National Situation and Outlook
USDA/ERS reported in Floriculture and Nursery Crops Yearbook (Dec. 2007) that value of production of greenhouse and nursery crops had increased from $12.4 billion in 1997 to an estimated value of $16.8 billion for 2006, for an average growth rate of about 3.6%. This was considerably lower than estimated growth rates for the 1980s and 1990s, and the estimated change from 2005 to 2006 was only 0.3%. Changes in the larger economy in terms of income growth and rising interest rates probably have been responsible for these declines. The demand for plants and flowers as ornaments depends on consumer discretionary income and consumer preferences, and to levels of other household expenses. Energy costs in particular probably have affected sales of ornamental plants and added to the cost structure of growers in production and transportation.
In 2006, an important factor in the economy was declining growth rates (in some cases actual declines) in prices of residential housing. This trend continued and might have been more pronounced in 2007, and early in 2008 there are few signs of abatement. Forecasts of recession are common. In this environment, reduced growth rates for expenditures on nursery and floriculture products should be expected. Our outlook a year ago was that it "might be expected that sales at the national level again would increase in the range of 2 percent to 3 percent." That apparently did not happen. Further, economic reports and declines in consumer confidence as measured by polls suggest that consumers might lower spending. However, the National Gardening Association reported that in 2006 "Homeowners spent a record $44.7 billion … to hire lawn care and landscape maintenance services, landscape installation and construction services, tree care services, and landscape design services. Thirty percent of all households nationwide, or an estimated 34.5 million households, currently hire at least one type of lawn and landscape service. And the market for residential lawn and landscape services has increased at a compound annual growth rate of more than 10 percent a year for the past five years." In addition, lawn and garden participation rates have not declined. So, factors suggest market weakness are evident, but other pieces of evidence suggest any decline in expenditures on gardening may be moderate. Overall, conservative planning based on the expectation that sales level as measured by dollars would be no higher than 2007 seems to be appropriate.
Louisiana Situation and Outlook
Production and sales of nursery-grown ornamentals have significantly increased over the past 5 years. The farm-gate value of wholesale production is $120-$125 million with an additional $75-$100 million in plant inventory. Some growers feel these values are under-reported. Total sales for 2007 were up slightly from 2006 figures. Nursery crop sales in 2005 suffered due to Katrina ($11 million) and Rita ($5 million) hurricane-related losses but have rebounded. The Louisiana nursery industry, along with growers from Texas to Florida, are slightly ahead of national trends in wholesale production sales. The extended drought in portions of the southeast United States in 2007 hurt out-of-state sales for Louisiana nursery producers.
Woody ornamentals account for the vast majority of the wholesale farm-gate value of commercial nursery crops in Louisiana. The LSU AgCenter estimates wholesale sales of woody ornamental in Louisiana of about $75 annually. The prediction is for a continued increase for the next three to five years. Container production acreage has increased significantly in the last five years, while acreage in field production has been stagnant or decreased slightly. The major container crops are azaleas, hollies, crape myrtles, Indian hawthorns, groundcovers and shade/flowering tree species. The number of acres in bigger container sizes is up significantly. Adequate inventory in 1-gallon and 3-gallon woody ornamental material was in extreme short supply for the spring 2007 season but should be slightly improved for the spring 2008 season. In addition, shortages of high-quality larger container trees exist at the wholesale level in Louisiana.
Floriculture/bedding plants typically represent about 30 percent of Louisiana’s nursery crop production. At the wholesale level, about 40 percent of bedding plant/floriculture crop sales occur in late winter and early spring. Floricultural crop and bedding plant production (including poinsettias, hibiscus, garden mums, lantana, impatiens, petunias and periwinkles) has experienced little growth in Louisiana in the past three to five years. Profit margins in floriculture crop production are shrinking due to energy price increases, transportation cost, fertilizer expenses and other factors.
Foliage plant production in Louisiana has slowed. Most foliage sold at the retail level now is imported from Florida or brought in from Florida by wholesale growers and brokers. Some of these imports are grown in Louisiana for several months prior to wholesale sale. Interest in wholesale production of tropical plants, however, has increased recently in Louisiana. Although this category could fall into the floriculture/bedding plant category, outdoor tropical plants such as gingers, cannas, etc. have increased sales potential. Many greenhouse growers have profitable markets for these products.
Fruit/nut tree production is stable in Louisiana at the wholesale level. A slight increase has occurred in the last several years. Container citrus production has rebounded from 2005 when damages occurred because of hurricanes Katrina and Rita. Availability of container-grown improved pecan cultivars is significantly below market demand, and opportunities to grow these cultivars for wholesale or retail sales are considerable. Also, many new fruit cultivars could be grown to increase market potential. Citrus, figs, pecans, peaches, muscadines, blueberries, apples and pears represented the vast majority of wholesale production of container grown fruit and nut trees.