the state of the green industry: current trends · the state of the green industry: current trends...

The State of the Green

Industry: Current Trends

Dr. Marco A. Palma Assistant Professor and Extension Economist

Texas AgriLife Extension Service

Texas A&M University System

[email protected]

IQDHO. January 26, 2012. Quebec.

http://aggie-horticulture.tamu.edu/faculty/hall/s1021/austin/index.html

Outline

Why is the National Nursery Survey

Important?

The survey design and implementation

General results

Economic Impacts

Advertising and Promotion

Turning Point clickers

TEST QUESTION

http://www.turningtechnologies.com/audienceresponseproducts/responseoptions/responsecards/

Why is this important?

The state of the Industry – size and growth

Visibility and impact in consumers and

policy makers

Identify current practices and market

trends – opportunities

You can be more informed; and hence

Make more informed business decisions

Why is this important?

USDA collected data and prepared reports

The National Agricultural Statistical

Service (NASS) conducted the Nursery and

Floriculture Survey

Economic Research Service (ERS)

prepared the Nursery and Floriculture

Outlook and Yearbook

NASS

Floriculture crops surveyed went from 36

to 15 states in 2005

Nursery crops included 17 states

Horticultural specialties – every 5 years

Only 1 out of 25 NASS advisory committee

is representing the horticulture industry

7

Current Status – Limited

USDA reports

4 National Surveys conducted to date

1989 - 23 states - 75% U.S. grower receipts




Trade Flows and Marketing Practices

within the

United States Nursery Industry: 2003

Southern Cooperative Bulletin 404, 2005http://economics.ag.utk.edu/pubs/crops/SCB404.pdf

John Brooker, David Eastwood, Charles Hall and Kirk Morris

The University of Tennessee

Alan Hodges and John Haydu

University of Florida

Trade Flows and Marketing Practices

within the

United States Nursery Industry: 2003

Southern Cooperative Bulletin 404, 2005http://economics.ag.utk.edu/pubs/crops/SCB404.pdf

John Brooker, David Eastwood, Charles Hall and Kirk Morris

The University of Tennessee

Alan Hodges and John Haydu

University of Florida

19881988

The survey

The survey Questionnaire adapted from

previous surveys for 2003,

1998, 1993, and 1988.

It incorporated 33 questions to

collect information about:

Sales

Employment

Production and marketing

practices

Regional trade

Influencing factors

The survey

Compiled lists of growers in all

50 states from National Plant

Health Board, State Departments

of Agriculture, grower

associations, and business

databases (n=38,000)

Stratified random sample for mail survey

(n=15,000); supplemental Email sample in 12

states (n=2,900).

Survey procedures

Conducted two mailings in June and July,

2009 with postage paid envelopes

Received – 3,044 valid responses

Response rate = 17%

Total sales reported = $4.45 billion

Employment = 48,833 (fulltime, part time)

Regions


QUESTION # 3


0.2%

0.7%

0.9%

2.6%

5.5%

6.3%

15.7%

24.4%

43.7%

0% 10% 20% 30% 40% 50%

1800-99

1900--19

1920--39

1940--59

1960-69

1970--79

1980--89

1990--99

2000--08

Percent of Firms

Year Established

434

774

481

644

332

216

115

45

0 200 400 600 800

Pacific

Southeast

Midwest

Northeast

Appalachian

Southcentral

Mountain

Great Plains

Number of Firms

Respondents by Region

0 2,000 4,000 6,000 8,000 10,00012,00014,000

Pacific

Southeast

Midwest

Northeast

Appalachian

Southcentral

Mountain

Great Plains

Number of Employees

Employment Reported by Region

Permanent

Temporary

1,113

1,057

646

573

475

396

122

63

0 200 400 600 800 1,000 1,200

Pacific

Southeast

Midwest

Northeast

Appalachian

Southcentral

Mountain

Great Plains

Million Dollars

Annual Sales Reported by Region

1.8%

2.2%

3.9%

5.7%

4.6%

4.5%

2.2%

9.7%

5.5%

3.6%

13.3%

7.0%

4.1%

31.9%

0.0%

0% 10% 20% 30% 40%

Share of Total Sales Reported

Firm Size Distribution by Annual Sales

50%

9%

8%

6%

3%

2%

1%

2%

1%

0%

1%

0%

0%

1%

15%

0% 10% 20% 30% 40% 50% 60%

< 0.25

0.25--0.49

0.50--0.99

1--1.9

2--2.9

3--3.9

4--4.9

5--9.9

10--14.9

15--19.9

20--29.9

30--39.9

40--49.9

50+

Not reported

Share of Respondents

Million Dollars

Region Number Survey

Respondents

Business

Population

Validated

Population

Expanded Sales

(million$)

Expanded

Employment

(permanent &

temporary jobs)

Appalachian 332 3,509 2,025 1,947.9 25,273

Great Plains 45 290 150 247.8 2,966

Midwest 481 5,148 2,888 3,516.5 49,142

Mountain 115 1,069 516 436.0 8,181

Northeast 644 8,060 4,610 4,550.9 45,194

Pacific 434 6,582 3,224 8,353.0 59,564

Southcentral 216 2,648 1,216 2,822.6 12,943

Southeast 774 10,708 5,174 5,264.0 59,677

Total All

Regions 3,041 38,014 19,803 27,138.7 262,941

Summary of U.S. Nursery Industry Population, Expanded

Sales and Employment, By Region, 2008

Validated business population excludes inactive and disqualified firms in telephone survey.

Expanded estimates compiled by state and firm size strata.

State Sales State Sales

CA 6,681.8 MO 182.8

FL 3,520.9 NE 181.3

TX 1,350.4 CO 171.0

PA 1,235.0 WI 162.3

GA 1,013.5 SC 151.1

NY 927.7 AK 150.1

NJ 916.7 KY 147.1

LA 872.0 MS 146.3

OH 859.7 VT 141.3

IL 830.6 OK 98.2

MI 715.7 AR 96.9

VA 661.1 MA 90.4

NC 588.0 MT 82.5

WA 565.0 ME 74.0

TN 543.9 AZ 67.6

OR 480.6 ID 66.8

HI 475.6 RI 44.5

AL 432.2 KS 37.4

NH 423.8 UT 30.9

NM 405.2 SD 27.1

CT 377.9 WY 11.1

MD 309.6 DE 10.0

MN 308.7 WV 7.8

IN 239.5 NV 6.1

IA 217.2 ND 1.9

Sales by State in Million $


QUESTION #4


11.8%

5.7%

6.4%

3.4%

7.0%

2.2%

3.0%

3.6%

5.3%

9.8%

4.1%

7.0%

2.7%

2.6%

6.1%

5.3%

3.5%

10.5%

0% 5% 10% 15%


37.5% 28.2%

25.7%

19.5%

34.5%

16.5%

19.7%

18.2%

26.2%

22.9%

20.4%

18.3%

12.9%

12.2%

12.2%

6.5%

9.8%

15.0%

0% 10% 20% 30% 40%

Deciduous shade and…

Deciduous shrubs

Broad-leaved evergreen shrubs…

Narrow-leaved evergreen shrubs

Evergreen trees

Azaleas

Vines and ground covers

Roses

Herbaceous perennials

Bedding plants – flowering …

Bedding plants – vegetables, …

Flowering potted plants

Christmas trees (live or cut)

Fruit trees

Foliage

Sod

Propagated material (liners,…

Other plants


Plant Types Produced/Sold

65.4%

12.9%

1.3%

8.3%

1.1%

2.6%

8.5%

0% 20% 40% 60%


Nursery Product Forms

62.4%

28.7%

4.4%

13.3%

4.9%

5.4%

14.0%

0% 20% 40% 60%

Containerized

Balled and burlapped

Field grow bag

Bare root

Balled and potted/processballed

In-ground containers(including pot-in-pot)

Other types (cut trees, budwood, scions, seeds,…


5.8%

43.3%

43.7%

2.6%

4.4%

0.3%

0% 10% 20% 30% 40% 50%


16.9%

55.8%

73.5%

11.4%

17.5%

0.8%

0% 20% 40% 60% 80%

Trade show orders

Telephone orders

In-person orders

Mail orders

Internet

Other method(s)


Sales Transaction Methods Used

9.3%

7.5%

21.9%

7.5%

30.8%

21.3%

1.8%

0% 10% 20% 30% 40%


7.5%

8.2%

34.1%

11.5%

43.5%

37.9%

2.2%

0% 10% 20% 30% 40% 50%

Mass merchandisers

Home centers

Single location gardencenters

Multiple locationgarden centers

Landscape firms

Re-wholesalers

Other type(s)


Market Channels Used


QUESTION #5


80.5%

36.6%

10.4%

15.5%

3.7%

0% 50% 100%


85.6%

68.9%

53.5%

28.0%

33.3%

0% 20% 40% 60% 80% 100%

Repeat customer sales

Negotiated sales

Brokerage sales

Contract sales

Export sales


Other Sales Practices Followed

12.1%

17.4%

4.4%

0.8%

7.9%

0% 5% 10% 15% 20%

Other producers

Retail gardencenters

Massmerchandisers

Cooperatives

Other(s)

Percent of Respondents

Types of Buyers for Forward Contracting

74.1%

51.5%

48.2%

66.0%

28.9%

2.2%

8.7%

21.0%

30.7%

33.6%

24.1%

49.5%

31.5%

62.5%

34.4%

14.7%

17.7%

31.0%

8.3%

15.5%

3.8%

33.6%

0% 20% 40% 60% 80%

Remove infested plants

Alternate pesticides to avoid chemical…

Elevate or space plants for air circulation

Use cultivation, hand weeding

Disinfect benches/ground cover

Use sanitized water foot baths

Soil solarization/sterilization

Monitor pest populations with tarp or sticky…

Adjust pesticide application to protect…

Use mulches to suppress weeds

Beneficial insect identification

Inspect incoming stock

Manage irrigation to reduce pests

Spot treatment with pesticides

Ventilate greenhouses

Use of beneficial insects

Keep pest activity records

Adjust fertilization rates

Use screening/barriers to exclude pests

Use bio pesticides/ lower toxicity

Treat retention pond water

Use pest resistant varieties

Percent of Respondents IPM Practices Used

57.9%

52.5%

35.5%

24.8%

22.4%

8.2%

54.6%

5.5%

14.8%

8.4%

4.1%

8.5%

3.4%

2.1%

5.8%

10.2%

4.5%

7.1%

6.1%

2.7%

5.2%

6.8%

5.2%

4.4%

6.1%

0% 10% 20% 30% 40% 50% 60% 70%

Word processing

Accounting/cost analysis

Inventory

Financial investments/analysis

Internet commerce (B2B or B2C)

CD’s for marketing

Communications – email

Landscape design (CAD)

Production scheduling

Greenhouse production controls

Digital imaging for disease…

Bar coding

Other function(s)


Computer Practices Used Currently or Planned Within 5 Years

Using Now

Planned

26.6%

10.3%

20.4%

56.1%

0% 10% 20% 30% 40% 50% 60%

Natural surface

Recaptured sources

City (municipal)

Wells


Irrigation Water Sources Used

59.5%

37.5%

4.5%

18.7%

0% 10% 20% 30% 40% 50% 60%

Overhead

Drip

Sub-irrigation(ebb/flood)

Other method(s)


Irrigation Water Application Methods Used

48.9%

11.7%

23.0%

35.4%

34.0%

30.2%

16.3%

13.6%

2.8%

17.5%

22.9%

29.6%

26.5%

28.4%

24.7%

28.5%

31.1%

0% 10% 20% 30% 40% 50% 60% 70%

Cost of production

Inflation

Other growers’ prices

Grade of plants

Market demand

Product uniqueness

Inventory levels

Last year’s prices

Other factor(s)


Factors Determining Product Prices

VeryImportant

Important

9.7%

8.5%

15.3%

15.1%

17.8%

27.4%

22.1%

12.8%

14.0%

21.7%

18.3%

23.5%

17.9%

20.6%

0% 10% 20% 30% 40% 50%

Debt capital

Equity capital

Marketing

Personnel

Production

Transportation

Plant offerings


Factors Affecting Geographic Trading Area

VeryImportant

Important

33.6%

14.3%

43.8%

19.9%

20.5%

12.0%

10.9%

24.2%

20.4%

16.0%

16.5%

12.6%

19.6%

25.3%

21.3%

24.5%

25.5%

18.9%

18.7%

18.8%

27.1%

26.0%

20.9%

20.7%

16.7%

21.2%

0% 10% 20% 30% 40% 50% 60% 70%

Weather uncertainty

Land

Market demand

Labor

Water supply

Debt capital

Equity capital

Own managerial expertise

Competition/price undercutting

Environmental regulations

Other government regulations

Ability to hire competent management

Ability to hire competent hourly…


Factors Impacting the Business

VeryImportant

Important

Report available at http://www.greenindustryresearch.org

or http://saaesd/ncsu.edu/docs/scsb411.pdf

July 2010

http://www.greenindustryresearch.org/

http://saaesd/ncsu.edu/docs/scsb411.pdf


QUESTION # 6


Promotion and Advertising

Promotion and Advertising aim to either

increase demand or sales of a firm

Generic vs. Brand Advertising

Do Green Industry Promotions increase

firm level sales?

Type of promotion

Firm size

12.5%

7.5%

4.5%

1.3%

3.5%

23.2%

3.1%

3.2%

20.9%

14.6%

0% 5% 10% 15% 20% 25%

Share of Total Advertising Expenses Reported

24.9%

18.5%

8.1%

3.9%

7.0%

17.4%

12.7%

12.8%

16.1%

23.8%

0% 5% 10% 15% 20% 25% 30%

Internet websites

Yellow pages

Radio/TV

Billboards

Gardening publications

Catalogs (print or CD)

Trade journals

Newsletters

Trade shows

Other media form(s)


Advertising Media Used

Elasticity Benefit Cost Ratio

Firm Size Internet

Printed

materials Mass Internet

Printed

materials Mass

Small ($10K-$250K) 0.0538 0.1072 0.1162 5.9 4.5 4.2

Medium ($250K-1Mil) 0.0253 0.0395 0.0236 7.5 1.5 1.7

Large ($1-$5 Mil) * 0.0511 0.0571 * 2.4 4.4

Very Large ($5 Mil +) * * 0.1922 * * 5.8

All firms combined * 0.1625 0.2854 * 6.3 10.2

* Promotional expenditures were found to have no statistically significant effect on green industry sales.

Advertising Media Returns for every $1 invested

38

Economic

Impacts of the

Green Industry

http://www.dreamstime.com/register?jump_to=http://www.dreamstime.com/stock-images-dollar-sign-clipart-profits-up-image2184274

Economic Impacts

Industry Group / Sector (NAICS)

Sales Revenue

Direct Output

Total Output Impact

Payroll Total

Earnings Impact

Total Value Added Impact

Direct Employ-

ment

Total Employ-

ment Impact

------------------------------ Million Dollars---------------------------- Fulltime & Part-time Jobs

Production and Manufacturing Group 35,386 35,386 52,572 8,773 13,145 32,128 277,736 468,692

Nursery and greenhouse production (1114) 27,139 27,139 40,941 8,268 11,986 27,099 262,941 436,462

Lawn and garden equipment manufacturing

(333112) 8,247 8,247 11,632 506 1,160 5,028 14,795 32,230

Horticultural Services Group 58,276 58,276 92,830 19,129 30,151 54,521 631,511 1,123,428

Landscaping services (56173) 53,910 53,910 86,661 17,389 27,809 50,283 596,896 1,075,343

Landscape architectural services r (54132) 4,365 4,365 6,169 1,740 2,342 4,238 34,615 48,085

Wholesale and Retail Trade Group 82,452 23,740 29,856 7,974 9,866 20,511 292,962 357,515

Building material and garden equipment and supplies stores (444)

39,004 11,896 14,121 4,609 5,300 9,706 163,458 190,839

Miscellaneous store retailers (453) 7,045 3,071 4,047 874 1,181 2,750 47,175 59,829

Merchant wholesalers, durable goods (423) 8,681 2,087 2,985 670 945 2,064 12,355 19,218

General merchandise stores (452) 7,489 1,955 2,220 711 794 1,532 36,366 39,433 Merchant wholesalers, nondurable goods

(424) 11,568 1,921 2,852 470 752 1,975 9,570 15,732

Nonstore retailers (454) 3,368 1,455 1,878 279 409 1,278 7,408 12,170

Food and beverage (445) 2,451 706 823 252 288 567 12,785 14,074

Wholesale electronic markets, agents and brokers (425)

2,129 431 658 46 116 453 1,030 2,765

Furniture and home furnishings stores (442) 218 97 114 30 35 78 1,128 1,325

Gasoline stations (447) 292 57 81 10 17 54 612 920

Electronics and appliance stores (443) 90 26 30 9 11 21 420 467

Health and personal care stores (446) 77 23 28 10 11 19 350 403 Sporting goods, hobby, book, and music

stores (451) 40 15 18 5 6 12 305 339

Total All Industry Groups 176,113 117,402 175,258 35,876 53,162 107,160 1,202,210 1,949,635

Employment Contributions

Output Contributions

Value Added Contributions

43

Implications

What does this mean for the Green Industry?

Dr. Marco Palma

Assistant Professor and Extension Economist

Texas AgriLife Extension Service

Texas A&M University System

[email protected]

http://hbin.tamu.edu

Questions

mailto:[email protected]

http://hbin.tamu.edu/

the state of the green industry: current trends · the state of the green industry: current trends...

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