Floriculture and Nursery Crops YEARBOOK – SUMMARY June 9, 2005 June 2005, ERS FLO-2005 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The complete report will be available electronically about 1 week following the summary release. ----------------------------------------------------------------- Floriculture Crop Sales Grow Faster Than Nursery Crops Wholesale receipts of greenhouse and nursery crop producers edged up less than 1 percent to $15.7 billion in 2004, boosted by the 2-percent gain in floriculture sales from 2003. The growth of nursery and other greenhouse crops was dampened by lower sales of cut Christmas trees as more artificial trees penetrate the market. The rebound in floriculture sales, after slipping in 2003, is attributed to increased demand for potted flowering plants, bedding and garden annuals and perennials, and propagative material, which more than offset declines in potted foliage plants for indoor or patio use, cut flowers, and cut cultivated greens. Imported cut flowers continue to supplant a larger percentage of domestic cut flower production. The small increase in total greenhouse and nursery crop sales in 2004 is noteworthy relative to the 3.7-percent pace of U.S. gross domestic product and private residential investment’s sharp 9.7- percent expansion. Indeed, personal consumption expenditures for flowers, seeds, and potted plants grew 3.8 percent to $19.5 billion in 2004 from $18.8 billion in 2003 (source: bea.doc.gov). A likely reason for the subdued demand for ornamental crops is the higher cost of energy, gasoline, and food, which reduce discretionary income. Another reason is the 10-percent increase in the value of imported cut flowers and nursery stock in 2004, which together comprise a growing share of their total supply. U.S. cut flower and nursery stock imports were up 16 percent and 5 percent, respectively, in 2004. The value of nursery stocks represents 49 percent of the combined $1.4-billion import bill. Close to half of nursery stock imports are from Canada, followed by the Netherlands, whose share is 27 percent. Canada supplies mostly live plants and trees, while the Netherlands ships flowering bulbs and tubers. Dutch tulip and lily bulbs grew significantly in import value and volume. In addition, imports of unrooted cuttings and slips of plants, which are grown further in the United States before final sales, and are largely from Costa Rica, Guatemala, and Mexico, increased 3 percent. However, live plants and trees, excluding cuttings and orchids, were down 3 percent in import volume as shipments from Canada and other sources dropped. Thus, the growth in import value of live plants and trees is accounted for by higher import prices. On the other hand, import prices of unrooted cuttings and orchid plants were both down despite more cutting shipments. The smaller quantity of imported orchids was supplanted by larger domestic production. As a net result, total U.S. floriculture and nursery stock import value, as a percentage of domestic grower receipts of the same products, is now at a record 8.8 percent, up from 7.5 percent in 2002 and 6 percent in 1991. The $6 billion worth of floriculture crops consumed in the United States in 2004 was up 4 percent from 2002--2 percent attributed to domestic production and 2 percent to net imports. Per- household consumption of floriculture crops is now at a record $54, up 10 percent from $45 in 1999. Higher spending on domestic flowering plants and other floral products, except cut flowers, is driven by consumer demand as the economy recovers and the housing market continues appreciating. Bedding and garden plants are responsible for most of the growth in floriculture sales in 2004. About half of the sales expansion of bedding and garden plants is accounted for by potted herbaceous perennials. While prices of imported ornamental crops are up--generated largely by the weaker dollar and higher transport and storage costs--prices of domestic floral plants are flat. Domestic cut flower prices are up slightly due to higher refrigeration and transport costs. But prices of potted flowering plants and bedding/garden plants are unchanged from 2003. Although estimated prices of annuals are down somewhat, prices of perennials are up 2 percent in 2004. Overall, consumer prices for floriculture crops inched up in 2004 largely because of higher import costs and retail markups, not from domestic wholesale grower prices. Sales per acre and per grower are both up Average sales per acre of large U.S. floriculture growers climbed 5 percent to $96,400 in 2004 as open-field and greenhouse production areas both decreased in size even as their sales expanded. Only production areas under shade and temporary cover increased in size in 2004. Furthermore, as the number of large growers fell further in 2004, average sales per grower continued their upward trend, now estimated at $1.1 million, up almost $60,000 from 2003. The comparable amount in 1998 was only $700,000. The average covered area per large grower in 2004 was 4.1 acres, along with 6.9 acres of open ground, for a total production area of 11.1 acres each. The average number of hired workers was 25.7 per grower, the highest thus far. Hence, given 4,579 operations with $100,000 or more in annual floriculture sales in 2004, the total number of hired workers was estimated at 113,127. This number is lower than in 2003 and 2,642 fewer than the recent high of nearly 116,000 workers in 2002. Thus, average sales per hired worker in 2004 were $43,200, up 41 percent from $30,600 in 1998. This impressive gain in sales per worker reflects better production technology, greater management efficiency, as well as higher output afforded by larger covered production areas in general. There is an apparent positive correlation between the use of greenhouse space and productivity. Regional comparisons reveal Western States have the highest average sales per grower at $1.5 million, followed closely by Southern States at $1.2 million. South Carolina and California are on top with more than $2 million in floriculture sales per grower. This indicates that the average size of operations is comparatively bigger in the West and South than in the Midwest and Northeast. However, with respect to floral sales per acre, producers in the Northeast and Midwest trump their counterparts in the South and West. In 2004, Midwest operations grossed $135,000 sales on average per acre, followed by $112,000 per acre in the Northeast. Maryland leads the country at $363,700 sales per acre, more than 3 times the national average of $96,400. Sales per acre in the West and other Southern States are significantly lower, reflecting more use of open field and shade covering and less greenhouse production. Despite fierce competition from imported cut flowers, domestic growers of cut flowers each reaped $786,000 worth of sales on average in 2004, the highest among floriculture crop groups. The next highest are bedding/garden plant producers--each earning $591,300 on average. Foliage plant growers, mostly located in Florida, received $424,600 each in sales in 2004. Sales per grower for the six floral crop groups were all record amounts in 2004, indicating that the average size of operations is growing bigger. Imported Cut Flowers Further Reduce Domestic Growers’ Share in Supply Cut flower imports rose 16 percent in value in 2004, in part due to higher prices. The import share of U.S. consumption of cut flowers is now a record 64 percent, up from 61 percent in 2003. Cut flowers also comprise more than half of total U.S. imports of floral and nursery products. Imported cut flowers from Colombia, by far the largest source, grew in value by 21 percent in 2004. Imports from the second largest source, Ecuador, were up 27 percent. The value of cut flowers from the European Union-25, by contrast, fell 3 percent as the euro strengthened vis-à-vis the dollar. The import value of fresh cut roses climbed 15 percent in 2004 as shipments from Colombia and Ecuador jumped significantly for the second year in a row. These two countries are also exporting more of other cut flowers to the United States, including chrysanthemums and carnations (mostly from Colombia). Since the total volume or quantity of cut flowers imported is up 7 percent, import prices of cut flowers inflated 9 percent in 2004 as the dollar’s exchange rate depreciated. These imports are largely responsible for the decline in domestic cut flower production, which now represents only 8 percent of total U.S. floriculture crop production, down from 12 percent in 1997. Cut flowers--For the second year since 2002, grower sales of cut fresh flowers are down. The drop is attributed to less sales of roses and gladioli. Among the major cut flower States, sales in California, Florida, and Hawaii are all lower in 2004. Total U.S. supply of cut flowers, however, is up 9 percent in value as net imports more than made up for the production shortfall. As a result, per household consumption of cut flowers reached $10 in 2004, up from $9.18 in 2003. Of the average $10 spent on cut flowers by each household, $6.40 is paid to foreign producers. Thus, only $3.60 on average was received from each U.S. household by domestic growers of cut flowers in 2004. Potted flowering and foliage plants--Although sales of potted flowering plants were up in 2004, sales of potted foliage plants for indoor or patio use were down. Poinsettias, orchids, and florist mums led flowering plant sales growth. Producers in California, Florida, New York, Texas, and North Carolina benefited from this growth. Producers in the Midwest States did not fare as well, as the region’s total sales slumped. For foliage plants, the largest producer State--Florida--suffered from adverse effects of hurricanes in the summer of 2004. Heavy rains in California also reduced sales in the second largest producer of foliage plants. While poinsettia sales from California fell, sales from North Carolina, Florida, and New York all increased. Average poinsettia sales per producer are now $157,162 nationally, up 7 percent from 2003. Florist mum growers each received $161,000 on average from corresponding sales in 2004, up 12 percent. The lion’s share, however, belongs to orchid growers, who each sold $564,637 worth of plants on average in 2004, despite an 8-percent reduction in price per pot to $7.41. Only growers of potted foliage plants top orchid producers--$568,545 average sales, not including foliage hanging baskets. This higher amount was likely aided by the diminution of supply from Florida in 2004 (no quantity sold data are available). Nevertheless, these gains lag the expansion of bedding and garden plants as the share of potted flowering plants in total U.S. floriculture sales slid to 16 percent from 20 percent a decade ago. Bedding and garden plants--The sales growth of annuals and herbaceous perennial plants was enough to push total U.S. floriculture sales up in 2004 even as other crop groups did not fare as favorably. The increased quantity of bedding plants sold in pots and hanging baskets more than offset the drop in the number of flats (celled trays) sold in 2004. Average sales per grower continue to expand for annuals and perennials with respect to sales volume and value. For the 3,121 growers in 2004, sales averaged $811,453, more than double wholesale receipts in 1994. For annual plants in all containers, average sales were $591,315 per grower in 2004, which compares with $257,708 for potted herbaceous perennials. These are all record amounts, especially for growers in California and South Carolina. Potted geraniums from vegetative cuttings lead sales of annuals-- $126 million in 2004, or 17 percent of total sales of potted annuals. Among annuals sold in flats, pansies/violas, impatiens, and petunias have the highest sales, although all were down in 2004. Since 2000, the share of annual plants sold in pots continues to increase at the expense of annuals in flats. Producers in the Southern States also have gained market share from growers in the West and the Northeast since 1998. Although sales of bedding/garden plants from California, Michigan, Florida, and other major producer States were up in 2004, sales from Texas were down. Herbaceous perennial plants also continue their growth as sales from South Carolina, California, and Michigan collectively claim 30 percent of the U.S. market in 2004. Unfinished propagative material for bedding and garden plants also dominates total sales of floriculture propagative material, earning each grower an average $1.35 million in 2004.