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

5 comments 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

  2. Dear Jerry,

    We are an Irish company growing crocus sativus – saffron bulbs, primerily for indoor flowering and mechanical extraction, the end product being premium quality dried saffron.
    Our soils and weather produce healthy large bulbs which were produced in Ireland as far back as the 16th century.
    We have 20,000,000 saffron bulbs currently under managment and are interested in supplying to the North American market.
    Would you be interested advising regarding distribution ?

More From Business Management...
Colorado State University 2015 Container Field Trials

November 29, 2015

2015 Colorado State University (Fort Collins, Colo.) Field Trials Results

See the 2015 field trials results (includes photo gallery) for Colorado State University in Fort Collins, Colo.

Read More
Coleus 'Colorblaze Velveteen' (2015 University of Tennessee Field Trials)

November 28, 2015

2015 University of Tennessee Gardens (Knoxville and Jackson, Tenn.) Field Trials Results

See the 2015 field trials results (includes photo gallery) for University of Tennessee Gardens in Knoxville and Jackson, Tenn.

Read More
Feature Image Cob 700 (NewLux)

November 28, 2015

16 LED Lighting Solutions For Your Greenhouse

Narrowing in on the right LED lighting product often comes down to considering your specific crop needs and growing requirements to see what works best for your application. Here are 15 LED products to take into account when choosing the right fit for your greenhouse.

Read More
Latest Stories

November 25, 2015

Everything You Need To Know About the New England GROWS…

Held In Boston December 2-4, New England GROWS includes a comprehensive conference program, a trade show, and with six special programs that teach new skills and provide opportunities to network with colleagues.

Read More
Giving Tuesday

November 24, 2015

Giving Tuesday On December 1 Is An Opportunity For The …

Organizations such as American Floral Endowment and others are encouraging industry members to participate in the generous spirit of the holiday season.

Read More
Random Acts Of Flowers

November 24, 2015

Random Acts Of Flowers Partners With FTD And Pro Flower…

The organization, which recycles and repurposes flowers with a volunteer team that delivers bouquets to health care facilities across the country, made its 100,000th delivery to a health care facility in Chicago.

Read More

November 23, 2015

Content Marketing: Buzzword Or Here To Stay?

A solid content marketing strategy provides valuable information that educates your consumers and builds trust.

Read More
Gotham Greens Chicago Rooftop Greenhouse

November 23, 2015

Gotham Greens Expands Into Chicago With New Rooftop Gre…

Touted as the world’s largest rooftop greenhouse, the company’s fourth facility is its first outside of New York and will produce nearly 10 million annual crops of local, premium-quality leafy greens and herbs.

Read More
Craig Regelbrugge Feature Image

November 23, 2015

Pollinator Initiatives Offer Opportunities For Growers,…

During Greenhouse Grower's 2015 Top 100 Growers Breakfast at Cultivate'15, Craig Regelbrugge, AmericanHort senior vice president for industry advocacy and research, discussed where things stand on the regulatory front with neonicotinoids, and the new Grow Wise, Bee Smart initiative.

Read More

November 20, 2015

Lessons Learned From The California Drought

For those of us who live in the areas of the country that experienced harsh winters and significant rain over the past three seasons, water has become a nuisance in some cases, rather than a blessing. I can’t count the number of times I have wished to be able to send the snow or the rain to the West Coast, tied up with a big red bow. But think about how we’d feel if we didn’t have the snow and the rain, and we were experiencing the same dry conditions that the residents of California, Oregon and Washington have. With fresh water supplies dwindling in regions of the world, and the resistance of residents in states like Michigan to share water from the Great Lakes, it’s likely that the next civil or world war could be fought over our most precious resource. California’s epic drought should cause everyone to look […]

Read More
Kate Santos Operations Director Dummen Orange

November 18, 2015

Kate Santos Presents New Opportunities For The Horticul…

Dr. Kate Santos is a scientist, an artist, an advocate, a traveler, a dreamer, a visionary and a go-getter. Well-known for her work managing Dümmen Orange as Operations Director, Santos has taken on a new role as co-founder of Luxflora, an organization for women in horticulture.

Read More
MPS Sustainable Quality Logo

November 17, 2015

International Seminar Finds Broad-Based Need For Indust…

Achieving durability and maximum transparency is the responsibility of the entire floriculture supply chain, was the main conclusion of the seminar “Shaping the Future of Floriculture,” which took place on Monday 9 November on the S.S. Rotterdam in The Netherlands. With just under 300 participants, the seminar, organized by Union Fleurs, VGB and MPS, received plenty of attention.

Read More
AmericanHort logo

November 17, 2015

Urgent: Your Voice Is Needed On Two Important H-2B Bill…

Two bills concerning the H-2B program were recently introduced in the House and Senate (H.R.3918 and S.2225). Both bills address key issues that employers continue to face with the H-2B program. Please urge your members of Congress to support these bills.

Read More

November 17, 2015

AmericanHort Moving Forward In Search For New CEO

The association is planning to enlist the help of a consulting firm that will solicit candidates best suited to lead the organization and serve the horticulture industry.

Read More
Costa Farms Owners

November 17, 2015

Costa Farms Named As International Grower Of The Year F…

The International Association of Horticultural Producers has announced its finalists for the International Grower of the Year award, and the list includes Costa Farms of Miami, Fla.

Read More
Bell Nursery reaches out by supporting projects that help children connect with plants

November 12, 2015

Bell Nursery Is An Advocate For Outreach In Its Communi…

In a heavily regulated society, growing relationships is just as important to our industry as growing beautiful flowers. In environmentally sensitive states like Maryland, outreach has become mandatory, says Bell Nursery’s Gary Mangum.

Read More
Greenhouse Grower State of the Industry

November 11, 2015

Greenhouse Grower’s 2016 State of The In…

The State of the Industry report, which uses input from both growers and suppliers, is designed to help you understand this year's crop and sales trends, as well as the issues that keep you up at night.

Read More

November 11, 2015

Drought Has Triggered A New Normal For The California L…

California is now entering its fifth year of the worst drought in 500 years, with no end in sight. Weather experts predict the current drought will continue into 2016, despite optimistic projections of increased rain patterns this winter caused by a strong El Niño ocean current. Residents have fully bought in to the emergency, and embraced Governor Jerry Brown’s April 1 mandate to reduce water usage by 25 percent. Even after an above-average hot summer, the state has exceeded its goal, with a per-month average of 28 percent water reduction. Some of the ways homeowners are being encouraged to reduce their outdoor water use are concerning, but the good news is, drought-tolerant landscaping and awareness of water-wise gardening is on the rise. Cash For Grass Rebates Have Landowners Trading In Their Lawns When Governor Brown’s water reduction mandate was announced in April, consumer reaction was reflected in the sales at […]

Read More
GreenhouseConnect 2015 Grower Supplier Meeting

November 10, 2015

Growers And Suppliers Exchange Solutions And Ideas At G…

Held this year in San Diego at the Rancho Bernardo Inn, GreenhouseConnect 2015 brought growers and suppliers together in a setting designed to amplify networking and collaboration.

Read More
Minnesota Landscape Arboretum – University of Minnesota

November 6, 2015

The Top 10 Most Beautiful College Arboretums

The best arboretums provide an ideal location for the study and contemplation of nature. Check out Best College Reviews’ rankings of the nation’s most beautiful arboretums.

Read More
Dave Armstrong Sakata Holding Corp.

November 5, 2015

Why Lobbying For Plant Breeding Is Important

Horticulture industry members who take the opportunity to advise Washington legislators on agricultural policy will find a surprisingly receptive audience.

Read More
[gravityform id="35" title="false" description="false"]