The changing role of commission agents

In the potato market, commission agents are almost extinct, but there are a lot of them active in the onion market. However, the role of the commission agent is changing and that has everything to do with the increase in scale and modern means of communication. Nevertheless, a commission agent can be of extra significance in a special year such as 2018.

"About 10 years ago, 80% to 90% of the sorters did not yet have their own buyer, but now half have their own buyer", is the rough estimate of Erik Arts, advisor at Countus. "It used to be a shadowy world. There were many clients and the arable farmer did not know who the commission agent was looking for. As a result, it remained unclear which party was on the market."

Are commission agents still necessary?
The number of sorters has since decreased drastically. "An estimate shows that 75% of the market is in the hands of 5 major sorters," says Arts. “Thanks to the current means of communication (such as WhatsApp), everyone knows quickly whether a certain sorter is on the market. That is not a desirable situation, because it gives growers a stronger negotiating position. In fact, sorters might as well send their own buyers out."

The above is happening more and more often. It is not only a saving on the commission, because the own purchaser has an interest in bringing in the very best parties for their own company. The price of 1 batch is also known more quickly, so that farmers are better prepared. "In short: more transparency has come into the market and that makes the position of a commission agent more difficult."

Benefits for sorters
A commission agent does offer advantages for the sorters. A client wants a certain quantity for a certain price and he wants to receive them in a certain period. In that case, engaging a commission agent is a great option, because they offer extra options compared to your own buyers.

For example, a commission agent can better sense where good parties are, compared to a private buyer who has to travel throughout the country. It can also be useful for the sorter to send specific wishes to the commission agent. An example is that a commission agent can steer towards coarser onions in consultation with the client, for example by advising the grower to sow fewer units.

A farmer cannot determine the effect of the neighbor's price on his onions. That is perhaps the immediate reason that there are still commission agents in the onion market, but that they have disappeared in the potato market. This is because more factors play a role in the onion market. This makes it possible to standardize less, so that arbitrarily named prices have less consequences for the entire market.

Benefits for growers
The commission agent can also offer advantages for growers. An example is that the buyer only has the interests of the sorting company in mind. A commission agent also considers the importance of a good relationship with the arable farmer. After all, he wants to be able to buy onions from the same farmer even more often. With his own buyer, the grower is dependent on the same buyer and/or has to tolerate several buyers on his property. That is not always conducive to the price of the onions.

In addition, the commission agent can offer added value in the form of cultivation guidance. Another reason for the existence of commission agents is that there are always growers who do not want to market the onions themselves. Commission agents (together with small sorting companies) also make the market. They disseminate information and ensure that growers have alternatives.

What do the commission agents say?
Richard Bolle, who has been working as a commission agent since 1989, calls his own buyers one of the most important changes. "However, you have to remember that the market has grown. The pond has grown, but more fishermen have also joined." Those fishermen must then also distinguish themselves.

This is also apparent from the history of Bolle. At first he mainly planned the logistics and his father did the trade, but now he has more roles. "Actually, we are involved throughout the growing and marketing season. It starts with choosing the right varieties and where necessary we give advice about diseases and pests."

Commissioner in 2018
Is the role of the commission agent different in a year like 2018? There are considerably fewer onions this year and the pond has become a lot smaller. According to Bolle, quality comes into play. "A high-level commission agent with reliable sales channels is of great importance in these times." 

Another commissioner believes that the role has not changed that much. "Our role has changed in potato cultivation, but this is not so bad in onion cultivation. Besides the regular buyers, sorting companies continue to look for onions." He does recognize himself in the fact that a commission agent has been given a broader role. 

It is clear that the good commission agents and sorters distinguish themselves in an extreme season like 2018/2019. However, as good as they may be, the brokers still expect a year in which they will have to settle for less. This is because there is simply less business to do.

Receive the magazine in your letterbox
This abbreviated article is part of the 2018 onion analysis. The subscribers of Arable farming Pro en Onion market have recently received it. Would you also like to receive this magazine? then click here to become a subscriber and receive the magazine sent to you.

With a subscription you get access to all private articles, data and market information on Boerenbusiness† As a subscriber you also get access to the National Economic Agricultural Congress and other seminars and workshops. Curious about all the benefits? View our offer in the webshop.

Anne-Jan Doorn

Anne Jan Doorn is an arable expert at Boerenbusiness. He writes about the various arable farming markets and also focuses on the land and energy market.

aj.doorn@boerenbusiness. Nl

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.