ST. PAUL, MN--Nursery and greenhouse production represents one of the largest horticulture industry sectors in the United States, and has become a significant contributor to the nation’s agricultural economy. A study that investigated factors affecting the flow of products in the U.S. nursery crop trade features important marketing recommendations for nursery professionals.
Xiaofang Guo and Chengyan Yue from the University of Minnesota–Twin Cities, and Charles R. Hall from Texas A&M University published a study in HortScience that reported on the use of a "gravity model" to investigate factors that affect the flow of products in nursery crop trade. "As the name implies, the idea of the gravity model stems from Newton's law for gravitational force," explained author Chengyan Yue. "In the basic gravity model of trade, the trade flow corresponds to the gravitational force, and the market sizes--which are often measured by gross domestic product, income, or population--are used to measure masses. Trade flows are expected to be inversely proportional to the distance between two regions and directly proportional to the market sizes."
Using national survey data collected in 1999, 2004, and 2009, the researchers explored how distance, market size, and business characteristics affect the domestic trade in the nursery industry. Data analysis showed that the impact of distance on trade value was different between large nurseries and small nurseries. Results also showed that the level of impact of distance on nursery trade differs across regions, and that the value of nursery trade was affected by the types of plants nurseries produced.
The study results have key marketing implications for the nursery industry. "As expected, we found that the impact of distance on trade is decreasing over time, which indicates that nurseries have can consider developing new markets in states that are further away," noted author Chengyan Yue. "However, we found that distance still has a relatively larger impact on the trade of nursery crops compared with many other agricultural products. For example, a 1% increase in the distance caused a 0.22% to 0.34% decrease in the trade value of meat. Nursery crops are alive, thus it is more time- and effort-consuming to move living plants."
The authors said that, because small nurseries are more likely to be in a growth stage (whereas large nurseries are more likely in their mature stage), smaller nurseries might have greater potential to expand their markets. "For example, to increase the trade value, small nurseries should target the wholesale market channel, whereas large nurseries should target retail channels."
The complete study and abstract are available on the ASHS HortScience electronic journal web site: http://hortsci.ashspublications.org/content/46/11/1518.abstract
Founded in 1903, the American Society for Horticultural Science (ASHS) is the largest organization dedicated to advancing all facets of horticultural research, education, and application. More information at ashs.org
Investigating Factors Affecting the U.S. National Nursery Trade: The Implications of a Gravity Model
Xiaofang Guo, Chengyan Yue, and Charles R. Hall
HortScience 46:1518–1522. [Abstract][Full Text][PDF]