Top 100 Growers: The Bright Side Of Contract Growing

Top 100 Growers: The Bright Side Of Contract Growing

Plants Unlimited President Nirmal Shah knows what it’s like to devote a majority of a greenhouse production facility to a single customer and lose all of that business in an instant.

The lost business was Frank’s Nursery & Crafts, which at one time was a retail chain with a couple hundred stores on the East Coast. In May 2002, though, Frank’s filed for Chapter 11 bankruptcy protection, leaving the operation previously known as Van Boven’s Greenhouses with 10-plus acres of greenhouses to fill in Kalamazoo, Mich.

“We were in kind of a panic situation at the end of the spring,” Shah says. “[Former owner] Larry [Boven] did not get paid for some amount of his product–not like all of it–but he did not receive a good amount. Going forward, we had to ask what are we going to do to replace that business? Out of the 13 acres, 10 1/2 or 11 were for Frank’s.”

It was around the time Van Boven’s lost the Frank’s business that Shah approached Boven about pursuing new customers. Shah had been with Van Boven’s as a grower for 2 1/2 years, but he joined Boven later that year on a mission to land enough new business to fill their empty greenhouses.

While Shah landed business with Menards, Boven successfully approached Masterpiece Flower Company about growing crops. Between the two new customers, Van Boven’s was able to fully use its greenhouses the following spring. Shah’s ability to land Menards was also a turning point in his relationship with Boven, who sold the business to Shah in 2006.

Menards is no longer a customer of Shah’s today, but Masterpiece Flower Company is. So are six other growers and brokers whom Plants Unlimited serves as an operation that’s entirely devoted to contract growing.

In Pursuit Of Opportunities

Because Plants Unlimited developed a good relationship with Masterpiece, Shah began to explore other contract growing options. One year, the operation grew a crop for Green Circle Growers. Another time, Plants Unlimited took an order from Zylstra Greenhouses, which is actually located across the street.

In Plants Unlimited’s first years contract growing, Shah took relatively small, one-time jobs. Still, those jobs trained him to work with other growers. They also provided Shah a glimpse at a new business model.

“We realized this could work if done in bigger numbers,” he says. “It could work if done correctly and planned out.”

When Shah took over at Plants Unlimited in 2006, he was mostly selling to Masterpiece. But he made phone calls, went to trade shows and expanded his network of growers. The extra effort ultimately led to six other customers. Shah currently serves as a contract grower for Battlefield Farms, Bert R. Hybels, CK Greenhouses, Color Point, Elzinga & Hoeksema Greenhouses, and Neal Mast & Son Greenhouses.

To Shah, the contract growing approach is the most appropriate one for his business. The thought of selling direct does cross his mind at times, but he realizes his operation is not entirely equipped to handle direct shipments to many of the retailers his customers serve.

“We are not required to have elaborate inventory tracking software, trucking, shipping management–which we will need if we work directly with Home Depot, Lowe’s or any big store,” he says. “Pay-by-scan comes into the picture, and we would need a lot of people and systems we do not have in place right now.”

Curbing Concerns

Shah also believes serving retailers directly could rile up other growers in his area.

“Between those two reasons, we decided to stay away from direct shipping,” he says. “If I get myself backed into a corner, I’ll try everything I need to. But right now, when there are other options, I like to have the relationship where I can sell to the big growers who can let me fill up my space. Basically everybody’s happy that way.

“So far, it has been successful for us and I intend to keep it that way. I’m not trying to explore into other things right now.”

Shah, like many contract growers, has one main concern about contract growing: What if your customers decide they don’t need you? There are a variety of reasons why growers wouldn’t contract others to produce crops for them. Perhaps the cost of fuel no longer makes long-distance business feasible. Maybe the quality of the crop the contract grower produced was below the retailer’s standard. It’s also always a possibility that the contract grower’s customers will build new greenhouses to handle production themselves.

The list of reasons goes on, but Shah argues a contract grower is likely just as concerned about losing business with other growers as other growers are concerned about losing business with retailers.

“If I were selling to Lowe’s directly, I could always have the same thought if the buyer said there’s no more for you,” he says. “What if it’s going to be your neighbor supplying me? I would assume everyone in business has the fear of losing their customer, so how is contract growing any different than selling direct?”

Shah combats his contract growing concerns by letting non-customers know he’s open to new business. Balancing the business between the seven rather than devoting an overwhelming majority to one or two customers is a strategy that helps Shah sleep at night.

“Our biggest customer went from 95 percent of our business to maybe 35 percent with Masterpiece,” Shah says. “It’s still a big number that if you were to lose that customer it would take a lot to replace it, but that number is significantly down.

Finding Balance

To Shah, there really are no set percentages that say how much of one’s total production should be committed to different customers. There is no set number of customers a grower should serve, either. In fact, in some instances, adding more customers complicates matters.

“In my case, I’m dealing with seven folks here,” Shah says. “I really enjoy working with all of them, and I would love to add two or three more to the mix. The only thing is because we grow for seven different people, everything from inventory and tag management to pot management and shipping complicates things more.

Shah estimates he grows 100 different SKUs, which is an extravagantly large number for a contract grower. Usually, contract growers prefer monocropping.

“I end up growing so many different things it makes growing challenging,” Shah says. “When you have so many different products–sizes, shapes–consistency becomes a concern. You take a step back and wonder if you need to project yourself and market more as a monocrop grower. Or, do you offer yourself and say you can do anything you want us to grow? Just give it to us.

“It is definitely a challenge but it is probably part of the reason customers keep coming back. It takes a lot of attention at the greenhouse. I want to make sure the Lowe’s grower doesn’t get a Home Depot tag or vice versa. Or the Meijer customer doesn’t get an independent garden center tag, and vice versa.”

Regular communication is a key to curbing contract growing concerns, as well. Say a customer orders 10,000 pots one spring: Shah will talk with that customer as early and as often as he can to anticipate drastic changes and keep his greenhouses full.

“There’s always the possibility that a customer who bought some product from me this year might not need as much–or might not need anything at all–the following year,” Shah says. “For example, when we sit down June or July with all seven of our customers, we will ask if we should plan on a similar approach next year. They can’t always give us a full answer, but even if there’s a slight hint that the chance is there for significant change, we like to know so during the summer and fall we can find other options to make sure our place is taken care of.”

Leave a Reply

More From Top 100 Growers...

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

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
Crop Protection Of The Future

March 11, 2015

Help Us Find Out How Crop Protection Has Changed Among …

Is your environmentally controlled greenhouse production area 500,000 square feet or larger? If so, we want to hear from you. Please take our Top 100 Growers survey to help us get an accurate picture of our industry from the perspective of our largest operations.

Read More
Top 100

September 18, 2014

The Top 100 Growers On Merchandising

See what Greenhouse Grower's Top 100 Growers have to say about merchandising changes over the last 10 years in our 2014 Top Grower Survey

Read More

September 18, 2014

The Top 100 Growers Talk Pollinator Health

The panel of experts at Greenhouse Grower’s 2014 Top 100 Growers Breakfast offered insight on how the industry is addressing the public scrutiny on neonicotinoids, research that still needs to be done and what growers can do to promote their operations’ responsible practices.

Read More
Top 100

August 29, 2014

2014 Top 100 Grower List

The 2014 Top 100 Growers list represents the largest greenhouse operations in the United States.

Read More
Gary Mangum

August 12, 2014

What Bell Nursery Learned From Growing Without Neonicot…

Determined to find out firsthand what a ban on neonicotinoid pesticides would mean for growers, Bell Nursery CEO Gary Mangum challenged his team to grow without them. Read to find out about the lessons he learned.

Read More
Top 100

May 14, 2014

2014 Top 100 Growers [Whitepaper]

Get the full set of data from our 2014 survey, including how the Top 100 Growers have changed their crop mix over the last 10 years.

Read More

May 13, 2014

The Top 100 Growers Find Diversity Provides More Securi…

Growers continue to broaden their crop offerings, provide more retail merchandising and market their own crops through social media, in an effort to increase sales.

Read More
Top 100

April 29, 2014

2014 Top 100 List Shows Growers Are Expanding

Grower acquisitions throughout the year, bankruptcy, closed doors, new operations, reduced square footage and changing business status have reconstructed Greenhouse Grower’s Top 100 Growers list, yet again.

Read More
Top 100

February 18, 2014

Help Us Find Out How Crop Mixes Have Changed Among The …

Is your environmentally controlled greenhouse production area 650,000 square feet or larger? If so, we want to hear from you.

Read More
Richard Jones

August 16, 2013

iPads, Automobile Cameras And The Future Of Your Busine…

Greenhouse Grower’s Top 100 Growers Breakfast has become a great annual event during OFA Short Course. We get together with representatives from the country’s largest greenhouse operations to talk about trends and developments in different areas of the business. And while the meeting is targeted for the Top 100, there are invariably interesting lessons that apply to growers across the board. This year’s breakfast featured a panel discussion on “The Even-Higher-Tech Future Of The Top 100.” (You can read about some of the highlights from the event on page 32.) Our panelists included Gary Falkenstein, president and CEO of the new online live goods broker, ePlantSource; Paul Pilon, owner of Perennial Solutions Consulting; and Charles Grinnell, COO of Harvest Automation (whose plant-moving robots were one of the highlights on the trade show floor at Short Course this year). They shared their opinions on what exciting new developments growers may have […]

Read More

August 16, 2013

The Even-Higher-Tech-Future Of The Top 100 Grower

As part of Greenhouse Grower’s 30th anniversary celebration, we’ve been taking a look at the current state of various segments of our industry in 2013. But there’s also value in looking ahead at — and preparing for — the next 10, 20 or 30 years. “The Even-Higher-Tech Future Of The Top 100 Grower” was the theme for Greenhouse Grower’s annual Top 100 Growers Breakfast, held during OFA Short Course. The Top 100 program was sponsored by BASF. The breakfast featured a panel discussion with experts in web technology, robotics and production: Gary Falkenstein, president and CEO of ePlantSource, Charles Grinnell, COO of Harvest Automation and Paul Pilon, owner of Perennial Solutions Consulting. Each shared his vision of the future and identified readily available technologies and opportunites that growers should be exploring for their business today. Where are the Top 100 Growers on the technology curve? Falkenstein: On the technology side, […]

Read More
Hermann Engelmanns Sandra Kitain, Chuck Romagnoli and Erin Leonard

August 12, 2013

Hermann Engelmann Greenhouses Reaches Out To Consumers …

Do you grow foliage and houseplants? If not, it might be time to consider it. In a recent Today’s Garden Center magazine survey, of those garden retailers who carry houseplants, 54.3 percent report an increase in sales in 2013. Hermann Engelmann Greenhouses reports good news, as well, with a 5 percent increase within the foliage segment in the past year. So how does the operation plan to keep the good times rolling? The formula for this grower includes marketing directly to the consumer through in-store materials, a loaded website and an active social media presence. But the message being broadcast through all these media is the same — to inspire the customer to create home décor designs and to educate with plant care tips that will turn timid gardeners into experts. “We want to transition our product from a commodity item to a home décor item,” says Erin Leonard, director […]

Read More

June 26, 2013

Metrolina Greenhouses Enters Purchase Agreement To Buy …

Metrolina Greenhouses, based in Huntersville, N.C., has entered into a purchase agreement to buy the assets of Stacy’s Greenhouses, Inc. pending U.S. bankruptcy court approval. “As part of Metrolina’s continuing expansion, the proposed asset acquisition of Stacy’s will improve our business growth as we continue with our 2025 Vision plan,” says Abe VanWingerden, co-CEO of Metrolina Greenhouses. “Stacy’s perennial business is a natural addition to our current product lineup as we continue to provide new and innovative solutions and concepts for our retail partners. “Additionally, by making this asset purchase, we will be able to honor and extend the business legacy of Mr. Stacy as he and my father, Tom VanWingerden, were both pioneers in this industry who worked together on many projects over the years as they both started in their businesses in the early 1970s. Combining the work of these two visionary leaders into one company makes logical sense.” […]

Read More

June 24, 2013

Stacy’s Greenhouses Files For Bankruptcy

Stacy’s Inc. has filed for Chaper 11 bankruptcy protection in order to facilitate an upcoming sale. “The process is going forward the way we had hoped,” says Stacy’s President Tim Brindley. “The court has approved a working budget to keep everything moving forward through July 26, and we have another hearing soon to approve a budget through August.” With the company going through Chapter 11 proceedings, any sale will be an asset purchase rather than a sale of the company. The business will no longer carry the Stacy’s name. “We have been in negotiations with a potential buyer for several months, and have a signed asset purchase agreement in place,” Brindley says. “Everything has to be approved by the courts and there are a lot of steps that still have to take place, but the goal is to have the sale complete by the end of August. The sale of Stacy’s […]

Read More

May 28, 2013

Rocket Farms Launches New Interactive Website

Rocket Farms has launched a new website to support the brand’s innovative approach that focuses on fun, creativity and interaction with the consumer. Offering a clean, modern look, the new offers a wide variety of information on the company and its products, the Rocket Farms Wholesale Center and product inspirations. In an effort to cater to today’s mobile consumers, the new website is compatible for viewing on all media devices, including PC, mobile phones and tablet devices. The website will continue to evolve as additional enhancements and new information are added to appeal to consumers’ changing interests and expand the product interaction portions of the website. The most exciting and original part of the website is Inspirations. An online reference guide for consumers to find fun and unique ideas for selecting and enjoying Rocket Farms products, Inspirations includes recipes, design ideas, inspirational concepts, and more. Visitors can then share […]

Read More
Top 100

May 6, 2013

Top 100 Growers 2013: The State Of Production

  As part of Greenhouse Grower’s 30th Anniversary, we reviewed the state of production among the nation’s largest operations. Our 2013 Top 100 Growers Survey, sponsored by Becker Underwood, asked three big questions to get a feel for where they see the biggest developments in greenhouse production. Innovations First, we asked them to identify the most important innovation in the greenhouse industry in the last 30 years. We got a variety of opinions, including integrated pest management, bottom heat and heat curtains, open roof greenhouses, plugs and other growing techniques and computer-based environmental controls. Most commonly cited were breeding improvements, hydroponic production and the big winner, automation and transplanters. “It’s not even close,” one respondent said. “Transplanters are the best innovation we’ve seen. To plant at the speed we do now, we would have to put 30 people on each production line.” Improvements Next, we asked them to tell us […]

Read More
Top 100

May 6, 2013

Greenhouse Grower Top 100 Growers: The 2013 List

It’s not necessarily an indication of a top-to-bottom trend in the horticulture industry, but one thing is clear from the results of the 2013 Greenhouse Grower Top 100 Grower survey: The largest greenhouse operations in the U.S are getting larger. Perhaps it’s a sign of things turning around after several years of a stagnant economy and an evolving customer base. Maybe the greenhouse industry is just continuing a shakeout, with the largest operations absorbing the production and space of growers who are leaving the market. Could be it’s simply the big continuing to get bigger to take advantage of the production efficiencies size can offer big retail customers and the growers’ own bottom lines. It’s likely some combination of all three. Whatever the reason, nearly a third of the growers in Greenhouse Grower’s 2013 Top 100 survey reported growth. Some of them significantly so. Ups And Downs Greenhouse Grower’s annual […]

Read More

April 29, 2013

Rockwell Farms Introduces Ready-To-Pour Container Ferti…

Rockwell Farms has introduced Rockwell Farms Plant Food, a bottled liquid fertilizer that does not need to be diluted before use. Always looking for ways to help the consumer succeeed, Jason Roseman of Rockwell Farms says the operation is also always looking for ways to get consumers to come back and buy more plants and flowers. “We feel like fertilization is one of those things that can be very confusing,” Roseman says. “Not everyone does it, and not everyone knows what they’re supposed to do.” The solution: Rockwell Farms Plant Food. The formulation is 150 ppm of a 20-10-20 fertilizer and is sold in 24-ounce bottles. Rockwell recommends that one bottle be used to fertilize 1.5- to 3-gallon outdoor plant and flower containers every 21 days. The product’s signage shows a young patio gardener pouring the bottled fertilizer on a windowbox with the tagline, “Just pour on your way out […]

Read More