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Economic Impacts of the Florida Environmental Horticulture Industry, 20001 Alan W. Hodges and John J. Haydu2 1. This is EDIS document FE 338, a publication of the Department of Food and Resource Economics, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL. Adapted from Economic Information Report EI-02-3, April 2002. Published May 2002. Please visit EDIS at http://edis.ifas.ufl.edu. 2. Alan W. Hodges, Assistant-in, Department of Food and Resource Economics, University of Florida, Gainesville, FL; and John J. Haydu, Professor and Market Specialist, Mid-Florida Research and Education Center, Apopka, FL; Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL. The use of trade names in this publication is solely for the purpose of providing specific information. UF/IFAS does not guarantee or warranty the products named, and references to them in this publication does not signify our approval to the exclusion of other products of suitable composition. The Institute of Food and Agricultural Sciences is an equal opportunity/affirmative action employer authorized to provide research, educational information and other services only to individuals and institutions that function without regard to race, color, sex, age, handicap, or national origin. For information on obtaining other extension publications, contact your county Cooperative Extension Service office. Florida Cooperative Extension Service/Institute of Food and Agricultural Sciences/University of Florida/Christine Taylor Waddill, Dean. Acknowledgments This research was sponsored by the Florida Nurserymen and Growers Association, its regional chapters, and Ag First/Farm Credit Bank. Introduction Florida is one of the leading states in the nursery and greenhouse industry, ranked second behind California, and ornamental plants are one of the largest agricultural commodity groups in Florida, together with citrus and winter vegetables. Florida has a comparative advantage for production of ornamental plants by virtue of the moderate climate and year-round growing conditions. According to the US Census of Agriculture, in 1997 the Florida greenhouse and nursery industry had over 5,000 commercial producers, a production area of 126,000 acres, and plant sales of $1.45 billion (Bn). Ornamental plant sales increased 10.7 percent in inflation-adjusted terms during the period 1991-98, representing an annual growth of 1.3 percent. The present study was undertaken to update a previous economic impact study of the Florida environmental horticulture industry for 1997 (Hodges and Haydu, 1999). Methods Estimation of the economic values in this study was based primarily upon information obtained from telephone surveys conducted with five different groups: wholesale nurseries, horticultural retailers, landscape service providers, residential households, and institutional/commercial consumers. Telephone surveys were conducted during the period of July to October, 2001. Nurseries, retailers and landscape firms interviewed were qualified as having sold horticultural products or services last year, while households and commercial/institutional consumers were qualified as being knowledgeable about landscape management. A total of nearly 18,000 telephone calls were made for the survey, with 12 percent of the interviews totally completed and 66 percent of the firms or households determined ineligible for the survey. A secondary, abbreviated survey was conducted by fax to provide adequate
Economic Impacts of the Florida Environmental Horticulture Industry, 2000 2 sampling in some counties. The survey was designed as a simple random sampling plan within 10 selected Florida counties. A total of nearly 2,200 completed surveys included 668 nurseries, 409 landscape service firms, 333 horticultural retailers, 452 institutions, and 321 households (Table 1). Estimates of the total value of sales or purchases for the entire population of firms or households were based on expansion factors that represent the ratio of the population to the number sampled and adjusted for ineligible contacts (Table 1). Information was collected on Florida sod farms, using a separate survey instrument similar to a previous study (Haydu, Satterthwaite, and Cisar, 1998). Non-survey information was also added on the value of cut flowers and cut cultivated greens from the USDA/NASS Floriculture Crops Report, and the value of imported fresh cut flowers shipped through the port of Miami were obtained from the Association of Floral Importers of Florida (Miami), whose members represent approximately 85 percent of the floral import industry in Florida. Output of the retail and trade sectors was taken as the gross margin on sales. Regional impacts and economic multipliers were developed with an input-output model and the social accounting matrix IMPLAN Pro software licensed from MIG, Inc. and the associated databases for Florida (1999). The economic multipliers reflect the direct, indirect, and induced impacts of specified changes in final demand or employment for any given industrial sector. Indirect impacts result from changes in economic activity of other industrial sectors that supply goods or services to a given sector, while induced impacts are the result of personal consumption expenditures by industry employees. Economic impacts of each sector and subregion of the horticultural industry were calculated for each type of impact, using the direct multiplier multiplied against local or state sales and the total effects multiplier multiplied against sales outside the region. Results and Discussion Sales of Horticultural Products and Services Total sales by Florida producers, service providers, and retail and trade businesses in 2000 were estimated at $9.91 billion, as summarized in Table 2. Sales (Bn = billion dollars and Mn = million dollars) for the producer sector amounted to $2.251Bn, including nurseries ($1.75Bn), sod farms ($307Mn), and cut flowers and cultivated greens ($199Mn); sales for landscape firms were estimated at $3.11Bn; sales for retailers were $3.64Bn; and sales were $904Mn for floral importers. Sales have increased significantly in all sectors since 1997. The increase in total industry sales from $7.09Bn in 1997 represented a growth of approximately 33 percent, or 10.9 percent annually in inflation-adjusted terms. The large increase in sales for the retail sector may represent an underestimate for this group surveyed in 1997 due to a small sample size. Sales per firm of businesses surveyed averaged $928,000 for nurseries, $3.55 million for sod farms, $935,000 for retailers, and $1.14Mn for landscape businesses. For all groups, about half of the firms had annual sales of less than $250,000, while 17 percent of nurseries, 12 percent of retailers, and 17 percent of landscaper firms had annual sales of at least $1Mn. Firms with sales exceeding $10Mn accounted for 28 percent of nursery sales, 44 percent of retail sales, and 42 percent of landscape sales. Among nurseries, shrubs and tropical foliage plants were produced by over 40 percent of firms, while flowering plants, deciduous trees, evergreen trees, palm trees, and vines or ground covers were produced by at least 30 percent of respondents (Table 3). Groups of ornamental plants that represented at least 10 percent of the total market were shrubs ($356Mn, or 16 percent), tropical foliage plants ($339Mn, or 15 percent), potted flowering or bedding plants ($313Mn, or 14 percent), and turfgrass ($307Mn, or 14 percent). Native plants, defined as plant species present in Florida prior to European settlement, were sold by 58 percent of the surveyed nurseries. However, sales of native plants were estimated at $101Mn in 2000, which was down slightly from the $106Mn estimated for 1997.
Economic Impacts of the Florida Environmental Horticulture Industry, 2000 3 Retail sales of plant products and related horticultural goods in Florida included $1.18Bn (32 percent) for plants, $799Mn (22 percent) for horticultural supplies, $359Mn (10 percent) for lawn and garden hard goods, and $1.30Bn (36 percent) for other types of goods. Live plant sales were reported by 45 percent of retailers surveyed, while horticultural supplies and hard goods were reported by 18 and 14 percent, respectively. Sales by Florida landscape services firms included landscape installation services ($1.19Bn, or 38 percent), landscape maintenance services ($1.08Bn, or 35 percent), landscape design services ($394Mn, or 13 percent), and plants and other lawn and garden goods ($449Mn, or 14 percent). For purposes of economic impact analysis, it is important to determine where economic activity takes place as well as its magnitude. Market areas were defined as international, national, state, or local, with the local area specified as the city or county, or within a five-mile radius. For nurseries, $995Mn (56 percent) of sales were state or local markets, while $749Mn (43 percent) of sales were national and international markets. For retailers and landscapers, sales were largely to local or state markets (87 percent and 92 percent, respectively). Total industry output, including sales by sod farms, cut flowers/greens, and floral importers amounted to $6.89Bn, of which $5.21Bn (76 percent) was within Florida and $1.67Bn (24 percent) was outside the state. Employment Direct employment in the Florida horticulture industry in 2000 was estimated at nearly 158,000 persons, including 35,622 employees in nurseries, 2,410 on sod farms, 60,637 in landscape services, 53,202 by horticultural retailers, and 6,100 by floral importers (Table 4). Overall, 68 percent of employees were full-time and 32 percent were part-time, temporary or seasonal. Purchases by Florida Consumers The value of horticultural goods and services purchased by households and selected commercial/institutional consumers in 2000 was estimated at $3.24Bn (Table 5). Purchases by institutions averaged $7,800 and totaled $69Mn, including $23Mn (33 percent) for plants, $21Mn (31 percent) for horticultural equipment, and $26Mn (37 percent) for horticultural services. Purchases by Florida households averaged $1,122 and totaled $3.17Bn annually, with $1.01Bn (32 percent) for plants, $1.19Bn (38 percent) for horticultural equipment, and $974Mn (31 percent) for horticultural services. Total Economic Impacts The total output impact of the Florida environmental horticulture industry in year 2000 was estimated at $9.16Bn, including $6.89Bn in direct output impact from industry sales, plus $363Mn in indirect impacts from allied firms that supply inputs to the industry and $1.91Bn in induced impacts associated with consumer spending by industry employees (Table 6). The estimated total output impact increased $1.19Bn between 1997 and 2000, representing a 26 percent increase, or 8.5 percent annually in inflation-adjusted terms. Value added is an important measure of an industry's contribution to a regional economy, representing the difference between sales revenues and the cost of purchased inputs, and includes the value of employee wages and benefits, owner's compensation, dividends, capital outlays, and business taxes paid. The total value added impact by Florida's horticulture industry was $6.40Bn, including $4.12Bn in labor income. Value added by the horticultural production, service, retail, and trade sectors were $2.52Bn, $2.13Bn, $1.08Bn, and $673 million, respectively. Total value added by allied industries (indirect effects) amounted to $230 million, and value added by employee spending was $1.23Bn. Indirect business taxes paid to governments by the horticulture industry and allied firms were estimated at $462Mn. The total value added impact grew 6.7 percent annually between 1997 and 2000. Total employment associated with the horticulture industry exceeded 192,000 jobs, including 158,000 jobs directly in the commercial horticulture sectors, plus an additional 5,000 jobs in the allied supply businesses and 25,000 jobs as a result of employee personal consumption expenditures. The employment impacts associated
Economic Impacts of the Florida Environmental Horticulture Industry, 2000 4 with the horticultural production, service, retail, and trade sectors were 54,000, 64,000, 56,000, and 13,000 jobs, respectively. Total industry employment increased 13 percent, or 4.4 percent annually since 1997. Economic impacts in 13 individual counties are summarized in Table 7. Total output impacts were highest in Miami-Dade ($902Mn), followed by Orange ($911Mn), Palm Beach ($867Mn), Hillsborough ($538Mn), Broward ($510Mn), Duval ($296Mn), Volusia ($293Mn), Lee ($266Mn), Lake ($234Mn), Manatee ($146Mn), Gadsden ($121Mn), Alachua ($73Mn), and Marion ($69Mn). Sales in each country were proportional to direct employment, but total output and value added impacts differed based on the makeup of the industry and its export base. Nursery sales were highest in the counties of Miami-Dade ($316Mn), Orange ($240Mn), Palm Beach ($164Mn), Volusia ($124Mn) and Hillsborough ($118Mn). Note that these figures do not include sod farms or cut flower/greens producers. Retail sales were highest in Hillsborough ($424Mn), Palm Beach ($279Mn), Miami-Dade ($264Mn), and Broward ($192Mn). Landscape sales were highest in Palm Beach ($450Mn), Orange ($298Mn), Broward ($270Mn), Miami-Dade ($210Mn), and Hillsborough ($185Mn). Economic Impacts of Drought on the Florida Horticulture Society Drought and water use issues are of special concern in the horticulture industry. During the past four years, many areas of Florida have experienced significantly below-normal rainfall. Anecdotal evidence indicated that many horticulture businesses have suffered severely in this situation due to limited availability of water for irrigation, water use restrictions, and loss of sales resulting from lower demand. However, drought could potentially benefit some horticultural business as a result of demand for replacement plants and water conserving equipment or supplies. As part of this study, we attempted to document the economic impact by asking survey respondents whether the drought had affected their sales or purchases of plants. A majority of nurseries, landscape firms, and institutional consumers indicated that indeed their sales or purchases had been affected by the drought, while somewhat less than 50 percent of retailers and households expressed this opinion. Among those respondents who indicated that they had been affected, over 75 percent said that their sales or purchases were decreased rather than increased. Moreover, for every group, the magnitude of change was greater in the negative direction than in the positive direction. The net change in total sales or purchases due to drought were estimated from these percentage changes, weighted by the sales or purchases for each respondent. The net impact for all groups was negative, except for retailers. Nurseries and landscapers were estimated to have suffered a net decrease in sales of $61Mn and $184Mn, respectively, while households and institutions reduced purchases by $109Mn and $3Mn, respectively. The retail sector had a somewhat different outcome, with a net increase in sales of $80Mn, due mainly to sales growth reported by large volume retail chains. The net change in sales of horticultural products due to drought and their economic impacts on the horticulture industry were estimated separately for the five Water Management Districts of Florida, which have varying water supply conditions and policies for water use restrictions. The St. Johns, South Florida, and Southwest Florida Water Management Districts all had horticulture industry sales exceeding $2Bn. The net change in horticulture industry sales was negative in all of the Water Management Districts. The largest change in sales due to drought occurred in the Southwest Florida Water Management District, with a loss of $155 million, which represented approximately seven percent of total industry sales. Horticulture businesses in the South Florida Water Management District and St. Johns River Water Management District also experienced significant losses in the nursery and landscape sectors, but these were partly offset by positive net changes for retailers. Significance This study showed that the environmental horticulture industry in Florida continues to grow rapidly and to have a major impact on the regional economy, in terms of jobs, income generated, and total sales approaching $10 billion. Growth in the
Economic Impacts of the Florida Environmental Horticulture Industry, 2000 5 horticulture industry was significantly greater than for other agriculture sectors, and for the regional economy as a whole, and has accelerated since the early to mid 1990s. The large export base of the plant production and floral import sectors in Florida are associated with significant indirect and induced economic multiplier effects. The horticultural retailing and landscape services sectors have greater total sales than the plant production sector, but primarily serve local markets. Economic activity in the Florida horticulture industry is rather concentrated in several large urbanized counties. The extended drought in Florida has had a mixed impact on the horticulture industry, but has had a net negative effect on sales and purchases of horticultural products and services. References Haydu, J.J., L.N. Satterthwaite, and J.L. Cisar. An Economic and Agronomic Profile of Florida's Sod Industry in 1996. Economic Information Report EI 98-7, Department of Food and Resource Economics, University of Florida, Gainesville, FL, August 1998, 23pp. Hodges, A.W. and J.J. Haydu, Economic Impact of Florida's Environmental Horticulture Industry, 1997. Economic Information Report EI99-01, Department of Food and Resource Economics, University of Florida, Gainesville, FL, March 1999. Implan Professional Social Accounting and Impact Analysis Software, User's Guide, Analysis Guide and Data Guide, second edition. Stillwater, MN: MIG, Inc., 1997, http://www.implan.com. USDA/NASS. Floriculture Crops Summary, 2001. Sp Cr 6-1 (01)a. Washington, DC. April 2001. U.S. Commerce Department, Customs Service, National Trade Data Bank, http://www.usatradeonline.gov.
Economic Impacts of the Florida Environmental Horticulture Industry, 2000 6 Table 1. Survey sample and expansion factors, Florida horticulture industry survey, 2000. Survey Group Sample Number Population Ineligible Contacts Respondents Reporting Sales or Purchases Expansion Factor for Sales or Purchases Nurseries 668 3,888 51.6% 621 3.0 Retailers 333 8,113 52.0% 273 14.3 Landscapers 400 8,467 67.8% 373 7.3 Institutions 452 19,887 55.3% 416 21.4 Households 3215,881,000 52.0% 309 9136 Total 2,174 1,992 Table 2. Sales by Florida commercial horticulture industry, 2000 and 1997, and percent growth. Sector Sales 2000 ($Mn) Sales 1997 ($Mn) Annual Growth 1997-2000* Production 2,251 1,837 5.5% Nursery 1,745 1,463 4.5% Sod Farms 307 199** 11.6%** Cut Flowers and Greens 199 175 2.6% Landscape 3,110 2,704 3.1% Retail 3,643 1,751 32.6% Trade (floral importers) 904 800 2.5% Total 9,908 7,092 10.9% Adjusted for inflation using the GDP Implicit Price Deflator. ** Data for 1996 and annual growth rate reflects four years.
Economic Impacts of the Florida Environmental Horticulture Industry, 2000 7 Table 3. Products and services sold by Florida horticulture firms, 2000. Product or Service Firms Selling Share of Sales Estimated Total Sales ($million) Plant Producers (nurseries, sod farms, cut flowers/greens growers) Shrubs 45% 16% 356 Tropical Foliage Plants 44% 15% 339 Potted Flowing Plants or Bedding Plants 31% 14% 313 Turfgrass 10% 14% 307 Cut Foliage or Flowers 5% 9% 216 Deciduous Shade, Flowering or Fruit Trees 31% 9% 191 Evergreen Trees 31% 8% 176 Palm Trees 38% 5% 123 Propagating Linrs, Cuttings, or Plugs 28% 4% 88 Other Types of Ornamental Plants 9% 3% 65 Vines or Ground Covers 33% 3% 65 Total Sales 100% 2,251 Retailers Live Plants 45.2% 32.4% 1,182 Horticultural Supplies 17.5% 21.9% 799 Lawn and Garden Hard Goods 13.6% 9.9% 359 Other Goods 25.9% 35.8% 1,303 Total 100.0% 3,643 Landscape Firms Landscape Installation Services 58% 38.3% 1,193 Landscape Maintenance Services 59% 34.5% 1,075 Landscape Design/Consulting Services 48% 12.7% 394 Live Plants 30% 12.2% 380 Lawn and Garden Supplies 18% 2.2% 69 Total 100.0% 3,110
Economic Impacts of the Florida Environmental Horticulture Industry, 2000 8 Table 4. Employment in the Florida horticulture industry, 2000. Sector Full-time Part-time, Temporary, Seasonal Total Share Full-time Nursey 27,463 8,159 35,622 77% Sod Farms 1,889 521 2,410 78% Landscape 47,433 13,204 60,637 78% Retail 29,975 23,226 53,202 56% Floral Imports N/A N/A 6,100 N/A Total 106,760 45,110 157,970 68% Table 5. Value of purchases of horticultural products and services by Florida institutions and households surveyed, 2000. Group/Type Respondents Purchasing Average Value ($) Share of Purchases Total Value Purchased ($Mn) Institutions Plants 92% 2,615 32.7% 22.6 Equipment 87% 2,574 30.5% 21.1 Services 86% 3,166 36.9% 25.6 Total 94% 7,800 100.0% 69.3 Households Plants 96% 364 31.7% 1,005.0 Equipment 97% 428 37.5% 1,189.0 Services 95% 356 30.7% 974.2 Total 98% 1,122 100.0% 3,168.1
Economic Impacts of the Florida Environmental Horticulture Industry, 2000 9 Table 6. Total economic impacts of the Florida horticulture industry, 2000 and change from 1997. Type/Sector Direct Impact Indirect Impact Induced Impact Total Impact Annual Change Total Impact 1997-2000* Output ($Mn) Production (nursery, sod, cut flowers/greens) 2,2511791,0463,476 7.9% Landscape Services 3,110 67 2183,395 4.5% Retail 1,093 18 1851,296 41.5% Trade (floral imports) 438 99 460 997 2.7% Total 6,892 363 1,909 9,164 8.5% Value Added ($Mn) Production (nursery, sod, cut flowers/greens) 1,740115 6642,518 8.7% Landscape Services 1,946 44 1402,130 -1.5% Retail 948 11 1221,080 41.9% Trade (floral imports) 311 60 302 673 2.7% Total 4,944 230 1,227 6,401 6.7% Labor Income ($Mn) Production (nursery, sod, cut flowers/greens) 1,108 71 4301,608 16.3% Landscape Services 1,298 29 911,418 -5.9% Retail 581 7 81 669 38.7% Trade (floral imports) 181 41 202 424 2.2% Total 3,167 148 803 4,118 5.8% Indirect Business Taxes ($Mn) Production (nursery, sod, cut flowers/greens) 26 10 54 90 16.3% Landscape Services 80 3 11 94 5.7% Retail 177 1 9 187 35.3% Trade (floral imports) 64 4 22 91 1.7% Total 348 17 96 462 15.1% Employment (jobs) Production (nursery, sod, cut flowers/greens 38,0322,78013,47754,288 5.9% Landscape Services 60,6378082,83764,282 0.9% Retail 53,2021992,47355,874 32.0% Trade (floral imports) 6,1001,1696,14613,416 1.3% Total 157,970 4,957 24,933 187,859 4.4% Adjusted for inflation using GDP Implicit Price Deflator.
Economic Impacts of the Florida Environmental Horticulture Industry, 2000 10 Table 7. Economic impacts in selected Florida counties by nurseries, horticultural retailers, and landscape services sectors, 2000. County Sales ($Mn) Employment Impacts (Jobs) Output Impacts ($Mn) Value Added Impacts ($Mn) Labor Income Impacts ($Mn) Nurseries Retail Landscape Total Palm Beach16427945089318,157867558362 Miami-Dade31626421079018,354902601389 Orange 11842418565316,303911587382 Hillsborough24011529872713,793538400257 Broward 4619227050710,596510341223 Duval 381361443186,739296209136 Lee 641321183146,187266192124 Volusia 12496 462666,225293219140 Lake 89132402615,790234162103 Manatee 4559 571613,35014610265 Marion 9 98 261332,180695233 Gadsden 812 8 912,43312110367 Alachua 16 45 30 91 1,792 73 55 36