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
hoffman-new-greenhouse-feature

September 30, 2016

How Hoffman Nursery Invests In Technology In Response T…

The North Carolina-based ornamental and native grasses producer recently invested in greenhouse structures and advanced automation to help increase efficiency.

Read More
cannabis-planted-in-a-greenhouse

September 29, 2016

The 10 Most Common Misconceptions About Greenhouse Cann…

In an emerging market such as cannabis, there can be a lot of bad information out there. One greenhouse supplier points out some common myths.

Read More

September 28, 2016

Pennsylvania Greenhouse Grower Applying For Cannabis Li…

Allen Wagner of Wagner’s Greenhouse in Grandview, PA, hopes to become one of 25 applicants — among as many as 150 — chosen for a grower-processor license.

Read More
finneran bee on snakeroot

September 28, 2016

Which Annuals And Perennials Are Good For Pollinators?

If you are a grower looking for information on producing plants that are safe for pollinators, or which plant types can be marketed as good food sources for bees, the new publication “Protecting and Enhancing Pollinators in Urban Landscapes” provides a good resource.

Read More
The-Capitol

September 28, 2016

How The November Election Might Affect The Legalization…

National polls indicate Americans are largely divided on the topic, while this year’s presidential candidates generally feel it’s a state issue.

Read More
tomato spotted wilt virus angular-necrosis-of-leaves-and-plant-stunting

September 28, 2016

Tips For Managing Tomato Spotted Wilt Virus In Mums

According to a report from Michigan State University, symptoms of tomato spotted wilt virus on chrysanthemum include yellow blotching and rings, necrotic lesions, and stem collapse.

Read More
cannabis-crop-protection

September 27, 2016

Washington State Outlines Pesticide Criteria For Cannab…

The state has also compiled a searchable list of pesticides that fit the criteria for use on marijuana.

Read More
Vogel Alcove NGB Therapeutic Grant Winner

September 27, 2016

National Garden Bureau Announces Horticulture Therapy G…

The NGB’s annual grant program, Growing for Futures, recently selected three therapeutic gardens that will receive grants totaling $5,000.

Read More
phlox-fashionably-early-flamingo-walters-gardens

September 27, 2016

Walters Gardens Partnering With Darwin Colombia On Unro…

Beginning in spring 2017, Darwin Colombia will offer unrooted cuttings of more than 40 varieties of Walters Gardens’ new genetics, including many popular genera such as Agastache, Monarda, Nepeta, and Phlox.

Read More
totalgrow-night-and-day-management-boom-lighting-venntis-feature

September 27, 2016

Check Out The Latest In Lighting Technology For Greenho…

Manufacturers are developing several innovative lighting systems that can help growers save on energy efficiency, while improving plant quality. Here’s a look at some of their newest offerings.

Read More
cuttings-facility

September 27, 2016

How Global Suppliers Of Unrooted Cuttings Are Working T…

The world’s top vegetative producers discuss how they continue to evolve to overcome challenges and embrace opportunities to help growers and the varieties supply chain.

Read More
Streptocarpus Ladyslippers Grape Ice (Green Fuse Botanicals)

September 27, 2016

9 New Blooming Potted Plants To Jazz Up The Home And Ga…

Blooming potted plants are the ideal gift for anyone, from a homesick college student to a spouse in need of some cheering up. Check out nine these new introductions hitting the retail market in 2017.

Read More

September 27, 2016

Kitchen Counter Gardening Leads Garden Media Group̵…

This year's list includes several items around healthy living and eating, from gardening indoors year-round, to "forest bathing."

Read More
bruce-butterfield-and-ngs-image

September 27, 2016

Bruce Butterfield, National Garden Survey Researcher, D…

The man who headed up the National Gardening Survey for the past 35 years, Bruce Butterfield, has died. He was 67 years old. Butterfield’s work with the National Gardening Survey gave the green industry a reliable tool to understand consumer gardening practices and spending. Bruce Butterfield started his career as the Market Research Director at the National Gardening Association in 1978 and continued that same work until his death on September 5 as the Research Director at GardenResearch.com. “These many years of experience doing market research about gardeners and gardening trends gives him a unique understanding of who gardeners are, what they need and want, why they buy the products they do, where they shop, how gardening trends have changed in the past, and where they are headed in the future,” his bio on GardenResearch.com reads.       Butterfield was also behind What Gardeners’ Think and the Environmental Lawn […]

Read More

September 26, 2016

How Even An Overworked Plant Retailer Can Predict Consu…

Years ago, I read an article about Pottery Barn and the women who were making it a success. It was eye-opening to realize that a glossy, national chain like Pottery Barn used to buy products in a similar way garden retailers do. There was one section of that article that really caught my imagination. It was the profile of Celia Tejada, the woman who moved Pottery Barn from buying products from outside vendors to designing their own products. When Tejada joined Pottery Barn, she instructed her entire staff to begin keeping an eye out for things they liked, no matter how minor. So if they were at a restaurant with friends, or walking along a street and something caught their eye, they were to either buy it or photograph it and place it in a room set aside for these kinds of inspiration. When it came time to select themes for the […]

Read More
urban-outfitters-logo-feature

September 26, 2016

Terrain’s Parent Company Breaks Impass For Waterl…

There’s been a development in the stalled plans for a new Terrain garden store from Urban Outfitters on the former Waterloo Gardens location. In a letter to Easton Township, PA, officials, Urban Outfitters’ Chief Development Officer J. David Ziel says the company is removing a key element that had met strong resistance from the community around Devon Yards, its term for the development plan on the former Waterloo Gardens site. Devon Yards will no longer include a four-story apartment building in its “lifestyle center” project, Ziel wrote. But it will still include its third Terrain store, a large format Anthropologie, and several eateries. The planned apartment building had created friction with local residents, Mainline Media News reported back in April. While residents welcomed the retail aspects of the plan, they felt a large apartment building would change the character of the community. The developer who will work on the project, […]

Read More
Orius_June 2015

September 25, 2016

Peace Tree Farm Hosting Biocontrols Event In October

“Advanced Greenhouse Biocontrols for Ornamental and Vegetable Producers” will feature advice from biocontrol authorities Lloyd Traven and Suzanne Wainwright-Evans.

Read More
sbi-software-triumph

September 25, 2016

Greenhouse Software Suppliers Offering A Range Of New S…

Want to know what some of the leading software suppliers are doing to address the ever-evolving needs of their greenhouse customers? Here’s a brief update.

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