The Changing Role Of The Plant Broker

Jerry Montgomery

The role of the plant broker is undergoing some significant changes with new entrants starting to impact how the channel operates. Over the last six months, major changes have occurred to this portion of the supply chain. Some prominent examples are:

• Griffin Greenhouse Supply acquired Syngenta Horticultural Services (SHS) from Syngenta.
• ePlantSource, an online storefront, has announced its launch sometime around April 2013.
• McHutchison has announced the formation of a new national division named Vaughn’s Horticulture, and it opened for business on February 19, 2013.

The North American broker channel consists of 30 to 35 brokers, albeit some are seed only and some are plants only. However, this channel is dominated by seven companies serving the U.S. market. Below these seven companies are listed in order of sales volume based on my own assumptions:

1. Ball Seed with sales estimated to be 2.5 times more than the closest competitor.
2. Express Seed is arguably the fastest growing broker company in the U.S.
3. SHS, which was recently purchased by Griffin Greenhouse Supplies, as mentioned above.
4. McHutchison has primarily focused on the small and mid-sized growers but will expand its reach into the large grower market with its Vaughan’s Horticulture division.
5. Fred C. Gloeckner is a solid broker seemingly focused on pot plants, cut flowers and bulbs. It has also introduced the Fantasy Poinsettia concept.
6. Henry F. Michel sells to growers and garden centers.
7. Eason Horticultural Resources (EHR) is a broker that seems to focus on the middle market and also serves garden centers with nursery stock.

The brokers listed above, in my estimation, constitute 80 percent of sales to the grower market. This does not factor in contracted items that are usually a direct grower-to-grower sale; it does not include a huge number of bulb products sold direct to the grower market.

It is interesting to note the number of growers has vastly declined but the number of brokers is now starting to increase. As so the pie gets smaller, this will lead to a decline in the number of brokers over the next five years. In 2000, there were 11,625 growers, and in 2005 that number dropped to 10,563 growers. In 2011, the USDA reported 5,763 growers. The number of reporting states dropped from 36 in 2000 and 2005 to 15 in 2011, so these numbers are estimates, but this clearly indicates a significant change in the grower population.

The Role Of The Broker

The role of the broker in the supply chain has changed significantly over the past 20 to 25 years. This change is driven by the retailer taking control, vast reduction in the number of growers and production exceeding demand. Prior to the 1990s, a plant vendor would set the grower selling price and offer all brokers a standard discount. There was little to no negotiation on price. The broker would take care of the marketing, sales and collection, and the vendors exercised more control than the broker, ultimately becoming more like an annuity for some of the larger vendors.

In the 1990s, however, that all began to change as the retailers took charge and demanded more from the growers who then demanded more from their brokers. The brokers now buy at a negotiated price and set their own selling price with much lower margins than in the past. For the most part, the brokers are also not doing as much marketing, as their primary roles became sales and financing. This has created huge accounts receivable portfolios prior to the spring market. Some brokers now use financing as a sales tool. Seldom do you hear of or see a really compelling value proposition, and some have given up on selling value. At some point, breeders and producers will be faced with the same challenge.

Today’s Broker System

One factor that impacts how a broker operates is its relationship with the breeding and production sector. Ball Seed is the only broker that is vertically integrated with sister companies in seed, vegetative breeding and production — a clear advantage to their broker division. Whole Express Seed is the only broker company owned by a grower with ties to young plant and plug production.

Most of the larger brokers are focused on multiple market segments with a few notable exceptions:

• Express Seed appears to focus on the large grower market (basically those who serve the national retailers), and I would argue they do this with very favorable results.
• Eason Horticultural Resources is seemingly focused on the small and mid-size markets with a large degree of success and growth
• McHutchison appears to focus more on the mid-size and smaller grower, but with the launch of Vaughan’s Horticulture, I expect to see a greater focus on the large-grower sector.

As the grower segment has experienced a lot of margin pressure, with higher costs and more demanding retailers, that margin pressure has been passed down to the broker, and many have seen significant drops in the past 10 years.
Some have responded by being better buyers and tougher negotiators, while some have rolled out more exclusive products. The smart ones have also figured out how to be more productive and are able to control and reduce costs, and they will be the ultimate winners.

There is still a lot of tradition in some brokers selling organizations that still rely on relationships to maintain or grow their businesses. While relationships are important, helping the customer remain competitive and profitable continues to be an important element for the broker. We frequently hear stories of sellers who lose orders and complain because they have been calling on that customer for 25-plus years but forgot one thing. These sellers want to re-book an order, not re-sell it, and there is a huge difference.

It is also very surprising what little investment some brokers make relative to training their salespeople on how to sell the products. In most broker companies, the sales part of organization is the engine driving the company. To prove my point, try asking your broker representative about the last sales book they’ve read.

The Future Of Plant Brokers

The brokers who will survive and thrive will outperform their competitors by:

• Using a computer system that provides instantaneous responses to customers, employees and vendors
• Having a website that allows the customer to access all information easily, 24 hours a day, seven days a week, 365 days a year
• Managing a high-performance supply chain
• Growing their sales faster than their costs
• Having a highly-trained and motivated selling organization

Brokers will continue to be the main sellers to the grower. Very few vendors want to sell direct due to the cost of selling and, most importantly, the cost of an account receivable. The broker segment will remain healthy for those who know how to manage.

Leave a Reply

One comment on “The Changing Role Of The Plant Broker

  1. I enjoyed you report but I do have a question or two. Would you please call me 318 613-3777. I understand you are very busy, I will not take up too much of your time.
    Judy Duhon
    318 613-3777

More From Business Management...

April 17, 2015

Sakata Seed Uses California Spring Trials Display Plants To Give Back

Sakata Seed America is putting its post-CAST (California Spring Trials) plants and flowers to good use to support events in local California communities of Salinas and Morgan Hill. The plants, along with donations through Sakata's Charitable Giving Program, will support three fun-filled community events that promote healthy lifestyles and support the agricultural industry.

Read More
Hakonochloa macra Aureola v

April 17, 2015

Ornamental Grasses — A Few Thoughts

Grasses have been embraced by growers, landscape architects and retailers, and are an important component in wholesale and resale sales. Allan Armitage shares some popular grasses, one to avoid and a few to use with caution.

Read More
PW_CAST15

April 17, 2015

Allan Armitage’s Favorite Plants From Proven Winners, Syngenta And Danziger

Between visiting California Spring Trial giants like Proven Winners, Syngenta and Danziger, Allan Armitage saw a lot of great plants in one day. Despite the size of the challenge, Dr. Armitage finds a few favorites he thinks you should try.

Read More
Latest Stories

April 15, 2015

Redesigned SunPatiens Website Offers New Tools For Saka…

Sakata Seed America's new and improved SunPatiens website launched March 1, 2015 and provides growing information, marketing support, product location and many more tools to encourage consumer success with SunPatiens.

Read More
Farwest2015

April 15, 2015

Online Registration For FarWest 2015 Open, Discount Bef…

Online registration is now open for FarWest 2015, a green industry educational conference and tradeshow, which will take place August 27 to 29 in Portland, Ore. The show promises a full menu of classes, seminars and off-site events, plus a special benefit added this year for attendees.

Read More
Syngenta logo

April 15, 2015

Syngenta Names Chris Freeman Senior Key Account Manager…

Chris Freeman is the new senior key account manager for Syngenta Flowers, Home & Garden's Commercial Sales business in the Americas, effective March 2015. Freeman, who joined Syngenta in 2006, carries more than 25 years of experience in the agriculture and floriculture business.

Read More
Janeen Wright

April 13, 2015

Different Routes Lead To New Growth In Your Greenhouse

The path you take to success in your greenhouse may not be the well-traveled one, but the end result can still be the same — growth for you and your greenhouse business.

Read More
Restricting foliar pesticide applications on blooming plants to early morning or as dusk approaches in the evening reduces direct exposure to bees.

April 10, 2015

10 Steps For Protecting Crops And Bees

Bees stay safe and high quality crops thrive when you use bee-friendly practices designed to help both succeed. Griffin Greenhouse Supply Pro (GGSPro) has been actively discussing bee-friendly pesticide use for years. Based on its current understanding of the science and social factors at play, GGSPro currently recommends these 10 bee-friendly practices.

Read More
Lake Buchanan_LCRA

April 10, 2015

USDA Designates Areas Of West And Southwest As Drought …

The ongoing drought has resulted in disaster area designations in counties across nine Western and Southwestern states, including Texas, where some reservoirs are at or near historically low levels.

Read More

April 9, 2015

Altman Plants’ Online Cactus Shop Shows Strong Sa…

Altman Plants recently opened its new Cactus Shop, an online retail store that sells a variety of cactus and succulents. The store is a take-off of Altman’s original wholesale business, as the company started as a mail order catalog.

Read More
Dummen

April 8, 2015

Dümmen Group Welcomes Jim Devereux And Andrew Konicki T…

Dümmen group recently announced the addition of Jim Devereux and Andrew Konicki to its team. They are the newest members of the Key Account and Broker Support team for Dümmen, and will be responsible for building, developing and maintaining current broker and grower customer relationships.

Read More
Todd Woodfield

April 8, 2015

Sustainable Horticulture Pays Off

Practicing holistic horticulture has saved money and improved plant quality for Abby Farms. Its manager shares where the operation has seen differences from conventional production.

Read More
Gov._Jerry_Brown_California

April 8, 2015

California Institutes First Ever Statewide Mandatory Wa…

California Gov. Jerry Brown announced April 1 that, for the first time in state history, action will be taken to implement mandatory water restrictions, with the ultimate goal of reducing water usage by 25 percent. As Californians are pushed to conserve more, growers will need to think about how demand for products will be affected.

Read More
HRI logo

April 8, 2015

Horticultural Research Institute Accepting Scholarship …

The Horticultural Research Institute (HRI) is offering seven scholarships for the 2015-2016 school year, totaling $20,000. Applications will be accepted through May 31.

Read More
american-hort-logo

April 8, 2015

AmericanHort And State Associations Advocate For Workfo…

AmericanHort, along with roughly two dozen other state association partners, joined nearly 140 organizations in a letter to the House of Representatives responding to the Legal Workforce Act (H.R.1147), which is being voted on without provisions that would ensure legal workforce options for agricultural and seasonal employers. H.R.1147 would mandate that all U.S. employers use the federal E-Verify program.

Read More

April 1, 2015

Philadelphia Flower Show Draws More Than 250,000 Attend…

With more than 250,000 consumers attending the prestigious Philadelphia Flower Show in March each year, it's a great opportunity to get flowers and gardening products into the public eye. This year's show displays took on family favorites at the movies, with a focus on Disney and Pixar films. Check out some of the highlights in our slideshow.

Read More
protecting bees and pollinators video

March 31, 2015

New Video On Protecting Bees And Pollinators Educates H…

A new educational video that provides information on the horticultural industry’s essential role in bee and pollinator stewardship is one result of industry collaboration by the Horticultural Research Institute, AmericanHort, Society of American Florists and the American Floral Endowment. “Protecting Bees & Pollinators: What Horticulture Needs to Know,” narrates the current state of bee and pollinator health, provides information on factors that impact pollinators and the environment and underscores the beneficial role horticulture plays in providing healthy pollinator ecosystems.

Read More
DNA-logo

March 31, 2015

DNA Green Group Will Acquire Rijnplant

DNA Green Group and Riknplant have finalized DNA Green Group's acquisition of Rijnplant, meaning that the breeding and propagation activities in pot and cut anthurium, bougainvillea and heliconia will transfer to DNA Green Group.

Read More
Rose rosette on Knockout rose, April 2012. Photo credit: Alan Windham, University of Tennessee

March 25, 2015

$58 Million In APHIS Farm Bill Funding Will Support Hor…

Nearly $58 million as been allocated by the USDA's Animal and Plant Health Inspection Service (APHIS) to support the industry's Plant Pest and Disease Management and Disaster Prevention Program, under Farm Bill Section 10007. The program will support mitigation efforts for specialty crops, including providing research and other funding to address plant pest and disease priorities for the specialty crop industry, including floriculture and nursery crops.

Read More
AFE scholarship_Ryan Dickson

March 25, 2015

AFE Educational Grant And Scholarship Application Deadl…

Apply now for American Floral Endowment (AFE) scholarships or educational grants. Applications can be found online. For educational grants for 2015-2016, applications must be submitted no later than June 1. Scholarship applications are due May 1. AFE will award $40,000 in scholarships for 2015.

Read More

March 25, 2015

NASS Reports U.S. Honey Production Was Up By 19 Percent…

Honey production in 2014 from producers with five or more colonies totaled 178 million pounds, up 19 percent from 2013, according to a March 20 report from the USDA's National Agricultural Statistics Service (NASS).

Read More