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Nursery and Tree Production

Date: 2023
From: Gale Business: Insights
Publisher: Gale, part of Cengage Group
Document Type: Industry overview
Length: 1,833 words

Full Text:
This industry comprises establishments primarily engaged in (1) growing nursery products, nursery stock, shrubbery, bulbs, fruit
stock, sod, and so forth, under cover or in open fields and/or (2) growing short rotation woody trees with a growth and harvest cycle of
10 years or less for pulp or tree stock. Establishments primarily engaged in growing vegetable and melon bedding plants are
classified in Industry 11121, Vegetable and Melon Farming; Operating timber tracts (i.e., growing cycle greater than 10 years) are
classified in Industry 113110, Timber Tract Operations; and Retailing nursery, tree stock, and floriculture products primarily
purchased from others are classified in Industry 444220, Nursery, Garden Center, and Farm Supply Stores.

Industry Snapshot
The floral industry is a subset of horticulture that is concerned with ornamental and flowering plants for floristry or gardens. The
industry is further divided into six types of consumer products, including:

1. cut flowers
2. potted flowering plants
3. foliage plants
4. flower arrangements
5. bedding plants
6. noncommercial home gardening

According to separate reports from MarketWatch and Future Market Insights, the global floriculture market was valued at
approximately $50 billion in 2022. On a regional basis, Europe held a leadership position, accounting for more than 50 percent of
revenues during the early 2020s. The United Kingdom and Germany were key markets for both ornamental plants.

Organization and Structure

According to the International Trade Centre (ITC), floriculture has traditionally been organized regionally. The Netherlands ranked as
the world's top exporter in 2021. With exports valued at $14.04 billion, it accounted for more than half of the global total ($27.77
billion). However, shifts in retail and exchange centers served to further decrease costs. Beyond the Netherlands, newer world
markets were emerging in Dubai, Tel Aviv, and Kunming, China.

Better transportation methods in the 2020s have allowed growers to send their products over larger distances, allowing lower-cost
flowers and plants producers to enter new markets. Increasing specialization served to make the industry more efficient and
competitive in its pricing. This shift was made possible by improvements in air transportation and refrigeration, which allowed for
efficient trade of cut flowers.

Background and Development

Globally, the ornamental floriculture and nursery industry has grown consistently since the 1950s, when the total world production
was estimated at $3 billion. Even during the global recession of 2008–2009, when growth flagged, the floral industry was estimated at
$40 billion, over 13 times its value from the 1950s.

According to the ITC, the global market for commercially grown flowers totaled about $50 billion in 2012, a figure that remained
steady through 2013. In the early 2010s, exports were experiencing an average annual 10.3 percent growth. In particular, floral
arrangements and cut flowers were being exported from supplier countries. The cut flower industry in major consumer countries
continued to suffer from competition from the developing world, particularly regions with warmer climates where growers did not need
to heat greenhouses and labor was less expensive. The top import countries for North America, Colombia and Ecuador, supplied
over three-quarters of all U.S. imports of fresh-cut flowers. These two countries, which have long growing seasons and low labor
costs, supplied 95 percent of the roses, 94 percent of chrysanthemums, and 99 percent of carnations brought into the United States.

The European industry experienced competitive conditions similar to the United States. While U.S. producers have been forced to
contend with low-cost competitors from South America, European producers have felt increasing pressure from African and
Southeast Asian competition. Predictably, the effects have led to increasing consolidation and vertical integration among European
Union commercial suppliers, according to Sumara Sarkar, chief manager at EXIM Bank of India, in a study quoted in a 2011 issue of
Floriculture Today.

In large part due to these shifts in production, the environmental impact of the industry became a point of focus. The Montreal
Protocol, established in 1989, had been ratified by 196 countries by 2011, making it pervasive in global policy. One of its propositions
had been to eliminate methyl bromide use by 2015. This chemical is widely used in floriculture as a pesticide in order to preserve the
flowers for distribution and purchase.

In response to these concerns, Colombia, a major producer, developed a strategy known as Integrated Pest Management (IPM).
Other main producers adopted many of Colombia’s practices in order to comply with Montreal Protocol guidelines. With very few
exceptions (years in which the countries did not meet stipulations), Ethiopia, Kenya, Colombia, and Ecuador were able to reduce
methyl bromide emissions in accordance with the Montreal Protocol schedule without significant influence on quality, price, or trade.
However, concerns regarding fertilizer use, which contaminates water sources, remained high.

Colombia remained a major exporter of floricultural products. In 2013 Colombia exported EUR 817.5 million worth of ornamental
horticultural products. Cut flowers made up most of the total, amounting to more than EUR 813 million. That year, the majority of
growers were located in the Antioquia and Cundinamarca regions. Roses accounted for the majority of growth area in Colombia that
year, according to the International Association of Horticultural Producers.

In India in 2014, there was a larger demand for roses and other floricultural products. That year, Taj Mahal rose exports as well as
exports of other roses were expected to increase by 50 percent, according to Biman Mukherji and Dhanya Ann Thoppil of the Wall
Street Journal. Bangalore, one of India's biggest grower areas, was seeing increased demand from overseas buyers that year around
Valentine's Day. Export prices were up about 20 percent that year. The increased interest and price came in part due to harvest
issues in China, which were caused by cold weather. Also, subsidies from state governments were helping growers with building
greenhouses and other structures. Furthermore, domestic demand for flowers was higher in India that year. There was a longer
wedding season, due to a larger number of favorable wedding dates, and a slightly higher interest in celebrating Valentine's Day,
which traditionally was not celebrated in India.

A January 2015 report from Rabobank analyst Cindy van Rijswick put the global export market for "cut flowers, cut foliage, living
plants, and flower bulbs" at $20.6 billion in 2013. While this was not as high as the 2011 mark of $21.1 billion, in 2001 the global
export market was only $8.5 billion, so long-term growth was occurring in the floriculture export market. Cut flowers were the largest
category, followed by living plants. Each was around 40 percent of the export market, with cut flowers typically above that mark while
living plants were slightly below that figure.

One shift in the floriculture market that has benefited emerging economies has been the increase in products sent via sea freight. The
Rabobank report by van Rijswick stated that transportation costs are reduced by sending flowers and plants in this manner relative to
air freight, which was almost always more expensive. Colombia was the world leader in flowers sent by sea in 2013, followed by
Vietnam. "Colombia shipped about 700 containers of mainly chrysanthemums to the United Kingdom (UK). One 40-ft container can
be loaded with about 150,000 chrysanthemum stems," according to the report. Most Vietnamese shipments went to Japan.

An October 2015 ITC report from Marianne Altman regarding floriculture in the EU noted that "identifiable past shifts in European
contact countries are continuing: Kenya is strengthening its position; in 2014 28% of EU imports came from Kenya alone." The report
also noted that Russia was a large market, and that the Netherlands had been losing market share in that country to other EU
countries, notably Poland, Lithuania, and Latvia. However, Dutch exports to the United Kingdom increased by 18 percent, and
exports to other Western European countries also increased.

In December 2018, Future Market Insights elaborated on the optimistic outlook for the global floriculture market, noting that promising
conditions were seen for cut flowers, potted flowers, bouquets, potted plants, seeds, single-cut flowers, and tissue cultures in 2019.
"Small and medium enterprises, who majorly dominate the floriculture landscape, have significantly benefitted from a well-developed
virtualized freight and logistics network and a well-coordinated supply chain, comprising growers, auctions, traders, logistics service
providers and gift shop outlets," the researcher explained. "These virtual networks also enable cost-effective and speedy deliveries of
floriculture products, specifically cut flowers, considering their fast deteriorating rate after harvest."

Online flower sales, which continued to deteriorate sales made via traditional retailers and florists, were a key driver of industry
growth during the late 2010s, according to Technavio. The researcher noted that advancements in biotechnology were producing
products that did not occur in nature, including blue roses. At the same time, biotechnology was resulting in flowers that were more
resistant to extreme climates. Monsanto, for example, was developing antiaging technology that helped to prevent flowers from
wilting.

Current Conditions
In December 2022, MarketWatch indicated that the global floriculture market was valued at $50.04 billion in 2022, a figure that was
projected to reach $58.03 billion by 2028, following compound annual growth of 2.5 percent. A separate Future Market Insights
analysis offered a virtually identical ($49.8 million) valuation of the market in 2022. However, it offered a much more optimistic
forecast, predicting that compound annual growth of 6.7 percent would propel revenues to $80.5 billion by 2029. The firm indicated
that cut flowers accounted for a commanding 80.9 percent share of the market during the early 2020s.

Citing January 2022 statistics from Garden Pals, Market Share Reporter revealed that Snake Plant was the most popular houseplant
in the United States in 2021, based on monthly Google search volume. Approximately 274,000 searches were made for the plant that
year. Philodendron ranked second, at 178,000. Other key plants included aloe vera (167,000), Peace Lily (150,000), Pothos
(127,000), and Peperomia (83,000). One factor that boded well for the industry was the burgeoning popularity of indoor gardening,
which was enjoyed by approximately 33.1 million households in 2021.

Industry Leaders
In 2019, one industry leader was Royal FloraHolland of the Netherlands. The cooperative included 1,617 member companies that
collectively served approximately 2,493 customers during the late 2010s. On the strength of 2,956 employees, Royal FloraHolland
generated annual revenue of about EUR 4.6 billion. Other international leaders included Germany-based Landgard, with 2017 sales
of EUR 1.9 billion, and Veiling RheinMaas (Germany's only flowers and plants auction), with 2018 revenue of EUR 348 million).
Veiling RheinMaas is a joint venture between FloraHolland and Landgard.

Major Countries in the Industry

According to the International Trade Centre (ITC), exports of live trees and other plants; bulbs, roots and the like; cut flowers and
ornamental foliage totaled $27.77 billion in 2021. The Netherlands ranked as the world's top exporter that year, accounting for more
than half of the global total ($14.04 billion). Columbia ($1.76 billion) and Italy ($1.36 billion) rounded out the top three. Other leading
exporters included Germany ($1.20 billion) and Ecuador ($964.60 million).

The ITC revealed that industry imports were valued at $25.07 billion in 2021. Germany was the leading importer that year, at $3.97
billion. The United States ($3.56 billion) and the Netherlands ($3.12 billion) ranked second and third. Other top importers included the
United Kingdom ($1.73 billion) and France ($1.60 billion).

Abu Kargbo, Jing Mao, and Cai-yun Wang. "The Progress and Issues in the Dutch, Chinese and Kenyan Floriculture Industries."
African Journal of Biotechnology 9, no. 44 (2010): 7401–7408. Available from http://www.academicjournals.org/.

Altman, Marianne. "Developments and Trends in the Flower and Plant Market for 2015/2016." International Trade Centre, October
2015. Available from
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%202016.pdf.

"Floriculture Market." Future Market Insights, 2023. Available from https://www.futuremarketinsights.com/reports/floriculture-market.

"Floriculture Market to Reach at a CAGR of 7.6% During 2018 to 2027—FMI." Globe Newswire, 10 December 2018. Available from
https://globenewswire.com/news-release/2018/12/10/1664257/0/en/Floriculture-Market-to-Reach-at-a-CAGR-of-7-6-During-2018-
to-2027-FMI.html.

Getu, Mulugeta. "Ethiopian Floriculture and Its Impact on the Environment: Regulation, Supervision and Compliance." Mizan Law
Review 3, no. 2 (2009): 240–270. Available from http://www.ajol.info/.

"Global Floriculture Market 2018–2022 | Increase in Online Flower Sales to Boost Demand | Technavio." Business Wire, 21
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Market-2018-2022-Increase-online-flower.

"Global Floriculture Market Size 2023, Share, Forecasts Analysis, Company Profiles, Competitive Landscape and Key Regions
2028." Market Watch, 9 December 2022. Available from https://www.marketwatch.com/press-release/global-floriculture-market-
size-2023-share-forecasts-analysis-company-profiles-competitive-landscape-and-key-regions-2028-2022-12-09.

International Association of Horticultural Producers. "Sales and Markets." International Statistics of Flower and Plants 2015. Available
from http://www.aiph.org.

———. "Statistical Yearbook." Reading, UK, 2014. Available from http://www.aiph.org.

International Trade Centre. "Floriculture Sector at a Glance." Geneva, Switzerland, February 2014. Available from
http://www.intracen.org/itc/market-insider/floriculture/at-a-glance/.

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Full Text: COPYRIGHT 2021 Gale, a Cengage Company

Source Citation (MLA 9th Edition)
"Nursery and Tree Production." Gale Business: Insights, Gale, part of Cengage Group, 2023. Gale Business: Insights,
link.gale.com/apps/doc/KJQLFU201833950/GBIB?u=deca12193&sid=bookmark-GBIB&xid=9fba5e7c. Accessed 11 Feb. 2024.
Gale Document Number: GALE|KJQLFU201833950