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Farmers forced to destroy crops as oversupply wreaks havoc on food supply chain

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April 16, 2020

Carleton Mushroom Farms had a problem. A third of its sales had disappeared as the restaurant industry shut down due to the coronavirus crisis.

But the farm just south of Ottawa in Osgoode, Ont., was still sprouting 200,000 pounds of button, cremini and portobello mushrooms each week, and would continue to produce that much in the coming weeks because a mushroom is not something you can turn off.

By late March, owner Mike Medeiros had more mushrooms than he knew what to do with. The food banks and soup kitchens in Ottawa and Montreal had taken more than 5,000 pounds already that week. He called them again to offer more. “And they’re like, ‘Oh, we’re full,’” he said.

That left Medeiros and his brother, who co-owns the farm, with a choice: They could spend money to harvest and package more mushrooms than they were likely to sell in grocery stores; or they could cut their losses and “steam off” some of the crop — an industry euphemism for destroying mushrooms.

The brothers decided to turn on the steam in two of their 20 active growing rooms. Steam is normally used to heat and sterilize the houses, but the farm used it to kill 20,000 pounds of mushrooms last month. At $10 per five-pound case, the destroyed crop represented a $40,000 loss.

“It hurts,”  Medeiros said.

Surpluses are one of the main complications to ripple through the food chain since the food-service sector’s near-total shutdown in mid-March, with supply chains scrambling to adjust to consumers eating more often at home.

For example, Atlantic Canada’s lobster sector faces a drastic drop in demand because the economic downturn has reduced appetites for the luxury product, and restaurants are typically the main place to eat lobster anyway.

The demand for pork bellies has dipped, too, in part because bacon is so ubiquitous on fast-food menus, one pork processor said this week. And, of course, dairy farmers have been dumping raw milk now that coffee chains and school programs need less dairy, if any.

Atlantic Canada's lobster sector faces a drastic drop in demand.

Atlantic Canada’s lobster sector faces a drastic drop in demand.

Joseph Prezioso/AFP via Getty Images files

Mushroom farmers across Canada have been struggling for weeks with an oversupply, according to Mushrooms Canada.

The association said changes in the industry have been happening too quickly to fully quantify how much oversupply is currently in the system, which produced more than 133,000 tons of mushrooms and $1 billion in sales last year. But it said the drop in demand, on top of shortages in farm labour, has some mushroom operations considering closure.

“Before COVID-19, mushrooms were already at close to 20-per-cent job vacancy rate,” the association said in an email. “Now with COVID, we have very high absenteeism due to fear of the virus, so our labour shortage is even higher now.”

The simple solution for mushroom farmers is for consumers to buy more, but selling mushrooms to grocery stores is a lot more tedious than selling to restaurants. Instead of sending big cases of loose mushrooms to a wholesaler, who sends them to pizza joints, steakhouses and the like, farmers have to divvy those mushrooms up into little plastic containers and then wrap each one of those with cellophane.

“It takes longer,” Medeiros said. “Our day drags on.”

Cases of mushrooms at a farm.

Cases of mushrooms at a farm.

Craig Warga/Bloomberg files

There are also extra safety protocols related to the coronavirus to consider. Medeiros personally takes the temperature of all 140 employees every day.

All told, harvesting is taking longer. And longer harvests mean some mushrooms grow for too long, causing them to open up and expose their gills. Buyers don’t like the look of that, so those mushrooms have to be thrown out or donated.

In the past, Medeiros’s second-generation family farm could send surplus mushrooms to canneries. But the canned mushroom sector in Canada has all but disappeared, due in part to cheaper competition from Asian markets, he said.

The other problem with trying to sell more mushrooms in the retail channel is changing shopper behaviour. After steaming off 20,000 pounds of mushrooms at the start of the crisis, Medeiros started looking for ways to push more mushrooms into retail, negotiating with supermarkets to offer his mushrooms on special and feature them in the weekly flyer.

“I’ve got to give them a little bit of a discounted rate to do that. But it brings up demand,” he said. “If there’s no ads, people aren’t going to buy as much.”

It’s a trade-off: Medeiros sells more, but makes less on every sale.

Mushroom farmers across Canada have been struggling for weeks with an oversupply, according to Mushrooms Canada.

Mushroom farmers across Canada have been struggling for weeks with an oversupply, according to Mushrooms Canada.

Alex Edelman/AFP/via Getty Images files

“You’re far better off to put items on special and move the product, because mushrooms have a limited shelf life,” he said. “It all depends on how big of a special you want. Sometimes you see specials that are 99 cents, then the haircut’s pretty short.”

Carleton Farms sold almost all its mushrooms when they were on special in stores over the past month. In a good week, Medeiros has only had to donate 1,000 cases of mushrooms to food banks.

“That’s about 5,000 pounds of mushrooms, which is okay. I can live with that,” he said.

But to avoid such oversupply issues in the future, Medeiros is reducing production by about 30,000 pounds a week. He can’t do that right away, since decisions about production levels are made months in advance.

A mushroom is the product of seven weeks of labour, and Carleton Farms is involved in the process from the beginning. Medeiros and his brother are partners in a compost facility that buys thousands of tons of hay and straw and lets it gently rot for weeks until it is ready to be inoculated — infected, essentially — with the fungus that will grow into mushrooms.

That compost, cut with a sprinkling of manure, is sent to dozens of indoor chambers where it is covered in an inch or two of peat moss. It takes two weeks for the mushrooms to poke through that layer in two distinct waves.

All that work is why it hurt Medeiros so much to fill the growing rooms with steam last month just as the second wave of viable mushrooms started popping up through the peat moss.

“Trust me,” he said. “We hate doing it.”

Financial Post

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