Shiitake mushrooms growing at Phillips Mushroom Farms. ( Amy Sowder )

The bankruptcy of a Pennsylvania mushroom grower signals how devastating Chinese shiitake log imports have been to U.S. growers over the past two years.

After growing and packing specialty mushrooms since 1985, Oakshire Mushroom Farm LLC, Kennett Square, Pa., is starting 2019 with a chapter 11 bankruptcy.

In 2017, the growing, shipping and wholesale business had annual sales of $37 million and 65 employees, CEO Gary Schroeder said. But early this year, the business filed for bankruptcy and 49 people lost their jobs.

In 2018, many Oakshire customers — retailers and other U.S. mushroom growers who didn’t grow shiitake themselves — stopped buying from him because the influx of much cheaper Chinese shiitake substrate logs meant they could save money by harvesting those shiitakes themselves, he said. 

“There are so many layers of this that are just wrong, it’s astonishing,” Schroeder said. “Here we have a product made in China, inoculated in China, predominately grown in China and mislabeled.
“And everybody is happily buying it because of the reduced cost and it’s legal, and I think that’s a problem in our industry,” he said. 

“It’s all about price. That’s our world.”

Oakshire packs oak sawdust and other ingredients into a polypropylene bag, sterilizes it and inoculates it with spawn, placing it into an environmentally controlled room. They produce shiitakes in seven weeks. The total process, from spawning to harvesting, takes about four months.

Frozen Chinese logs arriving U.S. need only eight to 10 days before mushrooms can be harvested, Shroeder said.

Import questions

The issue isn’t about really about Chinese competition, it’s the “Product of the USA” labels that mislead consumers, said Robin Gillette, president and owner of Top Hat Mushrooms Inc., Stayton, Ore., a third-generation company that grows only organic shiitakes. 

Top Hat was selling 20,000 to 22,000 pounds of shiitakes a week, but that dropped in half when customers switched to Chinese log imports, Gillette said.

In July, Top Hat partnered with Oakshire and two other growers that the Gillettes did not name to seek ways to address the issue.

“It’s a unique industry and growing process that’s not understood by the right government officials,” Gillette said. 

“They believe the product is spawn. And we are trying to tell them it’s not spawn, and so it needs more health inspection certificates.”

Spawn is like the mushroom equivalent of a seed, and seeds can be imported and the resulting plant is a U.S. product. 

But Gillette, Schroeder, and others say with shiitake, the spawn has spread mycelium throughout the living, moist substrate log in a growing process that’s almost complete by the time it arrives in the U.S. 
Also, there are different sanitation certificates required for soil, wood, spawn and plants, and by labeling it spawn, the log doesn’t need a separate certification.

Two years ago, Phillips Mushroom Farms, Kennett Square, Pa., produced 50,000 shiitake logs a week, but sales dropped steadily, cutting those numbers in half until December 2017, when the company shut down that part of the business, said Peter Gray, Phillips’ exotics grower.

Chinese logs sell for $1.50, which is several dollars cheaper than domestic logs, Gray said. 

Shiitake had comprised about 5% of the 8-10% organic sales at Phillips, Gray said. 

“We did try to fight this when it first happened, but really there is nothing we can do,” Gray said.

The company still produces shiitake mushrooms but now uses Chinese logs.

Elizabeth Gillette, Top Hat’s marketing manager, said the company spoke with the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service about importing plants and wood, and the Oregon and national offices of the USDA, and the North American Plant Protection Organization. 

Gillette said she has researched Chinese log growing processes and questions sanitary practices.

“But we’re still trying to get this in front of the right person,” Elizabeth Gillette said.

Laura Phelps, former American Mushroom Institute president, wrote about Chinese imports in the August 2018 issue of the institute’s Mushroom News. 

COOL regulations allow shiitakes harvested from the imported logs to be marketed as from the U.S. because they are harvested in the U.S. Phelps now specializes in farm program policies and agricultural issues at Watkinson Miller in Washington, D.C., a law firm providing legal and government relations services.
 
Domestic shiitake growers say they will keep fighting the classification.
 
Despite the bankruptcy, Oakshire plans to continue making spawn products for oyster, maitake and white mushrooms, and just a bit of shiitake, Schroeder said. He also wants to press politicians to include the Chinese logs in the retaliatory tariffs on Chinese fresh mushroom imports.

Robin Gillette wants more retail buyers to ask the question: Did these shiitake mushrooms come off Chinese logs or logs from the U.S.? 

“I just look at it as a problem of transparency. If the consumer wants to buy the product and knows it’s from China, then that’s fine,” she said. 

“But they don’t, and the U.S. government is allowing it, and you have your domestic growers going broke and not because they’ve done something wrong.” 

 

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Comments
Submitted by mushroom guy on Wed, 02/20/2019 - 14:46

If Customers or consumers switching from one product to the other, there are two reasons behind this, price and quality. Many companies involved with this kind of competition they tend to blame pricing first, but do they ever look at their own product(s) quality and try to compare with their competitor(s). Rather than spending too much time on finding ways to stop your competitors, you should find ways to compete against them. The winner always learns from other people's mistake. The loser always tries to blame others.

Submitted by Shiitake grower from avondale on Thu, 04/11/2019 - 17:12

Hey i would like to add how the ceo of oakshire was never present the logs werent consistent and some times picked good sometimes did not pick as well they cost 4.25 a log were suppose to pick 2.5 lbs in 3 harvest but had to soak the logs each time before picking required more man power and more space equals more money.. chinese logs buy they come in boxes 12 per box put on beds and water daily for mushrooms to grow cost 1.50 picks 1 lbs per log and from start to finish about 12 to 13 days so less man power and less space required And more consistent. That should be embarrassing for a product that is made half way around the globe to be better quality then my local shiitake makers that are just 20 min drive from my mushroom houses

In reply to by mushroom guy (not verified)

Submitted by Lou Hsu on Sun, 07/07/2019 - 16:26

If you research the time question, those Chinese logs have been incubated in China already for 60-70 days adding the time over the ocean, the logs have actually been incubated for over 90 days. It comes down to cost again, if the US east coast growers adopt the "brown inside the bag" growing method, the cost will be still higher. The "brown outside the bag" method requires soaking but fruits in shorter time, therefore a little cheaper to manage. The brown inside the bag method grows a mushroom similar or better than Chinese, but takes just as long namely about 90 days before fruiting cycle.

In reply to by mushroom guy (not verified)

Submitted by Delun Kang on Thu, 09/12/2019 - 00:27

There must be different ways to compete against them. Truly, there are two purposes for switching from one product to another for the buyers, which is price and quality. Numerous organizations engaged with this sort of rivalry they will, in general, accuse evaluating first, however do they ever take a gander at their very own product’s quality and attempt to contrast and their competitor’s. Instead of investing a lot of energy in discovering approaches to stop your rivals. I run my business while buying logs from Agrinoon(Fujian) and my main focus is to improve my product’s quality, packaging and then marketing.

Submitted by Jeannette on Sat, 10/26/2019 - 07:37

My only concern is are they checking the logs ( from China) for any potentially damaging side effects to our environment? Once spent these logs get tossed could they cause issues 🤷‍♀️