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
California Coast

March 28, 2017

How to Follow the Greenhouse Grower Team During Califor…

California Spring Trials 2017 kicks off in less than a week, and our team at Greenhouse Grower is making final preparations before we depart. Find out what’s in store during this busy but fun adventure!

Read More
Cyclamen Allure

March 28, 2017

Blooming Potted Plants for 2018 From California Spring …

We asked breeders to give you a peek at some of the great blooming potted plants they’re introducing this year at California Spring Trials. These new varieties will show up on the retail market in 2018.

Read More
Allan Armitage Of Naked Ladies and Forget Me Nots

March 28, 2017

New Book From Allan Armitage Features Stories of Plant …

“Of Naked Ladies and Forget-Me-Nots” offers Allan’s recollections of the origins of unique plant names, as well as how many plants factored into historical events.

Read More
Hydrangea paniculata First Editions Diamond Rouge (Bailey Nurseries)

March 28, 2017

Shrubs, Subshrubs, and Groundcovers from California Spr…

We asked breeders to share with us pictures and information on some of the shrubs, subshrubs, and groundcovers that you'll see at California Spring Trials 2017. They didn't let you down.

Read More
labor-supply-and-quality

March 27, 2017

Your Help is Needed to Save H-2B Returning Worker Exemp…

AmericanHort is leading the charge on this effort, but you can also help by contacting your elected officials via phone calls and social media, or by sending AmericanHort your personal story.

Read More
Pythium

March 27, 2017

Florida Ornamental Growers Took a Hit in 2016 Thanks to…

While damage figures from the 2015-2016 winter rains are still being compiled, researchers have found that Phytophthora and Pythium caused severe destruction in many plants.

Read More
Argus Multi-Feed RM - feature

March 26, 2017

Feeding System Allows For More Precise Delivery of Nutr…

Argus Controls’ Multi-Feed RM100 is designed to help producers custom-feed their plants based on specific nutrient recipes.

Read More
If your Wi-Fi is truly secure, your staff can help customers on the sales floor starting today

March 25, 2017

What Marketing Approach Can Attracts the Most Customers…

Inc.com surveyed more than a thousand customers to find out which marketing strategies worked best to entice them to try out a new business

Read More
Leanne Kenealy, Hoffman Nursery

March 24, 2017

New Horticulturist At Hoffman Nursery Will Focus On Dev…

Leanne Kenealy, who brings great experience in plant evaluation, says introducing consumers to new plants can hopefully generate renewed excitement for gardening.

Read More
GrowSpan Series 1000 Greenhouse (GrowSpan) feature

March 24, 2017

New Greenhouse Structure Models Emphasize Crop Protecti…

Manufacturers of new structure models say they are responding to grower concerns with designs that focus on ventilation, maximizing your space, and incorporating a wide range of crops. Here’s a look at some of their latest offerings.

Read More
GCA Summer Tour 2017 Andersons Newport Beach

March 23, 2017

Garden Centers of America Unveils Stops on Its Summer T…

Registration for the event, which includes visits to several garden centers each with their own unique highlights, is now open.

Read More
Bee on Lavender feature

March 23, 2017

Allan Armitage: Plant Consumers Don’t Talk About …

Allan Armitage says it's time to get in touch with our true audience and market plant solutions, not plant products.

Read More
Aspabroc Broccolini Sakata Vegetables Feature

March 22, 2017

Growing Tips for Sakata Vegetables’ ‘Aspabroc’ Br…

‘Aspabroc’ resembles a broccoli raab with an asparagus stem, has a mild taste, and requires little growing space.

Read More
Spin Top Gaillardia Series (Dummen Orange)

March 22, 2017

New Perennials and Tender Perennials for 2018 from Cali…

We asked breeders to share with us pictures and information on some of the true perennials and tender perennials that you'll see at California Spring Trials 2017. Here's a sampling of some of the varieties hitting retail shelves in 2018.

Read More
National Garden Bureau New Website

March 22, 2017

National Garden Bureau’s New Website Features Mobile-Fr…

The new site is designed to serve as a home base to drive traffic from NGB’s social media community to one central location.

Read More
Emerald Coast Growers Seed RoomTight feature

March 22, 2017

An Inside Look at Emerald Coast Growers’ New Seed…

Florida-based liner producer Emerald Coast Growers custom retrofitted and expanded an existing greenhouse, with the goal of increasing production efficiency.

Read More

March 21, 2017

How Greenhouse Vegetable Growers Can Prepare for a Prod…

The United Fresh Produce Association is holding a Recall Ready Workshop in April that is designed to help growers properly manage a recall, from liability to communications.

Read More
Lemnis Oreon Lights

March 21, 2017

Lemnis Oreon, EnviroTech Cultivation Solutions to Partn…

EnviroTech’s expertise in energy and water technology fits perfectly with the water-cooling solution of Oreon Grow Lights, according to the companies.

Read More