Roger A. Hinson, Owings, Allen D.
The green industry (nursery, landscape, greenhouse, sod and allied industries) is growing in Louisiana and nationally. This growth is fueled by changes in consumer incomes and demographics. Consumers continue to allocate a portion of their increased incomes to home improvements. An important component of growth results from baby boomers’ (individuals born between 1946 and 1964) choices. Generally speaking, people in this group have accumulated assets during their careers and have dedicated a portion of those assets to improving homes or moving to larger and more expensive homes. Baby boomers, like most other age groups, continue to demonstrate significant interest in gardening.
The latest National Gardening Association survey indicates that 78 percent of all U.S. households participate in one or more types of do-it-your-self lawn and garden activities, a rate that is growing at an annual rate of 5 percent. Almost all of these households purchase various products to support gardening activities. The average nationwide expenditure per household is nearly $460 – a value that has stayed at about the same level over the past five years – for a total of more than $38 billion spent on do-it-yourself lawn and garden products. For every $1 dollar consumers spend on green goods, they spend another $3 for other products and supplies.
In addition, households annually spend more than $31 billion for professional lawn and landscape services, landscape installation and construction, landscape design services and tree care services. These services have grown at a rate of 13 percent per year over the past five years.
Growers have benefited from consumer demand. From 1995 to 2003, sales of nursery and greenhouse crops by Louisiana growers increased from about $105 million to about $122 million, according to LSU AgCenter estimates. Another indicator of growth has been in the services sector, where sales by horticultural services firms, such as landscapers, increased from $146 million to $266 million over the period 1995 to 2001.
The green industry is an important contributor to the general economy as the result of value-added activities. Farm production requires extensive quantities of materials, and since production is not yet extensively mechanized, it requires a relatively large amount of labor.
Changing Market Channels
Nursery products move to market through sales to retailers, landscapers and wholesalers. The portions moving through these channels have changed over time, according to surveys of growers. In1988, the landscaper market was responsible for the largest portion of sales at about 40 percent, but that value fell to 24 percent in 1998. Over the same period, sales to retailers fell from nearly 41 percent to 35 percent. Sales to wholesalers, however, grew from about 19 percent to 38 percent for small growers and from 16 percent to 48 percent for large growers. The portion that went to direct retail was small and changed little. Overall, wholesalers have become a more important component of the industry. However, each channel adds value to the product.
A recent study showing the indus-try’s economic impact on the state included producers (farmers and the landscape services industry), golf (including all revenue and expenses), retail sales (garden centers, mass merchants, florists and others) and a category of other industries with extensive horticultural activity. The latter category was included in the study because industrial classifications put companies into specific industries and attribute all of an industry’s sales and expenses to its major activity.
Construction is an example. Building and remodeling are the main activities, but installation and mainte-nance of landscapes are required too. This portion of output was identified and attributed to the green industry because it is similar in nature to other activity reported as landscape services. In addition, landscape maintenance activities by a variety of public and private institutions, such as churches, schools and other public agencies, are either contracted out or hired and are included to the extent possible.
A model that estimated the economic impact from all sources showed that Louisiana’s green industry was responsible for about $2.2 billion in gross sales, provided nearly $1.2 billion in personal income to business owners and employees and contributed nearly $1.7 billion to the gross state product. The green industry also was responsible for around 56,700 Louisiana jobs.
The nursery and landscape industry has important linkages, influence and substantial effects on other sectors of the economy. (This article appeared in the spring 2005 issue of Louisiana Agriculture.)