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
Jim Devereux, Green Fuse Botanicals

June 24, 2017

Green Fuse Botanicals New Vice President is Focused on …

Jim Devereux, who will oversee production, sales, and marketing for Green Fuse, says he hopes to bring genetics to the market that break from traditional production methods for finished growers.

Read More
Greenbelt Microgreens

June 23, 2017

Greenbelt Microgreens is a Finalist for the 2017 Operat…

Winner of the Excellence in Innovation Award, Greenbelt Microgreens is constantly staying on top of the latest trends in technology,

Read More
Ushio Sakazaki feature

June 22, 2017

Japanese Breeder Ushio Sakazaki Wins Medal of Excellenc…

From Supertunias to Superbells, this innovative Japanese breeder has used wild genetics to create game-changing plants that help consumers reconnect with the beauty of nature.

Read More
Koppert Ulti-Mite Swirski sachet

June 21, 2017

New Tool from Koppert Provides More Effective Thrips Ma…

A newly patented sachet for the predatory mite Amblyseius swirskii is resistant to both low and high levels of humidity, helping growers combat thrips infestations.

Read More
CallaFornia Red

June 20, 2017

Dümmen Orange Enters Calla Market With Acquisition of G…

Golden State will continue to supply the market through September 2018, at which time Dümmen Orange will assume supply and delivery of much of Golden State’s product line.

Read More

June 20, 2017

Sign Up For The Luxflora Flower Run At Cultivate’17

The5k walk/run race, sponsored by Luxflora, is an opportunity for industry members to network, build relationships, have some healthy fun, and start off Cultivate’17 with a flourish.

Read More

June 19, 2017

IGC Show Features Talks on How to Cash in on the Buy Lo…

This year’s event, which takes place Aug. 15-17 in Chicago, also includes a free workshop on what you might do when starting your business over from scratch.

Read More
SNA Logo

June 19, 2017

SNA, MANTS Plan to Co-Locate Their Events in 2018

There is crossover appeal for participants of both events, according to show organizers, and this cooperation will bring value and potential new business opportunities for both audiences.

Read More
Heat Safety App

June 18, 2017

Protect Your Employees from Heat-Related Illnesses with…

The National Institute for Occupational Safety and Health and the Occupational Safety and Health Administration have released an updated app for smart phones that can help workers stay safe when working outdoors in hot weather.

Read More
Visser Autostix

June 17, 2017

Visser, Ball Partner on New Sticking Technology for Cut…

The new AutoStix system is designed to provide better consistency and uniformity with shipped cuttings, easier and more reliable counting, automatic transplanting, and optional buffering in the peak season.

Read More
sbi-software-triumph

June 16, 2017

Five Guidelines to Investing in Software for Your Green…

Any software improvement you make should make sense for your team and be worth the investment.

Read More
EOE-featureimage2017

June 15, 2017

Greenhouse Grower’s 2017 Evening Of Excellence Will Rec…

Registration is now open for the 2017 Greenhouse Grower Evening Of Excellence, which takes place Monday, July 17, during Cultivate’17.

Read More
Plantpeddler Variety Day

June 14, 2017

Plantpeddler Hosting Variety Day on Aug. 4 in Cresco, I…

The free event will allow attendees to tour Plantpeddler’s trial gardens, which include more than 1,200 varieties of vegetative annuals displayed in large containers, baskets, window boxes, and beds.

Read More
Iron and Manganese toxicity in geranium

June 13, 2017

Are Your Geraniums Showing Signs of Iron or Manganese T…

Zonal geraniums with low pH can exhibit iron and manganese toxicity symptoms, including marginal chlorosis, leaf speckling, and upward-cupping of the leaves, according to Michigan State University experts.

Read More
weed sanitation

June 13, 2017

New Research Explores Potential of Using Steam or Hot W…

USDA-Agricultural Research Service horticulturist Dr. James Altland is exploring an alternative method for controlling weeds in greenhouse propagation systems by using steam or hot water to kill weed seeds.

Read More
Paul Fisher Fertilizer feature

June 12, 2017

How to Improve Customer Success by Adding Residual Fert…

Even if it costs a few cents more per pot or extra labor, your customers will thank you with repeat sales.

Read More
Jonathan Babikow, Emerald Coast Growers

June 9, 2017

New Head Grower at Emerald Coast Growers is Excited abo…

Jonathan Babikow, Emerald Coast Growers’ new general manager/head grower for its Lancaster, PA, location, talks about his favorite perennials, the advantages of growing in Pennsylvania, and his future hopes for his career.

Read More
Petunia 'Amore Mio' (Danziger)

June 8, 2017

AmericanHort Update on Genetically Engineered Petunias

AmericanHort is actively assisting affected plant breeders, distributors, growers, and retailers as the genetically modified petunia regulatory response continues. Since the last update, there have been several changes to the list of petunias confirmed or suspected of being genetically engineered and therefore unauthorized to be imported or sold. Also, the list of recognized laboratories for petunia variety confirmation testing has expanded. Most importantly, petunia varieties on the USDA-APHIS Biotechnology Regulatory Services (BRS) list require an APHIS Form 2000 for importation. APHIS also began requiring that any Petunia spp. Shipments, not including regulated GE varieties, must be accompanied by a list of variety names. This resulted in some inspection delays at the USDA-APHIS plant inspection station in Atlanta over the past two weeks. In response, AmericanHort has negotiated a more flexible approach with APHIS, and new guidance has just been posted for importing Petunia plants, cuttings, or seed. The new guidance allows […]

Read More