Daniel L. Dyer. Jr.
The sugar brokerage industry is an old and colorful one,
dating back before the National Sugar Brokers Association
(NSBA) was formed in 1903. Today, with about 100 members,
the NSBA is optimistic about the future of sugar in the
American diet, as well as its role in the sugar industry.
Not all members of the industry, however, support sugar
brokers in the same manner in which its brokers support
the sugar industry. Some in the industry even go so far
as to say that there is no longer any need for the broker
in the sugar industry. They describe the broker as an anachronism
- a throwback to the past.
To the contrary, sugar brokers have played a principal
role in the sugar market in the past and present and will
continue to be a "keystone" in the sugar market of the future.
The term "keystone," defined as the main part or principal
of a number of associated parts, that supports or holds
together the others, best describes the role of the sugar
The sugar market has evolved significantly since the turn
of the century - even more so with the swift rise of high
fructose corn syrup in the market. The basic qualities of
a successful sugar broker, however, remain the same - integrity,
knowledge and resourcefulness. These qualities, combined
with a good command of functional skills in negotiation,
mediation and communication, enable the broker to best serve
the needs of his clients.
The brokerage industry is a service industry - one that
is based on interpersonal relationships developed over time
with sugar buyers/customers from the industrial user side
of the business, as well as sellers/principals in the industry,
and the domestic sugar companies.
The broker is a catalyst who not only may initiates the
buyer/seller relationship, but who is committed to maintaining
a healthy relationship as well. If a problem between buyer
and seller develops, the broker is there as an impartial
mediator to ensure that the lines of communications are
kept open. The broker's essential function is to help buyers
and sellers reach agreements to their mutual advantage.
The broker is in the business of selling his specia!ized
services to both buyers and sellers. A broker, therefore,
must be perceptive to the differing needs of both parties,
and flexible enough to tailor the services according to
their respective needs.
Today's broker no longer can rely solely in interpersonal
relationships to earn the confidence and respect of his
customers and principals. Although they serve as a business
foundation, a foundation is worthless without a structure
This is the Age of Information, and sugar brokers are in
the information business. They act as an unseen extension
of the buyer's and seller's staffs, with the time and flexibility
to pursue and analyze background information to facilitate
buyers and sellers in their decision-making process.
Not only is it necessary for the broker to develop an extensive
network of sources for market information, but it is necessary
to know how to manage the information. Knowing which information,
how much or how little, in what form the information should
be transmitted and when, and to whom it should be channeled,
is necessary to maintain productive working relationships.
Some clients require daily feedback on market activity,
while others prefer weekly updates on the industry trends
The brokerage firm is a team of "specialists" organized
to serve the sugar buyer's needs. One area usually handles
the day-to-day supply and demand outlook-keeping an open
hotline to the pulse of the market at all times. This enables
the broker to make objective recommendations on pricing
to buyers based on their knowledge of market conditions
- information which sometimes sugar companies are either
unable or unwilling to provide. Brokers are considered independent
advisors since they are paid a set fee, regardless of the
agreed price between buyers and sellers.
Many firms have a department that concentrates on research
and analysis, providing clients with timely Information
on how various factors influence the market. Facts and opinions
are gathered from sources both in and outside of the sugar
industry - from the political positions taken by different
sectors in the industry to government objectives, policies
and legislation, as well as the impact of economic situations
and weather on crops and pricing. The information may be
distributed in weekly, monthly, and annual reports, as well
as in the form of special projects conducted exclusively
at the request of a particular client.
Still a third department in the firm may constantly coordinate
and monitor traffic - the departure time of railcar and
truckloads of sugar from the supplier to the estimated arrival
times at locations designated by the buyer. Brokers not
only sell their services of providing information on the
sugar market, but a1so their abilities as salesmen of sugar.
Brokers are an invisible sales force representing domestic
sugar companies, but they are only invisible as far as their
physical presence is concerned at the various headquarters
of sugar companies around the country. Brokers provide sellers
not only with their market expertise, but with established
relationships with potential customers. The broker is able
to combine his keen knowledge of the sugar products available
from the seller, with his understanding of the individual
needs of the industrial buyer. Brokers enable sellers to
market their products to a broader purchasing public, eliminating
the need to hire a sales force with the salaries, benefits
and amenities associated with a permanent staff. The processor
knows exactly what each sale will cost him when using a
broker, because the pre-determined commission will be paid
only when a sale is consummated.
The membership in the Nationa1 Sugar Brokers Association
is reflective of the state of sugar consumption in the United
States. Its ranks have been cut in half in the past ten
years. As the domestic sugar market continues to shrink
each year, the brokerage industry has become increasingly
more competitive. However, this has kept the industry on
its toes and open to new advances in communications and
technology to provide the necessary advantage for survival
in today's demanding environment.
The ability to communicate effectively - in both oral and
written forms - is an essential tool of the broker. While
person-to-person contact has always been considered the
most advantageous form of conducting business, the widespread
geographic coverage of the sugar market - buyers, sellers
and brokers - requires alternative means for conducting
day-to-day business. New breakthroughs in technology have
enabled brokerage firms to better serve their clients. In
addition to the telephone and telex, there is now electronic
mail sent via computer, and the facsimile machine, which
can reproduce entire documents via telephone - to keep clients
on both sides informed on the latest, up-to-the-minute happenings
in the industry.
The specialized services of a sugar broker are now even
more important - as both sugar companies and industrial
buyers look to maximize their resources while increasing
By remaining flexible, resourceful and open to new ideas,
sugar brokers are able to keep pace with the fluid environment
of the sugar and sweetener industry. The dedicated and imaginative
broker will survive.
As keystones in the sugar industry, brokers playa vital
role. They work for both the buyer and seller. Their job
is to bring them together, and hold them together. The broker
provides all this at a nominal cost of less than 1 per cent
of the price of sugar.
Daniel L. Dyer. Jr. was a Past President
of the National Sugar Brokers Association in New York City.