374 



HORTICULTURE 



March 15, 1913 



STATE OWNED vs. PRIVATE OWNED NURSERIES^ 



Report of the special committee of the American Forestry Association, appointed January 9, 1912, for consideration of the 



subject of State Owned versus Privately Owned Nurseries. 



From the investigations of this com- 

 mittee under the resolution adopted 

 at the last meeting, authorizing its ap- 

 pointment for considering "the advan- 

 tages of State Nurseries tor the prop- 

 agation, cultivation and sale of fores- 

 try material in competition with the 

 business of private owners," it is our 

 conviction that the matter of produc- 

 ing and distributing forestry material 

 is one of such importance to the peo- 

 ple of the country, that the subject 

 should be handled as a matter of mu- 

 tual interest, on the part of the United 

 States Forestry Department, the differ- 

 ent states, this association, and those 

 owning private nurseries and engaged 

 in the business, rather than as a sub- 

 ject which might cause antagonism be- 

 tween the states and private nurseries. 



The committee wishes to emphasize 

 the fact that the suggestion for inves- 

 tigating the subject arose more from 

 a desire on the part of nurserymen to 

 have the subject investigated than on 

 the part of the association. 



From the various data obtained by 

 the committee from the leading forest- 

 ers and representative firms engaged in 

 the business, the following summary of 

 opinions is here presented: The opin- 

 ion of state foresters who are conduct- 

 ing state nurseries, all other state for- 

 esters and all foresters in other em- 

 ployment, is, with two exceptions, 

 unanimous, that state nurseries should 

 be permitted to sell stock to private 

 parties mainly for the following rea- 

 sons: 



(a) Previous to the estalilishment of 

 State nurseries, private nurseries had not 

 furnished stoclj at prices which would 

 permit the planting of large quantities of 

 trees for forestry purposes. 



(b) As a result there was comparatively 

 small demand for nursery stoclj for forest 

 planting until certain States Instituted the 

 policy of supplying such stocli to private 

 planters. 



(c) The demand fnr nursery stock for 

 forest planting is largely the result of this 

 policy on the part of the States, and the 

 claim is made that private nurseries have 

 in the aggregate been benefitted rather 

 than injured by it. 



(d) The State is Justifled In encouraging 

 forestry planting by assisting private own- 

 ers to obtain cheap nursery stock in order 

 to secure to the community the benefits 

 of forestry. 



Private nurserymen contend and are 

 generally of the opinion that, 



1 — State nurseries wliich sell to private 

 parties act to deprive privately owned 

 nurseries of their legitimate business, 

 causing them tinancial loss and should be 

 prohiinted from competing witli them. 



2 — They also contend tliat 11 is not the 

 proper function of a State to engage in 

 this industrial enterprise more than in the 

 manufacture and sale of any commerlcal 

 product in which large am^'unts of private 

 capital are already invested. 



Between these opposing opinions de- 

 cision should rest upon ascertainable 

 facts bearing on the cost of producing 

 and distributing nursery stock of the 

 desired quality and quantity, and the 

 prices asked for this stock by states 

 and private nurseries, respectively, 

 upon the demand for stock for this 

 specific purpose and the supply of 

 nursery stock available from states and 

 from private nurseries. 



The commitee is advised by the U. 

 S. Forestry Service that ten states re- 



ported maintaining forest nurseries, 

 the aggregate acreage of which is 140.5 

 acres: Connecticut, Kansas, Massa- 

 chusetts. Michigan, New Hampshire, 

 New York, Ohio, Pennsylvania, Ver- 

 mont and Wisconsin. There were pro- 

 duced during the past year 19,058,000 

 plants, including both seedlings and 

 transplants. The cost of raising this 

 stock varied for seedlings from 45 cents 

 to $5.00 per thousand plants, with an 

 average of $2.50 per thousand; and for 

 transplants from ?2.00 to $6.00 per 

 thousand, with an average of $4.50. 

 This covered all species, both hard- 

 woods and soft woods. The hardwoods 

 were in all cases seedling stock and 

 very much in the minority. The num- 

 ber of plants distributed by these states 

 amounted to 14,100,100, for which a 

 price varying from $1.00 to $7.00 per 

 1000 was charged, the average being 

 $4.00 for both seedlings and trans- 

 plants, as well as hardwoods and soft- 

 woods. The apparent discrepancy be- 

 tween the figures of production and 

 distribution is accounted for by the 

 fact that several of the states are 

 themselves large users of the planting 

 stock which they raise. There are a 

 few states on the other hand that dis- 

 tribute considerably more stock than 

 they produce, the additional amount of 

 course being stock purchased from 

 commercial dealers. Only two states 

 report direct importation, the total of 

 which amounts to less than 250,000 

 plants. 



The committee has been unable to 

 ascertain as to the cost of producing 

 and distributing forestry material by 

 privately owned nurseries. 



The cost of raising forest nursery 

 stock includes the following items: 



(a) Initial cost for plant, as land, 

 buildings, equipment, waterworks. The 

 legitimate charge for the Item of Interest 

 on investment and depreciation of ecjuip- 

 ment. 



(b) Skilled supervision and overhead 

 charges. 



(c) Labor cost. 



(d) Selling costs, Including advertising. 



(e) Legitimate profits. 



These cost items vary according to 

 the following conditions: 



(a) Size of output. Overhead charges 

 are greatly reduced with large annual out- 

 pu.t. 



(b) Character of labor. 

 ir) Soil and climate. 



(d) Assurance of definite and stable 

 markets. 



The variation in cost of production 

 from these causes may be as great as 

 100 per cent. 



State nurseries, in computing costs, 

 are apt to neglect certain elements, es- 

 pecially depreciation, interest, super- 

 vision, and, necessarily, profits, and on 

 a basis of equal efficiency would tend 

 to undersell private nurseries. 



The demand for nursery stock for 

 forest planting arises: 



(a) From large corporations doing ex- 

 tensive planting. These concerns have 

 largely pursued the policy of raising their 

 own stock, and are therefore seldom in 

 the market. 



(b) Smaller owners planting a few 

 thousand trees per year. This demand Is 

 uncertain, constantl.v shifting, since the 

 same persons do not continue as pur- 

 chasers from year to year, and Is largely 



influenced by the educational propaganda 

 conducted by State foresters. In itself it 

 forms an unreliable basis for conducting a 

 commercial business. 



It is apparently true that state 

 nurseries have it in their power, by de- 

 veloping and increasing in size and 

 output to supply a very large propor- 

 tion of the nursery stock required for 

 private forestry plantations, and at 

 prices which will make it impossible 

 for private firms to compete success- 

 fully with them in this field, in the ab- 

 sence of an assured market for their 

 own output. 



In European countries, private nurse- 

 ries have been able to produce stock 

 more cheaply than states can grow it, 

 and states therefore purchase their 

 stock in considerable quantities from 

 private nurseries, and are their main 

 customers. Demand is steady and 

 permanent. 



In conclusion the committee presents 

 the following conclusions and sugges- 

 tions: 



(a) States are at present justified in 

 raising their own nursery stock for re- 

 foresting State lands. 



(b) Sales of nursery stock at low prices 

 by State nurseries to private parties nat- 

 urally tend to encourage forest planting 

 by individuals. 



(e) Low prices for nursery stock sold 

 by States will have the effect of lowering 

 the prices of stock sold by private nur- 

 series for forest planting, but only under 

 the conditions that State output does not 

 monopolize the demand. Should the State 

 output keep pace with the demand, private 

 nurseries will be forced out of their field 

 of endeavor. 



(d) The value of State nurseries as 

 regulators of prices for forest stock Is 

 recognized, but the policy tor the future 

 should probably be for State nurseries ^o 

 contintie as regulators, along the lines in- 

 dicated, rather than to assume permanent 

 responsibility for the business. 



(e) Present prices on 2-year seedling 

 stock sold by private nurseries, In most 

 Instances compare favorably with State 

 prices, while prices for 3-year transplants 

 are. except in one or two Instances, much 

 higher than the State prices. 



In view of the facts above stated, 

 the committee recommends a policy of 

 state purchase of such stock as may be 

 procured to advantage from private 

 nurseries and sale or subsequent sale 

 to private parties, for planting pur- 

 poses. 



In the long run it will probably be 

 better for both states and private land 

 owners if states endeavor to encourage 

 the legitimate development of private 

 nurseries in the field of supplying trees 

 for forest planting, while retaining the 

 right and ability to check extortionate 

 prices, by supplying stock from state 

 nurseries at low cost. This policy 

 would mean careful consideration of 

 the elements of cost in raising stock, 

 and of the demand and size of output 

 required to supplement and regulate 

 the trade, in order that the states may 

 act with fairness to the public on the 

 one hand and the nursery companies 

 on the other. 



The committee doubts the advisa- 

 bility of free distribution of material 

 for forest planting by states and con- 

 sider that better results may obtain if 

 proper prices are charged for the ma- 

 terial. 



Your committee desires to express 

 its appreciation of the courtesy ex- 



