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Mushroom demand up for the year along with sales and production

by Tad Thompson | October 26, 2009
AVONDALE, PA -- National mushroom sales are up slightly for the year and growers are always eager to meet demand with more volume. It is a long established pattern that characterizes the business.

Paul Frederic, the senior vice president of To-Jo Fresh Mushrooms Inc., based here, said that the mushroom industry has "pretty strong results and positive growth at retail. The foodservice business is soft, as we try to be aggressive in promoting deals to keep them moving. In the past week our whole team was out at distributor food shows," he said Oct. 14. "We are trying to do all we can to keep demand as strong as we can under the circumstances."

"The mushroom industry held its own very well this year," said Kevin Donovan, the sales manager of Mushroom Farms LP, based here. On Oct. 14, Mr. Donovan told The Produce News that he expects the mushroom industry "to rebound, with everything else" in the national economy.

But, he said that in mid-October "prices are lower now because of a decline in demand. We have to meet prices that come about with a slower market." The mushroom industry has kept its volume but not its market.

The problem for the mushroom industry "is very simple," Mr. Donovan said. "When the markets rise, new production happens. Like any other ag commodity, if everyone adds a few acres, then there are too many for awhile. It's basic Ag 101. "

Still, in the broader picture, Mr. Donovan said, mushroom prices "are fairly steady with a significant change when there is a huge demand or drop-off in production."

Joe Caldwell, vice president of Monterey Mushrooms Inc. in Watsonville, CA, said that, for his industry, "the good news is that mushrooms are only one of a couple categories that have outpaced produce in sales growth."

Retail sales have been especially strong, while foodservice sales are down because of the economy, Mr. Caldwell noted.

"Retail continues to be very strong and we feel great about that. The bad news is that the economic times have hit the industry hard." Mushroom input labor and materials costs "haven't dropped & and there are declining margins, putting pressure on growers. There are some casualties already and others are barely surviving. I think there are several [mushroom companies] finding it very hard to hold the line and survive at current pricing levels. We will see more casualties in the coming year. That probably will mean slightly upward prices. Sales will continue to increase at retail and, as foodservice improves through next summer, we will see that climb as well," Mr. Caldwell said.

"Everyone is fighting in the trenches, trying to survive right now," he said. The national mushroom industry is "very active and very aggressive. It's been more 'survival' than a real growth year for us." Mr. Caldwell added that his industry increases production too quickly when prices go up. "We have short- term gains in pricing that allow industry to continue on. But that is always short-term. We always increase our capacity, so we are never in a really tight market for very long at all. That is the nature of the beast we live with."

(For more on mushrooms, see the Oct. 26, 2009, issue of The Produce News.)