Quantity-Based Versus Quality-Based Pricing: Developing the Niche Pine Seedling

Demands placed on pine production in the southeastern part of the United States prompt managers to research and employ intensive cultural practices. Bareroot conifer seedling culture, like loblolly pine (Pinus taeda L.), is highly preferred in moderate regions of the South, since bareroot stock is relatively inexpensive to purchase, transporting and planting costs are reasonable, and field survival and growth measures are tolerable. For almost 50 years, Philip Wakeley's Monograph No. 18 has been used as the "bible" for the cultivation of southern pines, because sound prescriptions have served many nurseries well. In recent years, some of the methods commonly employed have been challenged in different ways, like that of decreasing seedbed density. To lower seedbed density has been shown to increase seedling root collar diameter, and thus improve seedling survival and growth potential. Some conditions that result from using this method to produce new archetypical, "high-quality" seedlings will involve the elimination of stems from a nursery's productive capacity (for example, reducing sowing densities from 330 to 110 seedlings/m2). Cost efficiency evaluation can be employed by a nursery to analyze this and other production operations for any species. If cost information were openly shared among firms, benchmarks would indicate a nursery's position among other nurseries. Since cost information unique to a nursery's operation is confidential, and cash flows are considered proprietary, it seems more proper to use publicly disclosed information, like values of seedling price and yield (in other words, diameter and height), when comparing firms. Price efficiency evaluation is an acceptable model, since actual expenditures can remain conspicuous. If pricing standards were designed according to a "quality-based" format instead of the current "quantity-based" format, then perhaps the lowering of seedbed density to produce high-quality seedlings could be justified. It is quite costly to take seedlings out of production, and so it is essential to increase prices for "niche" products. Some firms (public and private) are beginning to employ niche-pricing strategies. If quality-based pricing schemes were adopted, nursery managers would be motivated to find other ways to produce valuable niche products, without reducing seedbed density. There are other low-cost cultural measures that, if incorporated into current operations, would serve to increase production efficiency.

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Author(s): Kirk D. Howell

Publication: National Nursery Proceedings - 2001

Event: Western Forest and Conservation Nursery Association Conference
2001 - Durango, CO