Floriculture & Nursery Crops YEARBOOK -- SUMMARY September 28, 2007 September 2007, ERS-FLO-2007s 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. Summary Total sales of greenhouse and nursery crops in 2006 increased by $52 million from 2005, a marginal gain over almost $17 billion in gross receipts. Of this amount, floriculture sales from 15 major (program) States were nearly $4 billion, down from $4.1 billion in 2005. This 4-percent drop is due to lower sales of potted flowering and foliage plants, annual bedding and garden plants, and propagative materials. Although competition from imports of unrooted cuttings and slips of plants is a factor that reduced sales, overall consumer demand was weakened by higher energy and food prices in 2006. The change in the number of States surveyed in 2006, to 15 from 36 in 2005 generated overestimated sales of nursery and other greenhouse crops, which would include floriculture sales of the other 35 States that were not surveyed (see footnote 4 in table A-1). The 15 States selected in the USDA survey accounted for 75 percent of cash receipts received by greenhouse and nursery crop farmers in 2006. Producers in these States with at least $100,000 of floriculture sales received a total of $3.8 billion from floriculture crops in 2006, 3.4 percent less receipts than in 2005. All floriculture groups experienced lower sales except cut flowers, herbaceous perennials, and cut cultivated greens, which together accounted for 27 percent of total grower sales in 2006. Despite the 4-percent growth of domestic fresh cut flower sales and the 8-percent rise in imported cut flowers in 2006, U.S. consumption of floriculture crops fell 1 percent. Two-thirds of U.S. consumption of cut flowers is now imported, up from 50 percent in 1993. The number of producers in the 15-State survey dropped by more than 600, to 6,546 in 2006 from 7,178 in 2005. There were 163 fewer producers with $100,000 or more in floriculture sales in 2006. As a result, average sales per large grower were close to $1.3 million, about 2 percent more than in 2005. Although average sales were highest for producers in the Western States, South Carolina posted the largest average amount of $2.3 million per grower. California came in next at $2.2 million of floriculture sales per grower in 2006. Among the 15 major States surveyed, producers in the West averaged $1.7 million in sales and producers in the South averaged $1.5 million in 2006. The quantity of domestic cut flowers sold in 2006 was up 1 percent from 2005, but the number of potted flowering plants sold dropped by 7 percent, or 12.4 million pots. While the number of annual bedding and garden plants sold in 2006 rose 2 percent, the number of potted herbaceous perennials fell 1 percent. Despite the smaller number of large floriculture farms in the United States—2,991 farms in 2006 from 3,154 in 2005—average sales per operation were up 2 percent, to $1,282,150, which was about twice that in 1994. The estimated number of hired workers in the U.S. floriculture sector was 90,000 in 2006, which is 63 percent, or 56,289 fewer workers than in 1998. For large operations (in the 15 program States), the average wholesale receipts per hired worker was $47,592 in 2006, down 1 percent from 2005’s record high of $48,257. This lower revenue stream is in part attributed to the smaller average production area per operation.. Each large operation farmed 14.5 covered and open field acres on average in 2006, down from 14.8 acres in 2005. While the average covered production area per operation is up 2 percent, to 5.4 acres, the open field area is down 4 percent, to an average 9.1 acres in 2006 from 9.5 acres in 2005. Nevertheless, average sales of floriculture crops per acre of production area for large operations climbed 4 percent, to $88,411 in 2006. This average, however, is 7 percent lower than when 36 States were surveyed in 2005 because total floriculture sales (the numerator) dropped by 25 percent, but the open and covered production area (the denominator) fell by 19 percent in 2006. Prices are Higher for Less Quantity Sold Wholesale prices of domestic fresh cut flowers and potted flowering plants are 4 and 5 percent higher, respectively, in 2006. Annuals and perennials, which accounted for 45 percent of total floriculture sales in 2006, posted 6 and 4 percent, respectively, higher prices. Imported cut flower prices were up 4 percent even at continued larger quantities of shipments. Imports of potted flowering plants, mostly from Canada, were down in volume as U.S. demand was discouraged by the higher exchange value of the Canadian dollar, which raised their import prices. An important reason for low prices of annual bedding and garden plants, which were 4 percent lower in 2006 than in 2000, is the continued increase in imported unrooted cuttings (and slips of plants), much of which consist of propagative stock. The import volume of unrooted cuttings was 878 million units in 2006, twice the amount imported at the turn of the millennium. Moreover, import prices of unrooted cuttings in 2006 were 6 percent lower than in 2003. Thus, U.S. floral growers of annuals can supply the domestic market at low prices in part because their import costs have remained low. The largest import sources of unrooted cuttings are Costa Rica, Guatemala, and Mexico, accounting for three-quarters of the U.S. import value in 2006. A contrasting price pattern to annual bedding plants is exhibited by cut flowers. While prices of domestic-grown cut flowers are up 6 percent from 2002, prices of imported fresh cut flowers are 22 percent higher than in 2002. Imported cut flowers now command a 67-percent share of U.S. cut flower consumption, up from 58 percent in 2002. Higher freight costs (largely by air), higher energy, and fertilizer costs, plus the depreciation of the U.S. dollar are responsible for much of the import price hike. As a result, the value of U.S. consumption of cut flowers, including imports, accounted for 23 percent of total domestic consumption of floriculture crops in 2006, compared with 16 percent in 2002. Prices of potted flowering plants, domestic and imported, have also experienced higher levels since 2004. Compared with prices in 2000, prices of domestic potted flowering plants were 11 percent higher in 2006. While much fewer in volume than imported cut flowers or unrooted cuttings, U.S. importers of potted flowering plants have seen their prices surge 23 percent in 2006 and are 12 percent more than in 2000. This price hike is attributed in part to the depreciation of the dollar against the currency of Canada, from where most imported potted flowering plants are shipped. The volume of most of these imports from Canada also fell sharply in 2006, including roses, mums, poinsettias, orchids, and especially herbaceous perennials. Cut Flowers Although many domestic cut flowers experienced lower sales in 2006, tulips, gerbera daisies, orchids, and lilies continue their upward trend. The principal reason for the boosted sales value of these cut flowers is higher prices. Despite competition from imports for orchids and lilies, these four flowers remain in strong demand as seen in greater numbers of stems or blooms sold. Sales of roses, pompon mums, gladioli, irises, and snapdragons were all lower in 2006, largely because of weaker demand as quantity sold declined. Many of these flowers, particularly roses, mums, and carnations face strong competition from imports, largely from Colombia and Ecuador. Among U.S. cut flowers, orchids show the greatest price increase in 2006. Average sales of cut orchids per grower also climbed 5 percent, to almost $130,000. Only Hawaii and California commercially produce significant amounts of orchids in the United States Among other major flowers, average sales per grower also increased for mums, gerbera daisies, irises, lilies, roses, snapdragons, and especially tulips. The average large grower earned more than $1 million from cut flower sales in 2006, up 9 percent from 2005. In California, by far the largest producing State of cut flowers in the United States, expanded sales of lilies, daisies, snapdragons, and alstroemeria helped the State earn 4 percent more receipts in 2006. Except for orchids, the other cut flowers from California exhibited relatively flat to lower prices in 2006. Potted Flowering and Foliage Plants Grower sales of domestic potted flowering plants were 3 percent less in 2006 than in 2005. Even worse, foliage plants in pots and hanging baskets for indoor or patio use had 19 percent lower sales in 2006. The largest decline in sales of flowering plants was for orchids, dropping by $12.2 million from 2005 in the 15 surveyed States. The only flowering plants to increase sales in 2006 were florist azaleas and Easter lilies, combining for a $5.2-million boost. The change in quantities sold largely mirror the change in sales value. The lower overall sales are in part due to the 4.5-percent higher average price of flowering plants in 2006. This price hike in turn stems computationally from the 7-percent decline in the number of pots sold by growers in the 15 program States. The smaller volume of flowering plants sold in 2006 can be traced in part to the 10-percent drop in the number of large growers, from 94 to 85. But because of the smaller pool of producers, average sales per producer of potted flowering plants rose 2 percent, to $466,109 from $456,906 in 2005. By contrast, since sales of potted foliage plants fell sharply, average sales per grower of these plants declined 11 percent, from $835,011 in 2005 to $744,384 in 2006 despite losing 68, or 10 percent of its producers in 2006. For poinsettias, losing 70 producers and dropping 1.4 million pots sold in 2006 still pushed average sales per producer up 8 percent, to $197,000 as prices climbed 3 percent. Weak U.S. demand for indoor/patio foliage plants was a factor in their reduced imports from Canada. Bedding and Garden Annuals and Perennial Plants The higher average prices and lower volume sold of annual and perennial bedding and garden plants in 2006 do not reveal whether prices increased because of smaller supply or whether the higher prices caused volume demand to fall. Nevertheless, they reveal that the price hike for annuals stems from more expensive potted plants. Sale values were down for annuals in flats and in pots but up 5 percent for hanging baskets. Geraniums from cuttings declined 5 percent for all containers sold. In volume, the total number of annual plants sold in 2006 fell 7 percent, from 530.6 million to 493 million containers by growers in the 15 surveyed States. As the number of growers of annual bedding and garden plants fell by 95 in 2006, average sales per grower for all containers grew 4 percent, to $710,000. Indeed, all container groups increased in average sales per grower. Records were set in 2006 for average sales per grower of annuals--$299,000 for flats, $307,000 for pots, and $104,000 for hanging baskets. Among propagative material, bedding and garden annuals experienced a sales reduction of 7 percent in 2006. However, propagative material for herbaceous perennials expanded 11 percent, reflecting continued higher expected demand for the finished plants. For producers of propagative bedding/garden annuals and perennials in the 15 surveyed States, average sales exceeded $1 million in both 2005 and 2006. Only growers of propagative indoor foliage plants came close to $1 million, at more than $900,000 sales on average in 2006. Florida, Michigan, and California top U.S. sales of propagative material, combining for two-thirds of total sales of $363.3 million in 2006 by the 15 program States. Trade The 53-percent share of cut flowers in total U.S. imports of floriculture and nursery crops in 2006 appears to be increasing relative to the share of imported nursery stock. This pattern, however, may be temporary since most cut flowers come from South America, whereas nursery stock is largely shipped from Canada and the Netherlands whose currencies have appreciated against the U.S. dollar in the past few years. In general, imported cut flowers and nursery stock continue to rise in both value and volume. Since their growth rates in value and volume are about equal, import prices have been largely stable. For major fresh cut flowers, import demand for roses and carnations were stronger than for chrysanthemums in 2006, whose prices climbed 4 percent. Shipments of unrooted cuttings and orchid plants also continue strongly. China and Brazil have been shipping larger amounts of unrooted cuttings to the United States, while Taiwan and Thailand lead in shipments of orchid plants. For flowering bulbs, the Netherlands and Canada are the major U.S. sources. After the Netherlands, New Zealand and Chile are next in line in supplying the United States with tulip and lily bulbs. Canada and, to a lesser extent, Mexico are the leading shippers of Christmas trees and other foliage products to the United States Although U.S. exports of floriculture and nursery products were a quarter of their U.S. import value, exports have been climbing steadily, largely to Canada and Mexico. Meanwhile, imported floral and nursery crops approached $1.5 billion in 2006, which are 8.6 percent of domestic greenhouse and nursery crop receipts. This share is underestimated because domestic greenhouse crops include vegetable transplants and greenhouse vegetables such as tomatoes, colored peppers, and cucumbers, which are not included in the import value. The increasing import trend for ornamental crops appears to be focused on unrooted cuttings and cut flowers, which are sourced largely from Central and South America. With respect to flowering bulbs and live plants, the fast-growing suppliers recently include Chile and China. Nursery Crops Growers of nursery crops in the 17 States surveyed by NASS earned $4.65 billion in sales at wholesale prices in 2006, a 17-percent increase from 2003. These States include the 15 States surveyed for the 2006 floriculture data, plus Alabama, Connecticut, Georgia, Tennessee, and Virginia, minus Hawaii, Maryland, and South Carolina. Quantity sold totaled 520.7 million plants and trees, excluding vegetable transplants and nursery propagative material. This quantity represents a 14-percent jump from the 457 million plants and trees sold in 2003. The fastest growing sales of nursery crops in 2006 were ornamental grasses at 91 percent more than 2003, palms at 55 percent, other woody ornamentals and vines at 32 percent, fruit and nut plants at 28 percent, and coniferous evergreens at 27 percent. Sales of propagative nursery material climbed 16 percent, and Christmas tree sales were up 15 percent. Although quantity sold of all crop groups rose at double-digit rates in 2006, except for broadleaf evergreens and deciduous shrubs, average prices were lower for palms, deciduous shade trees, deciduous flowering trees, and ornamental grasses. Overall, wholesale prices for all nursery crops climbed less than 3 percent from 2003 to 2006. Nursery producers in California, Oregon, and Florida sold a combined $2.7 billion in 2006, or close to 60 percent of the 17 States’ overall gross sales, including cut Christmas trees. The number of nursery producers in the 17 States declined by 450 from 2003, raising average sales per producer to $637,344, from $512,888 in 2003, a 24-percent boost. About half of all producers sold at least $100,000 worth of nursery crops in 2006. Their average sales at wholesale were $1.4 million, up 11 percent from 2003. A total of 471,106 acres were used for nursery crop production in 2006, 3 percent higher than in 2003. The average production area per operation was 64.6 acres, a 9-percent expansion from 2003. The number of hired workers in 2006 was 112,672, slightly less than 113,137 in 2003. More than half, or 54 percent, of these workers were paid for 150 days or more in 2006. The average number of workers who were paid for 150 days or more was 16 per operation in 2006, up from 15 workers in 2003. There was a 12-percent increase in the number of Christmas trees sold by the 17 States in 2006, to 11.6 million, from 10.3 million in 2003. The wholesale value received by large growers totaled $210.5 million, or 15 percent higher than in 2003. The average price was $18.20 per tree at wholesale, a modest 2-percent gain from 2003. The total production area for Christmas trees grew to 114,100 acres, or 6 percent greater than in 2003. Oregon was the top producer of Christmas trees in terms of quantity sold and value of sales, which were about twice as great as North Carolina’s, the next largest producer. Christmas tree sales receipts averaged $1,845 per acre of production area in 2006, 9 percent more than in 2003. About 89 percent of these trees were sold at wholesale prices, and the rest were sold directly to consumers. Imported Christmas trees amounted to $28 million in 2006, virtually all were fir trees shipped from Canada. Most U.S. imports of live trees and non-flowering plants come from Canada. The higher exchange rate of the Canadian dollar has in part kept U.S. Christmas tree imports from Canada flat, at around $28 million since 2003, and their quantity has declined from more than 2.6 million trees in 2002 to less than 2.1 million in 2006. The average import price of Canadian Christmas trees was $13.50 in 2006, up from $11 per tree in 2003.