The green industry complex includes input suppliers (manufacturers and distributors); production firms such as nursery, greenhouse, and sod growers; wholesale distribution firms including importers, brokers, re-wholesalers, and transporters; horticultural service firms providing landscape and urban forestry services such as design, installation, and maintenance; and retail operations including independent garden centers, florists, home improvement centers, and lawn/garden departments at home centers, mass merchandisers, or other chain stores. Many current economic trends and driving forces point to the fact that the green industry is in a period of hypercompetitive rivalry due to the maturing consumer demand. A number of firms have already been forced out of the green industry during the 2008–09 recessionary shakeout period and others continue to exit. To address this issue, a workshop was organized by G. Zinati for the 2009 ASHS annual meeting entitled “Managing and Thriving in Tough Times, When Every Dime Counts!”, which was sponsored by the Nursery Crops (NUR) and Marketing and Economics (MKEC) Working Groups and the American Nursery and Landscape Association (ANLA). This lead-off workshop presentation: 1) provided an overview of current economic conditions and trends and their influence on the green industry, 2) discussed supply-side methods and technologies for controlling costs during an economic downturn, and 3) addressed proactive demand-side differentiation and pricing strategies that will not only help ensure survival, but will also better position green industry firms for competing profitably in this period of hypercompetition.
Charles R. Hall
Charles R. Hall and Dewayne Ingram
University researchers have recently quantified the value of carbon sequestration provided by landscape trees (Ingram, 2012, 2013). However, no study to date has captured the economic costs of component horticultural systems while conducting a life cycle assessment of any green industry product. This study attempts to fill that void. The nursery production system modeled in this study was a field-grown, 5-cm (2-in) caliper Cercis canadensis ‘Forest Pansy’ in the Lower Midwest. Partial budgeting modeling procedures were also used to measure the sensitivity of related costs and potential benefits associated with short-run changes in cultural practices in the production systems analyzed (e.g., transport distance, post-harvest activities, fertilization rates, and plant mortality). Total variable costs for the seedling and liner stages combined amounted to $2.93 per liner, including $1.92 per liner for labor, $0.73 for materials, and $0.27 per liner for equipment use. The global warming potential (GWP) associated with the seedling and liner stages combined included 0.3123 kg of carbon dioxide equivalents (CO2e) for materials and 0.2228 kg CO2e for equipment use. Total farm-gate variable costs (the seedling, liner, and field production phases combined) amounted to $37.74 per marketable tree, comprised of $9.90 for labor, $21.11 for materials, and $6.73 for equipment use, respectively. However, post-harvest costs (e.g., transportation, transplanting, take-down, and disposal costs) added another $33.78 in labor costs and $27.08 in equipment costs to the farm-gate cost, yielding a total cost from seedling to end of tree life of $98.60. Of this, $43.68 was spent on labor, $21.11 spent on materials, and $33.81 spent on equipment use during the life cycle of each marketable tree. As per an earlier study, the life cycle GWP of the described redbud tree, including greenhouse gas emissions during production, transport, transplanting, take-down, and disposal, would be a negative 63 kg CO2e (Ingram et al., 2013). These combined data can be used to communicate to the consuming public the true (positive) value of trees in the landscape.
Dewayne L. Ingram and Charles R. Hall
The objective of this study was to examine the differences in global warming potential (GWP) and variable cost structure of a 5-cm-caliper red maple tree grown using two alternative production methods including a traditional field [balled and burlapped (BNB)] production system and a containerized, pot-in-pot (PIP) production system. Feedback from nursery growers was obtained to model each production system including the labor required for each cultural practice, materials used, and the hourly usage of tractors and other equipment. Findings from the study indicate that the total system GWP and variable cost for the PIP tree system is −671.42 kg of carbon dioxide equivalent (CO2e) and $250.76, respectively, meaning that the tree sequesters much more carbon during its life than is emitted during its entire life cycle. The same holds true for the BNB tree; however, in this system, the GWP of the tree −666.15 kg CO2e during its life cycle at a total variable cost of $236.13. Thus, the BNB tree costs slightly less to produce than its PIP counterpart but the life cycle GWP is slightly less positive as well.
Benjamin L. Campbell and Charles R. Hall
Data from the 2004 National Nursery Survey conducted by the USDA-CSREES S-1021 Multistate Research Committee (referred to as the Green Industry Research Consortium) were used to evaluate the effect of pricing influences and selling characteristics on total gross firm sales and gross sales of several plant categories (trees, roses, shrubs/azaleas, herbaceous perennials, bedding plants, foliage, and potted flowering plants) for commercial nurseries and greenhouses. As expected, the firm's selling characteristics play a large role in whether a firm sells a specific plant category. Demand factors also play a role in affecting plant category sales with income, population, and race tending to be the only significant variables, except for the potted flowering plants category. In regard to sales, our results show that certain factors affecting pricing decisions play a critical role in both plant category sales and total sales. Furthermore, demand and business characteristics play a limited role as well, but not as big a role as selling characteristics. Of note is that firms with an increased percentage of sales through wholesale channels (of most plant categories and overall) result in increased sales. By understanding the nursery and greenhouse industry environment and how decisions affect overall and categorical sales, firms can implement strategies that capitalize on factors that have the potential to generate increased sales.
Xiaofang Guo, Chengyan Yue and Charles R. Hall
Literature on the domestic trade of nursery crops is sparse. Based on national survey data collected in years 1999, 2004, and 2009, we used augmented gravity models to investigate the primary factors affecting the value of trade for both large and small nurseries. We found that the impact of distance on trade value was different between large nurseries and small nurseries; the impact of distance on national nursery trade has been decreasing over time; and the level of impact of distance on nursery trade differs across regions. Additionally, the value of nursery trade was affected by plant types the nurseries produced and other business characteristics.
Charles R. Hall and Dewayne L. Ingram
This research uses a life cycle analysis and economic engineering approach to determine the costs and global warming potential (GWP) of production and post-production practices associated with Taxus ×media ‘Densiformis’, which is often grown using a more capital-intensive regime during the propagative and harvesting stages than the typical field-grown shrub. Total variable costs incurred during the rooted cutting stage were slightly over $0.24 per marketable rooted cutting. This was made up of $0.1966, $0.032, and $0.0127 for labor, materials, and equipment operating costs, respectively. The GWP of materials and equipment used during the rooted cutting stage of production was 0.0097 and 0.2762 kg CO2 equivalent (CO2e), respectively. Equipment costs in this phase were predominantly from heating the greenhouse (92%) and the greenhouse heating functions comprised 95% of the rooting cutting GWP. GWP during the post-farm gate stage was 2.4506 kg CO2e per marketable shrub but was offset by 12.5522 kg CO2 being sequestered in the shrub during its time in the landscape and weighted over the 100-year assessment period, leaving a net GWP of –8.1824 kg CO2e per marketable shrub by the end of the life cycle. Total takedown and disposal costs (labor) after an assumed 50-year life in the landscape were $9.0610. During the entire life cycle from cutting to landscape to takedown and disposal, total variable costs incurred were $17.9856 per shrub. These findings are consistent with previous studies in that the GWP is positive when considering the entire life cycle of the shrub from propagation to eventual removal from the landscape. Knowing the carbon footprint of production and distribution components of field-grown shrubs will help nursery managers understand the environmental costs associated with their respective systems and evaluate potential system modifications to reduce greenhouse gas (GHG) emissions.
Dewayne L. Ingram and Charles R. Hall
Previously published life cycle assessment (LCA) studies regarding the global warming potential (GWP) of tree production have shown that the carbon footprint during the cradle-to-grave life cycle of a tree can reduce atmospheric CO2. This study provides another unique contribution to the literature by considering other potential midpoint environmental impacts such as ozone depletion, smog, acidification, eutrophication, carcinogenic or non-carcinogenic human toxicity, respiratory effects, ecotoxicity, and fossil fuel depletion for 5-cm-caliper, field-grown, spade-dug trees. Findings from this study validate using data from various literature sources with a single-impact focus on GWP and compiled and calculated in a spreadsheet or using a LCA software package with embedded databases (SimaPro) to generate comparable GWP estimates. Therefore, it is appropriate to use SimaPro to generate midpoint environmental impact estimates in LCA studies of field-grown trees. The authors also compared the midpoint environmental impacts with other agricultural commodities [corn (Zea mays), soybean (Glycine max), potato (Solanum tuberosum), and wool] and determined that trees compare favorably, with the exception that fossil fuel depletion for the trees was greater than the other products as a result of the high equipment use in harvesting and handling trees. In addition, the water footprint (WF) associated with tree production is also determined through LCA using the Hoekstra water scarcity method in SimaPro. The propagation-to-gate WF for the three tree production systems ranged from 0.09 to 0.64 m3 per tree and was highly influenced by irrigation water, which was the major contributor to WF for each production system. As expected, the propagation stage of each tree represented significantly less WF than the field production phase with larger plants and lower planting densities, even with more frequent irrigation/misting in liner production.
Dewayne L. Ingram, Charles R. Hall and Joshua Knight
The components for two production systems for young foliage plants in 72-count propagation trays were analyzed using life cycle assessment (LCA) procedures. The systems differed by greenhouse type, bench size and arrangement, rainwater capture, and irrigation/fertilization methods. System A was modeled as a gutter-connected, rounded-arch greenhouse without a ridge vent and covered with double-layer polyethylene, and the plants were fertigated through sprinklers on stationary benches. System B was modeled as a more modern gutter-connected, Dutch-style greenhouse using natural ventilation, and moveable, ebb-flood production tables. Inventories of input products, equipment use, and labor were generated from the protocols for those scenarios and a LCA was conducted to determine impacts on the respective greenhouse gas emissions (GHG) and the subsequent carbon footprint (CF) of foliage plants at the farm gate. CF is expressed in global warming potential for a 100-year period (GWP) in units of kilograms of carbon dioxide equivalents (kg CO2e). The GWP of the 72-count trays were calculated as 4.225 and 2.276 kg CO2e with variable costs of $25.251 and $24.857 for trays of foliage plants grown using Systems A and B, respectively. The GWP of most inputs and processes were similar between the two systems. Generally, the more modern greenhouse in System B was more efficient in terms of space use for production, heating and cooling, fertilization, and water use. While overhead costs were not measured, these differences in efficiency would also help to offset any increases in overhead costs per square foot associated with higher-cost, more modern greenhouse facilities. Thus, growers should consider the gains in efficiency and their influences on CF, variable costs (and overhead costs) when making future decisions regarding investment in greenhouse structures.
Dewayne L. Ingram, Charles R. Hall and Joshua Knight
Three scenarios for production of Buxus microphylla var. japonica [(Mull. Arg.) Rehder & E.H. Wilson] ‘Green Beauty’ marketed in a no. 3 container on the west coast of the United States were modeled based on grower interviews and best management practices. Life cycle inventories (LCIs) of input products, equipment use, and labor were developed from the protocols for those scenarios and a life cycle assessment (LCA) was conducted to determine impact of individual components on the greenhouse gas emissions (GHGs) and the subsequent carbon footprint (CF) of the product at the nursery gate and in the landscape. CF is expressed in global warming potential (GWP) for a 100-year period in units of kilograms of carbon dioxide equivalents (kg CO2e). The GWP of the plant from Scenario A (propagation to no. 1 to 3 container) was 2.198 kg CO2e with variable costs of $4.043. Scenario B (propagation to field to no. 3 container) would result in a GWP of 1.717 kg CO2e with variable costs of $2.880 and take a year longer in production than the other two models. The GWP of Scenario C (propagation to no. 1 to no. 2 to no. 3 containers) would be 3.364 kg CO2e with variable costs of $5.733. Containers, transplants/transplanting, irrigation, and fertilization input products and associated activities accounted for the greatest portion of GHG and variable costs in each scenario. Pruning, assembling/load trucks, pesticides, and chlorination were other important components to variable costs of each scenario but had little impact on GWP. Otherwise, the major contributors to GWP are also major contributors to cost.
Charles R. Hall, Alan W. Hodges and John J. Haydu
The United States environmental horticulture industry, also known as the Green Industry, is comprised of wholesale nursery and sod growers; landscape architects, designers/builders, contractors, and maintenance firms; retail garden centers, home centers, and mass merchandisers with lawn and garden departments; and marketing intermediaries such as brokers and horticultural distribution centers (re-wholesalers). Environmental horticulture is one of the fastest growing segments of the nation's agricultural economy. In spite of the magnitude and recent growth in the Green Industry, there is surprisingly little information regarding its economic impact. Thus, the objective of this study was to estimate the economic impacts of the Green Industry at the national level. Economic impacts for the U.S. Green Industry in 2002 were estimated at $147.8 billion in output, 1,964,339 jobs, $95.1 billion in value added, $64.3 billion in labor income, and $6.9 billion in indirect business taxes, with these values expressed in 2004 dollars. In addition, this study evaluated the value and role of urban forest trees (woody ornamental trees); the total output of tree production and care services was valued at $14.55 billion, which translated into $21.02 billion in total output impacts, 259,224 jobs, and $14.12 billion in value added.