In September, several U.S. mushroom growers filed an antidumping and countervailing duty petition with the U.S. Department of Commerce and the U.S. International Trade Commission, alleging Canadian producers export mushrooms into the U.S. at prices below fair value.
Since then, the U.S. International Trade Commission has offered a preliminary determination of injury and the U.S. Department of Commerce initiated antidumping and countervailing duties.
A Procedural Step
A spokesperson for South Mill Champs, which is part of the respondents, says this outcome wasn’t entirely unexpected.
“The ITC preliminary ruling is a standard and very typical procedural step in a long process - over the past 15 years and hundreds of cases, there has only been one instance in which the ITC decided to terminate the case at this stage,” the spokesperson says.
The spokesperson added that South Mill Champs views the petition as lacking merit and an attempt by “certain market participants to use administrative measures to thwart healthy competition.”
“South Mill Champs’ success and increasing market share is the result of our investment in modern growing facilities that enable us to deliver the consistency and high quality that customers want,” the spokesperson says. “We are retaining and earning new customers even though our prices are not always the lowest, underscoring our position at the ITC that quality and service are principal drivers of purchasing decisions.”
The company states it remains delighted by customer support and will continue investing in facilities to meet demand.
Navigating the Levy Timeline
Ryan Koeslag, executive vice president of Mushrooms Canada, which represents Canadian growers in this case, says he expects preliminary levies to begin in May or June as the U.S. International Trade Commission and the Department of Commerce will issue preliminary determinations in February.
Koeslag says all levies collected during the investigation period will be held in a trust and returned to the Canadian growers if the Department of Commerce and ITC do not find validity to the antidumping claims.
“We’re waiting to hear,” he says. “I think they’ll use a lot of the preliminary data that’s been collected by the farms from Canada and the locations where they sold into the United States. I think that will kind of play into how they’ll calculate that. We’re hoping that it will be a number that will still allow us to do business into the United States. “
While the growers Mushrooms Canada represents are disappointed that the case moves forward, Koeslag says he feels the team representing the Canadian growers has put forth a strong case with pricing points that reinforced the message that Canadian mushrooms are priced fairly and reflect market realities.
He says, too, ITC’s preliminary findings also indicated further investigation into the difference of newer generation infrastructure of mushrooms, how phorid flies have also impacted production in Pennsylvania and the limited reach for U.S. producers in the West Coast.
Koeslag says Mushrooms Canada argued phorid flies have impacted production in Pennsylvania and end producers sought Canadian imports to offset the reduced production in the U.S., not Canadian producers displacing U.S. growers.
“Part of the argument that our economists identified was that if production had remained consistent with the previous years, there could be an argument there that the Canadian exports to the United States could have either stagnated or declined,” he says. “But because there was a very visible reduction in production during that period of time, as we see as a result of that fly infestation, that impacted some of the purchasing habits and some of the outcome of the last little while too.”
Investing in Shelf Life
Koeslag says Mushrooms Canada and the growers his team represents feel as though the ITC heard the points brought forward during the initial parts of the case.
“It seems as though they heard our message,” he says. “Knowing that the threshold for them to move forward with wanting to have this investigation being very low, we realized that that was going to happen, and so they had enough for that to proceed, but they’ve identified already that there’s some things that they want to investigate with the full-fledged study over the next year, and it is including what we brought forward during our hearing.”
And he says this case is not about how Canadian mushrooms are of a superior quality than U.S.-grown mushrooms, but that the infrastructure of Canadian growers is modern and has allowed for a higher-quality mushroom with better shelf life.
“If you have a higher infrastructure farm in the United States, you would also find those same benefits,” he says. “In Canada, however, we’re looking at nearly 90%, if not higher, of the operations being of new infrastructure. They’ve made those investments, and they have the technology from Holland. That’s been a result of also in having reduced fly infestations.”
Koeslag says these modern growing operations have rooms with proper sealing, use aluminum trays and plastic and modern sanitation techniques. He says older growing systems that use wood have conditions that favor the reproduction of the phorid flies.
“The new infrastructure is reducing the possibility of those flies to reproduce and become a problem,” he says.
Koeslag says it’s been an unusual case as the filing happened before a government shutdown. He says his team used that time to pull together a positive and well-positioned case using data. As for now, he says growers await the initial tariff percentage to come out.
“We’re nervous to see how that comes through,” Koeslag says. “I think we’ve done as much as we possibly could, considering we’ve had some additional time to do this.”
