Unit One – Characteristics of
Horticultural Industries
AEC 317
Fall 2013
Horticulture and
Horticulture Industries
The Horticulture Industry
 Nursery
 Fruits and nuts
 Greenhouse
 Vegetables
 Floriculture
 Grapes and wine
 Landscaping and
services
 Sod
Characteristics of Horticulture
Production and Marketing
1.
High input – high value
2.
Labor intensive
3.
Management intensive
4.
Capital intensive – including land
5.
Perishable products – fast moving supply chains determine quality
6.
Large number of horticultural “commodities” – specialty crops
7.
Annual and perennial cropping systems
8.
Relatively little contracting – cash markets dominate – fewer risk
management tools
9.
Production consolidation and specialization
10. Market segmentation
Netted apple trees
Trellised grapes
Comparative Labor Costs
Commodity
Annual labor $ per acre
Lettuce (iceberg)
$5,200
Raspberries
$4,900
Peaches
$4,100
Broccoli
$3,300
Blueberries
$2,000
Wine grapes
$1,600
Sweet potatoes
$970
Alfalfa
$47
Corn
$35
Sources: UC Davis (CA), U Georgia, and Iowa St Univ budgets
The Specialty Crop Problem
 IR-4 designation
 Production supply chains
 Pest management tools and scale economies
 Commodity-specific R&D and scale economies
The Perennial Crop Problem
 Capital budgeting
 Market response vs supply glut
 Industry coordination
 Production cycles (in nuts and some fruit)
 More on marketing orders later
Sweet cherries and olives
Where’s the futures market for
watermelons?
 Risk management limits for perishable crops
 Smaller volume of specialty products
 Difficult to forward contract – high number of production
and quality variables
 Significant direct contracting for processed products
 Increasing contracting for fresh
Increases in vegetable
consumption
Source: Vegetable & Melons Situation and Outlook, ERS, 2012
U.S. Vegetable Farm Cash
Receipts
Source: U.S. and State Farm Income and Wealth Statistics: Cash receipts, by commodity
groups and selected commodities, 1924-2011
1992-2002 Produce Acreage Changes (thousand acres)
0
+105
-25
-28
+3
+823
0
+1
0
-7
-9
+11
-7
-9
-92
-4
-1-1
-13
-5
+2
0 0 -2
-2
-11
-30+2
-12
-6
-5 -9 -5
+17
0
0
+5
+5
+34 0
-24
-2 -11 +45
-57
-2
-50
-69
1 to +10,000 acres gain
11,00 to 45,000 acres gain
> Source:
100,000 USDA
acres Census
gain of Agriculture 1992 –
Produce Acres in U.S.
Fruits and Nuts (2012)
Vegetables and Pulses (2011)
Share of Farm
Cash receipts
Share of Farm
Cash receipts
CA
63%
CA
36.6%
WA
12%
FL
9.4%
FL
10%
WA
6.4%
AK
6.4%
ID
5.4%
Source: Selected ERS Commodity Yearbooks
Market Segmentation
 Produce adapting to segmented U.S. consumer
 Organics and sustainable production systems
 Value-added products
 General growth in credence attributes
 Fair trade, local, eco-labels