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
BrightFarms Ohio

October 18, 2017

Leafy Greens Grower BrightFarms Building New 120,000 Sq…

The operation will provide locally grown salad greens and herbs to supermarkets in the Cincinnati, Dayton, and Columbus, OH, metropolitan areas.

Read More
Rough Brothers HopsHouse

October 18, 2017

New Greenhouse Aimed at Hydroponic Hops Producers

The new greenhouse model is the first single-solution hydroponic greenhouse for year-round hops growth, and harvests anywhere from two to five times a year.

Read More
Petal It Forward 2017

October 17, 2017

Petal It Forward Event a Hit for Both Industry Members …

Check out how this year’s Petal It Forward event brought smiling faces to people across the country, including one personal story.

Read More

October 17, 2017

14 New Shrubs With Fringe Benefits

What’s popular with shrubs? Consumers want varieties that will give them more return on their investment, in terms of long-lasting blooms and multi-season appeal that lasts from spring until fall and at times stretches into the winter months. Here are 14 new varieties of shrubs and sub-shrubs to consider for your product mix in 2018.

Read More
NatureFresh Chili Dog

October 17, 2017

NatureFresh Farms Uses Pest-Detecting Dog to Sniff out …

Knowing that many worker dogs are trained to recognize and discover scents associated with drugs or bombs, the company figured it was possible to train a dog to recognize pepper weevil.

Read More
Researchers Study Rose Varieties

October 17, 2017

Rose Rosette Update: Research into Detection and Manage…

Halfway through a five-year, $4.6 million grant to combat rose rosette disease in the U.S., a national research team is encouraged by the amount of information learned, but admits having a way to go before finding how to overcome the deadly problem.

Read More
Seville Production Line

October 17, 2017

Production Technology Conference Tour Attendees See Tec…

AmericanHort’s Production Technology Conference in Dallas, TX, kicked off on Monday, Oct. 10, with a tour of three local production facilities.

Read More
Botrytis Symptoms on Leaves

October 17, 2017

How One Grower is Battling Botrytis with a New Biologic…

CropKing in Lodi, OH, recently began using a new beneficial fungus in its fight against Botrytis in its greenhouse tomatoes. So far, the results have been promising.

Read More
TTA PackPlanter S-2

October 16, 2017

TTA Introduces New Transplanter Suited for Smaller Grow…

The PackPlanter S has 16 grippers and a capacity of 10,000 to 20,000 plugs per hour in a small frame.

Read More
Karen Reardon, RISE

October 15, 2017

Karen Reardon of RISE Honored by CropLife America

CropLife America presented Reardon with its highest staff award for her successful effort to defend against the ban of pesticide use on private property in Maryland.

Read More

October 14, 2017

PlantPeddler Hosting Poinsettia Variety Day in December

The event will feature side-by-side comparisons of more than 100 commercial and pre-released varieties from seven breeders.

Read More
Whitefly adult

October 13, 2017

Researchers Continue to Keep Close Tabs on Whitefly

Dr. Lance Osborne of the University of Florida and Dr. Cindy McKenzie of USDA’s Agricultural Research Service are evaluating insecticide efficacy and the impact of product rotations on whitefly biotype populations.

Read More
GVZ Glasshouses

October 12, 2017

How to Deal With Common Greenhouse Maintenance Issues

The most common problems often come from a lack of cleanliness and faulty equipment. Here are a number of tips you can follow in each of these areas.

Read More
Mark Schneid

October 11, 2017

Bayer’s New Head of Environmental Science Has Roots in …

Mark Schneid says one of the biggest challenges the industry faces is the constantly evolving customer — particularly among millennials.

Read More
TreetownUSA

October 10, 2017

Houston-Based TreeTown USA Acquires Village Nurseries

With the addition of the new West Coast division, which will continue to operate under its trade name of Village Nurseries, TreeTown USA will now encompass 16 farm locations throughout California, Texas, and Florida, with more than 4,000 acres in production.

Read More

October 10, 2017

Sharpen Your Skills in Cost Management and Profitabilit…

The University of Florida is offering a new online course on costing and profitability. The course will take growers through the process of how to accurately evaluate cost of production, labor efficiency, pricing, and equipment investment decisions.

Read More

October 10, 2017

Coastal Callas Is a Dream Fulfilled for Founder Adrian …

Adrian Espinoza and his family founded Rancho Espinoza Inc. and Coastal Callas in California seven years ago with a mission and purpose to provide consistent quality and reliable supply of calla lilies to the marketplace.

Read More
Phillips, Ball Seed Partnership

October 10, 2017

Philips Lighting, Ball Seed Partner on Distribution

Ball Seed will now offer Philips GreenPower LED lighting as a complement to its liners, plugs, unrooted cuttings, seed, and prefinished products.

Read More