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.
Aalsmeer Flower Auction
Largest flower auction in the world
Dutch-based – Amsterdam
See highlights
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
1. Economic importance of the
GREEN industry.
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.
Agriculture
Number 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
Note: Source: 2007 Census of Ag; 2009 Census of Horticulture Specialties.
$202 Billion
$ 143 Billion
$ 17 Billion
1. Farm sales for nursery & greenhouse
for U.S.: $14.5 billion in 2012 ($16.6
billion in 2007)
2. $6 billion in floriculture crops
3. $5.1 billion nursery stock
4. $1 billion in sod
85 sod farms: 52% acres, 53% sales
5. 68% of cut flowers are imported,
primarily from Columbia and Ecuador
6. California, Florida & Hawaii major U.S.
producers
Recession Impacts
• Highly dependent on housing starts
• Consumer disposable income
• Major industry contraction during recession
National Nursery and Greenhouse Sales
2000-2014
Source: USDA/ERS Farm Income and Wealth Statistics, 2014
Economics
Greenhouse & Nursery Sales ($million)
2007
2012
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%
16632.734
14517.593
-2115.141
-12.7%
Natl
change Percent change
Source: 2012 Census of Agriculture
Economics
Most Important Factors Facing Nursery
Business During Next 2 Years
Business Issue
% Rating as #1 Issue
Excessive Overhead
21
Recession impact on premium/specialty products
18
Labor management & availability
17
Uncertainty of government regulation
16
Retaining key buyer relationships
13
Retaining key personnel
10
Source: Woods, 2011 Nursery Buyers Survey
Output of US Green Industry Sectors, 1987-2003
Landscape &
Horticultural
Services
Billion Dollars (deflated 2004)
40
35
Nursery &
Greenhouse
30
25
Lawn & Garden
Equipment
Manufacturing
20
15
Retail
Nurseries &
Garden Stores
10
5
0
87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03
Landscaping Services in Kentucky
Year
Employees
Annual Payroll
Million $
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
Source: U.S. Census Bureau, County Business Patterns
Demand factors impacting
nursery products and services
1.
2.
3.
4.
New construction (and mortgage rates)
Disposable income
Home improvement trends
Multiple worker households
• U.S. New Housing Starts: Where we came
from
•
Thousand Homes. Annual Rate Seasonally Adjusted.
2014-15 Housing Outlook
Housing starts trending upwards
*
Source: www.census.gov/construction/nrc/
thousands
Estimates of the Total Housing Inventory for the United
States: 2000 to Present
recession
Source: U.S. Census Bureau; Housing Vacancies and Homeownership
Daily Stock Prices 2008-2013
Lowes
Home Depot
Home improvement sector showing
recovery signs
2. Technological advancements in
the GREEN industry that have
revolutionized plant production
and marketing systems.
tissue culture and
plug production
biotechnology
container technology
slow-release and soluble
fertilization
automation technology
climate control
systems
irrigation technology
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!
examples of information
technology in green industry
precision agr. applications
bar code and scanner
technology
Flowchart of the Green Industry Marketing System
Final Consumers
Retail
Home Centers 38%
Garden Centers 32%
Mass Merchants 30%
Landscape
E-commerce
Contractors &
Maintenance
Direct to
Consumer
Re-Wholesale Distribution Centers
Infomediaries
Shipping Point Firms
- nursery growers
- greenhouse growers
- combination growers
- B2B alliances
Allied
Input Suppliers
The NEW Green Industry Structure
Final Consumers
Retail
Home Centers 38%
Garden Centers 32%
Mass Merchants 30%
Landscape
E-commerce
Contractors &
Maintenance
Direct to
Consumer
Re-Wholesale Distribution Centers
Infomediaries
Shipping Point Firms
- nursery growers
- greenhouse growers
- combination growers
- B2B alliances
Allied
Input Suppliers