AN ECONOMIC ASSESSMENT OF MUSHROOMS Executive Summary The white button mushroom (agaricus bisporus) accounts for 99 percent of all the mushrooms grown in the U.S. Specialty varieties, such as the shiitake and the oyster mushroom, make up the remainder. Production of specialty mushrooms, however, has been increasing. Their sales almost doubled between 1991/92 and 1993/94. Pennsylvania and California dominate U.S. mushroom production. Pennsylvania's production accounted for 47 percent of U.S. output in 1993/94, and California accounted for 17 percent. Mushrooms are produced indoors on stationary beds and in portable trays. With the tray system, mushrooms are moved from room to room with each succeeding stage of production. There were 355 mushroom growers in the United States in 1993/94, down from 468 in 1986/87. The decline in the number of growers is largely attributable to farm consolidation during the late 1980's. During this time, a number of farms expanded to gain greater production efficiency, while some operations, particularly the smaller ones, quit producing mushrooms. The majority of mushroom farms are family operations. Many of Pennsylvania's farms have been in business three to four generations, with second-generation farms considered new operations. Mushroom production, however, is dominated by several large firms, including Campbell's Soup Company, which owns eight mushroom farms throughout the U.S., and Monterey Farms, which owns five farms in California, Texas, and Tennessee. There are 5 or 6 mid-sized farms producing 5 million to 20 million pounds annually, and about 100 farms each producing 1 million to 5 million pounds annually. U.S. specialty mushroom production is dominated by six farms. Mushroom production involves an integrated series of operations, and is dependent on controlled environments. The unsuccessful completion of any one phase can lead to yield losses or crop failure. Traditionally, mushrooms were grown on beds in mushroom houses. The houses are called "doubles" because they were built in pairs under one roof. Newer methods involve mushroom production in trays that can be moved from room to room for different phases of the production cycle. Mushroom houses are well-insulated, vapor-proof buildings with temperature, humidity, and air exchange controls. Houses for agaricus mushrooms use minimal light, since this variety does not need light to fruit. Shiitake and oyster mushrooms, however, are grown in lighted houses, since light is necessary for their production. Mushroom production is nearly independent of outside weather, since modern houses and equipment provide favorable conditions for all phases of the growing cycle. Mushroom production consists of six principal steps: composting- -Phase I, and composting--Phase II, spawning, casing, pinning, and cropping. Although shiitake and oyster mushrooms follow a similar production cycle to the button variety, shiitakes and oysters require different growing mediums (substrates), are irrigated differently, have different production cycle lengths, and different numbers of croppings (harvestings). About 30 percent of the U.S. mushroom sales volume is sold for processing. Most processed mushrooms are canned in tins or glass jars. There are about a dozen processing plants that can mushrooms. Usually, these processors also can other vegetables as well. Very little mushroom drying is done in the United States. Specialty mushrooms are sold only to the fresh market. Natural perils that can affect mushroom yields are excessive rain, excessive heat and humidity, excessive cold, high winds, and other seasonal factors. Mushroom production occurs indoors and is largely insulated from outside weather conditions. On occasion, however, outside weather makes controlling the inside climate difficult. Autumn is an especially difficult season for mushroom growers. Because the weather is more predictable during the winter and summer, it is easier for growers to control heating, cooling, and moisture levels than during autumn. In autumn, sudden temperature changes increase the difficulty of controlling conditions inside the mushroom house. Inaccurate temperature and humidity controls can cause discolored or blotched mushrooms, which would be unmarketable in the fresh market. Weather conditions can also interfere with compost production, particularly phase 1 composting, delaying the processing or resulting in inferior compost. Brown outs, total power outages, or equipment breakage can interfere with controlling the mushroom house climate. Even though natural perils may cause losses, it is questionable, for several reasons, whether or not mushroom growers would participate in a multi-peril crop insurance policy. First, growers tend to be wary of Government programs because many believe they are already regulated too much. Second, growers currently can obtain insurance against fires or other disasters, such as equipment failure. Third, virtually all commercial mushroom production occurs indoors, where it is largely isolated from naturally-occurring perils, such as unseasonable cold, moisture extremes, wind storms, and hail, which cause most yield losses among outdoor crops. Finally, few producers participated in ad hoc disaster assistance. Disaster payments to mushroom growers totalled only $3,397 since 1988. Most of this money went to shiitake producers with outdoor operations. Shiitake growers account for only a small fraction of the mushroom industry. Despite these factors, some growers may participate in crop insurance. Participation, however, may be limited to the minimum catastrophic level of coverage.