OLMIS

by Pat O'Connor
Published Jul-22-2008

Introduction Employment has Seasonal Pattern Production Value Reaches $1 Billion Large Operations, Out-of-State Buyers Dominate Sales Characteristics of the Industry¿s Workforce Opportunities and Challenges

Oregon's nursery industry began before Oregon was even a state. The industry dates back to the time when pioneers used the Oregon Trail to come and live in the Oregon Territory. In 1847 Henderson Luelling and his family arrived in Oregon with a wagon load of over 500 young plants, trees, and seeds. The family settled in what is now the city of Milwaukie, near what is now the Waverly Country Club. The following year, William Meek, a neighbor of the Luellings back in Iowa, brought another 20 varieties of grafted trees to Oregon and the two men formed Luelling and Meek Nursery, the first nursery of grafted plant material on the Pacific Coast. Within a few years the company had over 60 varieties of trees for sale.

Word quickly spread that the Willamette Valley was a wonderful place for agriculture, with rich soil, moderate weather, and plenty of rainfall. The market was quite local for the pioneers of Oregon's nursery industry, but homesteaders and miners in California provided a lucrative market for early nurseries.

In the 1880s the nursery industry's importance in Oregon was further solidified with the founding of the horticulture department at Oregon Agricultural College in Corvallis.

By the early 1900s, the state's nursery industry had grown to about 1,000 acres with a crop value of over $150,000. Over the next decade the acreage more than doubled and the crop value topped $1 million for the first time. Growth has continued in Oregon's nursery industry over the past century. In 2007 the crop value of Oregon's greenhouse and nursery products topped $1 billion dollars; it is the largest commodity in Oregon agriculture. Oregon's grass seed industry is the second largest commodity in Oregon but it produces about half of the crop value of the greenhouse and nursery industry. Oregon's nursery industry is the second largest in the U.S., second only to California. Oregon produces 11 percent of the nation's nursery crops.

The United States Department of Agriculture (USDA) conducted a survey of Oregon's nursery and greenhouse operations in 2006. That survey found 2,100 nursery and greenhouse operations in Oregon. Oregon Employment Department (OED) records counted 438 firms in the "nursery and floriculture production" industry. The industry includes business establishments engaged in growing nursery and floriculture products under cover or in open fields and also businesses growing short rotation woody trees (e.g., cut Christmas trees). These 438 firms that report their employment to the OED are covered under the unemployment insurance (UI) program, and the discrepancy with the USDA figure is mostly due to the USDA's inclusion of a large number of farms that have no workers covered by unemployment insurance. Many small farms that don't exceed certain payroll thresholds, primarily use farm labor contractors, or almost exclusively employ family members are examples of farms without covered workers.

Graph 1 shows the seasonal pattern of employment in the nursery and floriculture production industry from 2001 through 2007. In 2001 the industry's annual average employment was 10,370. The monthly employment ranged from a low of 8,615 jobs in January to a high of 11,869 in November. By 2007, the industry's employment had grown by 21 percent (2,170 jobs) to an annual average of 12,540. The seasonal pattern in the industry remained, with a low of 10,791 jobs in January 2007 and a high of 14,034 jobs in November. The sharp spike in employment that occurs each November is due to Oregon's annual harvest of cut Christmas trees.

As mentioned earlier, not all nursery operations employ workers covered under the unemployment insurance (UI) program. A 2005 USDA survey found that Oregon's nursery industry employed 22,000: 10,400 full-time workers and 11,600 seasonal workers. In the 2005 USDA survey, the average wage per worker was $13,359. OED's 2007 payroll data showed an average annual wage of $24,991 for nursery employees that are covered under UI.

Oregon's nursery industry is concentrated in the northern Willamette Valley. The top five producing counties - Clackamas, Marion, Multnomah, Washington, and Yamhill - account for 86 percent of the industry's total production. Marion County is the largest producer, and Washington and Clackamas counties are essentially tied for second place. However, given the number of growers and acreage in Clackamas, Washington, and Marion counties, any of the three counties could be the number one producer depending on the year.

Graph 2 shows the growth in gross sales for Oregon's nursery and greenhouse industry from 1990 to 2006. Although not adjusted for inflation, the industry's sales have more than tripled from $315 million in 1990 to $966 million in 2006. Oregon State University has estimated the industry's sales exceeded $1 billion in 2007.

Table 1 shows Oregon's nursery industry summarized by sales size groups. Over half of the nursery operations in Oregon had less than $20,000 in gross sales in 2006. Although large in number, these smaller nurseries comprised less than 1 percent of the industry's gross sales. At the other end of the spectrum the 91 nursery operations with gross sales of more than $2 million generate nearly three-quarters of the industry's total gross sales.

A 2003 survey by the USDA found that 75 percent of Oregon's nursery gross sales are outside of Oregon. Sales in the upper Midwest account for 17 percent of the industry's sales and Northeastern states account for 16 percent of sales. Our neighbors to our north and south in Washington and California are responsible for more than 16 percent of the industry's sales. Canada is the only foreign country with a significant share of sales, comprising nearly 4 percent. Other foreign countries make up less than 1 percent of the industry's gross sales.

A relatively new data source from the U.S. Census Bureau allows us to look at some demographic characteristics of workers by industry. Graph 3 compares the age distribution of the nursery industry's workforce with that of Oregon's workforce across all industries. Workers age 14 to18 comprised 5.3 percent of the industry's workforce in 2006; that compares with 3.2 percent across all industries. Workers between the ages of 19 and 34 are underrepresented in the nursery industry. Workers age 35 to 44 are slightly overrepresented in the nursery industry compared with Oregon's workforce across all industries. Possibly the most surprising group is the age 65 to 99 group. Evidently turning 65 does not signal retirement for many workers in the nursery industry. Nearly 1 in 10 workers in Oregon's nursery industry are 65 or older; that compares with 3.3 percent across all industries.

The nursery industry's average annual wage is lower than Oregon's average wage across all industries: $24,991 and $39,566, respectively. However, wages differ considerably by age. Earnings for young workers are significantly higher than earnings for young workers across all industries. In 2006, employees ages 14 to 18 in the nursery industry had average monthly earnings of $1,349; earnings for workers ages 14 to 18 across all industries were $738 (Graph 4). Nursery industry employees ages 19 to 21 had monthly earnings of $1,444 compared with $1,272 across all industries. For workers age 22 and older in the nursery industry average monthly earnings are significantly less than earnings across all industries.

Growing nursery stock is very labor intensive. The occupational staffing of Oregon's nursery industry reflects this. Nearly two in three employees in the nursery industry are classified as "farmworkers and laborers for crops, nurseries, and greenhouses." That occupation dwarfs the second largest occupation which is "agricultural equipment operators."

Nearly 75 percent of Oregon's nursery sales are outside of Oregon. Having a large market and a broad base of products provides stability for the nursery industry. The recent national slowdown in the U.S. housing market will likely have a short-term negative effect on demand for nursery products. However, Elizabeth Peters of the Oregon Association of Nurseries (OAN) said that one long-term opportunity for the industry will hopefully be the aging baby-boomer generation. As more baby-boomers move into retirement they may have more time to enjoy hobbies such as landscaping and gardening ¿ that could raise demand for Oregon's nursery products.

The issue of sustainability has been a hot topic lately. One of the simplest ways to help the planet and reduce CO² levels is by planting more trees and plants; this could increase demand for Oregon's nursery products. A third opportunity for the industry is technological advancements that could make the industry more competitive. These advancements could control costs by reducing the amount of labor it takes to bring a product to market.

According to Peters, one of the biggest challenges facing the industry will be the availability of a skilled labor force. The nursery industry is labor intensive and depends on a reliable and skilled workforce. The OAN says, "Many farm workers are immigrants, who lack proper authorization to work in the United States. The high incidence of unauthorized workers in the agricultural labor force creates vulnerability, for workers and employers alike, and has the potential to destabilize Oregon's nursery industry." OAN also, "strongly support passage of federal legislation that would grant immigrant farmworkers the opportunity to obtain legal work status in the United States."

A second challenge for the nursery industry is the nation's transportation system. Transporting Oregon's nursery crops to market, in particular to the upper Midwest and Northeastern states, can be a logistical challenge. Crowded conditions on highway systems in the nation's metropolitan areas, where most customers live, provide a big obstacle for truckers transporting nursery products to market. Delays can be hard on the plants, and truckers may need to provide some care enroute. After all, nursery plants still require water to remain healthy even when being transported across the country.

A third challenge the nursery industry faces is preserving agricultural land. The majority of Oregon's nursery industry is located in the northern Willamette Valley and is near urban areas. The OAN says, "The expansion of Urban Growth Boundaries (UGB) onto prime and unique farmland, a limited resource, should be discouraged and in the event that UGB expansion onto such land occur, added protections should be applied to the area's remaining prime and unique farmland base."

It has been over 160 years since Henderson Luelling and his family arrived in Oregon to start Oregon's first nursery. We can only wonder if he knew that his nursery would begin what would eventually grow to become a $1 billion-a-year industry in Oregon.