The UK and Irish mushroom industry has suffered immensely in recent years. British production has virtually halved since the 1980s and 65 businesses have been forced to close in the past four years, leaving a total of 75 farms in Britain. Closures have resulted in around 3,200 job losses and the general outlook for the future is decidedly bleak.
“There is a certain inevitability about the direction in which the UK industry is heading,” says John Smith, md of Greyfriars. “We have seen massive reductions in production volumes here in the last 12 months, and I predict that by the end of this year, the UK industry will have halved in size again.” In the last two months, McGeary Mushrooms, a Northern Irish supplier of between 200,000lb and 300,000lb of mushrooms and around 1,300 tonnes of compost a week, and Norfolk producer Dewfresh have disappeared from the mushroom landscape.
“The mushroom industry is in an increasingly poor condition for several reasons,” says Jon Fuller, director of Waveney Mushrooms, a co-operative of six growers in Suffolk and Norfolk. “Supermarkets are still trying to force prices down and there has been a reduction in competition following Morrison’s purchase of Safeway. At the same time, packaging and transport costs continue to rise as oil prices hit hard.” In the short term UK growers will be trying to maintain stable volumes, while constantly working to reduce overall production costs. Fuller suggests forming co-operatives might be one way in which smaller growers can hope to compete with the larger suppliers favoured by the major multiples.
Andrew Middlebrook, sales director of Monaghan mushrooms, believes that the increasing competition between retailers is simply moving the product from one to another without stimulating underlying growth of mushrooms or helping to drive the product itself forward. And retailers are naturally accountable for the decline experienced by UK growers, he adds. “The biggest single issue for the UK industry is the extent of pressure in the marketplace, but it’s where we sell our product and that is that. Retailers are just trying to put products of the right quality at the right price on the shelves and consumers trust retailers to ensure it is coming from a good, secure source.”
Smith is also quick to remonstrate retailers. “The continuing downward pressure on prices is not doing UK suppliers any good at all,” he says. “It is increasing the opportunity particularly for additional Polish product to enter the market, as it is consistently high quality and very competitive. There is still a place for homegrown mushrooms, but the discrepancy between cost of procurement and production is so narrow, there is little scope for any “buy British” campaign to take off. Overall, it is a fairly sad outlook.”
While achieving high quality product used to be the growers’ aim, now the continual drive for volume increases, which has led to the preference for imported mushrooms, is resulting in significantly poorer products in store, says Fuller. “The long term situation will depend on the view point of the end customer. If it is considered acceptable to unnecessarily transport a perishable product half way around the world and lose 30 per cent of its shelf life then the industry will carry on the way it is going. But there really is no need to import mushrooms when we can produce them here,” he insists.
Adrian Sampson, director of South Down Mushrooms, is also Chairman of the Mushroom Bureau and Vice Chairman of the Mushroom Growers’ Association (MGA). As a small grower he does not supply the major multiples but is subject to the wholesale preference for import prices. “Aside from the issue of the cost to the environment in terms of haulage to get them here, the cheaper polish mushrooms are often quite good quality, but they do not match the consistency of local produce,” he argues. “The advantage of local growers is their ability to meet the quality and packaging sizes required. With imports wholesalers and multiples are stuck with the sizes dictated by the importers.”
With the prospect of little investment and even less interest from young growers, Sampson holds minimal hope for the future stability of the industry. “Growers are always wanting to invest in the industry, be it in pre-production, on mushroom houses or on packaging, but they are not seeing any return to make it worthwhile.” Likewise the children of growers see their fathers getting little return for the hours worked and are therefore not showing interest in continuing in the business. However, without investment Sampson fears growers like him will be unable to sustain production within a few years, especially if there are further price cuts. “The sad thing is we don’t need a costly input since mushrooms are not a price-sensitive article. An extra 5p for every pound can make a real difference.”
Rather uniquely for the sector, Middlebrook retains a distinctly positive outlook having experienced a better year than most in 2004. “Our business is in a better position now than a year ago but it is the result of the best part of four years of hard work,” he explains. “We began restructuring and improving our competitive position in 2001 when we were in serious difficulty, so we perhaps started a little sooner than others. After refocusing on our management and objectives we have managed to bring the business back to a more profitable position.”
Fuller suggests a large-scale change in attitude is needed. While it would be naïve to hope for loyalty to homegrown produce among British consumers, he agrees the impact of heavy-duty transportation on global warming is a pressing concern. “A product is being transported around the globe purely because it maximises the benefits of cheap labour but you wonder how long that can be maintained.”
The supplier rationalisation process being undertaken by UK retailers has taken its toll on the mushroom industry, as all others, and Smith says: “You always have to be in a position to deliver the lowest cost of production, but I would argue that it doesn’t always help. Greyfriars first started talking to Okechamp (in Poland) two years ago and signed them up as a producer for us last May.
“I think it is the best mushroom farm in the world and I would challenge anyone to find a company that can supply better quality mushrooms, or match Okechamp’s costs of production. The benefits could have gone to Tesco, but they didn’t - it didn’t prevent us from being de-listed.”
With exports of fresh white mushrooms tripling from 29,000t in 1999 to almost 90,000t last year, the Polish contribution to the sector is expanding rapidly.
An increase in the number of mushroom farms and compost companies, modernised rooms and quality sources is enabling Poland to obtain results comparable with Holland, the largest source of mushrooms in Europe.
According to Polish mushroom specialist and exporter Nawrot, an increase in the number of farms, reaching sizes of 4,000 square metres on average, reflects the more commercial attitude Polish growers have adopted in response to the country’s increasing ties to the Western market.
Nawrot has progressed from a single mushroom farm established in 1988 to a larger-scale operation uniting a few dozen farmers all over Poland.
Investing in training at Horst in Holland and elsewhere, and the introduction of quality schemes such as HACCP and ISO has enabled the company to adjust to higher standards of cultivation and technology.
With the opening of a logistics centre last year where storing, cooling, ripening, sorting and packing are conducted under one roof, Nawrot had hoped to be more self-sufficient. In 2004 the company produced 70 per cent of the Polish exports to Denmark and hoped to increase its customer base there and in Germany, as well as strengthening its position in the UK market.
However, developmental plans were strongly tested in the second part of last year as the Zloty strengthened against the Euro, resulting in reduced prices for export mushrooms. This sparked disputes over price between farmers and exporters and Nawrot says it will inevitably be forced to cut marketing expenditure, an area it had hoped to focus on in the near future.
With accession, the UK market is an attractive target for Nawrot and it insists it can compete successfully with Holland and Ireland in terms of quality. “Due to possibilities in the UK market we introduced the BRC quality scheme,” says president Ireneusz Nawrot. “We are planning the cultivation of baby buttons as well as mixed varieties, which has already been introduced for some of our clients.
“However the question of a positive response relies on effective branding, which is not just a matter of biding our time.” For Nawrot, the fear is that owing to the impact of the currency situation and negative market changes, the Polish may come to be a European supplier without the privilege of nominal recognition.
For Greyfriars, the opportunities it has been given through Morrisons’ acquisition of Safeway are the company’s number one priority in 2005, says Smith. The doubling in size of its Yorkshire packhouse and the establishment of relationships with other suppliers/packers in Cambridgeshire and the M25 belt should help towards growth targets. But Greyfriars has also begun to look further afield for sourcing options, as the decrease in volume of UK-grown mushrooms is unlikely to affect demand. Poland may not be the long-term answer to fill the volume gap. “In 10 years, we plan to be a major player in Ukraine,” Smith says. “The changing political climate there and investment in infrastructure, such as roads across the country, will eventually reduce the journey time to 36 hours, which could definitely place the country as the next in line for mushroom expansion. Over the next five years we are looking to develop partners in Ukraine, who are prepared to invest in the production side of things, while we will do the marketing in the UK.”
The Journal ran a month-long series of articles on mushrooms in August, one of which detailed the serious threat of closure that hung over the Mushroom Bureau, which has long provided the UK with a centralised voice for mushrooms from all sources.Thankfully, existing members rallied around and crucial funding was raised, allowing the bureau’s Victoria Lloyd-Davies what she hopes will be more than a temporary reprieve.
One of the key benefits of maintaining the Bureau has been its crisis management ability. “The industry needs a single voice to talk to the government, and to the Food Standards Agency. There is no value in lobbying as an individual company and last year’s success in reinstating the right to promote mushrooms as a salad ingredient was a case in point,” says Lloyd-Davies.
“We are not actively doing any promotion in the first six months, but there is plenty to do. As well as a Radio 4 programme this week and the Farmhouse Breakfast Week, we are revamping our website with a view to redirecting as many people as possible there for the information they require,” she says. “The Bureau represents mushrooms everywhere. We have no specific allegiance and what interests me most is what the consumer wants to buy.”
During its period of decline, Monaghan made the decision to withdraw from the Mushroom Bureau. However when approached by the struggling organisation in June last year the company decided renewing its support would be a worthwhile expenditure.
“The bureau provides a focal point for journalistic interest which is very important for the industry and on the back of our decision a number of larger suppliers have also started to re-contribute as well,” Middlebrook explains.
Patrick Herne of organic producers Capel advocates the major impact made by the Mushroom Bureau in increasing the general consumption of mushrooms. However, with it already buying 170,000t of mushrooms a year, he suggests as the largest consumer in Europe, the UK may have reached saturation point. As such, a move towards promoting consumption in other European countries would be the most successful enterprise for the industry, he argues. “There is a greater scope for promotion in other countries to get them up to the level that we are at now. They still eat a lot of tinned produce in Europe.
“If we convince Poland they don’t need to be exporting because there is enough interest at home, it would be a way of keeping imports at bay from the UK industry as a whole,” he adds.
Middlebrook strongly disagrees with the suggestion of UK market saturation. “Over 80 per cent of mushroom consumers only buy them once a year and 60 per cent buy them only once a month and if you compare that to other categories there is definite grounds for that to increase. We categorically believe that with some kind of generic advertising we can get more regular purchasing of mushrooms,” he says.
With this in mind, Monaghan Mushrooms has entered into discussions with fellow Irish businesses to try and generate support for more promotion. “Between three companies we have put e40,000 into consumer research to develop an idea as to how we can move forward with this, to persuade others who maybe aren’t yet convinced that promotion is a positive step to take.”
With regards to the future of the UK mushroom business, Middlebrook is hopeful but realistic. “As the largest producer of mushrooms I would like to believe there is a place for UK mushrooms and there is every chance that in five years time the UK will be the place to be.” However, he does not believe the UK consumer will act in its favour without action from within the industry.
“There are certain areas in the country where a reason bias exists for the consumers,” he says. “For instance in Scotland there seems to be a significant demand for Scottish produce but here there is no such protectionism in place. And if we haven’t got it already it is unlikely we will be able to see the same attitude here. All we can do is force the bias by making sure that the UK is competitive and by producing more homegrown mushrooms.”
Middlebrook is equally reserved about the likelihood of further decline in the Irish sector. “I think the Irish situation will improve. It is going through some difficult times at the moment but it will be managed in the same way. People will restructure their businesses and they will either compete or they won’t.”
DOMINO EFFECT ON INDUSTRY
As an engineering consultant to the industry, both in the UK and abroad, Rodney Barrett is a regular visitor to many mushroom farms and readily agrees that the industry has suffered increasingly during the past year.
The sharp decline will have a knock-on effect on other parts of the industry, he says. Spawn, casing and packaging suppliers, as well as consultants like him, will all be surplus to requirement. Barrett expects other mushroom producers will follow McGeary into extinction.
“I am sure other growers will continue to go out of production, both in Ireland and in this country as they get near to retirement age, or when the losses can no longer be sustained, and there is no future prospect of any resurgence in mushroom prices,” he adds.
Another area of concern is the lack of retail promotion directed at home production. Waitrose is the only supermarket promoting UK produce, highlighting that its mushrooms are sourced from the chain’s own farm in Hampshire.
Barrett suggests poor quality is more than likely contributing to the stagnancy of any growth in sales, and that improvements to the process of quality assurance are long overdue.
“I am extremely concerned at the quality of the produce I see only too often on the shelves, as being very poor to really disgusting, and I cannot imagine why people would even bother to pick up some of the rubbish on offer.
“The industry should have its own quality control people who could reject unsuitable produce and monitor the stores’ handling of mushrooms with some real authority, as rubbish is only lowering the value of our product across the board.”
While the industry continues to worsen, growers and traders are too afraid to speak out for fear of a backlash from supermarket customers, which has led to a real sense of instability.
“Not one trader has any faith in the strength of their relationship with their customer to say what they really mean, in case they lose what business they have.”
CASUALTY LIST CONTINUES TO GROW
As managing director of Tunnel Tech, a major compost supplier, Martyn Dewhurst has witnessed the growers’ struggles first hand. “There have been a lot of casualties in the industry,” he says, “not particularly among the large suppliers to the multiples but a whole tier of sub-suppliers have suffered. Compared to previous years, growers have performed well from a production point of view, but the current situation is sub-economic for UK growers.”
Dewhurst predicts Irish growers will face an accelerated rate of decline in 2005. While the UK sector has already undergone a major level of contraction, Ireland still has a number of large players in the industry but many of these are likely to close in the next three to six months, he says. Tunnel Tech has experienced set backs alongside the growers, says Dewhurst.
“What is mildly disappointing from our perspective is that for the last 13 years we have invested in new technology and systems of operation - in the last few weeks we completed our phase III facility at a cost of in excess of £1million - which was done on the back of growers hoping to increase sales to UK multiples. However, by the time expansion was finished, promised orders have failed to materialise.
“There is absolutely no contractual commitment. We invest in good faith but there is no guarantee of having sales going forward. A few years ago everyone talked about the need to have a three-to-five-year business plan but you can’t get commitment from multiples for three-to-five-months let alone years.” For growers the situation is particularly unstable. They spend hundreds of thousands of pounds in investments but the supermarkets may then not take the produce a couple of months later.
Dewhurst is in favour of co-operatives, or producer organisations, but he says there can be misconceptions about them. “Sometimes producer organisations are only set up in order for growers to access funding. But in reality multiples are recognising any potential benefits and opportunities for lowering prices, so growers end up subsidising mushrooms to them.”
Dewhurst unsuccessfully attempted to establish a national producer organisation in the UK two years ago. However, he maintains that co-operation of sorts would be a major step forward for the industry. “I would like too see more co-operation among mushroom producers be it the English, Irish, Polish, Dutch or whoever,” he says.
Tunnel Tech has been actively involved in encouraging support for the Mushroom Bureau and has had success in raising its profile, however Dewhurst fears this may be short-lived. “As the pressure to reduce costs has been getting even bigger, growers have had to stop spending money where it is not absolutely necessary and that may mean membership of the bureau.”
Yet, believing in the fundamental importance of promoting mushrooms, he has just agreed to sponsor a visit from a team actively trying to promote the industry in Australia. Having been impressed with the possibilities for innovation presented by the panel, which included representatives from the Australian Mushroom Growers Association, Dewhurst is hoping to arrange for a similar conference to be held in the UK in late spring or early summer of this year.
ORGANIC SPREADS ITS WINGS
The organic mushroom sector is still a fledgling entity with only four main organic farms. So far they have not been faced with the same threat of closure as the mainstream growers but according to Capel’s general manager, Patrick Herne, stability is never guaranteed.
“We have been somewhat protected against the vagaries of the multiples,” he says. “However in recent years the volumes of organic product has risen to quite a large amount which is putting more pressure on us and we no longer have the luxury of ordering prices.”
Yet one factor that continues to set organic growers apart from the rest, according to Herne, is the fact that it is generally not considered acceptable to import organic produce that can be grown in the UK, since there is a greater emphasis on UK traceability for organic consumers.
Herne has plans for considerable expansion in the coming year. He is in the throes of planning the construction of a new farm on a green field site.
As a member of a supported producer organisation Capel has benefited from EEC funding and interaction with the five other grower members. The company is home to the only organically registered compost yard and, being the sales desk for the whole producer organisation, it endeavours to promote the marketability of other members.
BANKEN ON POLISH QUALITY
After nearly 30 years of experience in mushroom production, in 2002 Dutch specialist Banken Champignons Group, started a subsidiary in Poland, Banken Polska. According to financial director, Rob Banken, there were two main reasons behind the expansion: demand from Banken customers for a high quality product available in large volumes at a lower price and a wish to expand to an east European market.
The Polish site is located in Niepruszewo, which is close to the A2, leading from Berlin to Warsaw.
Banken Polska processes about 150t of mushrooms per week and is growing rapidly. Last year Banken’s production grew by almost 20 per cent, mainly due to growth realised in Poland, and an additional growth of 15 per cent is expected for 2005.
All mushrooms are picked up at production sites using Banken’s own trucks. “This makes Banken Champignons unique,” says Banken. “We transport our products throughout Europe in our own, computer controlled trucks. The black boxes in the trucks register the temperature and humidity and we are able to see at any moment where our 25 trucks are.”
The company says it bases its selection of production farms on product quality, presentation, existing quality schemes and the flexibility to meet market demand. As such it can guarantee year-round product.
Continual contact with growers is maintained via an intranet system, and quarterly “market sessions” to discuss the European market.
Banken Polska is soon to be awarded BRC certification. The next step towards increased partnership with European-wide multiples and caterers will be to develop from exotic to cultivated mushrooms in the East European market, as these organisations increase their volumes of imports.
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