Greenhouse Costs Rise
31 Oct, 2006 By: Jamie J. Gooch LDB SolutionsThe United States Department of Agriculture (USDA) released its Floriculture and Nursery Crops Outlook late last month. The outlook isn’t rosy for greenhouse growers. With rising costs to produce flowers and ornamentals, landscape design-build professionals can expect to pay more – though not much more. Supply still outpaces demand, so flowering plant prices are expected to increase just 4% overall in 2006.
“Higher energy and gasoline prices not only increase greenhouse operation costs, they also raise the cost of living of consumers,” according to the report. “In 2005 and 2006, higher petroleum prices led to greater price inflation in the food and agriculture sector as costs rose for fertilizer, storage, processing, and transport, among others. Thus, as in 2005, demand in 2006 will be subdued despite abundant floral and nursery crops.”
That should equate to a modest 2% gain in sales of greenhouse and nursery crops for 2006, with ornamental crop sales expected to rise from $16.2 billion in 2005 to $16.5 billion in 2006. Sales of foliage plants are projected to be up 4% and herbaceous perennials by 3%.
Import volume of flowering plants is projected to decline by 33%, based on January through June data, which could provide a boost for domestic plant sales. Domestic prices of floriculture crops are only 5% higher than in 2000. Import prices of floral crops are up 5% in 2006 alone, and up 17% from 2000.
Regional Trends
Sales of floral crops are growing fastest in the South, taking market share from growers in the West, according to the report.
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“In contrast to the Midwest and West, growers in the Northeast and South experienced positive sales growth in 2005,” states the report. “These gains in the South are further extended to nursery and other greenhouse crops, especially from Florida, Georgia, and Texas. Foliage plants sold by growers in Florida have increased their market share in the East Coast area. Sales of flowering annuals and herbaceous perennial plants from the South already lead the other U.S. regions in pace and value. It is apparent that growers located in the South are capturing U.S. market share for many floral crops at the expense of growers in other regions, including the West.”
Traditionally, ornamental growers have supplied local areas. However, southern growers have raised their share of the U.S. market to 42% for floriculture crops, partially by selling to other areas. Growers in the South also took advantage of consumers’ desire for more herbaceous perennial plants, led by hardy chrysanthemums. Sales of herbaceous perennial plants expanded by 3% in 2005. Still, annuals are king.
“Per U.S. household sales of bedding and garden annuals are more than twice those of herbaceous perennials, $17 versus $6.50. Of the $56 (at wholesale, including net imports) spent by the average U.S. household for floriculture crops in 2005, $46 were for flowering and foliage plants and $10 were for cut flowers,” according to the report. “While per household sales of annuals in flats declined in 2005, annuals in pots and herbaceous perennials both boosted sales. Nevertheless, sales growth of perennials exceeds that of total annuals, except for annuals in pots.
The full report is available here as a PDF file.
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