create attractive displays; they are also focusing on quality, service, and more frequent deliveries.”