S1021: Managing and Marketing Environmental Plants for Improved Production, Profitability, and Efficiency
Statement of Issues and Justification
Billions of dollars have been invested by the USDA to fund production research, resulting in over-production of agricultural products. In the 21st century, over-production is not a sustainable business practice for individual businesses or an entire industry. Rather than continue to produce even more products, horticultural businesses desperately require information to make their businesses more profitable, more efficient, and more sustainable. Still, few resources have been allocated to conduct research associated with the improving businesses ability to thrive in an increasingly competitive arena. In fact, the USDA has few people who are responsible for collecting, analyzing, and disseminating economic information regarding environmental plants. If agriculture is to thrive in the 21st century, it will be from improved business savvy, not improved production practices. Often overlooked in the agricultural sector are products that enhance the quality of life either through aesthetic properties or environmental enhancing properties. In the last 20 years in the United States, the production, marketing and maintenance of environmental plants has been one of the few parts of the agricultural economy increasing in value and employing more people. Because of the limited nature of resources devoted to this research arena and the growing economic importance of this sector, it is crucial that research mechanisms be developed to assist producers and marketers of these plants to better ascertain opportunities and threats in the next five years.JUSTIFICATION The U.S. leads the world in the production and marketing of flowers, cut foliage, potted plants, bedding plants, turfgrass, and other nursery crops. These combined products have grown to be known as the green industry. The U.S. green industry continues to experience strong growth during the 1990's and into the 21st century. According to USDA, grower cash receipts gained about $400 million annually, or about 5 percent, through to the year 2000. This growth followed a decade of 10 percent annual increases in the 1980's (Johnson, 1997). Greenhouse and nursery crops were the fourth largest crop group based on farm cash receipts in 2003 with cash receipts for greenhouse and nursery crops estimated at $14.3 billion (USDA, 2004). U.S. per household purchases of ornamental crops was $140 in 2003.
The green industry is usually divided into the floriculture sector (which includes cut flowers, cut cultivated greens, potted flowering plants, potted foliage plants, and bedding and garden plants) and the environmental horticulture sector (which includes crops usually grown outdoors and used primarily for landscaping purposes). These plants include trees, shrubs, ground covers, turfgrass or sod, bulbs, and planting stock (Johnson, 1997). The fastest growing sectors in the ornamental crop market are flowering and foliage plants, which include bedding, garden, and indoor plants (USDA, 2004).
In 1997, U.S. consumers spent $16 billion on floriculture ($54 per capita), which was the 12th highest in the world in terms of per capita expenditures on indoor flowers/plants. In turn, of the $54 spent, $9 was used to purchase cut flowers and $45 for flowering and foliage plants (USDA, 2004). The leading countries with respect to per capita consumption of floriculture products are Japan, Austria, Belgium, Denmark, Finland, France, Germany, Netherlands, Norway, Sweden, and Switzerland (Johnson, 1997). Americans, on the other hand, are by far the leading consumers of outdoor landscaping plants. In 1997, U.S. consumers spent $37 billion on environmental horticultural products, or $138 per capita. A robust economy usually generates increases in housing and other construction. This eventually leads to increased sales of environmental horticultural products, although there is usually a lag between sales of landscape plants and new construction. This lag can be anywhere from 6 months (Johnson, 1997) to 2 years (Gineo and Omano, 1990).
Landscape plant production has become a major sector within U.S. agriculture and is of major importance to farmers, rural communities, and consumers. In fact, greenhouse and nursery product producers generate the second highest (after vegetables) net value added per dollar of gross income among all agricultural commodities. Net value added provides a measure of agriculture's contribution to the general economy by emphasizing the income generated for all the people who contribute to agriculture production (Jinkins and Ahearn, 1991).
While better nursery data and data gathering procedures are needed by researchers and the industry, existing data sources indicate continuing industry growth nationwide (Johnson, 1990). Household expenditures on nursery products over the last 25 years appear to have been influenced by household income, the number of single family home construction starts, education levels attained, and age composition of the population (Gineo and Omano, 1990). The National Gardening Association reported that 78% (or 84 million) U.S. households participated in lawn and gardening activities in 2003 (Butterfield, 2004), making it the nations favorite leisure activity.
Many problems in the nursery industry relate to economic and environmental constraints. Environmental constraints revolve around water and soil quality, weather related stresses, and aesthetic and biological requirements. Economic constraints include changing resources, costs (such as land, labor and chemicals), and demand for landscape plants. Another important problem to be considered is the comparative advantages of producers in some regions of the United States. Aggregate data suggests that although the leading ten states' percentage of total grower cash receipts for greenhouse and nursery crops has remained stable (at between 65 and 70 percent) over the last 30 years, the composition of these ten states has changed (Johnson, 1990).
Several complicated issues exist in securing a stable nursery industry work force for todays U.S. nursery industry. For of these issues are legalization, availability and retention of workers and reduction of work force via mechanization. The demographics of the nursery industry have changed dramatically in the past 10-15 years. Today, we believe that the majority of the worker level of nursery staff is Spanish-speaking. However, there have been no workforce surveys conducted in this industry to support that belief. From the only survey that has been done (Mathers, 2003b; Mathers, 2003c; Mathers, 2003e) in Ohio and Oregon, Hispanic employees did represent the majority of the nursery industry work force and the technical needs of this audience were not being adequately addressed. The current lack of information available on the nursery industry workforce nationally, the heavy reliance on labor, and the perceived lack of technical information available to workers in Spanish give this project special significance for the ornamental industry.
The regional/national approach available to this committee will continue to provide a connecting mechanism to permit the collection of primary data to conduct analyses on horticultural and economic problems facing the nursery/greenhouse industry. The collaborative approach is critical to the continuation of multi-state participation in the analysis and development of cost-of-production data for use in interregional competitive position analysis. Cost-of-production data must be generated in a consistent manner in each climatic zone of the United States for the interregional work to be valid. Likewise, the complexity and time required for the construction of production budgets for use in marketing analysis problems is such that a collaborative effort is essential. Unlike traditional agricultural crops, the landscape plant industry produces and markets thousands of different plants. Great care must be taken to select key plants that can suitably represent the cost of producing a group of plants with similar growth characteristics and requirements. Both a horticultural and economic perspective is needed.
The previous S-290 and S-103 regional committees (which were national in membership) provided the seminal cost-of-production work, and initiated and conducted the regular collection of primary data for marketing purposes - both vital industry services. Problems with the availability and quality of production and sales data exist to various degrees for all agricultural products, but the problem is most severe for landscape plant products. Data appropriate for use in market analysis studies must be collected by the researchers in a collaborative manner. Otherwise, there is no mechanism to organize, fund, and conduct surveys to collect information useful for interregional analysis.
With limited secondary data, a continuing and difficult question concerns judgments on regional growth prospects in most areas of the nation. The apparent regional advantages due to population shifts, climatic differences, lower resource prices, containerization, etc., are very important. The obvious implication is the prospect for continued growth within the entire nation. With increased growth projections, production and marketing of landscape crops provides an alternative for some farmers that have produced traditional agricultural crops, e.g., corn, cotton, soybeans, tobacco, and vegetables. The evaluation of this potential in terms of individual firm adjustments, structure of the industry, and future technological possibilities should benefit not only nurserymen and consumers, but also the entire national economy as well as other areas of the nation involved in trade interrelationships. Insight regarding potential growth in demand and adjustments in sources of supply will permit the more efficient allocation of resources over time, which is a critical component of a market-oriented, competitive industry.
Research is needed to ascertain the potential of the landscape industry to provide jobs and business opportunities to agriculturists displaced by the shrinking number of farms in traditional agriculture. Extensive expansion without regard to regional and national supply and demand for landscape plants could result in instability in the landscape industry and the misallocation of resources. Also, the benefits to consumers and the overall environment should be positively impacted by the expansion and further development of society's aggregate demand for landscape plants. Continued nationwide growth and expansion of this industry should benefit society in general because of the improvement in the environment from an aesthetic perspective as well as from the perspective of adding living plant material to our cities and communities where various forms of pollution are apparent.
Collaborative research on the production, marketing, and managing of landscape plants should provide insight regarding the relocation of production of certain species as competitive advantages in the production and/or marketing of these plants are identified. Insight regarding these long-run economic forces would permit researchers, extension workers, and other individuals working with the industry to more efficiently plan the reallocation of these resources than if these long-run economic forces are not identified in advance. In other words, the research may provide insight regarding these adjustments so that in some cases nurseries may be forewarned about the risk of investing for future expansion that may really be destined to relocate to another production area. The possibility of this insight exists with all economic analysis regarding sources of supplies of products.
The research proposed in this project statement coincides with the mission of the Cooperative State Research, Education, and Extension Service (CSREES). This mission is to achieve significant and equitable improvements in domestic and global economic, environmental, and social conditions by advancing creative and integrated research, education, and extension programs in food, agricultural, and related sciences in partnership with both public and private sectors. Furthermore, the proposed research in this project statement supports goals 1, 4, and 5 of the Strategic Plan developed by the CSREES (Goal 1 - an agricultural production system that is highly competitive in the global economy, Goal 4 - greater harmony between agriculture and the environment, and Goal 5 - enhanced economic opportunity and quality of life for Americans). The cooperation of horticulturists and agricultural economists from around the United States that comprise the S-(temp) 426 committee offer a unique resource to examine economic and environmental issues.
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