Week in Review

Knives out in mushroom industry

Accusations of anti-competitive behaviour are flying in New Zealand’s small mushroom market. Farah Hancock reports.

Imported compost with traces of animal manure has created a big stink in the mushroom industry, putting a Waikato and Christchurch company at loggerheads and causing one company to cease production.

The drawn-out process, which has left Mercer Mushrooms unable to import a compost to grow mushrooms, has one remaining opposer to a decision that would allow it to get back in business - its competitor, Meadow Mushrooms.

“We've got the okay from everyone. The one person who is slowing us down is the competition," said Mercer Mushroom's chief executive Dave Hyland.

Hyland thinks it's clear the motivation for the opposition is commercially-based and anti-competitive. Based in the North Island, his company could get fresh mushrooms into local supermarkets quicker than the Christchurch-based Meadow Mushrooms. It could become a supplier of choice for Auckland supermarkets wanting a fresher product.

While the Ministry for Primary Industries (MPI) has been working on new rules related to importing the compost, Mercer Mushrooms has shut down production and Meadow Mushrooms has grown a near mushroom monopoly, capturing around 85 percent of market share.

Meadow Mushrooms' objections to the imported compost have been based on biosecurity concerns. However, it's not all as it may first appear. Newsroom has seen documentation showing Meadow Mushrooms has recently been in contact with European compost suppliers seeking to import the same growing medium Mercer Mushrooms has been fighting to bring in.

Frustrated by MPI's slow pace, Hyland has written to the director-general pleading for a faster decision. He also asks how seriously MPI can take the challenge from Meadow Mushrooms when it wants to import the compost it claims to have biosecurity concerns about.

"This doesn’t sound like a submitter who has grave fears about the risks of imported substrate, whilst displaying the audacity to question the Chief Science Adviser and MPI’s work in this space."

The long saga

It's been a four year manure-related shit-fight.

Waikato’s Mercer Mushrooms has been in stasis since 2016 after concerns were raised about what it was importing to grow its mushrooms. Its factory now sits idle and staff have been laid off, according to Hyland.

“The business basically shut down. Probably 85 jobs were lost.”

Located in a semi-rural area, the company had fielded a number of complaints about the odour generated by creating its own compost. It began importing a pre-made, heat-treated compost from the Netherlands. The complaints about smell stopped and mushroom quality improved.

There was a catch though. Not declared when imported were trace amounts of chicken and horse manure in the compost. This obviously posed a biosecurity risk, and MPI launched an investigation in how the manure came in undeclared. The import licence to bring the material in was revoked. According to Hyland, this occurred after Meadow Mushrooms threatened MPI with a judicial review of the licence.

Meadow Mushrooms hasn’t commented on this, but MPI said the issue was raised from within the industry.

What were the concerns?

The spectre of a biosecurity threat was the biggest fear, and it was held by a range of groups.

For mushroom producers there are two diseases that could pose a risk, Trichoderma aggressivum and Mushroom Virus X. The Poultry Association was concerned about the risk of campylobacter and Infectious Bursal Disease virus. Federated Farmers expressed concern about stray weed seeds and sought reassurance appropriate biosecurity measures were being taken.

Perhaps adding to wariness on MPI's part is an ongoing court process with the kiwifruit industry. Growers claim the PSA bacteria that cost the industry close to $900 million entered the country due to lax biosecurity. The High Court agreed and growers stood to be awarded around $450m in compensation. A decision from the Court of Appeal is pending.

Political voices have also featured in the debate.

In May 2017, prior to becoming part of the coalition government, Winston Peters penned an opinion piece in Farmers Weekly calling it the “dumbest import proposal I can recall any government considering”.

“There’s no way New Zealand First would ever do something so patently stupid because National has kicked the door wide open to animal-based manures.”

Winston Peters was a National government MP in the 1990s with Philip Burdon, whose family owns Meadows Mushrooms. In 2015, Peters and Christchurch Mayor Lianne Dalziel opened the company's expanded $120 million Hornby redevelopment.

New import health standards

As a result of the issues raised about the manure sneaking in with the compost, MPI worked on new import health standards related to mushroom-growing products and animal products. As part of the process, it visited the compost manufacturer in the Netherlands twice to inspect the facility and processes.

The draft standard says the compost must be heated to 65°C for eight hours for plant matter. Animal manure requires 74°C heat applied for 116 hours.

MPI believes if the standards it has proposed are met, the compost "poses a negligible risk to New Zealand".

Meadow Mushrooms has challenged the proposal and called for an independent review. Their December request states:

"The scientific evidence we presented during the consultation phase (under Section 23(3)(b) of the Biosecurity Act) that raised significant concerns about the efficacy of the Measures proposed in the draft IHS, have not been sufficiently addressed."

The objections are based on concern cold spots could occur during the heating process. It's also concerned about the risk of contamination if heat treatment and other hygiene measures aren't conducted simultaneously. MPI say both of these concerns were already addressed when Meadow Mushrooms first raised them.

Nevertheless, the request must be considered by the director-general of MPI. Until a decision is made about whether an independent review is warranted, Mercer Mushrooms remains in limbo.

As Meadow Mushrooms says its scientific concerns have not been addressed, it's not clear why it has made enquiries to purchase the compost itself. Responding to questions from Newsroom, chief executive John Barnes said:

"We at Meadow are concerned about mushroom diseases being carried in with the compost – these diseases, that are present in Europe, have the potential to impact the entire industry here in NZ. It is very similar situation to the PSA disease that affected the kiwifruit industry a few years ago."

Newsroom has asked for clarification around why Meadow Mushrooms would enquire to purchase the compost if it had disease concerns, and is awaiting a response.

Grown in New Zealand

Meadow Mushrooms has made headlines for a different import-related topic. It was selling shiitake mushrooms as "New Zealand-grown".

The company has been importing shiitake ‘logs’ from China. The logs are plastic bags filled with sawdust and inoculated with shiitake spawn.

Once in New Zealand, the spawn grow and are harvested.

Other mushroom companies felt the claim Meadow Mushrooms’ shiitake were New Zealand-grown was stretching the truth.

Tests undertaken by Massey University on the Chinese logs showed detectable levels of arsenic and lead. The New Zealand-grown claim has since been removed from the packaging.

An expensive waiting game

Before the import ban, Mercer Mushrooms had planned to expand. It committed to $20 million worth of new growing equipment to increase the 20 tonnes of mushrooms it was growing a week to 60 tonnes a week. Since the import ban, the equipment has sat idle. Five staff remain on payroll, mainly to ensure the facility doesn't fall into disrepair.

If it can bring the compost into the country, it plans to hire 150 staff. At present, Hyland says the company fields calls from people seeking jobs he can't offer and retailers he can't supply until he gets answers.

MPI expects to make a decision by April.

Until then, Mercer Mushrooms is in the dark about its future.

Read more:

Bid for mushroom dirt fails, but Mercer not giving up

A can of worms in the mushroom industry