On the 26th November, the Mushroom Workers Support Group (MWSG) held a 100-strong rally in the Hillgrove Hotel in Monaghan. The workers, in their first public appearance as an organised group within the mushroom industry, called on "mushroom growers and on government agencies and supermarkets to put an end to the exploitation of workers and to build a new culture of compliance and fair treatment in the industry".

On the 2nd December, the chairman of CMP, Jim Gollogley, published an article in the Irish Farmers' Journal warning that the Irish mushroom industry could disappear "in as little as six months from now", if prices don't increase 8 to 9 per cent per pound immediately.

These two events are not accidentally connected. They must be understood as the final act of the most important structural transformation of the Irish Mushroom Industry since the setting up of the satellite growing system in the early 1980s.

The workers' rally
During the rally, Bill Abom, on behalf of the MWSG, a group organised by the Migrant Rights Centre Ireland (MRCI), presented the document 'Harvesting Justice: Mushroom Workers Call for Change.'

The actor Martin Sheen, at present a student in the University of Galway, and "a long time ally of migrant farm workers in the United States", wrote the forward of the document. He considered the cases of exploitation of mushroom workers in Ireland "not only immoral, but a violation of fundamental human rights."
The document, based on the information mainly collected from accounts by the 50-odd members of the group, tells of workers being paid average wages between Euro5 to Euro6 per hour, below the current agricultural minimum wage of Euro8/h; not getting overtime, Sunday premium, or public holiday payment; not getting full annual leave entitlements; not getting work contracts; tax and PRSI contribution not being made; getting illegal deductions for accommodation; working an excessive number of hours; working in dangerous and unsafe situations; and suffering threats, verbal abuse and intimidation at work.

The MWSG is funded by the EU Programme for Peace and Reconciliation and has appointed a full time organiser, a former mushroom picker from Latvia, for the counties of Cavan and Monaghan.

CMP warning
Jim Gollogley, chairman of CMP, on the other hand, has recently warned (Irish Farmers' Journal, 2 December 2006) that the number of mushroom farms in the South has fallen to around 100 (the last Teagasc census registered 129 in March 2006) and that "a further third of these remaining members are being paid a price either equal or below the cost of production". He considers that the industry is in a terminal decline and could disappear "in as little as six months".

In terms of the whole industry, he supplies data from Teagasc and the research agency TNS showing that average costs of production are Euro0.77/lb, and that growers are only getting a margin of Euro0.02/lb. The difference between the current average price growers get, i.e. Euro0.79/lb, and the average price customers pay for the mushrooms that they buy in the supermarkets, i.e. Euro1.66/lb, breaks down as - service cost, Euro0.25/lb; marketing groups get €0.18/lb; and supermarkets get Euro0.44/lb.

The chairman of CMP thinks that the margin of supermarkets is "obscene" and has asked all the "key marketing agents in Ireland to support CMP in this effort to drive up prices for primary producers and allow the sector to survive."

This can only mean either a reduction in the margins of supermarkets or an increase in the price that consumers pay, or both.

Growers' and workers' demands
The organising work of the MWSG started in February 2006, according to the document launched at the rally. It was soon after a grower in Kilnaleck, Cavan, fired 17 mushroom pickers when they walked-out in protest over their working conditions. The workers had just approached SIPTU to mediate between them and their employer (see The Mushroom People, Feb. 2006).

In March 2006, SIPTU launched a campaign “to clean up the mushroom industry” (Irish Independent, 25 March 2006). The following month, SIPTU's representatives met with representatives from the Department of Enterprise, Trade and Employment; and the Department of Agriculture and Food to address the substandard working conditions and payment (Irish Farmers' Journal, 15 April 2006).

The representatives from the government ensured SIPTU that "all grants [growers receive from the Department of Agriculture and Food] are conditional on compliance with labour law", and that they "were taking complaints about the industry and evidence of workers being mistreated as a serious issue." In the Dail, Tony Killeen, minister of State for labour affairs, said that the labour inspectorate had identified this sector for a "focused campaign" this year (Irish Times, 22 May 2006).

The editor of the Irish Farmers Journal (15 April 2006) blamed the Minimum Wage for Agricultural Workers, "the second highest in Europe" he said, for the crisis of the mushroom industry:

"We need rules that give people a chance of survival. Rules that recognise that the capacity to pay bureaucratically imposed Irish costs is crippling legitimate business that must export to survive..."

That was an implicit assumption that if growers couldn't get better prices they had to pay wages below the legal minimum if they were going to compete for the British mushroom markets with growers from other countries, who might be more efficient (as the Dutch ones) or might have lower labour costs (as the Polish ones).

Since the government announced the beginning of labour inspections in mushroom farms - labour inspectors have actually started to visit mushroom farms recently – working conditions and payment for workers have improved in mushroom farms. The constant surveillance of the media has also contributed to these improvements.

All this has exposed even more the less efficient farms, which had found previously a way of surviving by paying workers well below the minimum wage.

In Jim Gollogley's December 2nd article in the Irish Farmers' Journal, however, we can see that the initiatives of the representatives of the remaining mushroom growers turn towards marketing and towards private and public regulation as the quick ways to solve the crisis of the mushroom industry.

CMP, actually, attempted to market directly the mushrooms of its member, which would have eliminated part of the margins that market agents absorb (see The Mushroom People, April 2006). This would have increased growers’ margins.

But in the end, CMP was unable to secure the order it was after. Now, CMP seems to demand that British supermarkets should pay higher prices for Irish mushrooms. Does this mean higher prices for Irish growers and lower prices for Polish growers? Does it mean the introduction of protectionist regulation? Jim Gollogley says:

"If [the supermarkets] wish to have a continued supply of mushrooms locally, without adding to their carbon footprint by importing from Eastern Europe, it is imperative that the multiples and CMP... come together immediately to address this crisis directly."

I think we need to examine the character of the crisis the mushroom industry is undergoing in order to understand what is going on here.

Structural change
If we take at face value the figures Jim Gollogley uses, the number of mushroom growers just about making profit is around 65. Those farms, therefore, must have lower production costs than average, which means higher margins than Euro0.02/lb. Jim Gollogley situates the minimum margin for the viability of a mushroom farm in around Euro0.11/lb. He says that the producer viability threshold is Euro0.88/lb. The average price in the last two-three years, however, has been Euro0.80/lb, according to Teagasc (see Teagasc mushroom censuses 2005 and 2006). And with those prices some growers are not only making profit, but also expanding.

In the last three years, for instance, the Department of Agriculture and Food has subsidised the mushroom industry with grant aid for a value of "over Euro18m in capital investment for the modernisation of mushroom production facilities (Irish Farmers' Journal, 2 December 2006). Since grant aid accounts for around 30 per cent of all capital investment, the total capital invested in mushroom farming, supported by these grants, has been around Euro60m.

A look at planning permission applications in County Monaghan shows that in the last three years, while the number of mushrooms farms has gone down from 87 to 30 in County Monaghan - and from 342 to 129 in the Republic of Ireland - 7 mushroom farms in this county have applied for planning permission to build 37 new mushroom houses of the Dutch type. This is a considerable expansion in a time of crisis.

What does it mean?
Averages are just averages. They don't show who is doing well and who is doing badly. For example, what is the average margin of the 44 growers in Ireland on the Dutch system? Or what is the average margin of those who are expanding? We only know, according to CMP, that around 33 growers are doing really badly. We don't know anything about the other 67. Also, some growers are marketing their own mushrooms or getting better prices than others (see for example The Mushroom People, April 2006).

The other point in discussion is the margin that supermarkets make. It is true that supermarkets, because of their scale and buying power, have been able to drive prices down, and are making very good margins. We also have to add here the margin of the market agents. But these are not the only factors worth considering.

Supermarkets have also expanded consumption by creating more points of sale throughout the UK in the last 20-30 years. In Western Europe, mushroom production has gone up from 412,970 tonnes in 1980 to 841,600 tonnes in 1999. Although, competition with Eastern Europe, and the latest crisis of the industry, had reduced production to 803,400 tonnes by 2003.

What is really driving down prices is a strong competition among Irish growers, and competition between Irish growers and Dutch and Polish growers. The outcome of competition tends to be overproduction, and fall in prices. Growers know, for example, that when there is high demand for mushrooms, marketing groups are not so fussy about quality, and prices go up. The general tendency, however, is for prices and margins to go down. This tendency compels growers to expand production and to produce at lower cost. That is what competition is about.

If Irish growers were able to market their own mushrooms, avoiding market agents, they would get a temporary gain, but in the long term prices would go down again because competition never stops. Crises cannot be avoided.

In our case, what is about to disappear is not the Irish mushroom industry but the old satellite growing system, and with it the small farms relying on mother companies for compost and for marketing. The farms that are expanding production buy compost from the companies that offer the best compost and sell mushrooms to the market agents, several of them at the same time, that offer the best prices and the most secure relationships. And some growers do their own marketing.

The disappearance of the smaller and more obsolete farms will, on the other hand, increase the market share of the remaining farms. For example, in 2003, 342 farms consumed 291,346 tonnes of compost, an average of 852 tonnes per farm. In 2005, +152 farms consumed 242,376 tonnes, an average of 1,544 tonnes per farm.  This means that when the number of farms get stabilised at around 50, according to predictions within the industry, the market share of the remaining growers will increase accordingly, and margins will rise again because of a general reduction of output.

That is actually happening already. Paul Mooney (Irish Farmers' Journal, 18 November 2006) has written that "since mid 2006 the supply situation across the EU and in the UK has reversed as capacity shrunk...after a decade of declining prices and margins, the mushroom sector is showing tentative signs of recovery. In the same article, Ronnie Wilson says that prices will increase again.

The icing on the cake is the pressure that MRCI and SIPTU are putting on growers who don't comply with labour standards. This pressure is both accelerating the elimination of obsolete capital and increasing the market share of growers who comply. I don't mean there is plot here; only that the interest of the workers can be better articulated in larger and more efficient farms.

And then, what after that? A new cycle will start, and new crises will follow. Blaming the supermarkets for the crisis of the mushroom industry doesn't get to the roots of the problem. Take it or leave it, but this is how our economic system works.

Francisco.arqueros@nuim.ie