Articles
SHARE ANALYSIS OF DRIVERS OF GROWTH IN THE ORNAMENTAL INDUSTRY: A CASE STUDY OF NEW JERSEY
New Jersey led the region in terms of ornamental industry growth rate.
During the 1989–93 recession when disposable income, real estate construction, and housing starts fell, ornamental demand fell sharply and industry growth was curtailed.
For example, while the ornamental share of New Jersey’s total agricultural cash receipts increased from 10% in 1960 to 35% in 1990, the share fell to 27% by 1993. Agricultural policy makers in the region are concerned about the ornamental industry’s future.
Information on the drivers of change in the industry is useful in policy development and planning for the industry.
Using New Jersey as a case study, this paper investigates the demand and supply side factors that drive the growth and contraction of the ornamental industry and examines the relative importance of each.
Results obtained via a revenue share model of ornamental industry contribution confirm the importance of consumer purchasing power, population growth, and real estate activity in encouraging increased ornamental activity.
However, the notion that rising land values encourage ornamental industry growth is rejected.
Industry growth seems to be encouraged by declining prices of vegetables and livestock products, suggesting that these activities are the ones replaced by ornamentals.
Field crop prices seem unimportant while fruit prices are positively related to ornamental market share, suggesting that land in field crops and fruit is not likely to be converted to ornamental production.
It therefore appears that despite the high-value and high-return nature of the ornamental industry, it is susceptible to economic downturns due to its dependence on factors strongly linked to general economic conditions.