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Shiitakes seeded in China sprouting as “Product of the USA”

A Shitake mushroom company in Kennett Square, PA, would prefer to quietly go about its business.

Kennett Square Specialties has no interest in anti-dumping law or lobbying or trade policy with China. Nor is it interested in the business practices of a fierce competitor on the other side of the world.

But Lou Caputo Jr., fresh mushroom sales director, said there is clear evidence of a clever plan by the Chinese to dump fresh Shitake mushrooms into this market. And, in the process, wipe out all U.S.-based competition.  KSS-cousinsThe second-generation operators of Kennett Square Specialties are David Guest, Jeff Guest Jr., Brian Guest, Steve Caputo, Mark Caputo and Lou Caputo Jr. On the table are Oyster bags, Shiitake logs, retail Crimini packs, organic Maitake and King Oysters.

Kennett Square Specialties creates and sells oak-sawdust Shitake spawn logs. The company grows Shitake, Oyster and, recently, white mushrooms.

Caputo said his firm’s customer base has shrunk but still sells Shitake logs to three grower: Monterey Mushrooms, To-Jo and The Rhode Island Mushrooms Co.

“We’re the last ones standing,” Caputo said.

He said a professional lobbyist has asked for as much as $100,000 to take the domestic Shitake cause to Washington, DC. That huge expense would be followed by unknown subsequent lobbying costs, Caputo noted.

The lobbyist sold the position that if Congress was made aware of this unfair situation, it should receive bipartisan support. But the cost of arriving to that point is prohibitively high for a firm that has already taken a financial beating.

Caputo said his company’s local competitor, Oakshire Mushroom Farm, went out of business in late December. The publication Lancaster Farming reported that among Oakshire’s problems, “a big increase in imported Chinese spawn logs was eating into Oakshire’s side business selling to other growers.” Also, in late January 2019, The Philadelphia Inquirer ran a similar report involving Oakshire’s Gary Schroeder, who has been growing and packing specialty mushrooms for nearly 40 years.

Shitake mushrooms are spawned in compressed sawdust logs, which are infused with grain. Caputo said the logs should be made of oak sawdust, which Kennett Square Specialties buys in Pennsylvania and Kentucky.

Caputo said Chinese spawn logs are being shipped in ocean containers to Philadelphia at prices below what his family’s spawn logs cost.

The big twist is that the Chinese logs are loaded with spawn “and are ready to burst” with a budding Shitake mushroom crop within days after the product is delivered by the containerload to customers who once bought from domestic producers. Because the logs’ crop is harvested in the U.S., the mushrooms are labeled as “Product of the USA.”

Perhaps no one in the U.S. knows with certainty how the Chinese spawn logs are produced. But, because no chemicals are used in the days before the U.S. harvest, the Chinese Shitakes are sold as organic, Caputo said.

Caputo doesn’t have the resources to investigate the Chinese spawn log business. He has gathered that there are many small-volume individual Chinese producers of these logs selling to a major exporter. But he knows that no oak trees grow in China. He questions what’s in the logs and who in China provides food-safety oversight or organic certification on the products. The logs have a registered import code of “live spawn” and “wood product.” There is no export notation of shipping fresh organic Shitake mushrooms.

The Pennsylvania Department of Agriculture reports that the Spotted Lanternfly, which is an invasive planthopper native to China, India and Vietnam, was discovered in Berks County and has spread to other southeastern Pennsylvania counties, which include Chester County and Kennett Square. “This insect has the potential to greatly impact agricultural crops such as grapes, hops, and hardwoods,” the state ag department said.

Caputo has no proof of a connection. But he notes the Spotted Lanternfly’s appearance in Pennsylvania generally coincided with the arrival of China’s first spawn logs.

Caputo noted that Chinese Shitakes are apparently a different strain of mushroom than his, because the Chinese product has a room temperature shelf life of a couple of weeks. Caputo wonders how such a product was bred.

The Chinese product is being sold by one Texas retailer at $12 for five pounds. “The Shitake fresh market was $3.50 to $4 a pound two years ago,” Caputo noted. He added that Chinese prices have recently inched up now that just one U.S. competitor remains business.

Kennett Square Specialties sells certified organic Shitakes and has paid for all the certifications and gone through all the proper procedures to assure it sells safe logs and safe fresh mushrooms.

In 2015, Kennett Square Specialties produced 100,000 spawn logs a week. Now the firm produces 20,000 logs a week. It uses 15,000 of those for its own Shitake production. Caputo said the firm’s former commercial grower-customers are buying the cheaper Chinese product.

Kennett Square Specialties responded to that devastating loss by returning to the production of white and other fresh mushroom varieties, in addition to Shitakes. As a result, the firm’s business status stabilized upward to “break even” in 2018.

Kennett Square Specialties’ roots go back to 1977, when Lou Caputo Sr. and his brother-in-law, Herb Guest, started the company after working for prominent mushroom growers of their teen years.