Finding Value In The Chain

The live goods brokers have been the link in the chain that’s been most immune to the consolidation we’ve been seeing at the breeder, grower and retail levels. But we have seen consolidation in distribution on the hard goods side of the industry and even more dramatic consolidation in manufacturing plastic pots and growing media. How can the live goods segment support so many distribution companies? 

Unlike their hard goods counterparts, live goods brokers are handling very little inventory. Cuttings are delivered to growers from offshore. Plugs and liners come from the young plant growers. The only inventory has been seed. A national sales force could be commission based with people working out of their homes. The biggest investments are in information technology and customer relationships. And as far as breeder relationships and genetics go, there seems to be an endless global supply of varieties to represent.

Over the last 20 years, the live goods distribution companies have settled into a big three at the top – Ball Seed, Syngenta Horticultural Services and Express Seed. While Ball and Syngenta are vertically integrated with breeding divisions, Express and Ball have key alliances in plugs.

Then there’s a second tier of national brokerages that have found niches based on serving smaller to mid-sized growers and grower-retailers and through plant offerings extending into nursery crops. McGregor Plant Sales is unique in its relationship with Florexpo, a cuttings farm in Costa Rica. Henry F. Michell Co. has had exclusive partnerships with breeders, including Floranova and Bodger.

One of the most interesting developments at this level is three competing firms cooperating on a marketing program. Fred C. Gloeckner & Co., McHutchison and Eason Horticulture Resources are all partners in promoting and facilitating the supply chain for Hort Couture with a strong focus on grower-retailers and wholesale growers who serve independent garden centers. Below this second tier of national brokers are smaller distribution companies focused on specific plant niches or regional needs.

When I posted my question about brokers on our Fresh Air Forum, grower Lloyd Traven from Peace Tree farm in Kintnersville, Pa., said the broker relationship is often a very personal one. “We all have a broker rep we love, someone who has been there for us and we reflexively give the business to first,” he says. “When they retire, that business will likely go to another brokerage, and that’s when the smaller brokerages will start to go away.”

He adds that most breeders and young plant producers have not invested in technology required to sell widely on their own. “As e-sales get easier, the broker will become less important,” Traven says. “Many breeder houses also stipulate that all sales must go through a broker, perpetuating their place in the chain.”

But the broker’s biggest role is bankrolling the industry and facilitating transactions in the supply chain. The global financial crisis has forced brokers to tighten up their credit extension terms. Six-month payment terms are common A broker should not be supporting a grower a banker would not. When a large growing operation files for bankruptcy, it’s often the brokers who feel it the most.

Brokers are looking for ways to minimize their risk. Heading into the spring ordering season, several told their suppliers they will start assessing a fee for royalty collections to recognize the costs associated with collecting royalties for breeders. Up until now, royalties had been passed through to breeders and marketers without a markup. As a result, we can expect pricing to be bundled to include royalties instead of them being broken out separately. While a royalty may be 2-5 cents on a vegetative annual, they can be as high as a dollar on a shrub. It all adds up.

Leave a Reply

Latest Stories

May 22, 2018

Little Leaf Farms Expands Its Indoor Baby Greens Produc…

The Massachusetts-based company has increased the size of its greenhouses to 5 acres, more than doubling its annual production of baby greens.

Read More
Biocontrols in a Greenhouse

May 22, 2018

Register Now for Award-Winning Online Greenhouse Growin…

Learn about production cost and profit, as well as the basic behind plant science, via two online classes being offered by the University of Florida.

Read More

May 21, 2018

Insights From Lawmaker’s Visit to a Top 100 Greenhouse …

When Rep. Julia Brownley of California visited Sun Valley Group, she got a firsthand look at a very busy time in the life of a flower grower.

Read More

May 20, 2018

Smithers-Oasis Now Offering Rootcubes Foam Media in Ret…

Designed with smaller or hobby growers in mind, the Rootcubes packs are also ideal for larger growers to use for trials.

Read More

May 19, 2018

Westerlay Orchids Shows Its Support for Local Schools

Proceeds from all sales the company made during the Carpinteria Greenhouse and Nursery Tour will be donated to fund STEAM (Science, Technology, Engineering, Art, and Math) programs.

Read More

May 18, 2018

Five Education Tracks Set for IGC Show

The event will feature topics such as online sales, store renovations, and more.

Read More
Ian Baldwin

May 17, 2018

Ian Baldwin: Why the Rise of the Under 35s Will Help Yo…

In his latest blog, garden retail consultant Ian Baldwin says this new generation of plant buyers is seriously engaged in gardening, and is using social media to help become successful plant owners.

Read More

May 16, 2018

2018 Perennial Plant Symposium Offering Power to the Pe…

Perennial and gardening enthusiasts of all experience levels are invited to attend plant discussions on Monday, July 30 for a chance to hear from the best in the field on a range of topics.

Read More

May 15, 2018

Floriculture’s Future Hangs in the Balance Between Labo…

The nation’s largest growers are investing heavily in technology, new structures, human resources, and efficiency measures to stay competitive and profitable, despite significant labor shortages.

Read More

May 15, 2018

Gotham Greens Expanding Greenhouse Production Into Balt…

Scheduled to open in early 2019, Gotham Greens’ Baltimore facility will bring a reliable, year-round, local supply of fresh produce to serve retail, restaurant, and foodservice customers throughout the mid-Atlantic region.

Read More
Growing Innovations conference and tradeshow logo

May 14, 2018

Growing Innovations Geared to Connect Specialty Ag With…

Innovation abounds in agriculture, yet it can feel sometimes as if the gap between exciting new developments and what growers actually need in their operations can be awfully wide. We at Meister Media Worldwide intend to help narrow this gap. Which is why we’re pleased to introduce Growing Innovations – an altogether new type of event that will debut Nov. 7-8 at the Las Vegas Convention Center in Las Vegas, NV. Unlike most agricultural events and trade shows, Growing Innovations is not about technology per se, nor is it about everyday issues that growers face. Instead, this new conference and tradeshow is very acutely solutions oriented. It takes as its starting point specialty crop growers’ most pressing real-world challenges – production efficiency, labor and water shortages, logistics, and data management to name just a few – and showcases advances, both current and up-and-coming, that have the greatest potential to bring […]

Read More

May 12, 2018

Fungicide Resistance in Botrytis is an International Ch…

Clemson University’s research team is exploring Botrytis in cut roses to find out how to help you maintain postharvest crop quality by avoiding fungicide resistance.

Read More
Miscanthus-Bandwidth EmeraldCoastGrowers

May 11, 2018

New Sterile Ornamental Grasses One Solution to Grass In…

Aggressive grass species can turn gardeners off to using ornamental grasses. Less fertile alternatives offer options for keeping grasses from taking over the garden.

Read More

May 10, 2018

Beekenkamp Plants Acquires Sunny Osteospermum Breeding …

Beekenkamp took over all Sunny Holland sales activities in 2017, and now has ownership of the company’s entire breeding program.

Read More

May 9, 2018

How Greenhouse Sanitation Helps You Start Clean and Sta…

If you keep your greenhouse clean from the start, you’ll save yourself money in the end.

Read More
Laura Drotleff

May 8, 2018

Greenhouse Production Costs Keep Going Up, So Why Are P…

There is a general sentiment within the industry that pricing needs to be reevaluated to better account for the trend toward rising input costs.

Read More
VYPRxPLUS (Fluence Bioengineering)

May 7, 2018

Lighting Innovator Fluence Bioengineering Acquired by O…

Fluence specializes in LED-based horticultural systems, using Osram LED chips, for a wide variety of applications, including vertical farming and greenhouses.

Read More

May 7, 2018

2018 Greenhouse Grower Top 100 Growers: The Complete Li…

Strong growth among the nation's largest growers shows no signs of slowing down, as nearly a third of the Top 100 growers have significantly expanded production, and many have ongoing projects underway.

Read More