Michigan State University Extension
Ag Experiment Station Special Reports - SR639201
07/28/98
Department of Horticulture
Introduction
Floriculture includes the production and marketing of blooming potted plants, foliage potted plants, garden bedding plants, and cut flowers and foliages. Unlike other agricultural commodities, floriculture encompasses thousands of different plant species, and has the greatest number of unique cultivars. Domestic production statistics for floriculture are limited primarily to the USDA Floriculture Crops Report. Due to the variety of crops grown, no statistics are available for a large number of crops. Market statistics for the floral industry are limited; this lack of information is an obstacle to improving our competitive position. The floriculture and landscape/nursery industries also have lacked a strong identity with conventional agriculture. Some states do not even recognize greenhouse and ornamental plant production as agriculture.
In 1972 the Agricultural Experiment Station conducted a study entitled "The Michigan Floriculture Industry, Now and in 1985." At that time the value of the greenhouse industry in Michigan was just under $35 million. Since then the value of the industry has more than tripled. The industry, the university and the government have tried to adapt to significant changes. This report is presented as a way to assess where we are now and where we wish to be.
In the years from 1972 to 1990, bedding plant production and sales increased the most. Domestic cut flower production in greenhouses declined, while field-produced cut flowers increased in value. Potted plants have increased in value and foliage plants have shown a slight increase since 1972. The retail florist has lost market share to the mass market outlets and supermarkets, although retail sales at all outlets remain strong. The number of wire services has increased over the last 20 years, but the future will bring tough competition for these organizations. Many retail florists will offer their own toll-free numbers and accept credit cards. Survival of the wire services will depend upon their ability to offer greater services to their members and unique, valued products to the consumer.
Holidays and special events still provide the primary buying occasions for floral products. The major holidays for cut flowers and blooming plants are Christmas, Mother's Day, and Easter. Most significant nonholiday occasions are funerals, illnesses, weddings and birthdays/anniversaries. Bedding plant sales are most seasonal, beginning in March (shipped to Texas markets) and tapering off in June. Michigan floriculture is served by several trade associations. The Michigan Floral Association, a trade association of floral retailers, wholesalers, suppliers and producers, has a membership of 1,000. Member services, educational programs, legislative efforts and communications are primary services provided. The Western Michigan Bedding Plant Association and Detroit Metro Flower Growers' Association provide support and educational programs to plant producers.
Floriculture Production
Floriculture production in the United States was valued at $2.8 billion (wholesale) in 1990, an increase of 10% over 1989, and up 23% from 1988. These figures represent only a survey of 28 crops from 28 states; the real size of the industry is unknown. Scott Rawlins, director of the Horticulture Department, American Farm Bureau Federation, remarked in his 1992 outlook that the floriculture and nursery industries are the fastest growing sector of agriculture. When coupled with services and related products such as interior plantscape design and maintenance, which are not counted in statistics, the figures are even higher.
In Michigan there are approximately 500 commercial growers, producing under 600 acres of greenhouses and on 1,600 acres of cultivated fields. Wholesale crop value was $124 million in 1990, $112 million in 1989, and $35 million in 1976. On average, $200,000 of plant value is produced per acre.
Geographically, these growers are located across the Lower Peninsula with centers near Carleton, Grand Rapids and Kalamazoo. The Kalamazoo area, in particular, may represent the highest concentration of greenhouses in the U.S.
Demand for bedding and landscape plants will likely be one of the strongest demand areas for the next several years. Landscape contractors, homeowners, institutions and others needing to maintain the appearance of their property are the primary buyers.
Nationally, growth in sales is continuing for poinsettias, mums, azaleas, lilies, geraniums, and begonias. Demand for herbaceous perennials and flowering bulb plants is excellent. Consumers are seeking larger and higher quality plants, multicolored varieties, and plants with rich, vivid colors.
Sales of potted foliage plants are making moderate gains after several years of downturn. Demand is improving due to consumer environmental concerns, better products and new varieties of plants.
Michigan continues to hold a strong cut gladioli market, and produces quality cut roses which are marketed as premium flowers in the Midwest. Potential for growth is strongest with field production of perennial cut flowers. Examples include statice and yarrow.
Consumer Purchases of Floral Products
Per capita consumption of floriculture products is $63.00 (The Floral Index), $21.88 of which is spent on cut flowers. The U.S. market is considered one of largely untapped potential when compared to buying habits of other Western nations.
The retail value of floral products in Michigan is estimated at $600 million for 1991. The industry grew at an average annual rate of 7% between 1980 and 1985, and 10% between 1975 and 1980. Each household will spend about $200 on floral products this year. Table 8 illustrates the distribution of the consumer floral dollar, with cut flowers and bedding plants representing nearly two-thirds of purchases.
Retail Floral Outlets
There are now 41,000 florist shops nationwide and an estimated 900 in Michigan. Flowers and plants are also sold through 24,000 supermarkets nationwide. Retail outlets have shifted from the traditional retail florist to mass market outlets and supermarkets, most significantly for potted plants and cut flowers. This trend began in the 1970s; today supermarket floral sales represent a significant market share. Florists continue to hold specialty floral markets, but find it increasingly difficult to compete against large chain stores who buy in larger quantities and advertise flowers in mass media. Retail florist shops average gross sales of around $250,000, and continue to be family owned and operated small businesses. There are only two national floral franchises, Wesley Berry Florist and Flowerama. By comparison, supermarkets average $105,000 annually in floral sales, using 827 square feet of sales space (1989 PMA floral survey). Half of their sales are loose or arranged cut flowers, 25% of sales are blooming potted plants, 15% foliage and bedding plants, with the balance in nonperishable floral products. Whereas virtually all retail florists offer delivery and wire services, only 20% of supermarket floral departments provide these services.
Industry retail sales increased nearly 250% from 1979 to 1989. During this time florist sales advanced by 228% while supermarket sales advanced by 261%. During February 1985, consumers spent $7.29 for supermarket floral items and $26.51 at retail florist shops. By comparison, during the same month in 1988, sales were $7.95 and $27.85, respectively. In this 3-year period, florist sales advanced by 5%, while supermarket sales advanced by 9%.
International Floriculture
U.S. flower growers first felt the effect of international trade when Dutch flowers entered our marketplace in the early 1970s, followed soon after by Colombia. This trade threatened domestic cut flower production and historically altered the U.S. cut flower industry. Today, Colombia accounts for 80% of all flowers imported into the U.S.; the Netherlands 10%; and the balance from many other nations. Of total nursery and greenhouse crops imported to the U.S., cut flowers now represent 70% of this import trade. Additionally, Colombian-grown flowers hold nearly an 80% share of the entire U.S. cut flower market. The value of cut flower imports more than doubled from 1981 to 1985 (Table 10). In 1990 it was estimated to be an industry worth $313 million.
Quarantine-37 has prevented the importation of most plant material since it restricts importation of soil on the roots. Importation of U.S.-grown products into the EC has also been subject to these same restrictions. Domestic production of greenhouse plants has, therefore, largely been unchallenged by imports, unlike the cut flower market. There is pressure now to relax Q-37 standards. The Animal Plant Health and Inspection Service (APHIS) will propose several more amendments to Q-37 during the next several years, which may allow an additional 10,000 species into the U.S.
Relaxation of Q-37 creates concern about the infestation of exotic pests in this country. Despite its best efforts, inspectors have allowed the introduction of Medfly, citrus canker and poinsettia whitefly, to name a few, in recent years. There is also concern that some pests entering this country may be resistant to approved pesticides because of different chemicals used overseas.
With the globalization of the floriculture marketplace imminent for both plants and flowers, the U.S. flower growers are in need of an organized national marketing effort. "Floraboard," a proposed national floriculture market order, failed to receive enough support to gain legislative approval in the 1980s. This need for an integrated and encompassing promotional program for U.S.-grown floral products is stronger than ever before. In this same vein, improved communication among growers, wholesalers and retailers is essential to establishing U.S. floriculture in the international marketplace.
Additionally, research on the postharvest handling and storage of floral products to distant and environmentally different markets is needed. Market research to help U.S. exporters understand and target new international buyers is also necessary. Export counseling and legal advice for these small businesses is essential to encourage market expansion. Competing in the European Community depends on growers developing a market niche and succeeding in delivering a quality product.
Summary Remarks From the Conference May 1, 1992 Barbara Fails, Department of Horticulture
Key Issues
1. International free trade agreements, particularly with Mexico, will provide both opportunities and challenges for Michigan flower growers. Approximately 25% of the Kalamazoo area bedding plant growers ship to Texas in February and March for early spring sales; this market could be lost to Mexico. Importation of mature plants from overseas is not likely because of the shipping cost for such high bulk goods. The risk of pest and disease infestation from international trade is currently protected under Quarantine 37, and the industry will need to maintain this control. Other related issues involve use of chemicals by growers in other countries and what agreements will be developed to standardize production practices and protect consumers.
2. Market information, particularly production and sales statistics, is lacking for much of the floral industry. Production data is collected only on the top 28 crops from growers with over $10,000 annually in sales. No information is available on the wholesale and retail value of the industry. Information on consumer attitudes and values which influence floral purchasing habits is also lacking.
3. More consumer focus, rather than production focus, is necessary to increase per capita floral consumption. Regional market information is needed to expand markets within Michigan. Production technology has advanced at a much greater rate than marketing activities.
4. Changing distribution channels within the recent past has left the floral industry not always knowing who to buy from or sell to. Efficiency of transport, rapid communication, mass market and convenience store floral retailing and the use of toll-free numbers to sell flowers have altered the ways in which the industry does business. Consumers demand better quality products, encouraging more direct buying and selling. Particularly influencing distribution of plant material is the increasing volume of plant sales at supermarkets. This forces Michigan growers to rely on fewer accounts (from large supermarket chains) to assure sales. Growers also recognize the need to provide care and handling information to supermarket floral department staff to maintain quality products. Small retail florist businesses, once the backbone of the industry, are repositioning their market strategies to compete with the mass market floral retailers.
Broad Issues 1. New opportunities with the speed of technology transfer.
2. Environmental protection, consumer health issues, the "Right to Know."
3. Recycling of plastics, water, compost.
4. The need for strong federal agricultural leadership to address image problems and increasingly limited university funding.
5. Changing demographics, such as the aging of the Baby Boomers, the shrinking of the middle class and the increasing diversity of the population.
6. General business acumen within the agricultural industries.
Table 1. Michigan floriculture production in comparison to United States. Source: 1990 Floriculture Crops Report.
State Greenhouse acres Field acres $ Millions California 2824 8700 717 Florida 1112 9261 528 Michigan 592 1600 124 Ohio 530 170 125 Texas 451 309 135 New York 410 482 ? Pennsylvania 387 131 97
Table 2. Michigan floriculture production by county. Source: 1990 Michigan Agricultural Statistics.
County No. of growers Sq. ft. of
production space
Ottawa 123 8,520,338
Kalamazoo 92 5,247,981
Wayne 78 2,500,471
Kent 71 2,346,598
Macomb 115 2,058,869
Monroe 56 1,497,987
Washtenaw 47 691,241
Table 3. Michigan floriculture production by production area and wholesale sales. Source: Michigan Agricultural Statistics. (A commercial grower is one with sales of $10,000 or more.)
Year No. growers Greenhouse acres Field acres $
Millions
1990 480 592 1600 124
1989 470 574 1300 112
1988 470 551 1300 100
1987 445 528 1100 95
1986 435 505 1000 88
Table 4. Michigan floriculture production by commodity. Source: 1990 Michigan Agricultural Statistics.
Commodity $ Million % of total
Bedding plants 83.9 68
Potted plants 26.4 21
Cut flowers 13.3 11
TOTAL 123.6 100
Table 5. Michigan bedding plant production by crop. Source: 1990 USDA Floriculture Crops Report.
Crop $ Million % of total Flats 52.3 62 Pots 20.0 24 Baskets 9.9 12 Hardy mums 1.7 2
Table 6. Michigan potted plant production by crop. Source: 1990 USDA Floriculture Crops Report.
Crop $ Million % of total Poinsettias 9.7 37 Lilies 4.1 16 Foliage (assorted) 3.8 14 Florist mums 3.5 13 Other 5.3 20
Table 7. Michigan cut flower production by crop. Source: 1990 USDA Floriculture Crops Report.
Crop $ Million % of total Gladioli 5.4 41 Roses 4.7 35 Mums 0.5 4 Other 2.7 20
Table 8. Distribution of consumer floral spending in the United States.
Consumer spending
Crop category ($ Billion) % of total
Cut flowers/greens 5.9 37
Flowering potted plants 3.3 21
Foliage potted plants 2.4 15
Bedding plants 4.3 27
Table 9. Per capita consumption of cut flowers (1990). Source: Flower Council of Holland
Nation Per capita expenditures ($) Japan 51.25 Switzerland 46.88 Netherlands 45.00 Italy 43.13 West Germany 39.38 Denmark 39.38 Sweden 36.88 Belgium 34.38 Austria 32.50 Norway 30.00 France 28.13 United States 21.88 United Kingdom 21.88 Spain 10.63
Table 10. Value of U.S. greenhouse and nursery imported products. Source:Floriculture and Environmental Horticulture Products Review, 1960-88. USDA.
Year Value of All Nursery & Value of Cut Flower
Greenhouse Imports Imports
($ Thousands) ($ Thousands)
1979 145,347 77,994 1980 166,544 89,154 1981 180,377 103,561 1982 212,185 131,530 1983 248,431 164,322 1984 325,300 214,198 1985 342,026 220,870 1986 376,784 234,985 1987 396,256 243,609 1988 451,171 283,505 1989 445,374 309,397 1990 (est.) 460,000 313,066
Table 11. United States floriculture production in comparison to the world. Source: Jaap Blauw, United Flower Auctions, Aalsmeer, The Netherlands.
Acres of production Percent of total
Nation 1981 1988 1981 1988
Japan 29,393 35,815 26 25
Italy 13,338 23,959 12 17
United States14,820 16,459 13 12
Netherlands 13,091 16,302 12 12
Spain 3,705 5,681 3 4
Colombia 2,964 5,187 2 4
Israel 3,211 3,977 2 3
Belgium 3,458 3,557 3 3