In 2500 BC the Pharaohs of ancient Egypt ruled that the mushroom was to be reserved for royal consumption as it was claimed to be the plant of immortality. Fast forward to the 21st century and the story could not be more different. Results published by the Fresh Produce Consortium highlight that the market has continued to be affected by downward pressure on prices, fuelled by cheaper imports.
According to John Smith, managing director of Greyfriars, the past four years have been particularly tough for the industry. “The UK mushroom industry is undergoing a difficult and traumatic period of change, characterised by contraction, consolidation and closure. Since 1999, production has fallen dramatically from an estimated 1.8million kg a week to 900,000kg a week and only a quarter of mushrooms consumed in the UK are grown here,” he says.
Pressures within the industry have led to many established growers deciding that mushrooms are no longer for them. Most recently, Aylesbury Mushrooms, Gateforth Park and, most surprisingly, the three farms that made up Blue Prince have all called time on mushrooms. Smith believes that this decline is likely to continue for the foreseeable future. He says: “On the economic front the mushroom industry has many complex problems, high capital costs at both the composting and production levels, high labour costs, high due diligence costs, high transport costs and, until recently, the disadvantage of over valued sterling which gave European competitors as much as a 19 per cent price advantage over UK growers.”
Elliott Gough, sales and marketing manager at the Southern Mushroom Company, agrees that the industry is going through a tough time but is sure there is light at the end of the tunnel. “The market is going through some major changes and upheavals and it isn't easy,” he says. “However, there are two ways of looking at the mushroom market. You can either leave the industry or you can try and find ways of making more money. We're being very positive about the future and are excited at a number of initiatives we have developed,” he says.
Formed in 2001; James A. Gooding Ltd, Pondchase Nurseries Ltd, Shackleford Mushrooms Ltd, Fiddleford Mushrooms Ltd are the four companies which make up the Southern Mushroom Company. Co-operatives with farmers working closely together is one way Gough is sure businesses can enjoy success in difficult times. He says: “The mushroom winners will be the ones who respond to what the market requires.”
Smith maintains that the sector's problems have been magnified by the lack of movement in price. He says: “The industry structure might have survived amid the problems, but the reality is that there have been no price increases for 15 years, and indeed the reverse has happened. On average, prices have dropped by about 10 per cent in this period. This has been driven by the major multiples with Asda in particular leading the charge.”
With the problem of pricing comes the issue of the strength of sterling. Smith believes the weakening of sterling has come too late for many. “Once the process of farm closure has begun, it can't be easily reversed,” he says. “Trained composters find new roles, experienced growers go to easier lives and skilled pickers melt away into other jobs in horticulture. It is remarkable how much effort everyone puts into survival but once he or she crack they never revert,” he says.
How is demand being met during difficult times? Gough admits that the Southern Mushroom Company is in a fortunate position, which in part is due to its own efforts. He says: “Some 75 per cent of our mushrooms go to Tesco. We are in a fortunate position that Tesco only uses UK and Irish products.”
The Dutch have made formidable inroads into the UK industry and the Polish have also joined them for the fight. Smith says: “The Dutch are experienced and competent marketers and realised some time ago that Polish mushrooms represented a threat to the German, French and Scandinavian markets. The Dutch targeted the UK as an alternative and their aggressive pursuit of a share of the marketplace is reflected by close ties with Asda and a significant role in Sainsbury's and Safeway.”
Gough agrees that the market is tough but the Southern Mushroom Company is working hard at securing and growing its market share. He says: “Supermarkets want a decrease in costs and an increase in joint-sector management, technical expertise and new product development. It's not easy at the moment. We produce 360,000ñ400,000 pounds of mushrooms each week and we are looking to improve our margins further. We are working to do more than just provide a product. With Tesco we now hold integrated monthly meetings to iron out problems. This also provides an opportunity to try out new ideas. We have also been working with the US firm Monterey Mushrooms where we have developed a washed and ready-to-use product. This has given even more business to Tesco. It's ideas like these that can help us succeed.”
One issue that has seemed to accentuate dilemmas within the industry is the role of the internet auctions. Smith believes this is a tool that has benefits to supermarket buyers but is inappropriate for the mushroom industry. “Unlike most other horticultural industries, mushrooms have high costs of capital entry and investment, an extensive degree of vertical integration from composting to production and packhouses and is a highly skilled industry right down to the mushroom picker. Unlike potatoes and carrots, people don't drop in and out of mushrooms. If you participate in an internet auction and you lose, you won't do it again ñ quite simply because you won't be there,” he says.
Problems within the world of white mushrooms are also affecting the market of exotic mushrooms. According to Vianney Lonjon, sales manager at Tecfoods, Shitake are seeing pressure on their prices.
“The supermarkets are putting pressure on the whole chain and exotic mushrooms are made to look expensive by the falling price of white mushrooms,” says Lonjon. “Problems within the market are also due to the general downturn in the economy, while strange weather conditions have made for an interesting season. A cold winter followed by a warm flush in spring has seen the crop be late by around a month and a half.”
An area within the industry showing signs of improvement is the ready meals market. Lonjon says: “Certain supermarkets are working to upgrade the ready-meal concept, we hope this snowballs throughout the entire industry as it could become a big area for us.”
Lonjon believes that more could be done to promote the health benefits of mushrooms and this could improve the mushroom market. He says: “Consumers need to be made more aware of the health benefits and nutritional value of mushrooms. Further coverage could raise the profile and sales.”
Smith believes that more growth could be in the value added areas of mushrooms. He says: “Here lies an opportunity for both growers and supermarkets. Diversification into other mushroom varieties and organics has also proved beneficial but limited. Although in terms of subsidy, there is nothing available from Europe for the UK but some companies are subsidising their mushroom activities from more successful sectors of their business.”
Why do mushroom growers continue to do this? According to Smith, the long-term players believe that there will always be a place for mushrooms grown in the UK. He says: “Many growers believe that the economic worm is about to turn and they want to be there for the holy grail of a higher price regime, safe in the knowledge that should supplier and retail prices go up by 10 per cent, demand will not be affected. Long-term it makes sense for companies to form alliances. If you have 25 growers, supermarkets will not want to speak to all of them, they want to speak to about five.”
One company progressing in the industry is Golden Crumb Produce Ltd. The company moved away from being a traditional mushroom grower in 1989 to become a leading manufacturer of frozen breaded vegetables. Over 80 per cent of the company's output is mushroom related. Managing director Tony Dumbreck has an in-depth understanding of the industry. Dumbreck is a third generation mushroom grower and treasurer of the Mushroom Growers Association. The company still grows around 10ñ15 per cent of mushrooms that it uses in its products but now it has a turnover of more than £3million providing many of the UK's major restaurant, hotel and catering groups with its products.
Dumbreck believes the biggest problems in the UK are the high labour costs. He says: “Within the UK, around 35 per cent of costs are labour. The bulk of our mushrooms come from Holland via Poland as labour costs are around a sixth of what they are in the UK. The biggest hope for the UK is with Poland joining the EU, wages will start to rise, costs will gradually increase and as long as there is still a UK industry around, there is every chance for a bright future. But it won't easy for the growers.”
Dumbreck believes that with more people opting for vegetarianism, more could be done to promote the qualities of the mushroom. He says: “The Mushroom Bureau already does a fantastic job promoting the industry, but it would be nice to see the supermarkets doing more as there is a real opportunity to promote the health benefits of mushrooms.”
Victoria Lloyd-Davies runs the bureau and is continuing her efforts despite all the problems. Most recently the bureau was heavily involved in Vegetarian Week, which ran from May 19ñ25. She says: “We provided seven recipes for the week, one of these was a mushroom casserole. We also published 10,000 consumer booklets, 1,000 leaflets went to restaurants and schools covering 250,000 children. The week featured in 77 publications, so it was a great success for the industry.” Lloyd-Davies is already making plans for the autumn. “We are planning to have a mushroom market outside Antonio Carluccio's cafes across London,” she says. “The bureau will provide mushrooms for the campaign and we are hoping to build on the success of last year.”
It is quite clear that it is not going to be easy for the mushroom industry and Smith believes things may get worse before they get better but growers will battle on. He says: “I do think there will be more tough times for UK growers, more farm closures, more consolidation of surviving players and poorer economic returns for the surviving players but there could be a glorious purple patch for some. Don't ask when.”
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