Unit One – Characteristics of Unit One – Characteristics of Horticultural IndustriesHorticultural Industries
AEC 317Fall 2014
Horticulture Industries
Horticulture and
The Horticulture IndustryNursery
Greenhouse
Floriculture
Landscaping and services
Sod
Fruits and nuts
Vegetables
Grapes and wine
Characteristics of Horticulture Production and Marketing
1. High input – high value
2. Labor intensive
3. Management intensive
4. Capital intensive – including land
5. Perishable products – fast moving supply chains determine quality
6. Large number of horticultural “commodities” – specialty crops
7. Annual and perennial cropping systems
8. Relatively little contracting – cash markets dominate – fewer risk management tools
9. Production consolidation and specialization
10. Market segmentation
Trellised grapesNetted apple trees
Comparative Labor CostsCommodity Annual labor $ per acre
Lettuce (iceberg) $5,200
Raspberries $4,900
Peaches $4,100
Broccoli $3,300
Blueberries $2,000
Wine grapes $1,600
Sweet potatoes $970
Alfalfa $47
Corn $35
Sources: UC Davis (CA), U Georgia, and Iowa St Univ budgets
The Specialty Crop Problem
IR-4 designation600 minor crops with a collective huge economic
impact
Production supply chains
Pest management tools and scale economies
Commodity-specific R&D and scale economies
The Perennial Crop Problem
Capital budgeting
Market response vs supply glut
Industry coordination
Production cycles (in nuts and some fruit)
More on marketing orders later
Sweet cherries and olives
Where’s the futures market for watermelons?
Risk management limits for perishable crops
Smaller volume of specialty products
Difficult to forward contract – high number of production and quality variables
Significant direct contracting for processed products
Still mostly cash transactions and spot market
Increasing contracting for fresh
Watermelon vs #2 Yellow Corn
Perishable
Seasonal
Many varieties
Small volume
End consumer product
Small volume buyers
Storable
Year around supplies
Recognized uniform product
Large volume
Input to other products (feed, fuel, corn syrup)
Large volume buyers
Loading watermelons at Asheville NC Market
Increases in vegetable consumption
Source: Vegetable & Melons Situation and Outlook, ERS, 2012
U.S. Vegetable Farm Cash Receipts
Source: U.S. and State Farm Income and Wealth Statistics: Cash receipts, by commodity groups and selected commodities, 1924-2011; ERS Veg & Pulses Outlook Sept 2014
Per Capita Fruit Consumption
Source: USDA-ERS Fruit & Tree Nuts Outlook Sept 2014
U.S. Fruit Farm Gate Cash Receipts
Source: USDA-ERS Fruit & Tree Nuts Outlook Sept 2014
Produce Acres in U.S.
Fruits and Nuts (2012) Vegetables and Pulses (2011)
Share of Farm Cash receipts
Share of Farm Cash receipts
CA 63% CA 36.6%
WA 12% FL 9.4%
FL 10% WA 6.4%
AK 6.4%
ID 5.4%
Source: Selected ERS Commodity Yearbooks
Market SegmentationProduce adapting to segmented U.S. consumer
Organics and sustainable production systems
Value-added products
General growth in credence attributesFair trade, local, eco-labels
