1. Overview of the Green Industry Special thanks for some of these slides to Dr. Charles R. Hall Professor & Extension Economist Texas A&M University

2. Outline 1. The economic importance of the GREEN industry. 2. Interesting technological advancements that have caused structural changes in the green industry. 3. Marketing systems in the GREEN industry.

3. Largest flower auction in the world Dutch-based – Amsterdam See highlights Aalsmeer Flower Auction Source: Images from Aalsmeer Dutch auction

4. Dutch Auction Auctioneer starts with one high price and goes down until there is a bid – first bid takes the lot. Advantage of moving large number of lots of flowers quickly

5. 1. Economic importance of the GREEN industry.

6. Green Industry Also referred to as “environmental horticulture” –Nursery & floriculture –Sod –Greenhouse for ornamental and annual vegetable/tobacco plant stock –Landscaping services Markets include –Home construction/home improvement –Golf courses, parks, outdoor sport facilities, public spaces –Retail garden centers, florists

7. Kentucky’s “green” industry includes … Nursery and greenhouse growers/auctions, firms providing landscape services such as contracting and maintenance, and retail operations including independent garden centers, home improvement centers, and mass merchandisers/chain stores.

8. The nursery and greenhouse industry comprises the fastest growing segment of U.S. Agriculture Number of nursery and greenhouse farms continue to increase Grower cash receipts increasing at ~ $500 M per year Third most important sector in U.S. crop agriculture Seven states account for 2/3 of all U.S. nursery crop production --- CA, TX, FL, NC, OR, OH, MD

9. Perspective on Nursery, Greenhouse and Sod Industry U.S. value of agriculture production U.S. value of all crops U.S. value of nursery, greenhouse, sod $202 Billion $ 143 Billion $ 17 Billion Note: Source: 2007 Census of Ag; 2009 Census of Horticulture Specialties.

10. 1. Farm sales for nursery & greenhouse for U.S.: $14.5 billion in 2012 ($16.6 billion in 2007) 2. $6 billion in floriculture crops 3. $5.1 billion nursery stock 4. $1 billion in sod 5. 68% of cut flowers are imported, primarily from Columbia and Ecuador 6. California, Florida & Hawaii major U.S. producers 85 sod farms: 52% acres, 53% sales

11. Recession Impacts Highly dependent on housing starts Consumer disposable income Major industry contraction during recession

12. National Nursery and Greenhouse Sales 2000-2014 Source: USDA/ERS Farm Income and Wealth Statistics, 2014 Economics

13. Greenhouse & Nursery Sales ($million) 20072012changePercent change KY87.74879.283-8.465-9.6% OH444.855437.723-7.132-1.6% IN126.241110.838-15.403-12.2% IL435.073332.104-102.969-23.7% TN325.079294.740-30.339-9.3% Natl16632.73414517.593-2115.141-12.7% Source: 2012 Census of Agriculture

14. Business Issue% Rating as #1 Issue Excessive Overhead 21 Recession impact on premium/specialty products 18 Labor management & availability 17 Uncertainty of government regulation 16 Retaining key buyer relationships 13 Retaining key personnel 10 Most Important Factors Facing Nursery Business During Next 2 Years Source: Woods, 2011 Nursery Buyers Survey

16. YearEmployeesAnnual Payroll Million $ Firms 20115128146.7876 20104931135.7898 20095025136.8889 20054801124.0839 2000418676.8702 Landscaping Services in Kentucky Source: U.S. Census Bureau, County Business Patterns

17. Demand factors impacting nursery products and services 1.New construction (and mortgage rates) 2.Disposable income 3.Home improvement trends 4.Multiple worker households

18. U.S. New Housing Starts: Where we came from Thousand Homes. Annual Rate Seasonally Adjusted.

19. 2014-15 Housing Outlook Housing starts trending upwards Source: www.census.gov/construction/nrc/ *

20. Estimates of the Total Housing Inventory for the United States: 2000 to Present thousands recession Source: U.S. Census Bureau; Housing Vacancies and Homeownership

21. Home improvement sector showing recovery signs Lowes Home Depot Daily Stock Prices 2008-2013

22. 2. Technological advancements in the GREEN industry that have revolutionized plant production and marketing systems.

23. tissue culture and plug production

24. biotechnology

25. container technology

26. slow-release and soluble fertilization

27. automation technology

28. climate control systems

29. irrigation technology

30. All of these technologies have been important, but… the technological driving force that is shaking things up the most today in the Green Industry is… INFORMATION technology!

31. examples of information technology in green industry

32. precision agr. applications

33. bar code and scanner technology

34. Allied Input Suppliers Shipping Point Firms - nursery growers - greenhouse growers - combination growers - B2B alliances Re-Wholesale Distribution Centers Infomediaries Retail Home Centers 38% Garden Centers 32% Mass Merchants 30% Final Consumers E-commerce Direct to ConsumerLandscape Contractors & Maintenance Flowchart of the Green Industry Marketing System

35. Allied Input Suppliers Shipping Point Firms - nursery growers - greenhouse growers - combination growers - B2B alliances Re-Wholesale Distribution Centers Infomediaries Retail Home Centers 38% Garden Centers 32% Mass Merchants 30% Final Consumers E-commerce Direct to ConsumerLandscape Contractors & Maintenance The NEW Green Industry Structure