The recovery continues

In late December, the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) revealed horticulture operations sold a total of $13.8 billion in floriculture, nursery and specialty crops in 2014, up 18 percent since 2009. The number of horticulture operations in the United States increased 8 percent during this time to 23,221. The data was presented in the 2014 Census of Horticultural Specialties report.

The increase points to market correction, says Hayk Khachatryan, an assistant professor and extension economist at the University of Florida’s Food and Resource Economics Department and Mid-Florida Research and Education Center.

“The 18 percent growth rate is not a big surprise given that the previous census collected data immediately after the 2007-2009 recession. Part of this double-digit growth is due to market correction,” he says.

As the economic recovery continues, several factors have contributed to the growth in the green industry, Khachatryan says.

“An increase in consumer confidence, which translates into more expenditures, as well as increases in new residential and commercial construction, low interest rates and easier consumer access to credit, all played a factor in the increased sales of horticulture products,” he explains.

While the growth in the industry is noteworthy, Khachatryan cautions growers to take key steps to avoid falling into another situation of overproduction and learn lessons from the recent recession.

“Adopting better inventory techniques will be useful in understanding market demand dynamics to avoid over-supply situations,” he says.

Top crops

The top commodities sold in 2014, and compared to 2009, were:

• Nursery stock, $4.27 billion combined wholesale and retail sales, up 11 percent
• Annual bedding/garden plants, $2.57 billion combined wholesale and retail sales, up 11 percent
• Sod, sprigs and plugs, $1.14 billion combined wholesale and retail sales, up 30 percent
• Potted flowering plants, $1.08 billion combined wholesale and retail sales, up 24 percent
• Potted herbaceous perennials, $945 million combined wholesale and retail sales, up 12 percent
• Food crops under protection, $797 million combined wholesale and retail sales, up 44 percent

Within the nursery stock category, the top five crops based on total sales were:

• Broadleaf evergreens, $807 million
• Fruit and nut plants, $755 million
• Deciduous shrubs, $677 million
• Coniferous evergreens, $568 million
• Deciduous shade trees, $562 million

Top states

Horticulture production in 10 states accounted for 65 percent of all U.S. horticulture sales in 2014. The top five states that led the nation in sales were California ($2.88 billion), Florida ($1.80 billion), Oregon ($932 million), Michigan ($645 million) and Texas ($594 million). And the states that rounded out the list were North Carolina ($571 million), Ohio ($392 million), Arizona ($389 million), Washington ($366 million) and New Jersey ($356 million).

Location and innovation have helped increase sales for New Jersey nursery owners, says Dominick Mondi, executive director of the New Jersey Nursery and Landscape Association.

“New Jersey growers are perfectly located to serve the large Northeast market, and the ideal growing conditions in the southern part of the state allow for diverse plant production,” Mondi says. “New Jersey growers have also not sat on their hands during the economic recovery. Our growers have found creative ways through partnerships, mechanization, and developing marketing channels that have allowed them to grow.”

Thanks to a surge in new construction in Florida, the state is experiencing a renewed horticulture market.

“Florida has long been the second-largest nursery crop production state in the nation. As a storied destination state, robust population growth has returned,” says Ben Bolusky, CEO at the Florida Nursery, Growers & Landscape Association. “In turn, residential and commercial construction has rebounded and it is spurring sales of trees and landscape material. Nationally speaking, a staggering lion’s share of tropical foliage and houseplants are produced in Florida. We are experiencing a healthy spike in sales of these plants to retailers and garden centers throughout the country. Even in the dead of winter, it seems everyone yearns for a little bit of sunny Florida inside their homes.”

Oregon led the nation in sales of coniferous evergreens ($129 million), deciduous shade trees ($114 million) and deciduous flowering trees ($50 million), says Curt Kipp, spokesman for the Oregon Association of Nurseries.

“An improving economy and a strong housing market are driving increased demand for plants,” Kipp says. “Homebuilding in particular helps drive demand for deciduous shade trees, deciduous flowering trees and conifers.”

Oregon’s water quality and climate help keep the state as one of the top nursery crop producers, Kipp says.

“Oregon is a great place for growing a wide variety of top-quality plant material. We have innovative growers, excellent water sources and an ideal climate with an early growing season, but also the needed winter dormancy so plants and trees come out of the chute strong,” Kipp adds.

More than plants

Other key findings from the 2014 Census of Horticultural Specialties report include:

• Total industry expenses were up 16 percent since 2009, with labor being the largest, accounting for 37 percent of total expenses in 2014.
• Food crops grown under cover gained in prominence as the number of operations engaged in this practice increased 71 percent to 2,521.

Labor costs ranking as the largest expense is certainly no surprise to the industry. But as the labor pool shrinks and gets more expensive, it will continue to affect profits.

“Labor is one of the most important issues facing horticultural producers, and given the current situation with seasonal worker related regulation, labor problems will not disappear in the near future,” Khachatryan says. “Increased expenses [of any type] at individual producer level translate into narrower margins.”

For more: View the entire census report at http://1.usa.gov/1SgqHMl.