A market review, a look ahead

Features - Management

In its latest webinar, Greenhouse Lighting & Systems Engineering (GLASE) reviewed the lows and highs of 2019’s market trends.

April 20, 2021

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As part of its consortium webinar series, GLASE highlighted the “most detailed and accurate” greenhouse production assessment in its most recent webinar, “CEA Market Trends: 2019 USDA Census of Horticultural Specialties.”

The virtual evaluation was hosted by Executive Director Erico Mattos. He covered data retrieved from the 2020-released USDA National Agricultural Statistics Service, and reviewed the market trends of floriculture and food crops grown under protection in the U.S. He also analyzed crop type and market value as well. Below, is a recap for those who could not attend.

Market value overview

According to the 2019 Horticultural Specialties Market, the CEA market value was a whopping $6.5 billion, with food crops grown under protection making up 11%, cut cultivated greens at 2%, cut flowers and cut lei flowers at 6%, foliage plants for indoor or patio use at 11%; potted herbaceous perennial plants at 15%, annual bedding/garden plants at 36% and potted flowering plants for indoor or patio use at 19%.

While the market value is in the billions, Mattos noted that when compared to data from 2014, five out of seven categories experienced market shrink.

Food crops grown under protection

In comparison with the 2014 data, the value of sales from food crops grown under protection has decreased by 11.7%, while the number of farms has increased by the same percentage. Between 2014 and 2019, sales have gone from $796,664 to $703,469. When compared with sales from 1998, however, there is a visible increase of about $480,000 with 1998 earning a total of $222,624. For operations, this category has seen an increase all around, with 2,994 notable farms in 2019, compared to 2,521 in 2014 and only 1,015 in 1998.

The main crops that were analyzed in this category were cucumbers, herbs and cut fresh, lettuce, peppers, strawberries, tomatoes, and others, with additional crops not specified. “What was interesting is that [during market segmentation by crop] tomatoes represented the vast majority of the area under protection food crops at about 60% and for the value of sales, it represented about 50% as well,” Mattos said. “The worst one was strawberries, with representation of 0.74% in the area under protection and 0.13% in sales.” When compared with revenue per square feet, however, crops in the “other” category earned $15.60 while tomatoes earned $6.60.

Annual bedding and garden plants (flats, pots and hanging baskets)

Compared to 2014, the value of sales in annual bedding and garden plants has decreased by 12.6% with earnings reported as $2,244,460 in 2019 and $2,567,534 in 2014. However, both numbers show noticeable growth when compared to 1998’s sales of $1,729,949. The number of operations saw a decline as well, with a 16-percentage decrease between 2014 and 2019, with 7,964 reported farms in 2014 and 6,687 in 2019. This category overall, has seen a decrease in operations since its count in 1998 was 9,215. When compared by market segmentation, wholesale growers earned 78% of profits by earning $1,757,547 and retail earned 22% of the profit with a reported $486,913 value of sales.

Potted herbaceous perennial plants

In 2019, the value of sales in potted herbaceous plants decreased by 2.4% with earnings reported as $922,616 compared to $944,850 in 2014. However, 2019 experienced an increase compared to 1998’s sales of $627,236. While the value of sales has grown since then, the number of operations has steadily declined, with an 18.8 percentage decrease between 2014 and 2019 with 6,291 farms reported in 2014 and 5,108 reported in 2019 — both lower than the reported 7,391 operations in 1998. When segmented into markets, potted herbaceous perennial plants sold in wholesale made up $775,990, and the same plant segment sold at retail comprised $146,716, therefore, leaving wholesale sales at 84% of the total earnings, and retail at 16%.

Potted flowering plants

Potted flowering plants for indoor and/or patio use have increased in popularity, which is reflected by a 10.7-percentage increase between 2014 and 2019. When compared to 2014, the value of sales was $1,084,274 then and $1,200,387 last year. Data also shows that the value of sales has increased overall since 1998, with initial sales being $868,131. While the value of sales has grown, the number of operations has not, with data showing a 2% decrease in the last five years. In 2014, there were 4,059 operations and in 2019, there were 3,977 — both lower than 1998’s report of 5,080. When segmented, wholesale sales made up 90% of the total value with earnings reported as $1,083,169 in total, and earnings by retail made up 10% with earnings reported as $111,217.

Foliage plants

Pots and hanging baskets were another category that experienced market shrink. In 2019, the total value of sales was $691,472 — a 4.2-percentage decrease compared to 2014’s sales of $721,889. However, 2019’s sales still remain higher than 1998’s reported $594,760. As for operations, those too, have seen a decrease with 2,336 reported in 2019 compared to 2,644 in 2014 and 3,074 in 1998. When segmented, wholesale stole the show again, making 97% of total sales and bringing in $667,974, compared to retail’s 3% contribution of $23,498.

COVID-19’s impact

In 2020, our sister magazine Garden Center, published the 2020 State of the Industry report (which can be found here bit.ly/32klhei) with an emphasis on the coronavirus’ impact. GLASE highlighted the research in this webinar and per the data, 50% of operations were impacted a great deal; 21% were impacted a lot; 18% were impacted a moderate amount; 7% were impacted a little and 3% weren’t affected at all. Sales wise, 71% of operation experienced an increase in their earnings; 18% experienced minimal change, 1% did not experience any change at all; 4% experienced a somewhat decrease in sales and 7% of operations experienced a significant amount of decrease. In regard to pickup and delivery, 78% of operations offered curbside pickup; 62% offered phone ordering; 45% offered online shopping; 42% offered order delivery; 8% offered online classes and 5% offered other, unspecified options.

Industry investments

Although COVID-19 impacted the industry in many ways, there were a host of investments that may lead to future growth. Per the collected data, App Harvest invested $475 million in tomatoes; Plenty invested $140 million in leafy greens; Bright Farms invested $100 million in leafy greens; Little Leaf Farm invested $90 million in leafy greens; Gotham Greens invested $87 million in leafy greens and herbs; Greens Empire Farms invested $72 million in berries, tomatoes, cucumbers and peppers; Revol Greens invested $68 million in leafy greens; Shenandoah Growers invested $66 million in leafy greens and herbs and Upward Farms invested $15 million in microgreens, making the total amount of investments $1.1 billion.

Some names may look familiar, since our sister magazine Produce Grower ventured inside AppHarvest and its growing facility (which can be accessed here bit.ly/3dQV0tG); highlighted Gotham Greens’ upcoming plans (which can be found here bit.ly/3d8YloL); spoke with Plenty about its push for retail (which can be read here bit.ly/3sdKJg6) and Revol Green’s drive for local (which can be found here bit.ly/3t9lYTL).

“Although the volume of sales came down in 2019 — and we are a little surprised with that — we thought it would be a good idea to show where the market is going next, or where we think it’s going next, by showing 2020’s investments in horticulture specialties cultivated in CEA,” Mattos said. “We are hopeful in its growth.”

To access this webinar and more alike, visit glase.org/resources/webinars.