September 2007 Big Grower

USDA Floriculture Data: What Does the Decrease Mean? By Jim Barrett

The USDA's annual survey of the floriculture industry caused considerable concern when it was released in July. The numbers indicated a 4-percent decrease in the wholesale value of all floriculture crops from 2005 to 2006 (Figure 1). Also, the number of production companies decreased 9 percent. These numbers look very different from the trends of the 2000-2005 period, which had shown a slight decline in the number of companies and a growth in wholesale value of about 3 percent per year (Figure 2). In my first statistics course, the instructor had a saying that "statistics are like bathing suits — what they reveal is influential, but what they cover up is important."

Figure 4 (opposite) shows the relative size of the seven crops making up the total production numbers. The annuals and bedding plants segment accounts for the largest portion of the industry, by far, and when combined with perennials, the general area of plants used for gardening totals more than half of the industry's wholesale value. From 2000 to 2005, the value of annuals and bedding plants grew 12 percent, a pace slightly behind the total industry growth of 17 percent. Flowering and potted plants is the second largest industry component, and it grew only 4 percent during this period.

The data indicates that the value of perennials grew 63 percent between 2000 and 2005. Much of this is probably real growth as the production of perennials probably did increase significantly during that period. However, some of the indicated growth likely is not real growth in perennial numbers. Perennials were first broken out as a separate category in the 2000 survey, and some of the increased numbers are likely due to greater recognition by survey participants of the category and movement of some items from bedding to perennials. It is likely also that a large amount of perennial production was not reported prior to it being added as a separate category.

Is It a Top-10 List?

For the largest 10 states based on wholesale value of floriculture crops, it is interesting to look at the average company sales (Figure 1). California, Florida, Texas and North Carolina are four of the top-six states and tend to have larger companies compared to Northern and Midwestern states. Notice, for example, that New York, Ohio and Pennsylvania make the top-10 list by having a large number of smaller companies. There are a number of reasons for this pattern that includes the longer sales season in the warmer states, types of retail customers and differences in production costs.

In the 2006 data for the 10 largest states, there was a surprising amount of variation in the change in value from 2005 to 2006, with four showing a decrease and five reporting an increase. The range was from -16 percent to +10 percent. As mentioned above, the industry average was -4 percent or a decrease in sales of 166 million. From 2005 to 2006, bedding was flat, potted flowering plants were down 4 percent, while perennials and cut flowers were up 3 percent and 4 percent, respectively. The big change in the numbers from 2005 to 2006 was foliage: off 20 percent or 130 million dollars.

A big reason for the differences in the results for 2006 is what has occurred in Florida. First, the hurricanes in 2004 and especially 2005 had a major impact on the growers' businesses and production capacity, which would have affected sales volumes in 2006. Also, in both the foliage and bedding segments there are significant changes occurring in the marketplace with consolidations and large market share shifting from one operation to another. It will take another 1-2 years for the market to settle down in Florida and become more stable.

Change in Methodology

There is another factor contributing to the differences in the results of the 2005 and 2006 surveys; the changes with the 2006 survey. At first, the 2006 survey was being cancelled and then it was decided to survey 15 states (15-state program). Previous surveys had included 36 states (36-state program). This confusion easily could have resulted in fewer growers doing the survey or taking the time required to accurately report production. This is reflected in the number of participating operations dropping so much from 2005 to 2006.

The 15-state program includes about 77 percent of the production covered in the 36-state program, based on wholesale value. The 15-state program is better than no survey results at all, but the industry should lobby for the 36-state program to be resumed. First, the 15-state program makes the industry seem that much smaller to those outside the industry. The 15-state program puts more emphasis on the states with the largest production values. In smaller states, the bedding and perennials segments are relatively more important than the other industry segments and the 15-state program lessens the comparative size of these segments. Also, in several of the states omitted from the 15-state program, floriculture and nursery is a major part of agricultural production and the industry needs the data to verify its importance.

While there may be critics of the USDA data, the industry needs the program and should work to strengthen it. The size of the industry in both number of people and dollar value is important in lobbying and government relations at the national, state and local levels. Also, the data is important to companies developing both plant and hard goods products for the industry.