Ireland’s €120m mushroom industry in the dark as Brexit looms

Puns aside, the mushroom industry in Ireland really is in the dark as to what will happen after Brexit.

While the all-island argi-food sector is the one most obviously exposed to the problems that will arise from regulatory divergence and a hard border, the mushroom part of it could be an early casualty. Mushrooms are grown quickly, harvested immediately and, if they are to be sold fresh, must be packaged and transported to market without delay.

The "best before" date is about five-seven days after harvesting, the Irish Farmers' Association mushroom chairman Gerry Reilly told TDs in September 2016.

In recent decades, the Irish mushroom industry – whether in Northern Ireland or the Republic – has rooted itself close to either side of the Border but for producers, suppliers, processors and marketers, the Border simply does not exist.

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Growers work together on a cross-border basis, buying supplies anywhere within the European Union, which generally means either from the UK or the Republic, and then transporting, packaging and selling their produce on the same, invisible-border basis.

The new composting facility is vast – seven acres of concrete buildings on aeroplane hangar scale

In the Republic, Monaghan Mushrooms has grown since its foundation some 30 years ago to be one of the largest mushroom companies in the world. Based in Tyholland, Co Monaghan, it employs about 3,500 people and has operations in the UK, the Netherlands, Germany and Canada.

Irish growers produce 70,000 tonnes of mushrooms a year, 80 per cent of which is sold in the UK, mainly through the big supermarket chains. The business is worth about €120 million a year and equates to 7 per cent of the total EU mushroom harvest.

Near Cabragh in Co Tyrone, about 16km north of the Border, a £25 million investment is nearing completion. It is a huge mushroom composting facility owned by Northway Mushrooms, Northern Ireland's largest grower company which is run along co-operative lines.

"Our aim is to grow mushrooms as efficiently as possible," says Northway's operations manager, Elaine Shaw, as she shows off the emerging facility.

Northway began in 2000 with about 65 growers between the North and the South. At the time, it had a turnover of £10 million. Today, the number of growers has shrunk to 20 but output has shot up and turnover is now around £55 million.

The transformation is down to technology, specifically the introduction of Dutch shelving inside growing tunnels. This is layers of stacked shelving that allows the tunnels to massively increase their output.

Northway has 11 growers in Northern Ireland and nine in the Republic, the southern growers producing about 75 per cent of Northway’s output. The 20 growers together employ about 1,000 people (picking is by hand so the sector is labour intensive). They produce 32,500 tonnes of mushrooms a year or 625 tonnes a week.

Composting facility

The new composting facility is vast – seven acres of concrete buildings on aeroplane hangar scale, and is sufficient in size to produce about half of Northway’s grower’s requirements. Several thousand large bales of straw are stacked alongside the site, the essential raw material for creating mushroom compost.

Eighteen people will be employed here full-time when the facility goes live at the end of next month.

It is one of the ironies of Brexit that part of the cost of building the plant is coming from the EU’s Common Agriculture Policy (Cap), of which Northway is a beneficiary to the tune of over £2 million a year.

Seventy-five per cent of the construction cost is being met by a bank loan, which has to be repaid in 11 years. The rest will come from the Cap money and a levy on growers, who will be supplied compost at production cost.

The compost has a lifespan of about six weeks after which it is recycled as farm or garden compost.

If the plant is successful Northway’s growers will have a guaranteed supply of compost – the essential component for growing mushrooms – and be well placed to weather some of the unknowns that Brexit will present, even though some of them will be outside the EU.

The £2 million a year Northway growers get from the Cap has been guaranteed by the UK government until 2022, according to Shaw.

In preparation for Brexit, Northway is to set up a southern production organisation as a hedge against the unknown and, because that arm of the business will be based in the EU after the UK leaves, will be able to access EU funding through that route.

Brexit is also likely to curtail severely access to labour. Monaghan Mushrooms employ people from 41 different countries

Right now, most of what Northway’s growers produce is sold to Hughes Mushrooms in Northern Ireland and Monaghan Mushrooms in the South. To the extent that selling is done cross-border, it is simply unknown if that will be possible in the event of a no deal Brexit – but it would seem legally doubtful.

“The general consensus is that free movement around the Border will continue but the change will be . . . Well, will it be electronic surveillance or done through paperwork? We just don’t know,” says Shaw.

“The big worry is transport. If there are any delays, will there be enough capacity in the system to cope? That is, [will there be enough] drivers available and trucks to carry on while other drivers and trucks are being checked and processed?”

Trade deal

In recent years, Polish mushroom growers have made inroads to the UK market. If they are ultimately prevented from selling in the UK, because of the absence of a trade deal and the tariffs that will therefore be levied under World Trade Organisation rules (strictures that would apply also to Republic of Ireland producers and marketers such as Monaghan Mushrooms), there is an opportunity for Northway to increase output to meet demand within the rest of the UK.

Having a guaranteed source of compost from the new plant will be critical to that. And if southern producers are shut out of the UK market because WTO rules destroy the viability of their business (the sector margins are 4-6 per cent and the fall in sterling has already inflicted huge damage), Northway’s growers have a great opportunity to expand.

"The opportunity is there if it is more difficult for Polish producers to come into England, they will go elsewhere and that will allow us to expand," says Shaw.

But Brexit is also likely to curtail severely access to labour. Monaghan Mushrooms employ people from 41 different countries, a profile typical of labour intensive, minimum wage agri-businesses.

“It is very important that we continue to have access to labour,” says Shaw.

She cites the Republic's "rest of the world permit scheme" which she says allowed non-EU nationals to obtain work visas in specific sectors. But because the Democratic Unionist Party and Sinn Féin cannot agree to restore the Executive, industry lobbyists are left floundering.

“We [in Northern Ireland] have a migration advisory committee that consults and advises government which makes policy decisions. We have asked for such a scheme for Northern Ireland.”

But with Stormont mothballed, problems in search of practical solutions remain unsolved. As to what happens on March 30th and thereafter, the mushroom sector remains, like its product, somewhat in the dark.