June 18, 2003

FLORICULTURE AND NURSERY CROPS YEARBOOK -- SUMMARY June 18, 2003
June 2003, ERS-FLO-2003

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 text of the yearbook will be available electronically about 1 week
following this summary release.
------------------------------------------------------------------

Green Industry Sales Are Flat

While grower sales of floriculture crops increased 1.6 percent in 2002 from 2001, nursery crop sales fell by a marginal amount. Together, floriculture and nursery crops, also known as the green
industry, reached $13.8 billion in sales in 2002, up from $13.7 billion in 2001. After accounting for imports and exports, domestic consumption of floral and nursery crops is up only slightly in 2002. However, on a per-U.S.-household basis, consumption is down to $136, from $137 in 2001.

The weak U.S. economy in 2001 and 2002 is largely responsible for flat grower sales in the green industry. Although floriculture crop sales have continued to grow, albeit slowly, nursery crop sales, which are about twice the size of floriculture sales, are flat. Among floriculture crops, only bedding and garden plants and foliage plants registered sales gains, raising floral crop consumption up 1.5 percent to $5.6 billion in 2002. Cut flower imports fell in value even as import volume rose, due in part to the high exchange rate of the dollar. U.S. consumption of cut flowers has been on a downward trend, now $8 per household compared with $10 in 1999.

Bedding and Flowering Plants Lead Floriculture Sales

Two-thirds of the value of U.S. floriculture production in 2002 consisted of bedding and garden plants and potted flowering plants. These plants led U.S. sales growth among the six floriculture subsectors, which also include cut flowers, foliage plants, cut cultivated greens, and unfinished propagative
material. In 1990, bedding-garden plants and potted flowering plants comprised only 55 percent of total U.S. floriculture production value. Their relatively faster growth over the past decade is due in part to reduced demand for domestic cut flowers and cut greens. Although demand for foliage plants continues to increase, their sales growth has been relatively slower.

Imports of flowering and bedding plants, largely from Canada, have also risen rapidly in recent years, helping consumption of floriculture crops per-U.S. household reach $52 from $32 in 1990. The largest producers of bedding and garden plants are California, Michigan, Texas, Ohio, Florida, and New York, each exceeding $100 million in sales in 2002. The production of potted flowering plants is dominated by California and Florida, whose combined sales were 36 percent of U.S. growers’ sales of potted flowering plants in 2002.

Most States produce more bedding and garden plants than any of the other floriculture products. One major exception is Florida, whose growers collectively produce and sell more foliage plants than any other State. Indeed, Florida produces almost 70 percent of total U.S. foliage plant production, which is not unlike California’s two-thirds share of U.S. cut flower production. Florida produces about four times more foliage plants than flowering or bedding plants, its next largest green product.

Growers in the South and West Have Largest Sales

California, Florida, and Texas all exceeded $1 billion each in sales of green crops in 2002. Since growers in these States also sell their products in other States, green sales per-U.S. household by growers in the four largest States are also the highest among all States. Together, sales by these four States accounted for 53 percent of the total U.S. green industry output in 2002.

Growers in the Southern and Western States produced 75 percent of all green crops in 2002. However, led by Michigan and Ohio, growers in the Midwest produce and sell a relatively large portion of total U.S. bedding and garden plants. Only growers in California sell more bedding and garden plants than Michigan growers. But with respect to herbaceous perennial plants, South Carolina is the sales leader.

Growers in the Midwest generated the highest sales per acre of production area--averaging more than $104,000 in floriculture sales in 2002. This compares with $92,000 in the Northeast, $80,000 in the South, and $77,000 in the West. Individually, however, growers in Colorado claim the highest sales per acre of floriculture crops in the United States--almost $300,000 in 2002.

Florida has the largest production area for floriculture crops--close to 18,000 acres in total--about as large as the combined growing areas of all States in the West, including California, and twice as large as the Midwest’s total production area. Although California’s total greenhouse cover is close to twice
Florida’s, the latter’s share of total U.S. use of shade and temporary cover is 82 percent.

Floriculture Growers Continue To Decline in Number

There were 12,717 growers of floriculture crops in the United States in 1997. In 2002, the number of growers has declined to 10,216. While the number of both small and large growers has fallen, the average sales of large growers now exceed $1 million, compared with only $46,000 for small growers. (Large growers have $100,0000 or more in annual floriculture sales at wholesale, and small growers have between $10,000 and $100,000 in annual floriculture sales.) The largest average sales are by growers in the West, followed by growers in the South. Among large growers, those in South Carolina averaged more than $2.25 million sales in 2002, the highest in the 36 surveyed States. The next highest average sales among large growers were $1.84 million in California.

As floriculture sales of large growers continue to expand, sales by small growers have been shrinking since 2000. Large growers in the West and South produce and sell about twice the crop value of
their counterparts in the Midwest and Northeast. Average sales of small growers are highest in the West.

The total production area for U.S. floriculture crops in 2002 was just under 58,000 acres. This is down from 1998’s 68,500 acres of production area. About 36 percent of the production area in 2002 was under covered protection, either under greenhouses or under shade and temporary cover. The rest of the crops are grown in open fields. Southern growers, principally in Florida, have bigger production areas under cover than growers elsewhere. While growers in the West also widely employ covered protection for their crops, growers in the South use more shade and temporary cover than greenhouses with rigid structures.

About 72 percent of the U.S. production area for floriculture crops is in the Southern and Western States. And of the U.S. total area under covered protection, 75 percent is in the South and West. Plants grown under covered protection include seedlings, immature, and unfinished plants, as well as high-value plants such as orchids and other tropical flowers. The decline in the size of total production area under covered protection in recent years is due in part to flat overall sales and to increasing outsourcing of seedling and propagative material production to growers in Central America and Mexico.

Cut flowers--Almost all the major cut flowers have experienced declining sales in the past decade. Although imports have supplanted domestic-grown flowers, such as roses and orchids, the import values of carnations and chrysanthemums have also fallen. The reason behind these downward trends is the general drop in U.S. demand for cut flowers since 1997 when total cut flower supply and consumption peaked. Relatively higher priced domestic cut flowers helped shift demand toward imported cut flowers and other domestic grown floral crops. Thus, while the import share of U.S. cut flower consumption remained around 60 percent, domestic cut flower production continued to recede. U.S. growers instead shifted production toward potted flowering plants, bedding and garden plants, and foliage plants.

Bedding and garden plants--As U.S. demand for floriculture crops other than cut flowers increased in the 1990s and continued to grow in recent years, domestic production of flowering, bedding, and foliage plants responded accordingly. Although still relatively small as a share of consumption, imports of these plants have also risen sharply, especially as the dollar’s exchange rate has risen. Thus far, most of these imported plants are produced in Canada since restrictions related to plant diseases and pests largely constrain imports from other countries, especially plants with soil attached to roots.
Consumption of flowering, bedding, and foliage plants is now $43 per-U.S. household, up from only $22 in 1989 and $30 in 1995.

Nursery crops--U.S. production of nursery crops was estimated at $8.9 billion in 2002, 83 percent larger than floriculture crop production. Per-household consumption was $84 for nursery crops and $52 for floriculture crops. While per-household consumption of floriculture crops continues to increase, that of nursery crops appears to have peaked in 2001. The U.S. economic recession in 2001 and weak growth in 2002 are partly responsible for the subdued demand for nursery crops, despite strong U.S. housing construction activity. Imported nursery crops, largely live plants and nursery stock, are still an insignificant fraction of U.S. nursery crop consumption at 3.3 percent. Growers in California and Texas produced 36 percent of the country’s nursery crops in 2002 based on sales of $2.1 and $1.1 billion,
respectively.

U.S. green imports--Cut flower imports are 48 percent of total U.S. imported green products, which were $1.1 billion in 2002. This import share is down from 60 percent in 1996 when cut flower imports per-U.S. household were $6. Cut flower imports are now down to an average $5 per household. Imported nursery stock, bulbs, etc., on the other hand, have been expanding continuously. As recently as in 2000, these nursery crop imports were less in value than cut flower imports. In 2001, nursery crops first exceeded cut flowers in value, and are now 52 percent of total U.S. green imports.

The bulk of imported cut flowers come from Colombia, Ecuador, and the Netherlands. Colombia supplies most of the imported roses, carnations, and chrysanthemums, while Ecuador ships more roses than other cut flowers to the United States. The Netherlands is the prime source for tulips. Canada and the Netherlands supply three-quarters of U.S. nursery stock imports. Live trees and plants largely come from Canada, and bulbs of tulips, lilies, and narcissus are from the Netherlands.

U.S. imports of propagative material--unrooted cuttings and slips of plants--have ballooned by more than 400 percent in value from 1995 to 2002. Attracted by lower production costs and favorable climate, these immature plants as well as unfinished seedlings are grown initially in Costa Rica, Guatemala, and increasingly in Mexico. After shipment into the United States, they are further  grown to maturity and final sale.

The full report will appear at http://www.ers.usda.gov/publications/flo/