Florida Nursery and Landscape

Industry Outlook for 2013 Presented by

Hayk Khachatryan and Alan Hodges

University of Florida, Food & Resource Economics Department

November 2012

Presentation Outline

• Industry at a glance

• Situation

• Sales estimates

• Market channels

• Industry threats

• Growth opportunities

• Competition

• Housing market

• Transportation costs

• Consumer demand

Florida Environmental Horticulture

Industry Profile

• About 4,700 commercial nursery and

greenhouse firms

• Production area: 141,724 open acres, 338

million square feet under protective cover

• Capital assets per firm: $1.18 million

Source: 2007 Census of Agriculture (USDA-NASS)

Florida is the Second Largest State in

Nursery Sales

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Thousand Jobs

Source: Florida Agency for Workforce Innovation, Quarterly Census of Employment and Wages

Florida Horticulture Industry Employment, 2001-10 (monthly)

Services to buildings anddwellings (Landscaping)

Greenhouse and nurseryproduction

Lawn and garden equipmentand supplies stores

3.6

4.1

5.5 5.7

6.7 6.8

6.0

7.7

7.1

2.0 1.9 1.9 2.0 2.0 2.1 2.0 1.8 1.9

0.7 0.8 0.7 0.9 1.2

0.9 0.9 0.6 0.7

0

1

2

3

4

5

6

7

8

9

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billio

n D

ollars

(2010)

Landscapeservices

Greenhouse,nursery, andfloricultureproduction

Retail lawn andgarden centers

Florida Environmental Horticulture Industry Revenues, 2001-10

Source: Implan

Economic Contributions of the Florida

Environmental Horticulture Industry in 2010

Source: UF-IFAS, Economic contributions of the Florida environmental horticulture industry in 2010, report to

FNGLA, Sept. 2011, available at www.fred.ifas.ufl.edu/economic-impact-analysis/publications

Estimated Sales of Florida Environmental

Horticulture Firms in 2010

Source: UF-IFAS, Economic contributions of the Florida environmental horticulture industry in 2010, report to

FNGLA, Sept. 2011, available at www.fred.ifas.ufl.edu/economic-impact-analysis/publications

Floriculture Crops 2010-11

2010 2011 Percent

Change

2010-11

Wholesale value ($1000)

U.S. (15 states) $4,148,766 $4,080,715 -1.6%

California $1,015,083 $1,011,530 -0.4%

Florida $826,077 $835,233 1.1%

Number producers

U.S. (15 states) 6,164 5,763 -6.5%

California 696 632 -9.2%

Florida 749 702 -6.3%

Covered production area (1000 sq.ft.)

U.S. (15 states) 729,834 711,905 -2.5%

California 135,950 142,579 4.9%

Florida 307,854 287,463 -6.6%

Source: USDA-NASS, Floriculture Crops Report, Apr. 2012.

Data represents operations with $100,000 or more in annual sales.

Florida wholesale floriculture sales by plant type ($1000)

2010 2011 Percent

Change

2010-11

Annual bedding/garden

plants $80,525 $73,667 -8.5%

Herbaceous perennials $46,766 $53,294 14.0%

Potted flower plants $115,421 $114,162 -1.1%

Tropical foliage plants $424,103 $442,650 4.4%

Cut flowers NA $3,663

Cut cultivated greens $59,394 $54,684 -7.9%

Propagative material $78,642 $81,713 3.9%

Total All Types $804,851 $823,833 2.4%

Distribution of Survey Respondents by Annual

Sales Range (2010)

0% 10% 20% 30% 40% 50%

Not available

less than $100,000

$100,000 - $249,999

$250,000 - $499,999

$500,000 - $999,999

$1.0 - $2.49 million

$2.5 - $4.99 million

$5.0 - $9.99 million

$10 - $19.99 million

$20 – $49.99 million

$50 - $99.99 million

$100 million or more

Percent of Respondents

An

nu

al

Sale

s R

an

ge

Nursery

Landscape

Retailer

Allied

Sales by Market Region (2010)

22.7%

83.9%

68.5%

10.3%

22.1%

13.9%

23.9%

23.8%

51.9%

2.0%

7.0%

60.4%

3.4%

0.2%

0.6%

5.5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Nursery

Landscape

Retailer

Allied

Percent of Sales Reported

Local area

Florida (non-local)

Other states

International

Nurseries and Greenhouse Sales by

Plant Type in 2010

34.7% 21.5%

10.1%

9.5%

5.5%

4.5%

4.3%

3.4%

3.1%

2.4%

0.6%

0.4%

0% 10% 20% 30% 40%

Tropical foliage

Potted flowering…

Shrubs

Palms

Other

Liners, cuttings, plugs

Deciduous shade trees

Vines or ground…

Flowering and fruit…

Evergreen trees

Cut foliage, cut…

Turfgrass

Percent of Sales Reported

1,480

916

431

404

237

190

185

144

132

104

25

16

0 500 1,000 1,500 2,000

Million Dollars

Landscape Firm Sales by Service/Product

Type in 2010

43.8% 22.8%

11.8%

8.2%

5.4%

4.0%

3.2%

0.7%

0% 10% 20% 30% 40% 50%

Landscape maint.

Landscape installation

Live plants

Landscape design

Supplies / equipment

Landscape consulting

Other

Interiorscaping

Percent of Sales Reported

2,647

1,377

712

498

324

244

196

42

0 500 1,000 1,500 2,000 2,500 3,000

Million Dollars

Horticultural Retailer Sales by Product

Type in 2010

50.6%

28.8%

13.7%

6.9%

0% 10% 20% 30% 40% 50% 60%

Live plants

Other goods

Supplies

Hard goods

Percent of Sales Reported

744

424

202

101

0 200 400 600 800

Million Dollars

Allied-Supplier Sales by Product/Service

Type in 2010

37.7% 15.9%

14.6%

14.5%

13.3%

2.3%

1.1%

0.4%

0.1%

0.1%

0% 10% 20% 30% 40%

Chemicals

Other products or services

Financial & insurance…

Fertilizer

Nursery containers

Equipment and tools

Soil media

Packaging materials

Consulting services

Peat

Percent of Sales Reported

211

89

82

81

74

13

6

2

1

0

0 100 200 300

Million Dollars

Nurseries and Greenhouse Sales by

Customer Type in 2010

37.2% 14.4%

12.7%

11.1%

9.3%

8.7%

3.7%

1.7%

1.3%

0% 10% 20% 30% 40%

Home improvement stores

Landscape contractors,…

Mass merchandise stores

Re-wholesalers or brokers

Ind. retail garden centers

Other growers

Homeowners

Developers, property…

Other customers

Percent of Sales Reported

1,587

612

543

471

398

369

157

72

55

0 500 1,000 1,500 2,000

Million Dollars

Landscape Service Firm Sales by

Customer Type in 2010

35.9% 21.9%

15.5%

10.8%

8.8%

5.4%

1.7%

0% 10% 20% 30% 40%

Homeowners

Apartments, condos

Commercial estab.

Builders, developers

Other landscape firms

Governments

Other

Percent of Sales Reported

2,171

1,322

934

651

531

328

101

0 1,000 2,000 3,000

Million Dollars

Horticultural Retailer Sales by Customer

Type in 2010

51.1%

19.4%

10.3%

7.6%

5.5%

3.8%

2.5%

0% 10% 20% 30% 40% 50% 60%

Homeowners

Commercial establishments

Apartments, condominiums

Landscape contractors

Other type of customer

Other retailers

Governments

Percent of Sales Reported

751

285

151

111

80

55

36

0 200 400 600 800

Million Dollars

Issues or Threats to the Environmental

Horticulture Industry

3 4 5 6 7 8 9

Economic recession

Energy or transportation costs

Increasing costs of production

Low prices for products or services

Drought or water use restrictions

Government regulations

Lack of professionalism

Market power of large retail chains

Poor worker education or skills

Restrictions on chemicals

Immigration enforcement

Competition by plant substitutes

Mean Importance Rating (1-10 scale)

Nursery

Landscape

Retailer

Allied

Source: UF-IFAS, Economic contributions of the Florida environmental horticulture industry in 2010, report to

FNGLA, Sept. 2011, available at www.fred.ifas.ufl.edu/economic-impact-analysis/publications

Opportunities for Growth by Florida

Horticulture Businesses

0% 10% 20% 30% 40% 50% 60%

Offering new services (e.g. green walls, roofs)

Securing sustainability certifications

Growing/Selling Florida-friendly plants

Using social media (e.g. Facebook, Twitter)

Expanding digital presence (websites, i-phone apps)

Participating in branding campaigns

Networking or partnering with builders/developers

Earning FNGLA professional certification

Using/Selling biodegradable containers

Landscape installation or maintenance

Changing plant or product mix

Retailing direct to the public

Growing bio-fuel energy crops

Growing edible crops

Contract growing

Percent of respondents already doing or very interested

Nursery

Landscape

Retailer

External Factors Affecting Industry

Performance

• Housing market dynamics - existing sales and

new construction starts

• Unemployment rate

• Consumer confidence index

• Competition - intra-industry and foreign

• Transportation efficiency and fuel prices

• Consumer preferences and demand

Housing Market: Case-Shiller Home Price

Index, Florida and U.S.

50

100

150

200

250

300

Dec-99 Apr-01 Sep-02 Jan-04 May-05 Oct-06 Feb-08 Jul-09 Nov-10 Apr-12

S&

P/C

ase

-Sh

ille

r H

om

e P

rice

In

dex

Lev

el

National Miami Tampa

Source: Standard and Poor’s Indices; http://us.spindices.com/

Unemployment Rate: Florida, CA, TX, & U.S.

Source: Bureau of Labor Statistics, through Google Public Data Service

Florida Consumer Confidence Index

(2000-2012)

Source: University of Florida, Bureau of Economic and Business Research

Competition: Intra-industry and Imports

• Large producers vs. small, family-owned operations

• Large chain stores vs. specialized retailers

• U.S. is a net importer of nursery products

• 2012 imports, $1.9 B, 12.5% of domestic demand

(expected 19.3%)

• U.S. exports 3.1%; $415.2 M of revenue

• Duty-free imports from South America (cheap labor,

favorable weather)

• The Andean Trade Promotion and Drug Eradication

Act

Industry Consolidation

• U.S. Establishments in 2007 - 52,845

• Decreased to 45,565 in 2012 (16%↓)

• Small firms exiting the industry

• Larger firms:

Efficient means of transportation

Improved logistics

Lower costs

Lower prices

Transportation Costs and Industry

Consolidation

Factors in choosing plants (1=Not important, 5=Extremely important)

2.9

3.6

3.8

3.8

3.9

3.9

4

4.1

4.4

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Effectiveness of Air Purification

Drought Tolerance

Light Demand

Size of Plant

Flowering

Guaranteed Growth

Color

Price

Quality of Plant

Importance Score (1=Not important; 5=Extremely Important)

Source: Choi, H.J., and H. Khachatryan. 2012. Main Factors Affecting Consumers’ Ornamental Plant Selection and Store Choice:

Results from a National Consumer Survey. Mid-Florida Research and Education Center, Apopka, FL. Unpublished Report.

Final Thoughts

• Revenue $13.5 B in 2012

• Decreased 4.2% per year since 2007

• 2012-2017 projected growth -0.7% per year (IBIS World Industry Report 11142, Sep 2012)

• Innovation

GM seeds (licensing issues)

Perceptions about GM movement

Disease resistant varieties

Consumer preferences

Plant quality vs. price

Thank you for attention!

Alan W. Hodges (awhodges@ufl.edu)

Hayk Khachatryan (hayk@ufl.edu)

Food & Resource Economics Department

Institute of Food and Agricultural Sciences

University of Florida