SUSTAINABLE PRACTICES, ECONOMIC CONTRIBUTIONS, CONSUMER BEHAVIOR, AND LABOR MANAGEMENT IN THE U.S. ENVIRONMENTAL HORTICULTURE INDUSTRY

• Sponsoring Institution: National Institute of Food and Agriculture
• Project Status: ACTIVE
• Funding Source: HATCH
• Reporting Frequency: Annual
• Accession No.: 1025952
• Multistate No.: S-1087
• Project Start Date: Mar 24, 2021
• Project End Date: Sep 30, 2025
• Program Code: [(N/A)]- (N/A)

Recipient Organization
UNIVERSITY OF FLORIDA
G022 MCCARTY HALL
GAINESVILLE,FL 32611

Performing Department
Mid-Florida Research and Education Center

Non Technical Summary
The environmental horticulture industry, also known as the green industry, includes nursery and greenhouse producers, landscape service providers, horticultural product wholesalers/retailers, and various allied professionals. Nursery and floriculture (greenhouse) crops include a wide variety of ornamental plants for landscaping purposes such as trees, shrubs, ground covers, turfgrass, bulbs, and propagation stock, as well as plants used for interior or patio decoration such as cut flowers and greens, potted flowering plants, foliage plants, and bedding/garden plants.The United States green industry generates over 2 million jobs in the U.S., however, information on labor use, demographics and employment characteristics is very scant for this industry. Labor costs have risen about 40% since the "Great Recession." Labor shortages, immigration reform and legal status of employees are widely reported as some of the most critical issues in the U.S. green industry. Competitive rivalry in the green industry is intensifying, especially at the retail level. One of the impacts of the mass marketing of nursery and floricultural crops has been to bring about an increase in size of growing operations. The capital requirements and infrastructure to produce these mass quantities of product have increased. Larger growers have started partnering, usually on a contract basis, with smaller growers to handle the volumes required to supply large retail chains. Several dozen growers may be involved to satisfy a retail chain's product supply needs in one market area. This may help to spread the risk among several producers. Still, there are numerous examples of producers who supply 50 to 100 percent of their output to one box store. The focus on mass markets by large growers has also created opportunities for smaller growers to develop niches serving independent retailers/landscapers or to go into retailing themselves, selling directly to the consumer. Some producers have also used their own retail outlets as a diversification tactic for risk management. Another impact of mass marketers has been consolidation within the production sector. These stresses have created intense market pressures and heightened competitive rivalry among larger producers. The smaller producers' struggle to remain competitive in a viable niche can be difficult in markets inundated by competing chains.One of the most widely discussed topics in the green industry today is the issue of environmental sustainability brought about by consumers with a greater degree of environmental awareness. A common assumption is that using environmentally friendly practices will bring profits (Majsztrik et al, 2019). However, sustainable alternatives often require a price premium in the marketplace or a cost reduction within production to be economically viable.On the production side, project investigators have been and are continuing to examine water usage and mechanization. Water issues, specifically irrigation scheduling and efficiency, surface and groundwater water management, and water quality are quickly becoming topics of major concern to the ornamental plant industry even in states that have previously had ample water resources. Drought, urban competition for surface and groundwater water reserves, salinity and runoff water quality, and increasing regulation at national, state and county levels are increasing the need for ornamental crop producers to manage water more effectively. Mechanization is normally defined as the replacement of a human task with a machine, but true automation encompasses the entire process, including bringing material to and from the mechanized equipment, and normally involves integrating several operations. Mechanization and automation have been important strategies for reducing labor costs in the nursery industry. However, as noted by Krahe and Campbell (2016), producers do not seem to be substituting labor for mechanization, but rather reallocate labor to other areas. Understanding the interface between labor shortages and cost effectiveness of becoming more mechanized is essential. As the green industry continues to evolve, industry stakeholders need more information to help make critical decisions. The lack of information was heightened by the "Great Recession" of 2007-09 as the USDA-NASS annual survey of wholesale growers of floral and nursery crops now only covers 15 states, the USDA-ERS has discontinued its annual Situation and Outlook reports, and The Census of Agriculture and the Census of Horticultural Specialties are conducted only every five years. A multi-state collaborative effort is imperative because these issues are simply too comprehensive for any single researcher to adequately address alone and since state budgets for many land-grant institutions have been cut dramatically in recent years, these collaborative efforts enable the research team to more effectively utilize constrained research dollars in a synergistic fashion. Moreover, since limited granting programs are available to conduct research in this area, the research collaborations (and teams formed) by these multi-state efforts will enable the research teams to more effectively compete for grant dollars. Furthermore, the need to have a multi-state project in place with members already working on firm profitability that can rapidly respond to industry issues (e.g., the impact of Conronavirus on industry profitability, weather damage, and labor shortages, etc.) is critical and essential.

Animal Health Component

75%

Research Effort Categories

Basic

25%

Applied

75%

Developmental

(N/A)

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
601	2110	3010	100%

Knowledge Area
601 - Economics of Agricultural Production and Farm Management;

Subject Of Investigation
2110 - Ornamental trees and shrubs;

Field Of Science
3010 - Economics;

Keywords

green industry

ornamental horticulture

landscaping services

economic contributions

consumer behviaor

Goals / Objectives
Investigate environmental, social, and economically sustainable practices in ornamental crop production and landscape systems Evaluate structural economic characteristics and economic contributions of the U.S. green industry to the national and state economies of the United States. Evaluate consumer preferences for environmental plants and related horticultural products and their contribution to health and well-being. Investigate labor management practices and automation/mechanization in the nursery and greenhouse industry

Project Methods
Objective 1: Investigate environmental, social, and economically sustainable practices in ornamental crop production and landscape systemsResearch will address methods of establishing sustainable landscape sites and managing those sites in a sustainable manner. Specifically, we will study warm season grass/forb meadow establishment and explore species composition for meadows providing pollinator habitat. The project will investigate developing new standards for landscape sustainability as currently outlined by the Sustainable Sites Initiative and assess the economics of implementing sustainable practices and certification programs. Management practices will focus on methodologies that enhance ornamental attributes and improve public perception of meadow landscapes.We will evaluate sustainable production systems for landscape trees, shrubs, annuals, and perennials with a focus on irrigation management, including irrigation scheduling, cultural practices, and runoff water. We will assess water use, fertilizer use, plant growth parameters and plant quality to determine the impact of various irrigation regimes on these species.Evaluation of economic and environmental impacts of sustainable practices in ornamental plant production systems will include cost analyses, assessment of carbon and water use, worker efficiency, and shrinkage at the production, shipping, and retail level. Assessment of economic impacts on income and employment will use agricultural, labor, and industry statistics to estimate economic changes that would take place if containers based on domestic materials replaced petroleum-based pots. We will determine carbon footprints for container manufacturing, shipping, utilization, and disposal. We will calculate carbon sequestration and exchanges for the crops used in this research. We will determine data on shrinkage and reduced efficiencies during production for each pot type for economic analysis.Objective 2: Evaluate structural economic characteristics and economic contributions of the U.S. green industry to the national and state economies of the United States.We will implement and analyze the sixth National Green Industry Survey, which this multi-state project has been conducting every 5 years for the last 30 years. We will develop survey questionnaires in consultation with industry stakeholders to address current industry issues. The questions will focus on: general business characteristics; types of plant materials sold; container substrates used; sales transaction methods; discounts published; seasonal sales; contract production; market channels, regional (state) trade; advertising expenditures, sources of propagated plants; water conservation practices; pest management practices; labor-related human resource management strategies; and retail marketing practices. For continuity, we will use the same key questions used in previous surveys in this survey. We will develop regional economic models for the green industry for each state using the IMPLAN (Impact Analyses for Planning) Professional software and associated regional datasets (Implan Group LLC). Economic multipliers derived from these models estimate total contributions to the regional economy in terms of output (revenues), employment, and value added or income, including direct effects that represent the initial value of the industry in question, indirect effects of supply chain input purchases, and induced effects of local spending by employee households. IMPLAN is a standard tool for economic impact analysis in the U.S., used by over 500 universities, planning organizations and consultants.Objective 3: Evaluate consumer preferences for environmental plants and related horticultural products and their contribution to health and well-being.We will conduct economic experiments to investigate consumer preferences and willingness-to-pay (WTP) for ornamental plants and specific attributes. Data generation methods will include internet surveys using reputable consumer panel providers and in-person experiments. We will use choice modeling and cluster analysis procedures to analyze data to identify consumer segments and help businesses better position their product. We will determine how product attributes impact purchase decisions, and consumers' involvement regarding plants, attitudes about the environment, and demographic characteristics play a role in predicting consumer demand for ornamental plants and related services. We will investigate the relative importance of plant and container attributes using discrete choice modeling or experimental auctions methodologies. In addition to stated preferences, we will incorporate biometric measurement equipment (e.g., eye tracking devices) into traditional experiments to better assess attention and purchase intention of green industry product characteristics.Objective 4: Investigate labor management practices and automation/mechanization in the nursery and greenhouse industryWe will determine how nursery and greenhouse producers are changing their production practices given the move toward automation and mechanization as well as the impact of an evolving labor force. We will analyze the impacts of the tradeoff between labor and automation using data from the green industry survey and federal and state sources. Notably, we will conduct statistical modeling to determine whether producers are changing their labor makeup when automating or whether they are simply reallocating labor to non-automated areas.

Progress 03/24/21 to 09/30/21

Outputs
Target Audience:The target audience reached includes the nursery and greenhouse producers, horticultural wholesalers and retailers, landscape service providers, horticultural industry associations, and the University Extension agents. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?The nursery, floriculture and landscaping industry stakeholders were informed of the results of this research through channels such as webinars, in-person presentations, industry outlook reports, and individual consulting. Growers, environmental consultants, landscape architects, interior designers, wholesale and retail operators learned about innovative strategies for effectively utilizing novel plant attributes to improve customers' perceived value, differentiate products, and justify higher price points. Participants of the educational programs also learned about marketing methods in the ornamental plant industry that can be used to communicate valuable product information to customers and influence their purchasing decisions. How have the results been disseminated to communities of interest?The accomplishments are presented in the form of external funding, publication of trade magazine and newsletter articles, publication of Electronic Data Information Source (EDIS) reports, Cooperative Extension Bulletin, and dissemination of information to the industry stakeholders through the network of county extension personnel, workshops, field days, webinars, in-service training, and individual face-to-face consulting. To date, the program has generated over 111 local, state and regional educational presentations, 50 trade magazine and newsletter articles, 43 EDIS publications end Extension bulletins, and 37 webinar presentations. What do you plan to do during the next reporting period to accomplish the goals?Continue to conduct research in the area of consumer economics and marketing, collecting and analyzing primary and secondary market data and disseminating results to the local and state stakeholders.

Impacts
What was accomplished under these goals? As part of the integrated research and extension program, educational materials were presented at 11 academic conferences and 4 extension/industry workshops. Research reports were prepared and disseminated through the local industry associations and trade shows, leading to 15 peer-reviewed journal publications, and 11 non-refereed industry articles. Outreach workshops were designed and delivered to increase nursery/greenhouse growers' and landscaping firms' knowledge of the economic outlook of the environmental horticulture industry, and factors influencing production, marketing, consolidation and competition in the industry. Outreach efforts also included information about the effects of neonicotinoid pesticides related information on consumers' preferences and willingness to pay price premiums for horticultural products. Other workshops focused on residential landscaping practices, preferences, and willingness-to-pay for eco-friendly lawn fertilizers in Florida and nationwide, as well as smart irrigation technology adoption by homeowners in Florida and the effectiveness of conservation policies.

Publications

• Type: Journal Articles Status: Published Year Published: 2021 Citation: Zhang, X., H. Khachatryan, and M. Knuth. 2021. Relating Knowledge and Perception of Sustainable Landscape Practices to the Adoption Intention of Environmentally Friendly Landscapes. Sustainability, 13(24), 14070.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Zhang, X., and H. Khachatryan. 2021. Interactive effects of homeowners environmental concerns and rebate incentives on preferences for low-input residential landscapes. Urban Forestry and Urban Greening, 65, 127322.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Rihn, A., C. Hall, B. Peterson, A. Torres, M. Palma, and H. Khachatryan. 2021. Changes in Production Practices by Green Industry Growers from 2009 to 2019. Journal of Environmental Horticulture, 39(3): 123-130.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Rihn A., Khachatryan H., and X. Wei. 2021. Perceived Subjective versus Objective Knowledge: Consumer Valuation of Genetically Modified Certification on Food Producing Plants. PLoS ONE 16(8): e0255406.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Yue, C., Y. Lai, H. Khachatryan, and A. Hodges. 2021. Effect of Geographic Distance on Domestic Trade: A Case of the U.S. Green Industry. Agribusiness: An International Journal, 1-21.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Wei, X., H. Khachatryan, and A. Rihn. 2021. Estimating Willingness-to-pay for Neonicotinoid free Plants: Incorporating Pro-environmental Behavior in Hypothetical and Non hypothetical Experiments. PLoS ONE 16(5), e0251798.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Wei, X., and H. Khachatryan. 2021. Analyzing Growers Pest Management Decisions in the U.S. Ornamental Horticulture Industry. Journal of Cleaner Production, 312, 127788.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Rihn, A., A. Torres, S. Barton, B. Behe, and H. Khachatryan. 2021. Marketing Strategies Utilized by U.S. Landscape Services Firms. HortScience, 56(6), 695-708.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Torres, A., A. Rihn, S. Barton, B. Behe, and H. Khachatryan. 2021. Evaluating the Business and Owner Characteristics Influencing the Adoption of Online Advertising Strategies in the U.S. Green Industry. HortScience, 56(6), 659-666.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Knuth, M., H. Khachatryan, C. Hall, M. Palma, A. Hodges, A. Torres, and R. Brumfield. 2021. Trade Flows within the United States Nursery Industry in 2018. Journal of Environmental Horticulture, 39(2), 77-90.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Khachatryan, H., A, Rihn, and X. Wei. 2021. Effects of Pollinator Related Information on Consumer Preferences for Neonicotinoid Labeling. International Food and Agribusiness Management Review, 24(6), 971-991.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Khachatryan, H., X. Wei, and A. Rihn. 2021. Consumers Preferences for Eco-labels on Plants: The Influence of Trust and Consequentiality Perceptions. Journal of Behavioral and Experimental Economics, 91, 101659.
• Type: Journal Articles Status: Published Year Published: 2021 Citation: Zhang, X., and H. Khachatryan. 2021. Effects of Perceived Economic Contributions on Individual Preferences for Environmentally Friendly Residential Landscapes. Land Use Policy, 101, 105125.