Emily Johnson
The global mushroom market is expected to grow by USD 18.78 billion between 2020 and 2025, with a CAGR of 6.43%. This growth is driven by the medicinal values associated with mushrooms, such as their high antioxidant content and their role in combating cancer. However, the mushroom industry has faced challenges due to supply chain issues and labor shortages, particularly during the COVID-19 pandemic. In 2021, the mushroom industry in Pennsylvania, USA, faced a labor shortage of approximately 25%, impacting their ability to meet the increasing demand for mushrooms. The pandemic also affected mushroom production and sales globally, with lockdowns and restaurant closures leading to reduced demand and production in countries like Spain and Greece. While the situation has stabilized since then, the industry continues to work towards overcoming supply chain and labor-related obstacles.
| Characteristics | Values |
|---|---|
| Location | South Africa |
| Reason | Load shedding, farm closures, and increased input costs |
| Impact | Restaurants and consumers are substituting mushrooms with alternative ingredients, such as canned mushrooms, tofu, or eggplant |
| Future Outlook | Unstable until load shedding ends |
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What You'll Learn
Demand for mushrooms increased during the pandemic
In 2020, mushrooms were gaining popularity among home cooks and in the food service sector. However, the coronavirus pandemic caused a steep decline in orders as restaurants and food outlets closed and people stayed at home. Mushroom growers were left with excess inventory, which was either donated or destroyed. As a result, they scaled back operations and delayed plantings.
Now, however, demand for mushrooms has surged again. Growers and supply chains are struggling to keep up with the erratic demand. Mushrooms take around six to twelve weeks to grow, and growers also need to prepare compost and planting beds to support multiple harvests. They also need to repackage catering-sized boxes into smaller packs for retail.
Additionally, producers are facing challenges in sourcing the right kind of compost. While some growers make their own, others rely on commercial compost, which has been in short supply due to the cancellation of events like auctions and horse races, which are typical sources of raw materials.
The pandemic also disrupted the supply chain, causing a shortage of mushrooms in South Africa. In April 2023, several private mushroom farms closed, and a major producer, Denny Mushrooms, experienced a fire that destroyed its operations in Durban. Load shedding, or scheduled electricity outages, further exacerbated the shortage by impacting production and increasing input costs.
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Supply chain issues
South Africa has faced mushroom shortages due to supply chain issues. In April 2023, the shortage was caused by the shutdown of private mushroom farms and a fire that destroyed Denny's operations in Durban in September 2022. As a result of these incidents, the country was left with only about 18 mushroom farms. Load shedding, which refers to the scheduled shutdown of electricity to prevent power grid overload, has also been a significant factor in the mushroom shortage. The electricity requirements of mushroom farms are substantial, and load shedding, along with generator failures, has disrupted production and impacted the quality of mushrooms. The shortage has forced restaurants and consumers to find alternative ingredients, such as canned mushrooms, tofu, or eggplant.
The coronavirus pandemic also disrupted the mushroom supply chain globally. Mushroom growers initially experienced high demand and record sales in 2020. However, when the pandemic hit, orders decreased drastically as restaurants and food service outlets closed, resulting in excess inventory that had to be donated or destroyed. Growers scaled back operations and delayed plantings, leading to a future shortage of mushrooms.
Mushroom growers face challenges in meeting erratic demand. The growth cycle of mushrooms, which typically ranges from six to twelve weeks, includes the production of compost and the preparation of planting beds. Growers must also repackage catering-sized boxes into smaller consumer-sized packs. Additionally, producers struggle to obtain the right kind of compost due to the cancellation of events like auctions and horse races, which are sources of raw materials for compost companies.
In South Africa, the mushroom-growing process is highly mechanized and technologically advanced, requiring significant capital investment. The process demands tightly controlled air-conditioned and ventilated tunnels, growing rooms, and a continuous power supply. Load shedding has resulted in reduced yields, damaged equipment, and increased input costs. Peat, diesel, packaging, electricity, wages, and load shedding costs have risen above the inflation rate, further pressuring mushroom farms.
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Farm closures
In 2023, South Africa faced a mushroom shortage due to farm closures. Two private mushroom farms closed down, one in Gauteng and the other in the Western Cape. In addition, a fire destroyed the operations of Denny Mushrooms, a major producer, in Durban the previous year. The loss of these farms resulted in a 20% reduction in the mushroom supply, or 75 tonnes less being supplied to the market weekly. The South African Mushroom Farmers' Association (SAMFA) attributed the shortage to the sophisticated and vulnerable nature of the mushroom-growing process, which requires air-conditioned and ventilated tunnels, growing rooms, and an uninterrupted power supply. Load shedding and generator failures have contributed to the shortage and impacted the quality of the mushrooms.
In 2024, Monterey Mushrooms, a large mushroom farm in California, announced the closure of its Royal Oaks site in Prunedale, Monterey County, resulting in the elimination of several hundred jobs. The company cited California's challenging business climate, high labour and raw material costs, adverse weather, and regulatory burdens as reasons for the closure. The farm's aging infrastructure and complex operating model were also mentioned as factors that influenced the decision.
Other instances of farm closures include the Colorado Mushroom Farm, which displaced its primarily Guatemalan workforce, and the closure of farms owned by Monterey Mushrooms in Princeton, Illinois, and Orlando, Florida, resulting in over 500 layoffs.
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Load shedding and electricity issues
There is a mushroom shortage in South Africa, largely due to load shedding and electricity issues. Load shedding has created production challenges and increased input costs for mushroom farmers. The managing executive at Denny Mushrooms, Gerbrandt Rust, commented on the situation:
> Load shedding creates a production challenge, as well as increased input costs. Mushroom farms require lots of electricity, therefore, load shedding and generator failures contribute to the shortage and impact quality.
Denny Mushrooms, along with two other major producers, has experienced the negative consequences of load shedding. The company announced that unprecedented levels of load shedding added R39 million in operating costs, with 70% of this relating to three divisions, including Denny Mushrooms.
The South African mushroom industry is relatively small, with only about 18 mushroom farms in the country. Load shedding has impacted the volume of mushrooms produced, with one retailer noting intermittent shortages, particularly in the brown mushroom ranges. The industry body, SAMFA, predicts that mushroom supply will remain unstable until load shedding ends and that prices will continue to rise until stability returns to production.
In addition to the challenges posed by load shedding, mushroom farmers in South Africa have faced unusually high increases in input costs for items such as peat, diesel, packaging, electricity, and wages. These costs have risen between 3% and 15% above the inflation rate, further contributing to the production challenges and supply shortages.
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High costs of production
Mushroom production is a sophisticated and costly process. Commercial mushroom production is highly mechanised and requires extensive capital investment. The process is complicated and demands tightly controlled air-conditioned and ventilated tunnels and growing rooms, with an uninterrupted power supply.
In South Africa, the high costs of mushroom production have been exacerbated by load shedding, which has resulted in increased input costs. Load shedding directly impacts mushroom farms as they require a lot of electricity. The frequent power cuts and spikes have damaged the sensitive equipment used in mushroom production.
Input costs for items such as peat, diesel, packaging, electricity, and wages have increased between 3% and 15% above the inflation rate, placing significant financial pressure on mushroom farms. The managing executive at Denny Mushrooms, Gerbrandt Rust, stated that load shedding has resulted in "increased input costs" and created a "production challenge".
The high costs of production, combined with the impact of load shedding, have contributed to a significant mushroom shortage in South Africa. The shortage has forced restaurants and consumers to find alternative ingredients, such as canned mushrooms, tofu, or eggplant.
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Frequently asked questions
Yes, South Africa is currently facing a mushroom shortage.
The shortage is mainly due to load shedding, which creates a production challenge as mushroom farms require a lot of electricity. In addition, the closure of private mushroom farms and the destruction of Denny's operations in Durban by a fire in September 2022 have also contributed to the shortage.
The shortage has left chefs, food enthusiasts, and restaurants scrambling to find alternatives to this popular ingredient. Some have substituted mushrooms with ingredients like tofu or eggplant, while others have opted for canned mushrooms.
Yes, growers and supply chains have struggled to keep up with the increasing demand for mushrooms. Mushrooms take about 6 to 12 weeks to grow, and growers face challenges in obtaining the right kind of compost and repackaging catering-sized boxes into smaller packs.
