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Overview of the
Green Industry
Special thanks for some of these slides to
Dr. Charles R. Hall
Professor & Extension Economist
Texas A&M University
Outline
1. The economic importance of the GREEN industry.
2. Interesting technological advancements that have caused structural changes in the green industry.
3. Marketing systems in the GREEN industry.
Largest flower auction in the world
Dutch-based – Amsterdam
See highlights
Aalsmeer Flower Auction
Source: Images from Aalsmeer Dutch auction
Dutch Auction
• Auctioneer starts with one high price and goes down until there is a bid – first bid takes the lot.
• Advantage of moving large number of lots of flowers quickly
Green Industry
• Also referred to as “environmental horticulture”
– Nursery & floriculture
– Sod
– Greenhouse for ornamental and annual vegetable/tobacco plant stock
– Landscaping services
• Markets include– Home construction/home improvement
– Golf courses, parks, outdoor sport facilities, public spaces
– Retail garden centers, florists
Kentucky’s “green” industry includes …Nursery and greenhouse growers/auctions, firms providing landscape services such as contracting and maintenance, and retail operations including independent garden centers, home improvement centers, and mass merchandisers/chain stores.
The nursery and greenhouse industry comprises the fastest growing segment of U.S.
AgricultureNumber of nursery and greenhouse farms continue to increase
Grower cash receipts increasing at ~ $500 M per year
Third most important sector in U.S. crop agriculture
Seven states account for 2/3 of all U.S. nursery crop production--- CA, TX, FL, NC, OR, OH, MD
Perspective on Nursery, Greenhouse and Sod Industry
U.S. value of agriculture production
U.S. value of all crops
U.S. value of nursery, greenhouse, sod
$202 Billion
$ 143 Billion
$ 17 Billion
Note: Source: 2007 Census of Ag; 2009 Census of Horticulture Specialties.
1.1. Farm sales for nursery & Farm sales for nursery & greenhouse for U.S.: $14.5 billion greenhouse for U.S.: $14.5 billion in 2012 ($16.6 billion in 2007)in 2012 ($16.6 billion in 2007)
2.2. $6 billion in floriculture crops $6 billion in floriculture crops
3.3. $5.1 billion nursery stock$5.1 billion nursery stock
4.4. $1 billion in sod$1 billion in sod
5.5. 68% of cut flowers are imported, 68% of cut flowers are imported, primarily from Columbia and primarily from Columbia and EcuadorEcuador
6.6. California, Florida & Hawaii major California, Florida & Hawaii major U.S. producersU.S. producers
85 sod farms: 52% acres, 53% sales
Recession Impacts
• Highly dependent on housing starts
• Consumer disposable income
• Major industry contraction during recession
National Nursery and Greenhouse Sales2000-2014
Source: USDA/ERS Farm Income and Wealth Statistics, 2014Economics
Economics
Greenhouse & Nursery Sales ($million)
2007 2012 change Percent change
KY 87.748 79.283 -8.465 -9.6%
OH 444.855 437.723 -7.132 -1.6%
IN 126.241 110.838 -15.403 -12.2%
IL 435.073 332.104 -102.969 -23.7%
TN 325.079 294.740 -30.339 -9.3%
Natl 16632.734 14517.593 -2115.141 -12.7%
Source: 2012 Census of Agriculture
Business Issue % Rating as #1 Issue
Excessive Overhead 21
Recession impact on premium/specialty products18
Labor management & availability 17
Uncertainty of government regulation 16
Retaining key buyer relationships 13
Retaining key personnel 10
Most Important Factors Facing Nursery Business During Next 2 Years
Source: Woods, 2011 Nursery Buyers Survey
Output of US Green Industry Sectors, 1987-2003
0
5
10
15
20
25
30
35
40
87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03
Bill
ion
Do
llars
(d
efla
ted
200
4)
Landscape &HorticulturalServices
Nursery &Greenhouse
Lawn & GardenEquipmentManufacturing
RetailNurseries &Garden Stores
Year Employees Annual PayrollMillion $
Firms
2011 5128 146.7 876
2010 4931 135.7 898
2009 5025 136.8 889
2005 4801 124.0 839
2000 4186 76.8 702
Landscaping Services in Kentucky
Source: U.S. Census Bureau, County Business Patterns
Demand factors impacting nursery products and services
1. New construction (and mortgage rates)
2. Disposable income
3. Home improvement trends
4. Multiple worker households
Estimates of the Total Housing Inventory for the United States: 2000 to Present
thou
sand
s recession
Source: U.S. Census Bureau; Housing Vacancies and Homeownership
2. Technological advancements 2. Technological advancements in the in the GREENGREEN industry that industry that have revolutionized plant have revolutionized plant production and marketing production and marketing systems.systems.
All of these technologies have been important, but…
the technological driving force that is shaking things up the most today in the
Green Industry is…
INFORMATION technology!INFORMATION technology!
Allied Input Suppliers
Shipping Point Firms- nursery growers- greenhouse growers- combination growers- B2B alliances
Re-Wholesale Distribution Centers
Infomediaries
RetailRetailHome Centers 38% Garden Centers 32%Mass Merchants 30%
Final ConsumersFinal Consumers
E-commerceE-commerce
Direct toConsumer
LandscapeLandscape
Contractors &Maintenance
Flowchart of the Green Industry Marketing System
Allied Input Suppliers
Shipping Point Firms- nursery growers- greenhouse growers- combination growers- B2B alliances
Re-Wholesale Distribution Centers
Infomediaries
RetailRetailHome Centers 38% Garden Centers 32%Mass Merchants 30%
Final ConsumersFinal Consumers
E-commerceE-commerce
Direct toConsumer
LandscapeLandscape
Contractors &Maintenance
The NEW Green Industry Structure