Charles R. Hall
Associate Professor of Agricultural Economics & Extension Specialist
Texas A&M University College Station, Texas
Greenhouse and nursery agriculture continues to outpace all other major farm sectors. Producer cash receipts of $8.1 billion in 1990 grew by 7 percent over 1989 and contributed 10 percent of all farm crop cash receipts. In 1990, greenhouse and nursery agriculture ranked seventh among all commodity groups and in 21 states it ranked in the top five commodities in cash receipts. Steady and continued market expansion is expected in the next year or two for floriculture and environmental horticulture crops but growth will depend heavily on the general economy and consumer spending.
The 1991 grower cash receipts are expected to total $8.7 billion or 7 percent more than 1990). The 1992 outlook is for receipts to grow another 9 percent to $9.5 billion. Producer sales of most greenhouse crops will expand significantly in 1992 while expansion in nursery crop sales will be moderate. Markets are expected to strengthen in 1993, especially for nursery crop sales as construction activity enhances demand for landscaping plants.
Even though we are experiencing a recession and growth has slowed substantially, the greenhouse and nursery industry remains on the verge of another wave of expansion. If economic activity accelerates in 1992 and 1993, the outlook will be for double-digit growth for most categories of greenhouse and nursery crops. If the economy continues on its current track, overall sales growth is still expected to range 6-8 percent above this year. This holds true for producer sales as well as wholesale and retail sales. Demand for greenhouse and nursery products at the producer level is directly linked to retail market demand which is driven by the gross domestic product (gdp). The United States has the largest gdp in the world and therefore represents the largest flower and plant market in the world. The U.S. gross domestic product in 1991 showed a slight decrease from 1990 but the gdp is expected to grow by 3-4 percent in 1992. The markets for ornamental and environmental products are very responsive to greater consumer affluence which is the direct result of the gross domestic product.
Consumer Expenditures Expected To Improve
With renewed consumer confidence, retail expenditures for greenhouse and nursery products will surge ahead of the last two years. Retail expenditures in 1990 are estimated at $38 billion ($150 per capita); are projected to top $40 billion in 1991; and are forecast to reach nearly $44 billion in 1992 ($172 per capita).
The greenhouse and nursery industry is comprised of two major segments: the floricultural product segment and the environmental horticulture product segment. Environmental horticulture products (primarily nursery crops, turfgrass, and bulbs) account for about 58 percent of total expenditures. Floricultural products (comprised of cut flowers, cut cultivated greens, potted flowering and potted foliage plants, and bedding and garden plants), account for about 42 percent of total expenditures. Consumer expenditures for environmental horticulture products will increase to about $25 billion in 1992 or $97 per capita. A sharper rise is expected next year in expenditures for floricultural products which should exceed $18 billion or $71 per capita.
Texas Trends are Positive
An analysis of TAN Scope Committee reports over the last decade indicates positive growth for the greenhouse and nursery industry in Texas. Sales have increased substantially for every major sector of the Texas green industry. Each of these sectors are discussed below.
From 1982 to 1990, grower sales increased from $44 million to $309 million dollars. Losses after the 1983 freeze reduced 1984 sales and the 1986-87 “oil recession” reduced sales in those years. However, sales since 1988 have increased dramatically. While these trends are good, it should be noted that these estimates may be slightly underestimated due to the fact that sales tax figures are used to measure wholesale grower sales.
Sales at the retail level have held steady with a slight upward trend since 1982. Retail sales reached record-breaking levels in 1990 totaling $1.3 billion. Although sales by non-nursery outlets (retail entities whose primary activity is not nursery related) are not formally recorded by the State Comptroller’s office, estimates have been generated by the TAN Scope committee using information from the National Gardening Association.
The value of the service industries (landscape counseling and planning, lawn/garden services, and shrub/tree services) has also increased significantly since 1982. The reader will notice that there is a significant jump in the sales reported for the service sectors in 1988. While some of the increase may be attributed to an improving economy, much of the increase is due to reclassification procedures by the State Comptroller’s office which increased the number of firms included in these service categories.
Total nursery industry sales (1982-1990) for Texas are shown in Figure 9. Total sales in 1990 (nearly $3.5 billion) achieved an all-time record high previously set in 1983, even though the number of reporting outlets declined from 1989 levels. As long as these trends continue, the outlook is very optimistic for the Texas nursery industry.