| Economic Effects of Horticulture Industry Essay
Horticulture industry has great popularity in the United States. The industry is common people throughout the world; most households have small gardens to grow vegetables and fruits to supplement their diets. In the 1970s there was a green revolution and horticulture became important to all societies.
Environmental horticulture is has a wide range of segments; they include garden centers, horticultural distribution centers, nursery center for wholesale production, mass merchandisers with various garden departments, landscape architects, horticulture experts inclusive of contractors and firms maintainers, in addition there are horticulture intermediaries such as brokers. The economic activities involved are production, distribution and provision of services associated with ornamental plants, landscape and garden supplies and equipment.
Environmental horticulture is among the fastest growing industries in the nations economy, research has shown that even in the time of recession the industry has been growing. The retail sales of horticultural products have been on the increase both in chain and independent stores. The industry projections are positive, although there are increasing challenges due to competition.
Secondary sources of data correction have been used in this study; industrial statistics on economic census and census of agriculture, moreover studies and horticultural surveys have been used to gather further information on the study. Economic data shows that by the year 2002, economic production from these industry raise over $147.87 billion, 1964334 billion jobs were created, $6.099 billion in indirect taxes were generate from this industry. The productions sector inclusive of greenhouses, lawns, equipment manufacturers, and the total production level totaled $36.55 billion. The economic impacts are reported through the different regions (states), the total value added was largest in Midwest region ($19.22 billion), pacific region ($18.442), northeast region ($17.96 billion), southeast ($13.56 billion). In terms of the states the highest was California followed by Florida and Texas (HRI 18).
Environmental horticulture is linked to urban forestry by providing quality material or planting and also through provision of expertise in managing and maintaining city trees. Research has shown that there is increase of value as a result of, rise in income and also creation of jobs trough urban forestry.
The environmental horticultural industry is also known as the green industry, various businesses are created in this industry, this is done through different production process, distribution and services offered. Segments of the industry include garden centers, horticultural distribution centers, nursery center for wholesale production and mass merchandisers with various garden departments, landscape architects, horticulture experts inclusive of contractors and firms maintainers; in addition there are horticulture intermediaries such as brokers. The growth has been seen in this industry for the last two decades including time of economic recession.
The relationship between community and urban forestry with the environmental horticulture industry has become integrated as part of the infrastructure in the society; however, the real economic benefits from this relationship have not been fully appreciated. The green industry is important in providing the necessary support for urban forestry. The sector offers quality planting materials scientifically generated in the various nursery cites, in addition to this the sector offers professional personnel who expertise is used in the growth of urban forestry. The services offered by the professionals include managing and maintaining city trees. The professionals are capable of educating city residents on the importance of community forestry. In this perspective heir will be mutual relationship between the city dwellers and the horticultural industry who can sell their products to the residents. The benefits from this relationship should have a mechanism to facilitate its growth so as to facilitate future projections (HRI 72).
Despite the economic growth in the environmental agriculture, gains shown by the economic indicators, there is little information that has been developed to a national economic level. The census data on horticulture activities is subject to limitations which have been period overtime; there is low data accuracy from the census. The data source are hence questionable and as such they are cannot be trust to give proper results when used a research.
As a result of limitations in data source of the economic impacts from environment horticulture the state nursery and landscape associations have developed their own economic effect studies for the various green industries. This study has prompted the need for legislation in this sector. The studies on the state level are very positive, a national study would obviously show a better results.
Objective of the Study
The general objective of the study is to estimate the economic effects of the environmental horticulture at a national level. This will be possible through the use of the various studies by different states and through the use of data from other sources of secondary data.
Scope of the study. The study aims to cover the impact of environmental horticulture on the national level and show the economic changes in then various sector of the economy.
The environmental horticulture structure is composed of production firms such as greenhouses and sod growers, wholesale distribution firms inclusive of importers, brokers and transporters; horticultural service firms proving urban forestry services such as installation and maintenance as well as landscaping; other retail operations such as garden centers, florists, home improvement centers, mass chain stores and merchandisers. The United States is rated the worlds number one in the marketing and production of both nursery crops and floriculture. This has been due to innovative measures that have been used in this industry and the advance use of technology (ERS, 45).
In the horticulture industry input supply firms are firms that provide inputs for ornamental plant production, retail sales and landscape services. Agrichemicals, containers, fertilizers, farm machinery, various equipments and tools, packaging and consulting services are the various forms of inputs (Hoboken 24). The production firms are firms that are involved in the production of horticultural products which include; floricultural crops that is, cut flowers, foliage crops, potted flowers, bedding plants, which include young flower plants and vegetable plants, they mainly cultivated in greenhouses and are used in landscaping and gardens.
Nursery crops are plants usually grown in containers; they also include fruits and nut shells for non-commercial use, this is according to the definition by agricultural census. The major use of these crops is landscaping. The determinants of production of nursery crops include; availability of water, accessibility of markets, cost of land, climate and the type soil. These crops usually grow in containers and do not have cover protection; as such the growth depends on the crops ability to tolerate the environment. In comparison to floriculture the nursery crops are usually sold in the local market or within a given region. This crops demand depends on the seasonal planting, that is whether spring or fall.
The market for nursery crops involves retail and wholesale persons. The wholesale persons have created relationships large with buyers. Marketing is done through trade shows and trade publications.
Wholesale distribution firms form the supply chain of the industry; this is done through importers and exporters. Most of these whole sale suppliers are located away from the urban centers; this is as a result of land being very expensive near the urban centers and most producers preferring to cultivate away from the urban centers.
Horticultural service firms various services including, construction, maintenance services and architectural services. They have a wide range of customers ranging from commercial business owners to home owners and municipalities. Some companies specialize in sale of fertilizers, other specialize in the sale of seedling, in addition some opt for construction of devices that control soil erosion. Landscaping services are for those companies that provide services such as mowing, trimming, mulching, snow removal and lawn care services. Some firms are more advanced in that they provide extension services such as pest-control and management, resodding and over seeding (NTHAC 35).
Retailers of horticultural products are in contact with the end customer of the good. They sell the goods in same amounts. They apply business strategies such as customer loyalty so as to stay in the business, in addition the retailer should be in good location to maximize his sales.
The end users of the environmental horticultural products form part of the structure of the horticultural industry. The end users include institutions, golf courses, homeowners, municipalities, recreational areas, medical centers, schools and hotels and motels. According to the National Gardening Association, consumers spent $587 per household in 2010 on lawns and gardens. According to the ERS reports the house-hood expenditure on nursery and floral plants averaged $160 in 2010 (HSB, 40). Over the last five years there has been an average growth of garden and lawn sales of about 6%. Most consumers of the lawns and gardens were men.
The change, to a new system that is NAICS, has increased the sales in the environmental horticultural sector. After the change-over the immediate study showed that the output sales value rose from $10.78 billion in 1988 to $40.1 billion in 2001. The nurseries and gardens grew by only 0.5%, while the lawn equipment manufacturing recorded a decrease of 2.7%.
The environmental horticultural industry is facing both opportunities and challenge due to changing time. The consumer is having a high preference of the commodities he is consuming and while the producers are changing rapidly, to be able to much the competition in real time. In the retailers are also involved in real competition for the market. Traditionally there are two types of markets the one for independent sellers and also the one for mass sellers such as the supermarkets (Wal-Mart supercenters and super Kmarts), these supermarkets have in recent times added perishable goods in there retail sections for example groceries (HAC 20).
The consumer trends vary in-relation to the various retailers in the market. Many retailers do not have the ability to provide a mix of all the environmental horticultural goods. The consumer has to choice among various retailers to have a pool of all the commodities. In addition the producers are faced with various challenges, one of the major challenge, is the fact that the producer strangles to maintain the market in which he can sell his commodities. The options available to the producers are sometimes limited due to the fact that the producer has not developed good relationships with the mass buyers of the commodity.
The market dynamics also affect the producer, extreme weather conditions such as snow may cause great looses to the producers especially where there is no use of greenhouses.
The structural impacts on the markets are significant, the marketing strategies by the various marketer have led to the consumption of more floral and nursery products. The marketers have sourced out perfect information and thus have increased the level of competition in the markets. As a result the retailers have improved on their customer service. Offshore mass markets have increased the growth level through offering of cut flowers that were previously only assembled in the United States and sold.
In most of the case the chain buyers have reduced the number of production firms that they deal with in the market, they have been positive economies of scale in dealing with fewer vendors in the market. Most of the chains request one vendor to supply a whole bunch of the commodities. For the producers this might be a loss however, most of them confirm that in the long run more profits are gained. Partnerships and mergers are some of the changes that firms have to under in order to enjoy some market power and hence have a higher bargaining power. There are several instances of producers merging with smaller firms in order to handle the volumes required to supply burgeoning chains, there may be as many as 40 producers tying to satisfy one chains needs in a market. Risks are mitigated this arrangements, through spreading the risks among the several producers. These discussions of whether there are markets efficiencies in the market differ according to the level of market share in a market. Producer with 75% or 50% of the market prefer not to have partnerships or mergers for they have to increase the level of the smaller producer y a great margin
This chapter discusses the various variables to be considered to carry out this research. It also discusses the various information sources of the research. The economic variables that affect environmental horticulture and associated with this industry are; nursery and greenhouses, lawn and garden equipment, greenhouse manufacturing (metal buildings), landscaping services, wholesalers, lawn and garden equipment and supplies, florists, general merchandise stores and food and beverage stories.
The information is to be collected through secondary means; this will include the census on agriculture, US census Bureau. There were a total of 256,389 business establishments involved in the industry, including 56,235 nursery producers, 82,783 horticultural services firms, and 116,493 wholesale/retail trade firms. Total reported employment was 1.0856 million employees, and total payroll was $46.236 billion, excluding the nursery and greenhouse sector. Total sales receipts in 2002 were $147.123 billon, including $23.32 billion for producers, $38.89 billion for horticultural services, and $85.3 billion for wholesale/retail trade.
This topic involves the analysis of the economic effects of the environmental horticulture on the United States. The economic effects on output from data collected in all states were $147.98billion, there were 1,964,338 jobs that were created, $95.12 was the value added, and the labor income was $64.32, while the indirect taxes were $6.92 billion. For the production, involving nurseries and greenhouses, garden equipment manufacturers and the green house manufacturers the output amounted to $36.62 billion, employment created was 300,678 jobs while the value-added was $20.8 billion. Horticultural services had some economic impact which included employment, creation of jobs and also, value addition.
The sector which had the largest outputs were in the form of landscape activities that is around $53.12 billion, nurseries and green houses had $26.38, while retail garden stores and building material were third and four respectively.
Discussion of Results
The results of the nursery, greenhouse and floriculture production indicate that that they are significant economic impacts from this sector. The results portray a segment of an industry whose gains are growing at a steady rate. Greenhouse management is therefore a key component in floral cultivation; this can be attributed to the fact that flowers prefer a controlled environment for growth. The controlled environment facilitates growth of the flowers even in times of harsh climatic conditions. As a result the overall effects of cyclical economic conditions do not affect this sector.
However, the sector has to produce output strategically; such that there is abundant supply of the output during seasons of high demand. The environmental industry is a complex industry with economic returns from the various sectors of the economy. There is growth in the manufacture of lawn and garden equipment. The demand for equipment increases as a result of various horticulture producers, aiming to efficiently improve their production. The overall economic effect is the creation of jobs in the nation and growth of various industries.
Horticultural service sector is another sector in which there are positive gains including, the services provided includes the landscaping design, installation and maintenance services. They are provided within the same industry. The landscaping services comprise of services such as installing trees, shrubs, plants lawns or gardens, the provision of this services is inclusive of the designing landscapes plans construction of fences, ponds, decks, retaining walls, installation of walk ways. The firms in this sector just established for the purposes construction of fences or retaining of walls. They are involved in the planning and designing of land projects such as airports highways, schools, hospitals, land subdivisions among residential, commercial, and industrial sectors.
Landscape architectural services comprise of primarily engaging in the planning and designing of land area projects whose requirements involves the projects such as highways and airport.
The landscape services and the landscape architectural services form the bases of horticulture services offered in the industry. The results from the retail and whole sale industry, this includes;
Wholesale garden equipment and lawn
Wholesale florist supply
Whole sale nursery stock
Retail garden and lawn stores
Building material and supply stores
The wholesale flower, florist and nursery supply in addition to whole sale lawn and garden equipment provides the retail market with various commodities, some include; various types of lawn and garden equipment , fertilizer and various chemical supplies and plant material.
The whole sector economic impact was 37.12% of the total nations to environmental industry. Half of the jobs are generated in this sector, 37.3% of value added was by this sector, the whole sale and retail sector pays 70.1% of all the indirect business taxes. The retail building and retail stores and supply of materials have 14.2% of the total employment, 17.56% of the indirect taxes. Florists are third while general merchandise stores are fourth. The whole sale lawn and garden equipment, wholesale flower, nursery stock and florists supply and finally retail food and beverage stores.
The Horticulture industry is a very vibrant sector in the U.S. economy. It has great economic value to not only to the economy but to those who work in this industry. The industry is popular among many people and its history goes back to many centuries. It has been the culture of communities around the world to grow fruits and vegetables for either consumption or sale. What has made the industry so popular is the because of the economic value it accords the communities and the world in general. A health nation creates opportunities for its people and the generations to come. Consumption of horticulture products has continued to rise as world population continues to increase. This makes the industry a major sector in economic growth. Some countries realize huge sums of foreign exchange from this industry. The major product is fresh flowers which have ready market in Europe and USA. Some third world countries depend on the horticulture industry to meet a part of their budget.
Though the industry is that lucrative, some countries suffer from the dominance of foreign investors in the industry; this makes it hard for them to enjoy all the benefits associated with the industry. Those who dominate the industry are large investors who own big chunks of land. They are able to determine the market price through their organizations. However, some communities consist of small farmers who practice the horticulture farming. Most governments have been in the forefront in motivating farmers to engage more into this type of farming. This has been through provision of farm inputs such as fertilizers, farming tools and quality seeds. In addition, the farmers are taught on the best ways of ensuring they get high yields from their produce. Policies aimed at strengthening the capacity of the farmers as well as that of the market have been implemented by various organizations and governments. This has not only been beneficial to the stakeholders but also to the associated sectors. The industry has created numerous job opportunities and pathway for people to invest.
Globally, the horticulture industry is being enhanced by high consumer demand for quality products along with the need for high produce to cater for the ever increasing global population. Unlike in the past when flowers were used for home decoration and at no price, these days their price has escalated due to the high demand. Flowers have become a luxury and their use seen as presentable. They are now days associated with those who are able in the society. They are occasionally used in celebrations as a reflection of beauty and love.
The use of genetically modified seeds to grow horticulture products has seen increase of yields. However, the high cost of these seeds has resulted to farmers spending lots of money in buying them and catering for their growth. This has raised the cost of farming. The high cost is reflected in the high market prices of horticulture products. However, a number of countries that value this industry have subsidized the cost of seeds, fertilizers and herbicides used in the production of horticulture products. The high cost of farming has also been a threat to small scale farmers who are unable to meet the budget of farming. This has resulted to most of them being eliminated from the industry leaving behind large scale farmers who can meet the cost of farm inputs.
One product that has made this industry such popular is the flowers. The demand for cut flowers has been overwhelmingly big. This has been triggered by the increase in disposable income, online trading and a wide variety of flowers to choose from. The marketing of flowers has boosted their sale. This is seen through promotional work and online advertisements. Flowers are now delivered to the doorstep of the consumers, thanks to online trading where all one has to do is order for a bunch of his/her choice of flowers and its delivered to the house in a couple of hours.
The industrys future forecasts are very high. It is estimated that the industry will be worth more than $ 48 billion in 2015. Some of the factors that have been so vital to the continued growth of the horticulture industry are demand for fruits and vegetables; increasing population; improved farming methods; use of technology in farming and hybrid seeds.
Demand for Horticulture Products
Year after year, the demand for fruits and vegetables has significantly gone up. This has been triggered by the high growth in population and the need for healthy eating. The campaign on eating green for better health has seen many people shift their eating habits towards consumption of vegetables and fruits. People are now days more conscious about their health than before. Research has shown that farm products are the best for consumption as compared to animal products. The growing awareness on diet has made horticulture products so popular. Sick people are advised to take plenty of fruits and vegetables as they improve on their immune. This has made communities realize the importance of fruits and vegetables to their health. Health activists have been in the fore front advising locals on good nutrition and health living. One area that is always emphasized is the need to take greens as they are believed to not only improve immunity but prevents the prevalence of certain diseases such as cancer. It can be argued that, both the high population and continued awareness of good health are the main contributories to the increased demand of horticultural products.
High population has both positive and negative effects on any given economy. Positive effects are derived if the purchasing power of the population is greater. This means that they are able to buy products of their choice without any much challenge or hardship. On the other hand, a large population that lacks average purchasing power exerts pressure on the little available resources. It also creates interdependent hence reducing the purchasing power of the working class. In case of the horticulture industry, the growth in global population has been of immense benefit. High population translates to high demand for food. Horticulture industry is widely concerned with production of food products i.e. fruits and vegetables which are prime to all peoples diet. This puts the industry at an advantageous position because it doesnt depend on whether a given population has high purchasing power or not but the consumption of fruits and vegetables always thrive. The forecasts relating to the growth of the horticulture industry are all derived in relation to population estimates because the demand of horticulture products has been proven to be consistent with population growth. However, sale of flowers has been seen to be influenced by the purchasing power of a given population. This can be depicted by the high demand of flowers in the European countries than in Asia where the population is way too large.
Improved technology has come with advancements in the farming sector. Farmers have now mechanized the whole process of tilling, planting and harvesting of crops. Technology has brought efficiency in the industry and cut on the cost of labor. Use of machinery to farm ensures that seeds are planted on time and the harvest is realized in an effective manner that reduces losses and wastage. The use of greenhouse has been of immense benefit to the producers. Greenhouses help to prevent the exposure of the growing plants to adverse environmental effects. This is made possible by the enclosure and the transparent material that only allows light to pass through. Mulching ensures no much water evaporates to the atmosphere thus leading to dehydration of the flowers and vegetables. Farmers are also taken through training where they gain skills on better farming methods in order to improve on their yields.
Of essence to todays high yield is the emergence of hybrid seeds. The genetically modified seeds have tremendously improved the harvest realized by farmers. In addition, they are not adversely affected by pesticides thus making them adaptable to many regions of the world. However, the high cost of hybrid seeds has resulted to the control of horticulture industry by large farmers who can afford them. This has placed the small farmers at a disadvantage as they rely on seeds that do give much yields and hence uneconomical as compared to those planting hybrid seeds. Though, with the continued research on hybrid seeds and many countries such as the USA coming into play, we are likely to see the price of these seeds going down to a level where many small scale farmers can afford them. There is great potential in the horticulture industry that investors should highly utilize. It is of major concern that some countries imports fruits and vegetables as their own supply cant meet the demand of its population. Communities should work hand in hand to ensure they can feed themselves through horticulture produce. Government support is vital in ensuring the morale of small scale farmers continues to reign.
This topic gives the conclusions about the discussions of the effects of environmental horticulture on economic on the United States. The effects of nursery production and landscaping services have well been illustrated. The effects have been on employment, labor income, value addition and level of indirect taxes.
The economic variables including landscaping and nursery, adds great economic value to the land. The sale of properties is greatly influenced by the location, features of the neighborhood, transportation access. The green industries benefits are seen beyond the employment and payment of indirect taxation. The industry has both social and economic benefit.
The trees planted by municipalities in the urban centers gives the society better living conditions such that there is reduction of pollution in the towns. The other benefit derived from urban forestry is the fact that towns become an attraction of many who enjoy the aesthetic beauty of the towns. Considering these benefits the gains from a green industry out way the benefits, hence the governments of recent times should encourage facilitate growth of the green industry.
The impact on the tree production and tree care services is determined by the nursery and greenhouse sector while tree care is determined by landscaping services.
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