On July 14, the U.S. Department of Commerce announced its preliminary affirmative determination in the antidumping duty investigation of fresh mushrooms from Canada. This follows a May 13 affirmative decision by the Commerce Department in a countervailing duty investigation. With both decisions, imported mushrooms from Canada will be subject to subsidy rates and antidumping margins.
A Breakdown of the New Canadian Mushroom Duties
The preliminary subsidy rates announced on May 13 include:
- Champ’s Fresh Farms Inc., 1.62%
- Farmers’ Fresh Mushrooms Inc., 4.97%
- All other exporters and producers, 2.84%
With the July 14 announcement, the Department of Commerce’s estimated dumping margins placed against mushrooms from Canada are:
- Champ’s Fresh Farms Inc./Loveday Mushroom Farms Ltd., 8.71%
- Farmers’ Fresh Mushrooms Inc., 2%
- Highline Produce Ltd./Highline Mushrooms West Ltd., 11.8%
- All other exporters and producers, 8.26%
In a news release, The Giorgi Cos. says: “Together, the dumping and subsidy determinations reinforce the importance of ensuring mushroom producers compete based on quality, service, efficiency and innovation within a fair marketplace.”
Lewis Macleod, CEO of South Mill Champs, says while he disagrees with the duties, “at least the industry knows with some certainty what the numbers are.” He also says these countervailing duties and dumping margins are “not going to fundamentally change the supply dynamics in North America.”
Macleod says he sees the importance of an antidumping legal framework, and it has a place within international trade, noting “dumping of other products does happen from certain countries into the U.S., and having the legal framework to tackle that is right.”
Clash Over Real-World Pricing and Legal Math
Macleod disagrees with how asymmetric comparisons have been built into the law. He says South Mill Champs charges more for mushrooms shipped from Canada to the U.S. than it charges for the same products in Canada.
He also points out that what South Mill Champs charges for imports into the U.S. is higher than its prevailing domestic price for U.S.-grown mushrooms. Charging higher prices for imports than domestic products is the opposite of dumping.
Ryan Koeslag, executive vice-president and CEO of Mushrooms Canada, says in a news release that the preliminary antidumping findings reflect the idiosyncrasies of U.S. antidumping law, rather than the commercial reality of the North American mushroom market.
“U.S. antidumping law contains technical calculation rules that can produce a finding of ‘dumping’ even when business sense and market realities tell a different story,” Koeslag says. “A straightforward comparison of true average U.S. prices to true average Canadian prices would show no dumping at all. The preliminary rate announced today is the product of legal methodology — not proof that Canadian growers are selling unfairly.”
Mark Currie, CEO of the food division of The Giorgi Cos., disputes this: “The Department of Commerce’s preliminary findings do not support this claim and instead demonstrate the merit of the petition.
“The facts in this case are supported by the Department of Commerce’s preliminary findings,” Currie adds. “Canadian growers have unfairly manipulated the U.S. mushroom market, and now they are attempting to obfuscate and manipulate the findings to distract from the truth that they dumped mushrooms below fair market value at the detriment of American farms.”
Macleod says the Commerce Department’s antidumping methodology compares “individual U.S. prices against an average Canadian price that’s determined after everything below cost has been taken out.”
He also notes the Department of Commerce methodology compares Grade 2 products to Grade 1 products, which he says “is just not like for like.”
“Real-world pricing tells the real story: Using their same formulas, had the department simply compared South Mill Champ’s average U.S. prices to its average Canadian prices, the calculated AD [antidumping duty] rate would be zero,” he says.
Currie points to the investigation by the Department of Commerce using the methodology required under U.S. trade law.
“These are not conclusions reached by a single company,” he says. “They are factual findings by the federal agency charged with administering U.S. trade law.”
How Trade Penalties Will Impact Grocery Bills and Farms
Currie says leading retailers choose American-grown mushrooms for consistent quality, reliability and service, adding, “we welcome competition based on quality, service and innovation.”
While the Canadian industry has accused U.S. growers of choosing litigation over actual business investment, Currie says “fair market conditions are what allow businesses to confidently make additional long-term investments.
“American mushroom growers have continued investing in our operations while also exercising our right to seek enforcement of U.S. trade laws,” he adds. “We have invested for generations in growing capacity, packing technology, food safety, environmental controls, workforce development and the systems required to supply customers reliably.”
Macleod says an unfortunate consequence of this case is that these duties will lead to higher mushroom prices, calling it “demand destroying.” He says it’s also likely this will delay the modernization of facilities in the U.S. to more quality and consistent production.
“Prices to consumers will go up,” he says. “It will slow down the transformational shift that needs to happen in the U.S. from old to new infrastructure, and it will slow down demand creation of mushrooms. Everybody loses.”
Currie says though reports suggest consumers are buying fewer mushrooms due to inflation and rising grocery prices, these duties restore fair competition.
“Duties are not an arbitrary surcharge intended to raise prices,” he says. “They are a remedy calculated by [the Department of] Commerce to address unfair pricing and subsidies.”
He says the “greater long-term risk is allowing more American farms to close and making the U.S. market increasingly dependent on imported supply.”
Currie notes a healthy domestic industry, and one protected against long-term food inflation, is one where consumers have more supply options, greater resilience and continued competition.
“Losing American farms and becoming increasingly dependent on one source of imported supply creates its own serious pricing and availability risks,” he says.
And Currie notes that there’s an important focus the mushroom industry needs to take toward building category demand.
“Our industry still has an important job to do in building consumer demand,” he says. “Trade enforcement does not replace marketing, innovation or operational improvement. It simply gives American growers a fair opportunity to make those investments.”
What Comes Next for the Cross-Border Mushroom Market
Koeslag says the next steps in the case include the Department of Commerce issuing final antidumping and countervailing duty determinations and the U.S. International Trade Commission also issuing a final injury determination on whether imports of fresh mushrooms from Canada cause material injury or the threat of material injury to the U.S. mushroom industry and whether the antidumping and countervailing duties will be terminated or remain in place.
“Canadian growers provide high-quality, responsibly produced mushrooms that support consumers, retailers, foodservice operators, and the broader North American market,” Koeslag says in the news release.
Looking ahead, Macleod says he sees the Canadian mushroom industry having a strong argument against the antidumping claims leading into the International Trade Commission ruling in the winter.
“That’s where we feel there is a strong argument that there has been no harm to industry, which should contribute to a positive ITC ruling in the winter,” Macleod says. “This is not about Canada versus U.S.; this is about old infrastructure versus new infrastructure. That is where we feel are the argument is very strong, and we’re working very hard to make sure that the ITC makes the right decision there.”
Koeslag also points to the strong integration of the U.S. and Canadian mushroom industries.
“The mushroom sector in North America has grown through collaboration, cross-border supply relationships and shared commitment to quality and food security,” he says. “This case should not obscure the fact that Canadian and U.S. producers, workers, customers and consumers all benefit when our markets remain connected and reliable.”
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