They say it never rains but it pours, and theUK mushroom industry can certainly identify with that adage. Having battled against supply base rationalisation, low prices and under-investment in the sector in recent years, June threw up a new challenge when compost supplier Tunnel Tech North was hit by a severe outbreak of Trichoderma green mould.
Leading mushroom producer Greyfriars was significantly affected by the Trichoderma outbreak, which had a “devastating effect” on its UK crop and resulted in a 40-50 per cent drop in output, says managing director John Smith. “Our production fell significantly for two weeks and, during our worst week, we emptied five sheds,” he tells FPJ.
Greyfriars reported an improved situation in mid-June when production was cranked up to 75-80 per cent capacity. By the beginning of July, the producer was hoping for more than 90 per cent capacity.
Although Smith says the Trichoderma mould is being addressed, he makes the point that producers are constantly concerned with problems of this nature.
“Given that mushroom production is now a marginal type of business, it is disappointing to say the least when we are faced with a substantial drop in production,” he says. “At one point, our staff were not picking or packing, yet we still had to cover our operating costs.
“The contraction of the mushroom industry in the last decade has meant that Tunnel Tech is the sole supplier of compost, so it is not as if we can hedge our bets, as other compost companies have exited the market. Generally speaking though, we have had a good run with Tunnel Tech.”
While Greyfriars’ UK production slowed, it made up the shortfall with mushrooms from Okechamp SA, its Polish operation. “Some 60 per cent of our mushrooms are imported from Poland and, during the difficult time, we were able to help our customers by increasing uptake from two farms there,” Smith says.
Greyfriars’ producer organisation Northern Mushrooms expanded in 2005, and the organisation produces 1.3 million lbs of mushrooms a week.
At the height of the outbreak, there were no standard UK mushrooms in certain wholesale markets, as product from the Netherlands, Ireland and Belgium dominated. Prices for brown cap from the UK rose to 850p for 3kg.
Sources say that retailers did a “bit of jumping around”, and those that are most dependent on UK supplies were inevitably most affected.
The Trichoderma situation was dealt with very quickly, according to Stephen Allen, newly appointed Mushroom Bureau committee member and group marketing manager of Monaghan Mushrooms Ltd. “Although managing supply was a significant issue for those affected for a short period of time, it has now returned to normal,” he says.
Although Tunnel Tech North was contacted a number of times to give its side of the story, no comment was forthcoming as FPJ went to press.
Waitrose’s Leckford Estate sources its compost from Tunnel Tech South in Hampshire, and therefore was unaffected by the Trichoderma outbreak which hit Tunnel Tech North.
Some 1,600 tonnes of conventional white mushrooms are produced on Leckford Estate each year, and production has risen significantly over the last two years. The working farm in Hampshire, which is wholly owned by the John Lewis Partnership, is looking to increase this figure by 20 per cent over the next 12-18 months depending on compost availability, says farm manager Justin Coleman.
Coleman reports stable demand for mushrooms, although he acknowledges that sales were stronger last summer due to the cold and wet weather. “This year’s early summer sales have not been as strong as 2007, but they are in line with expectations,” he tells FPJ.
Although mushroom production is steady year round, demand is stronger during the winter. Indeed, Allen says one of the main issues for growers supplying the UK market, regardless of the country mushrooms are sourced from, is to balance supply and demand, particularly in the summer months, when demand declines by up to 20 per cent.
“It’s a market-driven exercise,” says Coleman. “Growers produce at their maximum capacity during the winter, and reduce their inputs during the summer.”
The sector is hoping to increase mushroom consumption during the summer, and producers have joined forces with the Mushroom Bureau for precisely that aim. The Mushroom Bureau website, www.mushroom-uk.com, has been updated and features a number of summer recipes from celebrity heavyweights including Greg Wallace, Jean-Christophe Novelli and Sophie Conran, that aim to show consumers how to be more experimental in their use of mushrooms.
The Mushroom Bureau has reported a very good response to the ‘Love Mushrooms’ promotion, with additional media coverage and exposure in mainstream, high-circulation publications. “In order to grow mushroom sales, we need to increase frequency of consumption, and this can be done by educating the consumer on how and when to use mushrooms,” Allen explains.
Allen has identified a number of opportunities that are centred on premiumisation, repertoire purchasing and de-seasonalisation.
He claims that increasing sales of premium-priced mushrooms such as Portobello, browns and exotics, getting more consumers to buy different types of mushroom products for different occasions and getting more people to eat mushrooms in the summer months as an accompaniment to salads and with barbecues, could all help to lift the sector.
Over the last 12 months, there has been a growing emphasis on locally grown, regional food, and this trend has put mushrooms in a strong position. In a May issue of FPJ, Coleman reported that local sourcing has a strong following in Hampshire and consumers were impressed that mushrooms were harvested and on Waitrose shelves within 24 hours.
“There will always be stable demand for mushooms and there will definitely be strong demand for locally grown, locally sourced produce over the next two years as consumers relate to where food originates from,” Coleman predicts.
In terms of specific products, Leckford Estate is confident its large packs of mushrooms, which are sold under Waitrose’s Cook’s Ingredients range, will find favour. These mushrooms are used for general cooking and stewing, and are the vegetable equivalent to Waitrose’s Ugly Fruit i.e. product that is Class II quality that would previously have been rejected by the retailer.
“With the credit crunch and increase in food prices, the big pack of mushrooms offers significant value,” Coleman says.
He is also a strong supporter of the exotic Maitake mushroom - also known as the king of mushrooms - which Waitrose has recently begun stocking.
Certainly, demand for exotic mushrooms is rising as more UK consumers are experimenting with different recipes. Coleman forecasts a sunny outlook for the category. “If there is growth in mushrooms, it will be in exotics and chestnut,” he says.
Evesham-based Walsh Mushrooms handles mushrooms from Ireland, Poland and the Netherlands. The company’s Brian Cartwright has been in the mushroom business since 1970, and he says the sector has experienced a series of peaks and troughs. Yet, despite all the current challenges, Cartwright has identified growth for white mushrooms and closed mushrooms, which account for the bulk of sales.
In particular, the hard discounters and convenience stores are enjoying rising sales. “One convenience store chain that we supply is enjoying 10 per cent year-on-year growth,” Cartwright tells FPJ.
Demand in the value-added sector is also rising, in particular for de-stalked, diced and sliced mushrooms, says Cartwright. “As recipes become more sophisticated, we will see some good opportunities,” he adds.
The mushroom marketing business makes its own compost, and Cartwright says its compost has helped Irish farmers to produce high mushroom yields.
Meanwhile, Allen says there has been significant investment in the UK industry in order to upgrade facilities and maximise efficiency. “Some members of the Mushroom Bureau have been investing in their UK farms to increase capacity, although the UK still accounts for less than one third of the mushrooms supplied to the market,” he adds.
“The Mushroom Bureau is not privy to the content of discussions between individual members and their customers but is aware that many members are looking at ways to invigorate the market.”
While there is some optimism among producers, the mushroom sector often faces a number of challenges and this year will prove no exception. Energy and higher fuel costs are a “huge concern”, say producers, and Smith argues that although growers do not need to heat mushroom sheds during the summer, once picked, mushrooms do need to be chilled. “There is always an energy demand,” he says.
Coleman agrees: “Mushrooms are energy hungry, and oil and electricity spikes are going to have an impact.”
Cartwright identifies two key areas that the sector needs to focus on. “It is crucial that we manage to cover the cost of inflation and rising costs don’t stifle investment,” he tells FPJ. “At the moment, the rise in oil prices is a real problem.”
Mushroom growers went through “horrendous times” in 2006 and 2007 as poor weather conditions, escalating wheat straw prices (which according to Cartwright rose 300 per cent) and the collapse of the sterling took their toll.
Cartwright insists that in the current economic climate, it is vital to continue promoting mushrooms in order that new, as well as existing, consumers buy the vegetable, and with greater frequency.
Labour and wages are also at the forefront of issues, and wages are expected to rise 3.8 per cent as of October 1. Smith says labour accounts for 50 per cent of mushroom costs, and he calculates that this increase is equivalent to a 1.9 to two per cent rise in total production costs.
The availability of Polish labour could be a problem for some producers. A stronger zloty has meant that workers are not sending as much money back to Poland, and growers have reported that some workers have already gone back to their homeland.
“We depend on the agencies who supply primarily immigrant labour, and we have some excellent workers who we have taken on via the agencies,” says Cartwright. “If workers go back in significant volumes, it is going to be difficult to maintain continuity during the summer.”
Furthermore, changes in legislation for seasonal workers could also present challenges. “Ukrainian workers are on visas specifically for picking and packing mushrooms and when they return home, they are replaced by Bulgarians and Romanians who have less specific visas and can work in other sectors,” Smith says. “There is an increased concern about pickers and packers.”
Greyfriars is not unduly concerned, as Smith says the producer has its own recruitment agency in Latvia. “We recruit directly and have a stable and highly efficient workforce,” Smith tells FPJ. “Our top picker picked 83lbs of mushrooms in an hour; the average worker picks around 55lbs.”
Leckford Estate is another company that is not too concerned with the labour situation, as Coleman says it has enough pickers. In addition, he says that the labour situation is not as volatile as it once was. “When a number of eastern European countries first joined the EU, a lot of workers from Poland and Russia came here to work, but this is changing,” Coleman says. “As the zloty gets more powerful, it is less beneficial for the Poles to work here.”
However, he says there is always going to be a degree of migrant labour and, with new EU entrants, the situation may well change.
As for future plans, Greyfriars is working on a number of plans to develop its business. However, the compost issue will inevitably influence the firm’s UK plans. “If we are spending a lot on additional capacity, we need to be reassured that the raw material will be consistently reliable for a considerable length of time,” Smith says.
“We are always looking at growing and developing the business, and new projects will hopefully come into fruition in June 2009.”
There could also be changes at its Polish site. “Okechamp continues to be a very active member of Northern Mushrooms, providing an excellent and reliable source of mushrooms,” Smith says. “It consists of two farms and a state-of-the-art packhouse, and continues to do well, although obviously it has been hit by the exchange rate.”
Indeed, the appreciation of the zloty against the pound means that Polish supplies are currently less competitive. Whether Poland will look for outlets beyond the UK is constantly on the agenda, says Smith.
Okechamp has identified opportunities in eastern Europe and, although Smith is playing his cards close to his chest, the producer is looking at Russia.
Meanwhile, this summer’s Beijing Olympics could also throw up opportunities for the sector. “Mushrooms are inextricably linked with Chinese cooking and Chinese culture,” Allen says. “With the Beijing Olympics starting in August, the Mushroom Bureau will be trying to get consumers to cook more mushroom meals and maximise awareness of mushrooms as an integral part of Chinese cooking.”
As ever, it appears that the mushroom industry will make the most of the opportunities available to it, and hopefully overcome the current obstacles.
SHARPAK LOOKS EAST
The UK’s largest supplier of mushroom punnets, Sharpak Yate has witnessed significant growth from Poland over the last two years as mushrooms are brought to the UK. “In future years we expect to expand our supply as Poland looks to export its products further east,” says sales director Tony Manners.
The manufacturer has enjoyed rising demand, while concern for the environment is leading Sharpak’s clients toward lighter recyclable and degradable packaging.
Sharpak’s top-seal punnet packaging is currently being trialled by a grower and the company is constantly developing its proprietary rotary thermo-forming process. In addition, it has recently invested in a new, high-volume manufacturing line.
Higher manufacturing costs are the biggest challenge Sharpak currently faces, although the company encourages its customer base to collect their product wherever possible to mitigate rising fuel costs.
One benefit of the weak pound is that it is making the firm more commercially attractive on mainland Europe, says Manners.
No comments yet