Nursery Trees

By Dan Burden, content specialist, AgMRC, Iowa State University, djburden@iastate.edu.

Profile reviewed August 2012 by Malinda Geisler, AgMRC, Iowa State University.

Overview

The nursery and landscape industry is made up of thousands of small family businesses that grow, retail, install and care for plants and landscapes. According to the USDA's Economic Research Service, the nursery and greenhouse industry comprises the fastest growing segment of U.S. agriculture. While the number of U.S. farms of all types has declined over the last two decades, the number of nursery and greenhouse farms has increased. Grower cash receipts from nursery and greenhouse sales (on sales of plants to retail and distribution businesses) have grown steadily over the last two decades and are increasing. The nursery operations also generate biomass in the form of pruning and culling waste. This may be utilized for energy production, converted to agricultural mulch or used in other ways.

The National Gardening Association stated that consumers spent $29.1 billion on lawn and garden products in 2011. There was an increase of 3 million more households in 2011 over the estimated 80 million households participating in lawn and garden activities in 2010. Consumers spent an average of $351 per household on do-it-yourself lawn and garden projects in 2011. Lawn and garden participation in 2008 was highest among married households, people 55 years of age and older, college graduates, those with annual incomes over $75,000, those with children at home and among households that are employed full-time or are retirees.

The survey tracked the location of lawn and garden sales. According to the National Gardening Association, U.S. households now spend more at home improvement centers (30 percent of the total sales) and at mass merchants (21 percent of the total sales) than they do at local garden centers and nurseries (15 percent of the total sales or local hardware stores (14 percent).

Production

Nursery and greenhouse crops are the top five commodities grown in 27 states and the top 10 commodities in 42 states. Ten states account for more than two-thirds of all nursery crop output in the United States: California, 20 percent; Florida, 11 percent; North Carolina, 8 percent; Texas, 8 percent; Ohio, 5 percent; Oregon, 5 percent; Michigan, 2 to 4 percent; Pennsylvania, 2 to 4 percent; Oklahoma, 2 to 4 percent; and New York, 2 to 4 percent. However, it is difficult to separate the nursery tree business from those that are also engaged in producing and/or selling garden and bedding plants.

The 2007 Census of Agriculture (2009) states that about $6.5 billion of nursery stock was sold in the United States. Florida, California, Oregon, North Carolina and New Jersey have the most farms, and the top producing states are California, Florida, Oregon, Texas, and North Carolina. There is a slight downward trend in the number of nursery culture operators from 2002 to 2007, amounting to a nation-wide reduction of several hundred operations.

Greenhouse space, at 405 million square feet, is down from 550 million square feet in 2004, accounting for 60 percent of the total covered area. Area covered by film plastic structures is virtually unchanged at 393 million square feet. Area under fiberglass, shade and temporary cover is at 333 million square feet of covered area. Open ground usage totaled 41,350 acres, virtually unchanged from the revised 2004 total.

The 2007 nursery culture business production value was estimated at $32.9 billion. In 2006, there were 7,292 nursery producers with sales of $10,000 or more in 17 states. Producers with sales of $100,000 or greater number 3,326; of those producers, 905 had sales over $1 million. States with the largest number of producers are: Florida, 1,307; Oregon, 878; North Carolina, 707; and California, 669.

In 2006, broadleaf evergreens accounted for 18 percent of the total sales, followed by deciduous shrubs at 14 percent, deciduous shade trees at 13 percent and coniferous evergreens at 12 percent. The top three states measured by gross value of sales were California with 24 percent of the total, Oregon with 18 percent and Florida with 17 percent. Each of these states is the sales leader in four of the 12 categories. Nurseries with sales over $10,000 report a total of 471,106 acres in production of nursery crops and cut Christmas trees in 2006, 3 percent more than in 2003. Oregon has 94,250 acres, North Carolina 48,454 acres, Pennsylvania 46,839 acres, Michigan 45,886 acres and Florida 40,706 acres.

Nursery producers with sales of $10,000 or more paid total gross wages of $1.41 billion in the 17 surveyed states in 2006. Gross wages include the employer's share of benefits such as social security, worker's compensation, insurance and pensions. During the year, 52 percent of all nurseries hired full-time workers (those paid for 150 days or more) and part-time workers (those paid for 149 days or less) were hired by 54 percent of nursery producers (Nursery Crops 2007).

The industry can have a positive impact on rural development and job creation. Overall, the nursery and landscape industry employs more than 600,000 workers during peak seasons. Operations that grow their own plants employ at least 45,000 workers year-round and 105,000 during peak seasons; landscape and retail firms employ nearly 500,000 full-time, part-time and seasonal employees. Net farm income is the highest of any specialty production area of U.S. agriculture. At an annual average of $53,589, nursery and greenhouse income is four times higher than the U.S. average ($13,458).

The nursery and landscape business is a great second business for commodity agricultural producers.  Many leading nursery operations grew out of ancillary operations on dairy or grain farms or as a hobby business. Additionally, the business is "Internet-friendly," and many companies direct market to consumers via mail order and Internet Web sites that contain illustrated product catalogs, location maps and similar contact information and product care support “help lines.”

There are opportunities and pitfalls in any of the many different types of nursery operations, and any business venture must include a significant amount of background research and a comprehensive business plan. Considerable personal reflection and business-related research should be undertaken before any actual commercial, retail or wholesale nursery planting is undertaken. Mistakes are always costly in time and money. Many questions must be answered before any plants go into the ground or into containers. If undertaken before any actual planting of a commercial, retail or wholesale nursery, proper planning can help alleviate a lot of the uncertainty and unexpected unpleasant surprises associated with starting a small business.

Consider the demands of your family and when the business should be open to the public to be successful. A full-time retail operation will have different needs than a part-time wholesale operation. Will the hours of operation be normal business hours, yearly or seasonal? Will the hours of operation include holidays and weekends? Will the demands of the business require that an employee is always available for customer service, phone reception and bookkeeping, day-to-day plant maintenance operations and during periods of peak weekly and seasonal customer traffic. Consider the needs of management and employees to get away from the business for personal and emergency leave and plan accordingly.

The different nursery operations tend to fall into one or more of the following categories. The most direct with respect to production would be a field-production operation. These producers grow woody trees and shrubs in the ground that are then harvested for resale. The merchandise may be “ball and burlap,” “pot-in-pot” or “bagged root.” All of these phrases simply describe the method of harvest and preparation of the product for distribution or sale.

A field or container operation usually includes a propagation nursery. In this operation, stock is propagated from other plants by taking seedlings, rooting cuttings or grafting one stock onto another. Propagators tend to be dedicated professionals and many are schooled horticulturalists. An understanding of the seasonal market demand for the plants, as well as an understanding of any regional or production-related disease issues, is essential to this type of operation. Some operations include the production of their own pots or flats from manure, paper fiber, agricultural waste or similar materials, sometimes for sale to other growers or retail garden centers.

Pot-in-pot includes in-ground production with the marketing flexibility of container production. It involves an intermediate level of management input, and initial start-up costs for the socket-pot, irrigation and drainage systems can be quite high. However, over-wintering costs are negligible compared to container production, and overall return has been reported to be at or greater than for conventional field ball and burlap or container production systems. Container-plant producers grow plants in containers, normally above ground. When the plants reach a specified size, they are immediately ready for sale. However, the level of management is significantly higher than for field production, and the over-wintering costs associated with container production can be quite high.

Innovative marketing programs can tap into the growing interest in attracting birds, butterflies and other fauna back into people's gardens. Retailers and producers are encouraged to tap into the landscaping and pet care markets by understanding the motivation of gardeners and pet owners, then consider “point-of-purchase” promotions and merchandise that can add to overall sales volume and value.

Specialty nurseries cater to connoisseurs and collectors, people who are looking for trees or other plants not readily available to the average gardener. Most of these nurseries sell their products retail through garden center markets and by mail order. Some operations start out as wholesale or mail order nurseries, then integrate a retail outlet, perhaps with a display garden, to provide their customers with a place to view and select their own plants and view other merchandise.

Developing direct personal contacts in the industry can be very helpful to new owners, and most state and national groups have very active promotion and marketing networks to assist their members. E-mail and Internet access is critical to any participation in this industry. Membership in certified nursery/gardener programs or in regional, statewide and local trade organizations can be invaluable to successful networking. Owner and employee certification programs or other forms of accreditation are helpful to building and promoting the business, as is attending educational meetings and trade shows. Anyone interested in any sort of retail operation and having limited landscaping experience is strongly encouraged to participate in some sort of landscape design course.

With respect to siting a landscape or nursery tree business, a study of the land resource is always an initial consideration. Soil characteristics like top soil depth, pH and available nutrients can make an important impact on additional fertilizer requirements and similar input costs. The need for proper drainage and water recycling (for example, for a container nursery) may require expensive grade changes. Adequate, clean pest-free water; local plant diseases; and culled plant material sanitation are always concerns. Some insect, nematode, fungus or bacterial infestations, for example, soybean cyst nematode and pine needle scale, can severely limit direct local sales and out-of-state export or result in quarantine. If you have infested or infected material, can you incinerate fungal- or bacteria-contaminated material at your site? Is open burning or similar incineration prevented for some reason? If so, what will be your waste disposal plan and associated cost?

The study of plant characteristics also is important. By concentrating only on those plants that do reasonably well in the climatic zone where the business will be situated, operational loss is minimized and customer satisfaction is ensured. Many good Extension publications and Internet references regarding site-specific recommendations are readily available. The National Arboretum USDA Plant Hardiness Map is particularly helpful. This resource identifies areas of average minimum cold temperatures and list species applicable to particular climatic zones.\

Sources

Garden Market Research, National Gardening Association.

National Gardening Association.

Nursery Crops, National Ag Statistics Service (NASS), USDA, 2007.

Nursery Stock, Nursery, Greenhouse, Floriculture, Sod, Mushrooms, Vegetable Seeds, and Propagative Materials Grown for Sale: 2007 and 2002, 2007 Census of Agriculture, NASS, USDA, 2009.


Profile created December 2004 and revised August 2012.

Links checked September 2013.