Economic Impact of the Florida Apiculture Industry,

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1 FE273 Economic Impact of the Florida Apiculture Industry, Alan Hodges, David Mulkey, Effie Philippakos, Gary Fairchild, and Malcolm Sanford 2 Introduction Florida has a large apicultural industry, with an estimated 258,000 honey bee colonies operated by 700 full-time or sideline commercial beekeepers and an additional 500 hobbyist beekeepers (Florida Department of Agriculture and Consumer Services, 1999). Florida is currently the fourth largest honey producer in the United States, with a production level of million pounds in In addition to honey production, Florida bees also pollinate many important fruit and vegetable crops, including specialty citrus, blueberries, strawberries, cucumbers, squash, watermelons, and avocados. Honey bee pollination activity is responsible for increased yields of these crops. Over the years the beekeeping industry of Florida has suffered very high numbers of business shutdowns and losses to pests. This study attempts to assess the broad economic impacts of the Florida beekeeping industry to better inform policy issues currently being considered. This paper presents an overview of a more detailed report assessing the economic impacts of Florida s apicultural industry ( edu/impact). Results of this study are based on primary data collected through two separate questionnaires that were mailed to 1,188 Florida beekeepers and 2,300 Florida producers of selected fruit and vegetable crops. Surveys were designed to assess the nature of beekeeping operations and honey bee pollination services, respectively. The beekeeper survey had a response rate of 55 percent while the response rate from the Florida grower survey was 19 percent. Survey results were expanded to represent the entire population of beekeepers. An input-output model using the IMPLAN PRO software package was used to estimate the indirect and induced economic impacts of the apicultural industry. The IMPLAN model was customized to reflect the Florida apicultural industry using operating expenditure information obtained from the beekeeper survey. Beekeepers were also asked to identify threats to the industry. Results Beekeeping Operations An estimated 258,696 honey bee colonies were managed in Florida in Twenty-seven percent of beekeepers reported managing migratory beekeeping operations for approximately six months annually outside of Florida. Sixty-two percent of honey bee colonies were migratory. The beekeeping industry employed 1,632 employees who worked a total of 95,572 days. Respondents reported a mean of 16.7 years experience in the beekeeping business. 1. This document is FE273, one of a series of the Food and Resource Economics Department, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida. Original publication date January Reviewed April Visit the EDIS website at edu. 2. Alan Hodges, coordinator of economic analysis; David Mulkey, professor; Effie Philippakos, research assistant; and Gary Fairchild, professor; Department of Food and Resource Economics; and Malcolm Sanford, professor, Department of Entomoloy and Nematology; Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL The use of trade names in this publication is solely for the purpose of providing specific information. UF/IFAS does not guarantee or warranty the products named, and references to them in this publication does not signify our approval to the exclusion of other products of suitable composition. The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A&M University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Millie Ferrer-Chancy, Interim Dean

2 Revenues totaled $19.5 million, or $75.19 per honey bee colony. Expenditures summed to $17.9 million, or $69.31 per honey bee colony, including an annual asset depreciation rate of 10 percent (Table 1). The largest expense categories included labor, transportation, taxes, insurance, freight shipping, supplemental feed, and packaged bees. Collectively, these expense categories accounted for 69 percent of total expenses. Florida beekeepers realized an estimated $1.5 million in net income during 1999, which translated to an average profit of $5.88 per honey bee colony, or $1,280 per beekeeper (Table 1). The profit margin, or ratio of pre-tax net income to revenue sales, averaged 7.8 percent. Total assets summed to $50.1 million for all beekeepers, or $183 per colony. Return on noncurrent assets (pre-tax net income divided by non-current assets) was three percent. Honey Bee Product Sales Bulk honey, retail packaged honey, and comb honey produced by Florida beekeepers in 1999 were collectively valued at $15.7 million, representing 89 percent of total sales (Table 2). The sale of beeswax was valued at $401,000. The value of all live bees sold exceeded $1 million, including queen bees valued at $834,000, packaged bees valued at $76,000, and nucs and complete hives valued at $361,000. Approximately 78 percent of total honey sales by Florida beekeepers were transacted through wholesale market channels. Value of Honey Bee Pollination for Fruit and Vegetable Production Both beekeepers and Florida growers were asked about levels of pollination services provided. Florida fruit and vegetable growers were also asked to indicate the typical yield increases associated with pollination service contracts on their crops. Twenty percent of beekeeper respondents reported contracting 73,000 colony sets to Florida growers at an average price of $24 per colony for pollination services. Thirty-one percent of growers reported contracting a total of four pollination services. Watermelon crops benefited the most from pollination services, with an estimated 60.1 percent yield increase. Additionally, pollination services were associated with a 58.6 percent yield increase in cucumbers, a 36.4 percent increase in cantaloupes, and a 32.1 percent increase in blueberries. On average, the Florida crops considered in this survey experienced a 37 percent increase in yields (Table 3). Total beekeeper income from pollination services was $1.9 million in The marginal value of crop yield increases attributable to honey bee pollination activities was determined by taking the change in yield-per-acre associated with the use of pollination services multiplied by the price per unit, multiplied by the number of pollinated acres for each crop less the cost of pollination services. We assumed the average yield for that crop would be lower by the amount of the suggested increase associated with pollination services and that there are no market supply or price adjustments associated with marginal changes in crop yields due to honey bee pollination. The total marginal value benefit of pollination services was estimated at $26.4 million (Table 3). Cucumbers had the largest marginal value of pollination at $7.4 million, followed by watermelons at $5.9 million, specialty citrus at $5.3 million, and squash at $3.7 million. The marginal value for the remaining crops totaled $3.7 million. Regional Economic Impacts of the Florida Apicultural Industry Three types of regional economic impacts are associated with the apicultural industry of Florida: direct, indirect, and induced economic effects. The direct economic impacts involve output, value-added, and employment contributions directly related to apicultural operations in Florida. Purchases from other industries by beekeepers and Florida growers support additional levels of employment and wages (indirect effects). Personal consumption purchases made by employees of the apicultural industry, and related sectors, further boost the economy (induced effects). The total impact is the sum of direct, indirect, and induced effects. Sales outside Florida hold a special role in stimulating the economic impacts just noted and have larger economic impacts because they bring new money to Florida, part of which becomes circulated statewide. The sum of product sales and pollination services was $19.32 million in Forty-five percent ($8.7 million) of this total was sold outside Florida, while 55 percent of total sales ($10.6 million) occurred within the state of Florida. Total impacts for the beekeeping industry were $30.5 million in output, $15.2 million in value-added, and 806 jobs (Table 4). Total impacts associated with marginal value of pollination services to growers were $38.2 million in output, $20.9 million in value-added, and 490 jobs. Threats to the Beekeeping Industry Florida beekeepers have suffered very high losses of colonies in recent years. Fifty-seven percent of beekeepers responding reported losing a total of 75,586 honey bee colonies over the last five years. Beekeepers were asked to rate the most important threats confronting the industry 2

3 on a 5-point Likert scale, where a score of 5 signified extremely important and a score of 1 signified unimportant (Table 5). The 13 threats listed in the survey included low honey prices, pesticide exposure, and low recruitment of new beekeepers. Seven threats received above average scores (>3), including foreign imports of honey (4.3), low prices for honey (4.1), decline of honey bee populations due to pests (4.0), resistance to pesticides for control of mites (3.9), high cost of beekeeping (3.8), losses to honey bee diseases (3.5), and potential contamination of honey by pesticides (3.1). The first five of these threats were assigned a score of 4 or 5 (e.g., very important and extremely important, respectively). Conclusion The apicultural industry has been beneficial to Florida s economy. In 1999 the economic impacts of the beekeeping industry were estimated at $30.5 million in output, $15.2 million in value-added, and 806 jobs, while the economic impacts of pollination services were $38.2 million in output, $20.9 million in value-added, and 490 jobs. Also, a large share of Florida s beekeeping operations is migratory and serves as a resource to many other states in addition to Florida. Furthermore, the benefits of pollination services to fruit and vegetable growers far exceed the cost of services provided by beekeepers by approximately $26 million. Despite the sizable benefits associated with the apiculture industry of Florida, this industry is currently in decline. It is characterized by low profits totaling $1.5 million, or $1,280 per beekeeper. Although beekeepers reported revenue receipts of $17.6 million, they also amassed considerable costs valued at $12.9 million. In particular, antibiotics and pesticides represented significant operating expenditures for beekeepers. Additionally, investments in equipment for beekeeping are substantial. Florida beekeepers have also suffered extremely high losses of colonies due to mites and other pests. The dying apicultural industry of Florida is an important concern because not only will the output, employment, and value added benefits associated with beekeeping and pollination services be forfeited by the state s economy, but a decline in this industry could potentially lead to a shortage of honey bee colonies necessary to sustain future Florida crops through pollination services. Table 1. Income and expenses for Florida beekeepers ($ thousands), Income and Expenses Amount ($1,000) Amount Per Colony* Total Sales Revenue 19, Product Sales 17, Pollination Services 1, Total Expenses 17, Cash Expenses 12, Depreciation** 5, Net Income, Pre-Tax 1, * Based on estimated 259 thousand colonies. ** Estimated production for commercial and sideline respondents not reporting production, assuming average yield of 97.6 pounds/colony. 3

4 Table 2. Quantity, price, and value of Florida honey bee products, Honey Bee Products Number of Respondents (%) Bulk honey 321 (50%) Retail packaged honey 117 (18%) Comb honey 36 (6%) Unspecified honey production** 43 (7%) Beeswax 102 (16%) Live bees (queens, nuc, and packaged bees) 52 (8%) Quantity (pounds)* Average Price Value ($1,000)* 21,010, , , , ,924, , , Other (1%) Total 17,564 * Based on estimated 259 thousand colonies. ** Estimated production for commercial and sideline respondents not reporting production, assuming average yield of 97.6 pounds/colony. 1,269 Table 3. Marginal value benefit of honey bee pollination services in Florida, Crop (units) Average Yield per Acre (units)* Average Percent Increased Yield by Pollination Marginal Production Due to Pollination (units/acre) Price per Unit* Cost of Pollination Services Marginal Benefit of Pollination Services ($1,000) Cucumber (55-lb. bushel) ,950 7,389 Watermelons (cwt.) ,535 5,899 Specialty Citrus (boxes) ,879 5,333 Squash (42-lb. bushel) ,799 3,673 Strawberries (12-lb. flat) 2, ,425 2,137 Avocados (bushels) ,138 1,144 Blueberries (pounds) 1, , Eggplant (33-lb. bushel) , Total 353,899 26,385 * Source: Florida Agricultural Statistics Service. 4

5 Table 4. Total economic impacts of the Florida apicultural industry and marginal benefits to Florida fruit and vegetable growers by pollination services, Multipliers Output ($ Million) Value Added ($ Million) Florida Beekeepers Employment (Jobs) Total Effects Direct Effects Indirect Effects Induced Effects Florida Fruit and Vegetable Growers Total Effects Direct Effects Indirect Effects Induced Effects Table 5. Ratings of threates to the Florida beekeeping industry, Threats to Beekeepers Number of Respondents Average Score* Percent That Respondents Scored Extremely or Very Important Foreign imports of honey % Low prices for honey % Decline of honey bee populations due to pests % Resistance to presticides for control of mites % High cost of beekeeping % Losses to honey bee diseases % Potential contamination of honey by pesticides % Potential adulteration of honey by other sweeteners % Pesticide exposure to bees from nearby ag operations % Lack of suitable bee pasturage and colony sites % Low recruitment of new beekeepers to the industry % Lack of skilled or willing workers % Losses to bears and other predators % * Scored on a scale of 1 to 5. 5 = extremely important4 = very important3 = somewhat important2 = slightly important1 = unimportant 5