Story published: Fri 25 Jan 08 at www.freshinfo.com

It is certainly not going to be a bed of roses for the mushroom industry this year - even if growers manage to negotiate the price rises that experts insist are so crucial to their survival in 2008.
"In the summer of 2007, higher retail prices and an uneven balance between supply and demand were encouraging signs for mushroom growers worldwide," says Martin Brown, managing director of The Greenery UK.

In the past year, mushrooms have been served on 1.2 billion eating occasions, according to figures from the Mushroom Bureau. This has grown substantially, by more than 12m occasions. "We saw the market for fresh mushrooms grow by more than eight per cent in volume terms in the 12 weeks over the summer," says Bureau chairman Andrew Middlebrook. "In value terms, mushrooms are now the fourth-largest vegetable category, and we see substantial opportunities for growth.
"On average, UK consumers buy mushrooms 18 times a year, or once every 2.8 weeks. In other western countries, the frequency of purchase is much higher, and we see tremendous opportunity for growth by persuading the shopper to put mushrooms into his or her basket on a more regular basis," he adds.

Demand rose sharply in the week preceding Christmas, according to John Smith, managing director of Greyfriars, the marketing arm of Northern Mushrooms, but the week after saw sales tail off. "We planned our production accordingly, across the industry, and this was well managed," he tells FPJ.

But while the market may be relatively mature and sales on an upward curve, the problems afflicting the mushroom sector at the moment seem almost beyond the industry's control. The exchange rate between the euro and the pound is creating what one insider describes as the "worst catastrophe" he has ever known to befall the mushroom category.

In November, there was around GBP0.68 to the euro, but that figure has now risen to GBP0.75, a 10 per cent difference that is damaging Dutch and Irish grower returns, according to insiders. The deflation of the pound against the Polish zloty is even greater -  nearer 15 per cent, according to Smith.
Brian Cartwright of Walsh Mushrooms takes a bleak view of the year ahead. "If English retailers do not give substantial price increases in the next two weeks, there will be gaps on the shelves," he tells FPJ.

"We had a torrid autumn with poor weather that hampered harvesting, the oil crisis has heaped on the pressure, with our plastic packaging manufacturers and hauliers and distributors ramping up prices, and the Agricultural Wages Board Order has also raised our costs significantly.

"I can safely say this is the worst situation I have ever come up against since I came into the business in 1971. When our growers in Europe bank their cheques, they are getting 10 to 15 per cent less than they did back in September. Prices simply must rise to cover this."

mushrooms on the move
So how have retail and processing customers reacted to the industry's rallying cry? "There has been a general realisation among our customers that prices will have to grow steeply," admits Smith.
"We need an immediate boost in price of seven to eight per cent, just to cover the exchange rate differences, but over the next few weeks we need that figure to rise by 10 to 15 per cent."
"We have been battling for inflationary prices from retailers and processors," adds Cartwright, whose firm markets white and chestnut mushrooms and organic white mushrooms from Ireland and Poland. The company also prepares mushrooms from the Netherlands for the catering sector.

Growers in the Netherlands and Poland will be forced to seek alternative markets if UK retailers and processors fail to boost prices in the coming weeks -  but with UK production only accounting for around a quarter of total demand, that could have serious implications for on-shelf availability.

Recent analysis from the Mushroom Bureau suggests that UK mushroom production accounts for, at most, 28 per cent of mushrooms sold in the UK. Estimates indicate that 30 per cent of demand is sourced from Ireland, six per cent from Northern Ireland and the remaining 36 per cent from the continent, with the Netherlands accounting for more than 70 per cent of that volume. Other suppliers include Belgium and Poland.

Substantial hikes in fuel costs and wages have only served to exacerbate the exchange rate effect. "UK growers will carry on as they always do, but the situation is much more severe for producers in Ireland, many of whom will have to pack the business in - without the UK market, they have nowhere to export their product," says Smith.
"If prices do not reflect the exchange rate and rising costs for growers, then it will make sense for European exporters to look elsewhere," he continues.
"But UK production cannot meet demand in the UK - there is physically no way we can grow any more. Over the last seven years there has been no further investment in UK production because of the horrendous economics. We used to supply in excess of 60 per cent of the UK market, but over the last few years that has dropped to less than 30 per cent.

"So without price rises, Irish growers will stop producing, the European players will look to other markets - France, Germany and Scandinavia - and UK producers will not have the substantial funds they need for further investment into production."

Walsh's heritage is in Ireland, and the firm has supplied Tesco for more than 25 years. "Over the last three years, we have had to start sourcing from primary producers in Poland - but in the last few months the zloty has actually fared worse [for importers] than the euro against the pound," says Cartwright.
Growers in Poland will seek markets in Russia and the Ukraine, and are already steadily building business in France and Spain, he says.

"Polish growers won't hang around begging for price increases in the UK - they will look elsewhere," he explains.
Some of Walsh Mushrooms' customers, who include retailers and processors, have already agreed, or are in negotiations, to link prices to the exchange rate, says Cartwright. "Across the industry, if any customers won't agree to price rises, growers will stop picking for them. Increasing numbers of business closures are likely, and we have already seen this happen over the past few years. In 2000, there were 600 mushroom growers in Ireland, but that figure is now well below 100. We have even had notice from a large grower in the past fortnight that it is due to close.

"I started in the mushroom business in 1971 - there was a huge crisis in the late 1970s and further troubles in the 1980s but, to my mind, there has never been a worse time for the mushroom industry. People's livelihoods are at risk."

Greyfriars pioneered the practice of bringing mushrooms into the UK from different sources, according to Smith, and today operates partnerships with key suppliers in all mushroom-exporting countries. "We have also diversified into sweetcorn and garlic production to keep things going," says Smith. "We have not gone into organic mushrooms and exotics - they certainly have their role in the marketplace, but they are not the panacea of economic revival."

Demand does indeed seem to be switching from regular to more exotic and healthy mushroom varieties. Middlebrook tells FPJ: "Mushrooms, both white and exotic, are well placed to capitalise on the ever-increasing media and consumer interest in healthy eating. Mushrooms are a valuable part of the diet, being a good source of B vitamins and essential minerals potassium, selenium, copper and phosphorus, as well as being low in calories, fat and sodium. In addition, they have also been elevated to superfood status, being a prime natural source of the powerful antioxidant L-Ergothioneine and one of the highest antioxidant vegetables in the world, in the same league as the red capsicum and spinach."

New varieties of exotic mushrooms account for a small but growing proportion of the UK retail mushroom market, according to the Mushroom Bureau. However, they are extremely popular in the foodservice market, and are widely used in restaurants and food manufacturing.

In order to meet these demands, major Dutch mushroom suppliers - such as The Greenery - have broadened their range and are now importing new varieties such as Enoki and Eryngii from Asia, and more specifically Korea. "These varieties are quite new, but showing great potential," says Brown.
"There has also been an increase in demand in the so-called 'flats'segment."

The fluctuating demands of the UK market have led to the creation of a grower association by The Greenery growers, called Champichique.

"Exporting mushrooms to the UK is not only a question of growing the mushrooms. It also means knowing and meeting retailer and consumer demands," says Brown.
"Although demand for mushrooms is growing and outstripping supply, The Greenery growers are constantly looking for new opportunities and innovations. The growers from Champichique who export to the UK are keeping a close eye on consumer trends and market developments."

In October 2007, Champichique growers, accompanied by market researchers from The Greenery, visited several UK supermarkets, in order to study the latest developments in packaging, product presentation, treatment and marketing. Some of these developments include single-serve packaging, fresh-cut mushrooms, giant "monster" mushrooms and an increased interest in exotic varieties.

"UK consumers have shown interest in the newer, Asian exotic varieties - especially the Enoki and Eryngii mushrooms," says Brown.

"In order to provide a complete range of varieties, these mushrooms have been added to The Greenery range. They are directly imported from Korea, where they are frequently used in cooking."

Vianney Lonjon, commercial director at Portsmouth-based exotic mushroom specialist Tecfoods, is more circumspect about growth in the exotics sector. He tells FPJ: "It is finally being recognised that mushrooms are a commodity, and that the industry's fixed costs are increasing. The problem with exotics is that they take much longer to grow than standard white mushrooms, so associated costs are higher.

"There is certainly a niche retail market for exotics, but primarily they are a catering product; the supermarkets have actually reduced the range of exotic lines they stock over the last five to 10 years. At peak times of year when people might want to cook - New Year, Valentine's Day, Christmas, etc -  the market grows. People are more aware of exotic mushrooms now than they were a decade ago, but they are not repeat buying just yet."

There is always potential to grow, says Lonjon, especially as consumers today want to trade up in terms of the food they buy  - but clever marketing and easy-to-handle, prepared product are the keys to boosting sales.
"Foodservice will always dominate, but the real growth with exotics is to be found by breaking into retail," he explains. "However, doing this will involve prepping products - and that starts really pushing up the price of exotics, almost creating a niche within a niche."

But innovative marketing concepts and product development aside, the UK mushroom industry is not going to get very far without the increase in prices it craves. "The exotics category is driven by out-of-home eating, and that largely depends on how the economy pans out, as eating out is one of the first areas where consumers budget," says Lonjon. "I think it will be a tough six months, but the second half of the year looks better."

Cartwright adds: "We have to see everybody take the necessary action to protect the UK and European industries. If prices do not rise, the mushroom supply chain will collapse."

By Laura Gould

Source: www.freshinfo.com