The impact of inflation on mushroom growers

The impact of inflation on mushroom growers

Across the world, inflation is rising and consumers are making changes to how they shop in order to accommodate rising costs. While inflation varies across different sectors, food is one area where it is being experienced at its most extreme. The impact that this is having on the agri-food sector, including mushroom growers, is significant. The cycle of rising costs and reduced customer spending is creating an environment where things are becoming difficult for the sector to keep going.

  • How can mushroom growers deal with this pressure?
  • What are the potential solutions?
  • And how long is this going to last?

In this article, we’ll do our best to try to make sense of the impact of inflation on the industry and consumers.

Impact on mushroom growers

A new report from Promar International commissioned by the NFU has shown that fruit and vegetable growers are facing inflation rates of up to 24%, and for mushrooms, the figure is 19%.[1] This equates to an increase of 13p per pack.

The report states that ‘…without an increase in prices returned to the farm gate, this will eventually, in a worst-case scenario, see producers unable or unwilling to carry on growing’.

To get a more detailed look at the stresses facing the sector, CAFRE Mushroom Benchmarking compiled the largest database of physical and financial information on mushroom farms in Northern Ireland. Information was gathered in May 2022, from seven growers (54% of total NI mushroom growers) filling 59% of the total compost used in NI to benchmark their business.

The data is outlined in the table below and shows the impact of variable costs, labour, fuel and energy on the cost of production/kg mushroom highlighting that mushroom growers are facing input price inflation rates of 16.4% since January 2021. The benchmarking data does not include any interest repayments or depreciation.

As the table shows, packaging, labour and energy are the key drivers of inflation in the mushroom industry[2] .

Northern Ireland Mushroom Growers Input Cost Inflation

 
  % of total input cost Jan-21 % of total input cost May-22 Jan-21 May-22 % increase Jan 2021 vs May 2022
Labour (£/kg) 39.1% 37.7%  £                0.520  £                     0.583 12.1%
Compost (£/kg) 37.3% 33.9%  £                0.496  £                     0.525 5.9%
Casing (£/kg) 3.5% 4.0%  £                0.046  £                     0.062 34.6%
Packaging (£/kg) 5.8% 8.1%  £                0.078  £                     0.125 61.1%
Fuel – Oil+biomass (£/kg) 2.4% 3.4%  £                0.031  £                     0.052 65.9%
Electricity (£/kg) 4.2% 5.8%  £                0.056  £                     0.090 60.5%
Other – Maintenance, Chemicals, Supplies, Overheads, Owner salary, Compost Emptying 7.8% 7.2%  £                0.103  £                     0.112 8.0%
       £                1.330  £                     1.549 16.4%
        YTD Weighted % increase Jan 2021 vs May 2022 16.4%

Impact on consumers

People are experiencing ‘shelf shock’ as they do their regular grocery shopping, with prices up by around 20% overall. As a result, people are rightly being conservative with their spending and reprioritise their family budget.

The latest IGD figures predict that the average family of 4 will spend £439 on groceries per month by January 2023 – a significant increase from £396 in January 2022[2]. This leads to concerns about food poverty, and there have already been reports of families skipping meals.

Potential solutions

Mushroom farms are working hard to keep supplying mushrooms to consumers, but the pressure for many is unsustainable. But the popularity of mushrooms hasn’t waned, and due to years of marketing, people have more knowledge about how good they are for our health.

Without help and support for growers from the government, or measure to curb energy prices, the situation doesn’t look set to improve any time soon. The longer the conflict in Ukraine goes on, the worse the impact will be.

It’s thought that prices will continue to rise through the summer[3]. This is a worrying time for everyone; consumers and growers who are trying to make a business work against tough odds.

For more information about the benefits of mushrooms check out Made With Mushrooms. 

[1] https://farming.co.uk/news/fruit-and-vegetable-growers-facing-inflation-rates-of-up-to-24

[2] https://www.igd.com/home/article-viewer/t/food-inflation-likely-to-reach-15-this-summer/i/29808

[3] https://www.foodmanufacture.co.uk/Article/2022/06/16/How-long-will-food-inflation-affect-the-UK