Project Report 1: The Dutch Mushroom Sector Small Mushrooms, Big Business

Michiel A. van Galen Jeroen J.C.M. Hammerstein Marcel P.K. Stallen Ben M. Kamphuis

IAE

Contents
Page Introduction....................................................................................................................... 5 1.1 Aim of the project.................................................................................................... 5 1.2 Scope and structure of this report............................................................................ 5 2. Dutch mushroom sector overview .................................................................................... 7 Part One.................................................................................................................................... 10 International Trade, Quality Control Systems.......................................................................... 10 3. International Trade.......................................................................................................... 11 3.1 Introduction ........................................................................................................... 11 3.2 Imports................................................................................................................... 11 3.3 Exports................................................................................................................... 13 3.4 Trade norm for fresh produce................................................................................ 14 3.5 Trade restrictions................................................................................................... 16 4. Other European markets and competitors....................................................................... 19 4.1 Introduction ........................................................................................................... 19 4.2 European markets .................................................................................................. 19 4.3 Competition from European growers .................................................................... 22 5. Quality and food safety control systems......................................................................... 26 5.1 Introduction ........................................................................................................... 26 5.2 Legislative framework........................................................................................... 26 5.3 Quality control systems ......................................................................................... 27 5.4 Food safety control systems .................................................................................. 28 6. Mushroom varieties, breeding and spawn production. ................................................... 31 Part Two ................................................................................................................................... 32 Production, Distribution and Consumption.............................................................................. 32 7. Mushroom production..................................................................................................... 33 7.1 Introduction ........................................................................................................... 33 7.2 Mushroom growing history and technique............................................................ 33 7.3 Production costs .................................................................................................... 35 7.4 Output and employment ........................................................................................ 37 7.5 Investment ............................................................................................................. 39 7.6 Profitability and income ........................................................................................ 39 7.7 Energy and pesticides............................................................................................ 40 8. Distribution ..................................................................................................................... 42 8.1 Introduction ........................................................................................................... 42 8.2 Distribution channels............................................................................................. 42 8.3 Packaging and labelling......................................................................................... 45 8.4 Retail market structure .......................................................................................... 46 9. Consumption................................................................................................................... 48 9.1 Introduction ........................................................................................................... 48 9.2 Household consumption ........................................................................................ 48 1. 2

9.3 Trends in consumption .......................................................................................... 50 The Institutional Framework of Dutch Mushroom Sector.............................................. 52 10.1 General Introduction .................................................................................... 52 10.2 Farmers' co-operative enterprises ................................................................ 52 10.3 Farmers' associations ................................................................................... 55 10.4 The Agricultural Product Boards ................................................................. 61 10.5 The Agricultural Knowledge System........................................................... 63 11. SWOT Analysis .............................................................................................................. 68 11.1 Introduction.................................................................................................. 68 11.2 Strengths ...................................................................................................... 68 11.3 Weaknesses .................................................................................................. 69 11.4 Opportunities................................................................................................ 69 11.5 Threats.......................................................................................................... 70 References ................................................................................................................................ 71 Appendix 1 Marketing standards for cultivated mushrooms ................................................... 73 Appendix 2 CN Codes Eurostat trade data............................................................................... 79 Appendix 3 Table of abbreviations .......................................................................................... 80 10.

1. Introduction
1.1 Aim of the project

The overall aim of the Asia-Invest project 'Small Mushrooms Big Business' is to enhance cooperation in trade, production and processing, and information sharing between Dutch and Chinese counterparts. This will ultimately lead to improving production and management, new marketing opportunities and more efficiency in trade and industrial processing. The project aims to exchange knowledge on the mushroom sector in both countries in order to enhance trade and investment opportunities for both sides. The specific objectives of the project are (Inception Report, March 2004): To provide an in-depth overview of the Chinese and Dutch mushroom industries; To improve the management skills of the Chinese Fungi Association (CEFA); To transfer technological know-how in order to upgrade the Chinese mushroom production and post-harvest handling; To enhance trade and investment opportunities between the Chinese and the Dutch mushroom industries. The project is jointly undertaken by Dutch and Chinese agricultural economics research institutes (LEI and IAE, respectively). LEI is the project manager, whereas Dutch mushroom grower training centre Cpoint, and Dutch mushroom grower association (VPN) participate in the project by delivering information, expert knowledge and reviewing. From the Chinese side, the Chinese mushroom grower association (CEFA) participates. This report describes the Dutch mushroom sector, while the Chinese sector is described by IAE. 1.2 Scope and structure of this report

The Dutch mushrooms sector accounts for approximately 5 percent of total value added in Dutch horticulture, representing a production value of more than 300 million euro. About 90 percent of production is destined for export, fresh or processed, making the Netherlands the biggest exporter of mushrooms in Europe. Button mushrooms (genus agaricus) form the lion's share of Dutch production and trade. This report will therefore be focused on button mushrooms. However, where available we add information on other mushrooms as well. The sector has been increasingly vulnerable to international competition. With expanding international trade and increasing food safety and quality demands by distributors and consumers, the sector is changing. The report is divided into two parts. Chapter 2 first gives a short summarizing overview of the Dutch mushroom sector. In part one the following topics are addressed: (chap. 3) international trade in mushrooms from a Dutch perspective, (chap. 4) the main European markets for Dutch mushrooms and competitors countries, and (chap. 5) process quality and food safety control 5

systems and standards. Shortly we will also touch on (chap. 6) the issue of defining property rights of new mushroom varieties. Part two deals with (chap. 7) deals with the production side of the mushroom sector. Chapters 8 and 9 describe the distribution channels and consumption, respectively. Some sector organizations are described in chapter 10, and we conclude with a short SWOT analysis (chap. 11).

2. Dutch mushroom sector overview

In this chapter we will briefly discuss the main characteristics of and important developments in the Dutch mushroom producing sector. Whenever possible, a distinction is made between hand-picking farms that supply the fresh market and mechanized cutting farms that produce so-called industry mushrooms. Again, note that almost the entire Dutch production is made up of (white) button mushrooms. Figures on the production of other mushrooms are difficult to obtain. The description is therefore mostly limited to the growing of button mushrooms. In part two of this report a more in-depth description and analysis is provided. Increasing scale and concentration Since 1990 the average button mushroom farm has almost doubled in size, from 1,232 square metres to 2,255. At the same time the number of farms has decreased from 790 to 400. About 300 of these are specialized professional firms. The others produce mushrooms as side activity. The average size of mechanized cutting farms is much higher than of hand-picking farms. (See Table 2.1) The use of full-grown compost During the last decade the use of full-grown compost has increased from 27 to almost 100 percent (See Table 2.1). Full-grown or phase III compost is produced on an industrial basis.
1990 790 105 1,232 27 1995 670 109 1,547 75 2000 520 95 1,838 95 2003 400 90 2,255 98

Table 2.1 Market structure of button mushroom farms Number of mushroom farms Area under cultivation (ha) Average farm size (m2) Use of full-grown compost (%) Source: CBS Statline, LEI 2004

Output Total button mushrooms production was 263 thousand tonnes in 2003. About 60 percent of production is destined for the processing industry. Production has increased 80 percent since 1990. The value of production is estimated at 303 million euro in 2002. Prices have fallen in recent years due to overproduction and competition from abroad.
1990 147 93 54 180 1995 230 152 78 243 2000 265 160 105 319 2002 270 157 113 303 2003p 263

Table 2.2 Production volume and output value Button mushrooms production For industry For fresh market Production value mushrooms (mln. Euro) Source: CBS Statline. p preliminary

Production of other mushrooms is limited to about 20 farms, producing oyster, flat and shii-take mushrooms. Employment Regular employment has decreased from 5,210 persons in 1990 to little more than 4,300 people or 2,600 fte (full-time equivalent jobs) in 2002, plus an additional 500 fte in temporary employment. Only about 300 fte is employed on the mechanized farms. On the other hand, the use of full-grown compost has increased yields and therefore labour demand. Furthermore, increasing production scale has lead to an increasing number of employees per farm. Cost of production Table 2.3 gives an overview of production costs for two types of mushroom farms: handpicking and (mechanized) cutting farms.

Table 2.3 Average production costs, euro per 100 kilogram, 2002 Direct cost Labour cost Repayments Fixed cost Financing Private spending Critical revenue price Average price 2002 Result Source: Source: ABAB Accountants 2003 (Agriholland) Hand picking 60.70 41.23 5.61 10.16 2.34 8.89 128.93 134.54 5.61 Cutting farms 55.77 14.33 5.37 5.62 3.04 4.72 88.85 88.27 -0.58

Direct costs include inputs like compost, casing soil, water and energy. Fixed costs, on the other hand, are independent of production volumes. Repayments are average costs made by mushroom farms to repay mortgages on land and barn-housing. The critical revenue price is the amount per kilogram necessary to cover all expenditures. It therefore includes repayments instead of capital depreciation. Financing costs and necessary private spending differ between the two types mainly because they differ in size. Revenue prices have come under pressure, particularly after 2001. The cheaper produce from Central Europe and the economic situation contributed to a lowering of farmgate prices by more than 25 percent. Cost prices of compost, energy and labour have, on the other hand increased (Agriholland News, 2003). This has lead to a worsening situation, continuing into 2003 and 2004. Profitability and income The average production area per farm has increased (See Table 2.1). This has led to an increase in farm revenues. However, falling revenue prices and increasing costs of labour

and compost have deteriorated per farm results. The forecast for 2003 shows total costs exceeding total revenues by 67 thousand euro. Profitability has decreased to 89 percent.
Table 2.4 Average farm profitability and family income of Dutch button mushroom farms (1.000 euro) Total revenues Interest and depreciation Energy Labour Compost Other costs Total costs Net farm result Profitability Family income from business operations Extra benefits and costs Family income Family expenditures Family savings Source: LEI Business Information Network, May 2004. 2001 524 57 29 195 190 56 527 -1 100 84 -2 82 53 19 2002 2003 (f) 518 542 63 30 220 201 51 565 -47 92 33 0 33 47 -22 68 31 239 213 59 610 -67 89 22 0 22 49 -35

Part One International Trade, Quality Control Systems

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3. International Trade
3.1 Introduction

Imports and exports of mushrooms include several types of product. On the one hand there is fresh (or chilled) produce, which is meant mainly for fresh consumption via the retail channel. These mushrooms are almost always hand-picked quality. Within the EU fresh button mushrooms trade is subject to the EU marketing standards for fresh cultivated mushrooms (See paragraph 3.4). On the other hand there are industrially preserved or prepared mushrooms. The largest group of industrially processed mushrooms in import trade is mushrooms in cans, glass jars and buckets. The second group is the provisionally preserved mushrooms, mainly buttonhead. Provisionally preserved mushrooms are an input to the processing industry, and not suitable for immediate consumption. A third group of industrial mushrooms are frozen for wholesale and retail sale. A small part of trade consists of mushrooms preserved by vinegar or other acids, and dried mushrooms. The latter are generally much more expensive than the other products. Figure 3.1 depicts imports and exports of fresh mushrooms for Europe's biggest mushroom trading countries. The Netherlands is Europe's most important mushroom exporting nation. Ireland is the Netherlands' biggest competitor on the UK market, and Poland is it's biggest competitor on the German market. The United Kingdom and Germany constitute the biggest European import markets for fresh mushrooms.
Netherlands Ireland Poland France Germany United Kingdom 0 10000 20000 30000 40000 50000 60000 70000 80000 Mtonnes

Imports Export

Figure 3.1 International fresh mushroom trade in several European countries, 2002 (in tonnes). Source: Faostat

3.2

Imports

Table 3.1 gives an overview of the amount of imports into the Netherlands in metric tonnes.1 Although the Netherlands is a big net exporter of mushrooms, imports are growing. Espe-

The corresponding CN codes for each product group can be found in appendix 2.

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cially imports of fresh mushrooms are increasing, from around 12 thousand tonnes in the early nineties to almost 30 thousand tonnes in 2002 (See Table 3.1).
Table 3.1 Imports of mushrooms in the Netherlands (in tonnes) 1990 1995 Total 45,003 32,206 Fresh or chilled 12,542 11,936 Belgium and Luxembourg 5,968 11,123 Poland 4,262 166 Germany 1,032 419 China 0 2 France 1,226 152 Frozen 1,885 1,196 China 22 367 Germany 147 410 France 67 131 Belgium and Luxembourg 661 84 Provisionally preserved 24,341 10,154 Poland 20,162 8,297 China 739 664 Canned or prepared otherwise 5,950 8,632 Poland 113 1,671 Germany 1,610 430 China 250 5,149 Belgium and Luxembourg 488 349 France 599 58 Preserved by vinegar or other acid 54 55 Dried 231 233 Source: Eurostat 2000 52,842 18,857 10,835 530 5,239 45 199 4,196 2,831 1,117 111 47 11,785 6,044 4,887 17,188 3,256 3,192 9,043 224 994 383 433 2001 47,868 24,653 13,444 3,168 6,633 35 200 3,324 2,659 309 198 103 7,473 5,425 1,898 11,752 2,152 2,493 6,637 45 186 305 361 2002 46,913 29,144 16,297 5,631 6,342 60 92 3,037 2,054 622 112 116 6,827 3,642 1,700 7,613 1,087 1,868 3,999 102 143 92 200 2003 45,853 25,208 11,193 7,122 6,013 190 39 3,343 2,691 203 248 124 9,834 6,685 1,731 6,628 1,148 1,445 1,448 123 1 681 159

Since 2000, imports from Poland have increased considerably, to about 30 percent of total imports of fresh produce. Sector participants are pointing to even higher volumes and strong growth of imports of Polish fresh mushrooms, because part of the mushrooms for the Dutch market are not included in the statistics. The figures are somewhat misleading as much of Polish produce finds it's way to the Netherlands through Germany.1 Belgium is still the largest source of fresh and chilled mushrooms, while France is losing market share fast. Poland is the biggest supplier of provisionally preserved mushrooms. As such, these mushrooms are not suitable for direct consumption. They are used as an input to the processing industry. Until now only a small percentage of industry inputs comes from imports; 5-10 percent. Recent estimates from the sector are 10-15 thousand tonnes of imported mushrooms are processed. The amounts of Dutch produce have been sufficient until today. Furthermore, (i) close cooperation between producers and the two biggest processors in the Netherlands 'Lutce' (market share approximately 70 percent in the Netherlands) and 'Prochamps', and (ii) high supply reliability of the Dutch producers has effectively prevented the industry from switching to foreign produce altogether. However, demand for provisionally preserved mushrooms from Poland increased in 2003 to more than 6,500 tonnes. Contracts between Lutce
1

Eurostat trade data includes some re-export

12

and the farmers tend to become shorter and pressure is put on the producers to lower their selling prices.
30000 25000
Mtonnes

20000 15000 10000 5000 0

20 00 20 01 19 88 20 02 20 03 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99

Fresh

Frozen

Prov. Preserved

Processed

Total

Figure 3.2 Decomposition of Dutch mushroom imports from Poland. Source: Eurostat

Imports of canned and otherwise preserved mushrooms show a height in 2000, but decline sharply afterwards. Poland makes up for the decline by supplying more fresh mushrooms (See Figure 3.2). 3.3 Exports
2001 251,134 84,912 24,043 30,600 10,343 6,862 19,041 8,415 1,829 3,258 13,905 132,622 57,558 18,859 7,348 11,571 6,846 7,859 5,823 1,465 229 2002 259,206 89,091 29,887 23,533 13,529 7,481 34,345 14,904 5,908 4,240 22,775 112,871 35,825 21,941 4,833 14,266 5,155 6,321 4,984 1,476 5 2003 240,969 66,650 26,237 14,381 7,504 4,960 35,592 11,433 8,070 3,184 13,731 124,378 54,581 16,708 8,048 9,173 5,826 5,965 4,797 3,055 47

Table 3.2 Exports of mushrooms from the Netherlands (in tonnes) 1990 1995 2000 Total 184,082 240,619 219,605 Fresh or chilled 28,908 39,403 77,442 United Kingdom 4,579 6,240 19,091 Germany 15,126 19,423 28,417 France 1,234 3,948 12,088 Sweden 2,481 3,646 6,959 Frozen 4,057 9,598 20,895 Germany 1,424 4,955 9,404 Belgium and Luxembourg 258 703 2,041 United Kingdom 569 1,471 3,869 Provisionally preserved 7,352 27,326 8,564 Canned or prepared otherwise 143,365 162,889 112,368 Germany 95,068 103,440 44,225 France 15,168 18,055 9,673 United Kingdom 3,110 4,077 4,424 United States of America 2,192 1,758 17,657 Belgium and Luxembourg 8,796 9,380 6,664 Greece 2,066 4,494 6,636 Italy 1,815 5,487 7,412 Preserved in vinegar/other acid 225 1,161 2,328 Dried 175 242 127 Source: Eurostat

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The Dutch mushrooms sector produces roughly 14 times more than domestic consumption absorbs in the form of fresh, jarred or canned mushrooms. Production equals about 270 thousand tons, while domestic consumption sums up to only 19 thousand tons. Exports are therefore of extreme importance. Although competition from abroad is increasing, total exports from the Netherlands keep relatively stable around 250 thousand tonnes in the period 2000 to 2003, of which roughly 50 percent is processed mushrooms (canned or otherwise prepared) (See Table 3.2). While the export of fresh or chilled mushrooms more than doubled since 1990, the volume of canned mushrooms export decreased by approximately the same amount. This indicates a trend towards demand for fresh, instead of processed mushrooms. Cans, jars and other products of the mushroom processing industry accounted for more than 50 percent of total exports (in tonnes) in 2002. Exports of preserved mushrooms decline slightly since the height in the mid nineties, but are more or less stable since 2000. Exports of prepared mushrooms (agaricus) to the United States have declined considerably in 2003. The importance of other than button mushrooms (agaricus) is increasing to about 15 percent of total export volume. Still, 60 percent of Dutch production is destined for the processing industry, of which 95 percent is exported. (Groot et al., 2003) Until 2002 exports of fresh mushrooms were rising.1 Especially France and The United Kingdom have been growing markets. In Germany the Dutch mushrooms face strong competition from imports from Polish and other Central European countries. This has lead to a decline in exports in 2002 and 2003. Figures from KCB2 roughly indicate the same trend. This decline is partly offset by a rise in the exports of frozen mushrooms to Germany and the UK in 2003. Nevertheless, the competitive position of the Dutch sector seems to be eroding. The Netherlands used to be the quality supplier of Europe. Excellent infrastructure and quality more than compensated the higher prices. Nowadays Poland and also Hungary and Austria have improved their quality and infrastructure and logistics considerably, and above all these countries are willing to go the extra mile to meet customer demands. One example is the fact that the mushrooms are harvested slightly earlier, which make them firmer and ensures that the caps (buttons) are more closed. (Jacobs, KCB Website) 3.4 3.4.1 Trade norm for fresh produce EU Regulation 982/2002

Within the EU certain criteria have been installed for outer appearance, quality and packaging of fresh mushrooms of the sort agaricus. The purpose of these standards is on the one hand to protect EU consumers and ensure fresh and safe products, and on the other hand to protect EU producers by imposing the same minimum requirements for all products traded in the community. Market transparency will ultimately decrease transaction costs and increase profitability of production. The norms are part of the Common Agricultural Policy of the EU.
1 2

Eurostat trade data includes some re-export Kwaliteits-Controle-Bureau voor Groenten en Fruit (See Appendix 3 for English explanation)

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They are put down in EU regulation 982/2002 by the commission of June 7, 2002. The policy was first implemented on January 1st 2003. Until that time, similar national regulations were applicable. Button mushrooms are separated into three classes, (i) Extra, (ii) Class I and (iii) Class II. Minimum standards apply to all classes. The mushrooms must be (Official Journal EC 8.6.2002): intact; cut mushrooms complying with the definition are regarded as intact, sound, produce affected by rotting, severe browning in the stalk or deterioration such as to make it unfit for consumption is excluded, clean, practically free of any visible foreign matter, other than casing material, fresh in appearance, account should be taken of the typical gill colour of the strain and/or commercial type, practically free from pests, free of abnormal external moisture, free of any foreign smell and /or taste; The development and condition of the mushrooms must be such as to enable them: to withstand transport and handling, and to arrive in satisfactory condition at the place of destination. Mushrooms of the Extra quality Class must be of superb quality, free from defects with the exception of very slight superficial defects that not affect the general appearance of the product, nor the quality, keeping quality and presentation in the package. Furthermore, mushrooms with cut stalk must be practically free from casing material. For Class I and II mushrooms the quality standards are more relaxed. The regulation also specifies the minimum requirements for each size class small, medium and large , for packaging and marking. (See appendix 1 for full text of the regulation) 3.4.2 Control authorities

In the Netherlands, compliance with the norms of regulation 982/2002 is controlled by two national institutions. The first is the 'Plantenziektekundige Dienst' (PD) in Wageningen. This official institution of the Dutch Ministry of Agriculture, Nature and Food Quality controls the regulation in the Netherlands, with regard to foreign produce. The second inspection body is the 'Kwaliteits Controle Bureau voor Groente en Fruit' (KCB). The latter is concerned with domestic produce. The KCB is funded by a producer levy per hectare (1,64 euro per m2 for button mushroom producers in 2002) paid to the Product board for horticultural products (PT). Since two years some countries (Morocco, Israel among others) have been given the opportunity to export to the EU produce without full control of quality. Products originating from these countries are subject to random sample controls only. In principle, all other fresh mushrooms must be checked. In practice, however, only small samples are taken from each shipment. A certificate of compliance issued by an acknowledged inspection body must accompany the products when entering into free EU circulation.

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Mushrooms destined for the processing and canning industry are free from the marketing norms, provided that they carry a so-called industry-certificate. Mushrooms of sorts other than 'agaricus' do not have to comply to specific norms. Of course, all food products need to be of certain minimum quality under the Food Act provisions. They cannot contain more than critical residue levels, must be free of diseases and must not be harmful to consumer health in any way. The importance of relevant sanitary and phytosanitary measures for agricultural products is underlined by Franz Fischler, the EU Agricultural Commissioner, in his speech to the European Chamber of Commerce in China (25 March 2004): 'European consumers want a variety of food, but we also want guaranteed standards, and products that fall short of these, either because of inadequate or ineffective application of control mechanisms, are never going to find a place on the EU market.' He refers to the lack of establishment of such measures as one of the main setbacks in EU-China trade. With the enlargement of the EU to 25 member states in May, the protection of the EU market will also apply to these new countries. Third countries (WTO) trading with these member states have a right to compensation for lost trade under GATT article XXIV.6. 3.5 Trade restrictions

Although free international trade is generally seen as being beneficial to economic efficiency in all countries concerned, many countries have trade barriers in place. These barriers limit the amount of imports or increase the amounts of exports of selected products. Within the EU (intra-EU trade) no barriers to trade may exist. However, imports from and exports to third countries are often subject to tariffs or quotas. These restrictions are set up to protect primary producers as well as the processing companies from foreign competition. Many industries would not be able to exist without the tariffs. A tariff is the simplest of trade policies. It is a tax on imports, payable at the customs office upon entering the customs zone. Tariffs can either be ad-valorem (percentage of the trade value) or specific. Specific tariffs are most often defined as a payable amount per unit. A second means of protection is an import quota, which physically limits the volume of trade. Usually the quota is enforced by issuing import licenses to specific companies. A quota will, like a tariff, increase the internal consumer price, as it restricts supply. The quota holders will be able to benefit from the difference between the foreign (world market) price and the internal reselling price: quota rents. In practice with regard to mushrooms a combination of different duty rates and tariff quota (contingents) is used. These contingents do not involve actual fixed limits of imports. They merely set the borders for application of the lower quota tariff regime. Imports above the contingent are subject to the normal tariff rate or import duty. In some cases, however, these normal tariffs are so high that the actually prevent more imports altogether. The restrictions only apply to certain specified groups of fresh, preserved and processed mushrooms (product codes are given in table 3.3). On a bilateral or multilateral basis some preferential trade agreements apply to certain countries. Some of these preferences stem from former colonial ties and commitments. Others must be seen in the light of giving opportunities to developing countries or the ongoing WTO trade negotiations.

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Import tariffs must be paid at the EU border over the customs value of the shipment. In order to apply for special treatment under preferences or contingent arrangements, traders must first register the products with the institution that administers the quota in the specific EU country. In the Netherlands, administration of the quota for vegetables and fruit is delegated to the Product Board for Horticulture (Productschap Tuinbouw, PT). Tariff quotas apply to prepared (canned) and provisionally preserved (salted) mushrooms of the species agaricus bisporus. Frozen mushrooms other than of the genus agaricus, also fall in the contingent regime. However, frozen agaricus mushrooms and mushrooms preserved by vinegar do not. License share-out occurs in two steps: the first on January 1, the second around July. The volumes are being distributed among importers in accordance with past imports (a rule of thumb is that importers receive a license to import the volume equal to the average of the last three years). For Dutch processor 'Lutce' this means a yearly quota of about 1,400 tonnes of imports. Increasing the quota is difficult, but can occur in the second share-out, if other importers choose to import less. If a granted volume is not actually imported, traders must pay (large) fines. New importers can apply for small volumes. In effect these volumes are so limited that it is very difficult to enter the market. An example will give some more insight into the different trade regimes listed in table 3.3. With regard to mushrooms under CN-code 2003103000 provisionally preserved, prepared or preserved otherwise than by vinegar or acetic acid and completely cooked the following tariffs and provisions are in place: within the quota a tariff of 23 percent of the value is charged for import into the EU. When the contingent (granted to an importing party) is fully exploited, special tariff rates apply to different countries, on the basis of bilateral or multilateral trade agreements. Normally, the EU would charge 18.4% plus 222 euro per 100 kilogram net weight. However, Poland has a special preference of 0% and Chinese exporters pay 14.9% plus 191 euro per 100 kilogram net weight. Note that this tariff actually raises the price per kilogram with more than 100 percent. Therefore the quota tariffs actually functions as a fixed import quota. Contingents are also country specific. After EU accession of Poland, Hungary and other countries in May 2004, all imports from these countries are tariff free. Several market participants estimate that the actual traded volumes are much higher than the official figures, as parties evade custom duties.

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Table 3.3 EU trade restrictions applying mushroom imports, April 2004 Product Product name Third code country duty 0709510010 0709510090 0709591000 0709593000 0709599010 0709599090 0710806100 0710806910 Fresh or chilled mushrooms of genus agaricus. Fresh or chilled chantarelles. Fresh or chilled flat mushrooms. Fresh or chilled edible mushrooms, other. 12.8% 3.2% 5.6% 6.4% 14.4% 14.4%

K*

S** Poland pref.***

China Pref. 9.3% 0% 2.1% 2.9%

Frozen mushrooms of the genus agaricus. Frozen mushrooms of species of the species Auricularia polytricha, steamed or boiled, for the manufacture of prepared meals. 0710806990 Idem, other mushrooms. 0711510000 Mushrooms of the genus agaricus, provisionally preserved. 07115900..

0%

10.9% 10.9%

0712319.3% ..39 2001905010 Mushrooms, prepared or preserved by vinegar 16% 12.5% or acetic acid, not containing added sugar. 2001905090 Mushrooms, prepared or preserved by vinegar 16% 12.5% or acetic acid, other than not containing added sugar. 2003102000 Mushrooms prepared or preserved otherwise 18.4% + 191 23% 0% 14.9% + 191 than by vinegar or acetic acid, of the genus EUR/ EUR/100 kg/E agaricus, provisionally preserved, completely 100 kg/E cooked. 2003103000 Mushrooms prepared or preserved otherwise 18.4% + 23% 0% 14.9% + 191 than by vinegar or acetic acid, of the genus 222 EUR/ EUR/100 kg/E agaricus, other than provisionally preserved, 100 kg/E completely cooked. 2003108000 Mushrooms, idem, not of the genus agaricus. 18.4 % * K: Tariff applying to shipments within the quota ** S: Tariff Suspension (erga omnes) *** Until May 2004 The figures presented in this table are just indicative. Trade regimes can change, regulations only apply to certain periods of time, and special provisions apply to many countries. Information on tariffs, quota can be found on: Source: http://www.europa.eu.int/comm/taxation_customs/databases/database.htm

14.4% 9.6% + 191 EUR/ 100kg/E Mushrooms and truffles, provisionally pre- 9.6% served, other. Dried mushrooms. 12.8%

12%

0% 0% 0%

6.1% + 191 EUR/100kg/E 6.1%

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4. Other European markets and competitors

4.1 Introduction

European markets for fresh and preserved mushrooms can differ considerably with respect to size and structure. French consumers buy a lot of canned mushrooms via the hypermarkets and supermarket, whereas Germans buy most of their fresh mushrooms at food discounters. The Netherlands is by far the largest producers of mushrooms in Europe. Nevertheless, some countries have been or will be formidable competitors in different markets. In this chapter we provide some data and insight into the main European markets for mushrooms (paragraph 4.2) and the main (upcoming) producing countries (paragraph 4.3).1 4.2 4.2.1 European markets The UK market

The United Kingdom constitutes a large market for mushrooms. More than 58 million inhabitants consume almost 60 million kilogram of mushrooms yearly. This volume has been growing mildly (2% per year) over the last years. Total value of consumption, however, increased from 254.3 million in 1998 to 267.1 million in 2001. (Van den Berg and Cadel, 2003) Per capita consumption in the United Kingdom is higher than the EU average and comparable to the Netherlands. The bulk consists of fresh mushrooms (90%), 4% is frozen and 6% is prepared of processed (canned). The white button mushroom has a market share of approximately 95 to 98 percent. The share of other mushrooms is growing, however. In contrast to the Netherlands larger shares of consumers prefer unpacked mushrooms. The share of packed mushrooms in consumer sales was 40 percent in 1996. Mostly younger people and larger households tend to buy pre-packed. The available number of unpacked mushrooms varies among supermarkets and specialty shops. The supermarkets account for approximately 85 percent of total mushroom sales (Van den Berg and Cadel, 2003) and their market share is growing. Most supermarkets have dedicated suppliers from the UK and Ireland, and use imports from the Netherlands to fill the gaps. The role of the wholesale level is decreasing over the years. In recent years exports from the Netherlands to the United Kingdom have been growing. In part this is a result of the increasing role of the Netherlands in the re-export trade of vegetables and fruit.

This chapter is based on several internal reports of: LEI, and PPO and PT (2003); Van den Berg and Cadel (2003); information from LEI researchers and other experts.

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Table 4.1 Imports of mushrooms in the UK (tonnes) 1990 Fresh 34,042 Ireland 26,195 The Netherlands 4,296 Belgium 3,116 France 404 Preserved or prepared 13,754 The Netherlands 4,306 France 7,824 China 338 Source: Eurostat

1995 51,344 37,853 7,250 3,377 2,137 16,511 7,309 6,313 853

2000 68,352 44,538 16,571 4,454 2,015 16,592 7,951 3,579 1,214

2001 71,159 47,385 18,060 2,700 2,337 18,067 9,099 4,004 987

2002 75,214 45,096 23,101 2,933 2,756 27,614 19,360 3,118 1,271

4.2.2

The French market

Consumption of fresh mushrooms only accounts for about 30 percent of consumption in France. Frozen mushrooms and preserved or prepared mushrooms have a share of 12 and 58 percent, respectively. Total consumption volume is estimated at 175 thousand tonnes in 2000. Per capita consumption consists of 1.2 kilogram of fresh mushrooms and 1.85 kilogram of preserved mushrooms per year (Van den Berg and Cadel, 2003). The trend is towards less consumption of prepared (canned) and more consumption of frozen mushrooms. Still, preserved mushrooms, especially canned stalks and bits of mushroom had a large market share in the late 1990's.
Table 4.2 Market shares of canned mushrooms in 1998 and yearly growth 1994 to 1998 Product Market share (in %) Growth (in %) First choice 'entire' (whole mushrooms) 30 -0.6 First choice 'eminence' (cut mushrooms) 11 11 Stalks and bits 57 -1 Source: LEI 2002

With respect to the marketing of preserved (canned) mushrooms in France, the supermarkets and hypermarkets have the largest shares, of respectively 32 and 40 percent in 1998. Discount stores and catering (food service) marketing channels have, however, gradually won market shares in the canned mushroom segment. Fresh mushrooms have long been preferably bought unpacked. However, the packed mushroom sales are growing rapidly and convenience seems to be ever more important. Market shares of sales channels of fresh mushrooms do not differ much from those of canned produce, with the exception of the discounters.
Table 4.3 Sales channels of fresh mushrooms in France 1994 Hypermarkets 30.9 Supermarkets 29.7 Specialty shop 11.1 Market 22.2 Other 6 Source: LEI 2002 1998 44.4 31.3 6.0 16.0 2.3

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Imports and exports of fresh and canned mushrooms show a shift from net-exports to netimports. Table 4.4 shows the import figures for France in tonnes.
Table 4.4 Imports of mushrooms in France (tonnes) 1990 Fresh 2,558 The Netherlands 899 Belgium 344 Preserved or prepared The Netherlands Spain China Source: Eurostat 23,554 16,845 193 2,405

1995 7,028 3,262 743 37,685 23,718 3,780 3,190

2000 21,716 12,381 4,645 54,573 21,942 12,694 5,407

2001 22,711 11,050 5,981 54,511 20,338 14,217 4,857

2002 24,667 13,752 5,172 51,578 24,930 9,100 3,993

4.2.3

The German market

With more than 80 million inhabitants, Germany is the largest market in the EU. With respect to vegetables and fruit the country is not self-supporting. The German market has always been very important to the Netherlands. However, exports to Germany are decreasing in recent years, mainly due to cheaper competition from Central European countries. Consumption of mushrooms in Germany can be split into household consumption (60 percent) and food service (40 percent). More than half of household consumption consists of prepared produce. Total consumption of button mushrooms was 3.7 kilogram per household in 2001, of which 1.17 fresh mushrooms. In addition, German households consumed about 150 gram of other fresh mushrooms. The discounters have a relatively large share in the marketing of fresh mushrooms. In 2002, the discounter's share was almost 50 percent.
Table 4.5 Consumption of button mushrooms in Germany Fresh, kg/household Fresh, buying households (%) Prepared, kg/household Prepared, buying households (%) Source: Van den Berg and Cadel (2003) 1998 0.94 45 2.63 68 1999 0.91 44 2.53 67 2000 1.10 47 2.47 66 2001 1.17 50 2.55 66

The Netherlands' share of the German fresh market is falling, to the benefit of Poland. And Polish producers are gaining ground in the German market for processed and preserved mushrooms, too (See Table 4.6).

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Table 4.6 Imports of mushrooms in Germany (tonnes) 1990 Fresh 27,459 Poland 5,276 The Netherlands 15,509 Preserved or prepared 194,563 The Netherlands 102,884 China 41,893 France 33,411 Poland 6,325 Source: Eurostat

1995 37,846 3,487 24,569 168,050 94,656 31,080 28,908 5,379

2000 62,024 11,036 38,368 175,453 91,624 33,567 24,531 14,708

2001 73,768 21,533 37,664 169,924 79,668 38,172 20,186 20,258

2002 54,255 24,834 20,098 176,748 84,880 41,410 22,157 19,064

4.3 4.3.1

Competition from European growers France

French production roughly sums up to 200 thousand tonnes of produce in 2003. Figures show considerable fluctuations in production volumes (See Table 4.7). The decrease in the number of growers is even more severe than in the Netherlands, from 377 in 1970 to 134 in 1998, concentrated mainly in the Loire valley. Most growers make use of the chalkstone caves, which lowers initial investment but is labour demanding en produces less yield than modern 'factories'. Substrate of high quality is produced by three modern factories. In recent years new modern production facilities have opened, but these have not been able to prevent a decrease in production (Van den Berg and Cadel, 2003).
Table 4.7 French mushroom production 1990 Production (1.000 Mt) 196 Number of farms 238 Source: FAO, Wijands and Deneux (2002) 1995 164 1999 208 2000 204 2001 196 2002 175 120 2003 200

The French mushroom sector is, like consumption, mainly oriented at processed produce. About 75 percent of mushrooms is produced for the processing industry. On the fresh market, the sector faces more and more competition from the Netherlands, Belgium and Poland. Annually, France exports about 30 thousand tonnes of canned and otherwise preserved or prepared mushrooms, almost entirely to other EU-countries. The United States of America has been a growing market, where exports to Germany fell from more than 25 thousand tonnes in 1999 to less than 18 thousand tonnes in 2002. Fresh produce is hardly exported. France only exported 4,500 ton of fresh mushrooms in 2002, of which 2,085 ton to the UK, about 600 to Belgium and 500 to Spain. However, these are mostly special and more expensive varieties, notably truffles, making the total value of exports about 25 million euro.

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4.3.2

Ireland

As the Netherlands is expanding exports to the UK, it is worthwhile looking at it biggest competitor on this market: Ireland. Production of mushrooms has increased tenfold over the last two decades and has become the most important horticultural sector in Ireland (See table 4.8). The sector is almost entirely focused on the British fresh market. A considerable share of Irish production is exported to the UK as fresh produce.
Table 4.8 Irish mushroom production and exports to the UK 1990 1995 Production (1.000 Mt) 37 49 Exports to the UK (1.000 Mt) 26 29 Source: FAO, Eurostat 1999 60 35 2000 61 40 2001 68 50 2002 69 56 2003 70

The increase in production and exports has brought Ireland to third place on the ranking of fresh mushrooms exporting countries in the world, after China and the Netherlands. However, the distance to the European mainland makes it difficult to expand the exports portfolio. The Irish production system is different from that in the Netherlands. Mostly small farms have taken up mushroom production in the 80'ties and early 90'ties. Low labour cost, government support and acceleration of the economy were the driving forces behind the sector. Mushrooms are being cultivated in plastic bags in tunnels. The plastic bag growing system is labour intensive but it makes costs of racking and filling redundant. Furthermore, there is no need to sterilize the growing cells or containers for reuse. Many farms have relatively simple heating and ventilation systems. The tunnels are well isolated in order to be able to produce during every season. The disadvantages of the plastic bag growing system have been stated in a 1998 report of the Irish Kinsealy Research Centre (Staunton et al., 1998): 1. 2. 3. Bags on delivery are flattened and compressed. They have to be shaped for standing and the surface of the compost made flat for casing. This labour intensive work is especially problematic from an occupational health point of view. Manually transferring compost from one bag to another to achieve uniform bag height poses a threat of disease transfer between bags. It also poses a threat to the health of the operative as there is a risk of mushroom lung developing [].1 Emptying the tunnel after cropping also poses risks to the operative from lifting, from spores and from inhalation of disinfectants []. Disposal of spent compost in bags is difficult and there is the threat to the environment from plastic bag disposal.

The shortage of labour and the abovementioned problems force the Irish mushroom sector to search for different production methods. Inputs (compost) for substrate are relatively abunMushroom lung development is caused by micro-elements (actinomycites), which grow in the compost mixture and break down carbohydrates. Before inoculation the substrate is cooled down to 25 degrees Celsius. The actinomycetes have died and form dust in the compost. After inoculation with mushroom spawn, the danger seizes.
1

23

dant and The International spawn Laboratory is one of the world leaders in spawn production. These are fertile grounds for sector improvements. Substrate producers often use machines produced in the Netherlands and experienced growers visit the Netherlands to learn. The number of farms is falling in combination with scale increases of the remaining farms, just as in the Netherlands. According to Eurostat in 1990 almost 450 growers were operating in Ireland. This number has fallen to little more than 250 in 2000. 4.3.3 Poland

With respect to fresh mushrooms, Poland is a strongly upcoming producer. The sector is not only producing more, it is also becoming increasingly exports orientated. After an initial period of adjustment to the market economy, Polish producers focus on the fresh market. Data from FAO (FAOstat website) show that total production lies around 110 thousand tonnes annually. Precise figures, however, are difficult to obtain. Table 4.9 shows figures of the production of button mushrooms collected from different sources. About 40 percent of this output is processed, either into provisionally preserved mushrooms, frozen, canned or preserved in vinegar or oil. The fresh market is becoming increasingly important.
Table 4.9 Polish mushroom production (in tonnes) Year 1993 1995 1999 2000 2001 2002 (FAOstat) 2003 (Van Horen) Source: Groot et al. (2003), FAOstat , Van Horen (2004)

Production 70.000 77.000 95.000 100.000 105.000 110.000 130.000

Around 1999 the number of farms was still about 2.000-3.000, but a restructuring is underway ever since. New large scale firms are being set up (often with foreign investments) that can produce all seasons. This has lead to a rise in production of high quality fresh mushrooms. The number of large-scale producers is about 200-300 (Van den Berg and Cadel, 2003). About 70 farms, with a size of more than 3,000 square metre produce more than 70 percent of total output. These firms are the real competition for Dutch and German growers. According to KCB there are about 30 HACCP certified (see paragraph 5.2) firms in Poland, some of them managed by Dutch growers. Their produce is comparable to the best Dutch mushrooms. Even more, because they can afford more labour, these Polish mushrooms are sorted within smaller ranges, leaving more uniform and better quality products for the West-European retail markets. The relatively low labour costs are Poland's most important competitive edge. Groot et a;. (2003) compute a cost price on the more modern farms of about 1 euro per kilogram on a minimum wage basis. Probably wages are lower than that in practice. Polish producers use about twice as much labour in production than their Dutch counterparts. Several sources indicate however that labour costs are rising and will continue to rise. With respect to capital goods the Polish sector is comparable to the Dutch. Often, farms make use of shelves pro24

duced in the Netherlands. Climate control is uncommon and mechanization very rare. Once Poland has joined the EU it will have to comply to several more stringent rules on hygiene and labour issues. Another problem still remains in distribution and relatively scattered supply. Due to a lack of cooling systems quality decreases quickly along the distribution chain. If these issues are further resolved, Poland is one of the Netherlands' biggest competitors, not only in the wholesale markets but also as a supplier of big retailers who demand both volume and uniform quality. Since 2001, Polish mushrooms can be exported to the EU under a zero tariff rate. Several foreign processing companies, among which is processor 'Lutce', conduct business in Poland. Until last year Holco/Lutce also operated a processing plant in Poland.

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5. Quality and food safety control systems

5.1 Introduction

Food scares, industrialisation and internationalisation of food production and distribution have prompted the need for ever more food safety control. This has led regulators to issue codes of conduct for food production, distribution, processing and preparation. The different stages of the production process are subject to different Dutch and European laws regarding food safety and quality control or related issues. Dutch law includes among others 'Warenwet' (WW, merchandise act), and therein 'Warenwetregeling Hygine van Levensmiddelen' (WHL, Food products hygiene act), 'Bestrijdingsmiddelenwet' (pesticides use act) and 'Wet Milieubeheer' (environmental protection law).

5.2

Legislative framework

The 'Warenwet' forms the legislative framework for other law concerning food quality and safety. It's three most important legislative statements are: i) the prohibition of distribution of food products, commodities or input material that form a threat to the health or safety of persons, to process raw materials into food products with the effect of making the product inferior and of which the inferiority could cause harm to the health or safety of persons, the prohibition of distribution of food products which are damaged in such a way that the utility derived from consumption is less than might be expected and the prohibition of using medical claims in advertising food products.1

ii) iii)

The 'Warenwet' is primarily targeted at food trading, processing and distributing companies and as such under the auspices of the The Food and Consumer Products Safety Authority (VWA). The Ministry of Health, Welfare and Sports, and the Ministry of Agriculture, Nature and Food Quality are responsible for the work of the Authority. The former targets the downstream levels of the distribution chain, while the latter is responsible for controlling the production level. The 'Warenwetregeling Hygine van Levensmiddelen' (WHL) is part of the 'Warenwet' and says that every company handling or processing food products must have a food safety control system. The system must be based on the Dutch HACCP-system (See paragraph 5.4.1.). Regulation of food quality is becoming increasingly a European matter. International trade has decreased transparency and regulatory control. That's why since 1992 European regulation lies full responsibility for the quality of the consumer product with the producer.
The general claim that a product is 'beneficial to consumer's health or well-being' is difficult to disprove and normally not prohibited. Direct reference to curing diseases are generally prohibited.
1

26

However, the seller can be held accountable by consumers for any damage resulting from consumption of inferior products. Retailers must then recover the costs themselves. This has led retailer organizations to implement stricter quality and food safety control systems with their suppliers. Figure 5.1 gives a broad overview of some certification schemes, standards and legislature applying to the production, distribution and processing of fresh and industry mushrooms. Paragraph 5.4 further explains their meaning and use. Most apply to all firms handling vegetables and are not specific to mushrooms. EurepGAP, BRC, IFS and Q&S are (national and international) retailer initiatives to guarantee food safety. Mushroom growers delivering to these retailers must obtain a certificate of compliance with the standards. Recently, retailer and food processing companies are seeking to harmonize all aspects of food safety control systems, through the Global Food Safety Initiative (GFSI) of CIES and FMI.
Primary Sector Process quality control Distribution and processing Regulatory Setting Generally, the certificates are voluntary. National and international law applies to many aspects. A HACCP system is compulsory for firms handling and processing food products. The WHL law applies to all firms. From 2005 onwards tracking and tracing of food products is compulsory.

ISO 9001 ISO 14001 Occupational Health and safety Laws Environmental pollution Laws Hygiene codes EurepGAP BRC IFS Q&S Hygiene codes HACCP BRC/IOP GFSI WHL law

Food safety control

Tracking and tracing

Tracing a product to it's source Tracking a products trough the chain Residue monitoring

Figure 5.1 Broad distinction of quality and food safety control systems for mushroom production chain Source: Q-point (Internet), Agriholland (Internet)

5.3

Quality control systems

The distinction between process quality control systems and food safety control systems lies primarily in it's focus. Food safety control systems are targeted at ensuring the quality of the consumed end product, whereas process quality control systems target the quality of the production process. Quality control systems are meant to minimise risks in the production process that could ultimately damage the firm. Occupational health issues, for example, can be a risk factor if employees get sick or are less efficient. Many aspects of quality control can actually bring efficiency gains to the firm. The International Standard Organisation ISO 9000 norms (and related ISO standards) are meant to structure the control of processes and continually improve the firm's performance. It 27

can be taken as a basis for most other (more specialised) quality control systems. Due to it's complexity, however, it is not often used by primary sector producers. Several organizations in the Netherlands are specialised in helping farmers and other supply chain participants implement quality control systems and complete the certification process. Among them is (former governmental, DLV) mushroom grower advice organization C-point. Most big traders and producers of mushrooms are ISO-certified. 5.4 Food safety control systems

Some supermarkets have drawn up food safety protocols, which suppliers must follow. BRC in England, Q&S in Germany and EurepGAP in the Netherlands (See Figure 5.1) are examples of certification initiatives by European retailer groups. While EurepGAP is meant specifically for primary producers BRC has a broader perspective and applies to packagers, processors and distributors as well. In this paragraph the different aspects of Dutch and European legislation and food safety and quality control systems are discussed. 5.4.1 The HACCP system

All companies producing, transporting or processing food products are obliged to have a quality control plan according to HACPP standards. This requirement is a part of EU regulation (EC 93/43) on food hygiene and Dutch law, 'Warenwetregeling Hygine van Levensmiddelen' (14 December 1995). The aim of the regulation is both to limit the risks to public health due to inferior product quality and to standardize procedures with respect to food safety. The Netherlands was the first country to specify norms and certify food processing and trading firms accordingly. The GFSI (Global Food Safety Initiative) has determined that the HACCP norms are in accordance with it's global standards with respect to food safety. Consequently, firms that possess a HACCP certificate comply with the norms of approximately 65 percent of all retail organizations worldwide. In addition these retailers might demand other certificates, like BRC or EurepGAP (See next paragraph). The system is directed to control the entire production process, from input to deliverance, by identifying all possible threats on a company basis. For each threat the company has to determine critical control points, such as temperature or chemical balances. Furthermore, action plans need to be worked out to correct the production process if critical control points indicate flaws. The steps of the HACCP system can be summarized as follows (Elsevier Praktijkhandboek Voedselveiligheid, 2002): 1. 2. 3. 4. 5. 6. 7. 28 Conduct a Hazard Analysis Determine Critical Control Points (CCP) and points of attention (PA) Determine Critical Values of the CCP's Install a system for measurement of CCP's and PA's Formulate the necessary corrective action in case of defect Determine and formulate a procedure to ensure that the HACCP system is effective Start documentation of all procedures and results

General company information, products and processes, as well as responsibilities, tasks and composition of the HACCP team have to be added to the HACCP plan. The HACCP system is based on self-control by entrepreneurs. National governments can limit themselves to periodical controls. In stead of inspection of finished products a HACCP based systems aims to eliminate all threats in advance. The HACCP system is specifically directed towards the management of food safety in the production phases. Because implementing individual food safety control systems is costly and complex, the government has decided that firms may use certain specified Hygiene Codes. The Product Board for Horticulture has drawn up a Hygiene Code for uncut fresh vegetables, fruit and mushrooms to assist distributors, traders, sorting and packing stations, auctions and producer associations. Primary horticultural producers, including mushroom growers, are not legally obliged to implement a HACCP system. However, the Product Board has also written a Hygiene Code for primary producers of fresh vegetables. The code includes practices and critical points of attention with respect to food safety. It helps farmers and growers to show compliance without having to go through costly individual control system design. 5.4.2 Retailer standards

Although legislation ensures that producers, processors, packagers and distributors follow stringent HACCP procedures, retailers typically demand more. They experience close consumer scrutiny and experience great marketing risks, especially with regard to the ever growing group of own-label products. In the HACCP procedure little attention is given to outstanding product quality. Initially all retailers have drawn up their own standards and procedures. Regular auditing on the firm was necessary to ensure the right quality and food safety. Different retailers had to perform different audits with the same producers. 5.4.2.1 BRC Global Food Standard

The fragmentation of the different systems and double effort involved led the British Retail Consortium to develop uniform standard for both product safety management, product quality and quality management. The BRC norms apply to both fresh and processed produce. This BRC Global Standard Food consists of six main points: 1. HACCP-system has to be the basis of the food safety system 2. Quality Management System 3. Norms applying to the production facility 4. Product (quality) control 5. Production process control 6. Staff /personnel In each section of the standard firms have to comply to several rules. Depending on the risk category (product group) firms need to implement about 200 different principles and practices. Much of these have to do with formulating, measuring and registration of production processes, hygiene codes and production and management practices. A special BRC/IOP Standard for Packaging firms exists, that is very similar to the food standard.

29

Aside from the abovementioned standards for button mushrooms (sub paragraph 5.2.2) the outer appearance, quality and packaging of mushrooms remains an issue to be negotiated among suppliers and retailers. 5.4.2.2 EurepGAP

In 1999 the 26 European retailer organizations united in the Eurep (Euro Retailer Produce) have published standards for growers of fresh produce and flowers, as well as nursery (input) material. In the meantime the EurepGAP (Good Agricultural Practices) standards are widely used by European retailers for a broad range of primary products. The most important points of interest in the EurepGAP standards are food safety and trace ability. The basis for the system is compliance with national regulations, and therefore the Eurep emphasises harmonization within all EurepGAP countries. The norms include rules of conduct regarding food safety, environmental pollution and occupational health and safety. The leading supermarket chain in the Netherlands, Albert Heijn, is one of the initiators of the EurepGAP protocol. Recently, the Dutch retailers united in Centraal Bureau Levensmiddelenhandel (CBL) have chosen to market as much EurepGAP certified fresh produce as possible (source: CBL). The guidelines apply to fresh mushrooms, too. EurepGAP is a system for primary producers. Other stages in the distribution channel are generally secured by other quality control systems, like BRC or HACCP (or other GFSI approved systems). On-farm packaging is included in the EurepGAP standards for vegetables and fruit. Farmers or farmer groups can apply for a certificate at an approved certification body (CB). Checklists can be attained to self inspect and improve operations (management) where necessary. External audits by the CB must then show any outstanding non-compliance. After resolving these, the CB decides on certifying the applicant. In each country, the CB's regularly audit the certified producers. As mentioned above, retailer induced standards have been implemented to increase transparency. It is based on national regulations. Therefore, minor differences in standards can exist between countries. In broad sense, however, all produce destined for Dutch supermarkets should comply to the EurepGAP rules. The secretariat of the EurepGAP organization is held by Foodplus, a subsidiary of EHI-Eurohandelsinstitut, in Kln, Germany. Information application, certification and the checklist can be found on the internet www.eurep.org.

30

6. Mushroom varieties, breeding and spawn production.

Nowadays only a very limited number of commercial strains of the buttonhead mushroom (Agaricus spp) are marketed and cultivated world wide. In 1981 the first two commercial hybrids Horst U1 and Horst U3 were introduced producing high quality mushrooms and giving high and regular yields. These hybrids have been registered and are protected by international breeders' rights as far as possible. Because mushroom spawn can be produced quickly and in large quantities these Horst strains were quickly adopted by growers in Europe, the United States and Canada. However mushrooms can be easily propagated vegetatively and a number of copies of these hybrids have been introduced by spawn producers over the years. Although new varieties sometimes have a different phenotype and appearance (colour, size etc) the genotype is often identical or only slightly different as compared with the originally introduced hybrids. Because mushrooms are propagated vegetatively there is a very restricted genetic diversity in cultivated lines, which poses a risk factor for production. When a new disease appears it can rapidly spread over a number of countries because identical varieties are cultivated. Diseases resistance is also not very well developed in the commercial strains. Breeding programmes have been started meanwhile to introduce more and different properties, such as disease resistance, which is sometimes found in wild varieties, in cultivated lines. World wide the UPOV1 organization is responsible for the protection of international property rights on plants including mushrooms. However, breeders' rights are hard to enforce in case of mushrooms. DNA fingerprint analysis has not been fully accepted as an instrument to discriminate between varieties and to determine whether a variety is new or a copy and whether royalties have to be paid to the owner. Moreover not all countries have ratified the UPOV convention protecting the intellectual property rights of breeders and their varieties. Nowadays these Horst hybrids play a minor role, also because of changes in the production systems, which ask for different characteristics of the varieties. A strain named 'A15' is commonly used nowadays throughout Europe. Because of the before mentioned reasons commercial mushroom breeding and improvement is not very profitable and is done at some laboratories in the world only. The Netherlands, Canada and the United States are important centres for breeding and germplasm collection. There used to be a number of spawn producers worldwide, many of them with production facilities in Europe. Nowadays the spawn market is dominated by one American based company; Sylvan Inc. with production facilities and a marketing network throughout the world (www.sylvaninc.com). Both the lack of well defined property rights and the monopolistic market structure have caused the number of strains to be relatively low. Small mushroom spawn producers mostly copy strains and do not have the facilities for improvement.
1

UPOV; The International Union for the Protection of New Varieties of Plants is an intergovernmental organization with headquarters in Geneva (www.upov.int). The objective of the UPOV Convention is the protection of new varieties of plants by an intellectual property right. The holder of the rights can issue licenses to producers that usually involve a fixed payment per unit produced.

31

Part Two Production, Distribution and Consumption

32

7. Mushroom production
7.1 Introduction

Dutch mushroom growing has been at the forefront of technological development for decades. Several factors have been pushing cultivation techniques into an ever more specialised, largescale and capital intensive direction. Growing of mushrooms in the Netherlands has become more efficiently regarding time and labour. This chapter deals with the production of mushroom (button mushrooms in particular) and the performance of the mushroom growing sector. In paragraph 7.2 button mushroom growing is put in a historical perspective and currently used production techniques are shortly presented. To show which costs are associated with this production techniques we present figures on costs for two types of farms, hand-picking and mechanized cutting farms (paragraph 7.3). We take a look at sector output and employment (paragraph 7.4), investment and productivity (7.5), and profitability and farmer income (7.6). In addition, some environmental issues are addressed in paragraph 7.7. After all, performance has more than only socio-economic or financial sides to it. 7.2 7.2.1 Mushroom growing history and technique History

In 1650 a French melon grower (re)discovered the breeding of edible fungi. He noticed that on the used soil of melons fungi grew spontaneously. In 1707 an 'edible fungus' was cultivated on horse manure. The technique has been brought to the Netherlands and around 1900, button mushrooms were cultivated on a large scale in the marlstone caverns in the southern province of Limburg. The dark and ever humid conditions are ideal for mushroom growing. These mushrooms were brown, huge and stark scaled. In 1927 a white button mushroom was found between the brown ones. From this one we got the white button mushrooms (agaricus bisporus) we know today. Due to popular demand, the white button mushroom has superseded most brown varieties. The first modern growing facility above ground was built around 1950. A concrete rack in a dark cell (or barn) formed it's basis. In 1960 the concrete racks were replaced by beds of wood on metal shelves. Fifteen years later the layered beds were made entirely of metal. Metal has the advantage of being easier to clean, relatively inexpensive and durable. These new beds are being mechanically filled with compost. After harvesting, the substrate is mechanically removed from the beds.

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7.2.2

Production process

Button mushroom production process is roughly divided in 3 steps. The first is compost manufacturing. In the second step the full-grown compost is put onto the beds and covered with casing soil. The last phase in the process is harvesting of the mushrooms, which appear in several flushes. Compost production Traditionally one mixed different kinds of manure, gypsum and straw into a compost in which the fungi can grow. Pressure to reduce environmental pollution and increase efficiency has led to the establishment of several large scale compost manufacturers. Compost is being produced in three phases. These phases take place in so-called tunnels. Each step requires a different production facility. The first step is mixing the ingredients straw, chicken and horse manure and gypsum. By adding air to the mixture and increasing the temperature up to 80 degrees Celsius, the fermentation process is started. After 1-2 weeks the first phase is ready: fresh compost or phase I compost. Then, the compost is taken to another tunnel in which it is pasteurised and freed of nitrogen (ammonia) and hazardous pathogens. The phase II compost is ready after 6 days. The last step is to inoculate the compost with mushroom mycelium, with the use of sterilized white grain that contains the mycelium (spawn). The spawn will grow through the compost in about 2-3 weeks. After that the full-grown compost (phase III) is distributed to the growers. In the Netherlands there are three large producers of phase I compost. CNC Grondstoffen (See paragraph 5.3) is the biggest, with approximately 50 percent market share. Other big compost manufacturers are Walcro and Fleuren. These large companies use most of their phase I compost for the production of phase III compost. Furthermore they supply about ten smaller firms that make their own full-grown compost. The quality of both compost and casing soil in the Netherlands is high. This leads to higher yield per square metre. According to Groot et al. (2003) the average quantity of compost used on mechanized cutting farms is 85 kg/m2. The average yield per ton of compost is 370 kilogram of button mushrooms. (Groot et al., 2003) Over the last 15 years almost the entire production of button mushrooms has converted to the use of full-grown compost. Besides reduction of the production schedule, another important advantage of full-grown compost is the decrease of ammonium and smell emissions, as it is produced in indoor tunnels. In 1990 only 27 percent of Dutch growers used full-grown compost, but in line with efforts of the mushroom sector to meet environmental regulations and increase productivity, this has increased to 98 percent today. Every week the mushroom sector uses about 12.000 tonnes of full-grown compost.

34

Mushroom cultivation Dutch mushrooms are mainly produced on beds (5 or 6 layers) in dark cells. The beds are mechanically filled with phase III compost. Then they are mechanically covered with a layer of casing soil of approximately 5 centimetres, in which the mushrooms will grow. The casing layer will force the mushroom spawn to go from a vegetative to a reproductive growth. Climate control in the cells is an automated process. After a few weeks the casing soil is homogenized and the mushrooms appear in several 'flushes', one week apart. The use of full-grown compost has brought the cultivation period back from 12 to between 6 and 7 weeks for hand-picking farms, depending on the number of flushes. With mechanical harvesting the schedule can be shortened even further to between 4 and 6 weeks, while keeping 2 flushes. With every flush the yield and quality decreases. Optimising between the growing time and the number of flushes is thus essential. Because compost has to be ordered weeks in advance, most farms have fixed growing schedules. Harvesting The final step is the harvesting of the mushrooms. Here, we distinguish between hand-picking farms and mechanized cutting farms. The first group produces mainly for the fresh market, although some lower quality product is supplied to the processing industry. The mechanized farms produce solely for the processing market. In the Netherlands about 100 farms are mechanized. These are much larger than the hand-picking farms, up to about 10,000 m2 against between 1,200 and 2,400 m2 (Michielsen, 2003). The cutting farms use larger cells to make optimal use of scale advantages of mechanization. Harvesting of hand-picked mushrooms is a labour intensive process. One person can pick about 20-30 kilograms per hour. Depending on demand and production schedules the picking continues for 2 or 3 flushes, lasting one to two weeks each. Sorting according to weight and appearance and packaging takes place on the mushroom farm. The mushrooms are put in the (blue) retail packing directly by hand, in order to prevent damaging. Sealing and labelling, however, is mostly done by special packing stations of the trading companies. Mechanized farms use a machine that cuts the mushrooms near the compost from the beds and collects them in a special gutter alongside the bed. The cutting machine is placed on top of the beds and mechanically cuts all mushrooms as it wheels from one end to the other. The machine can cut up to 250 kilogram per hour. The mechanized farms use a 5 week growing schedule (including cleaning and refilling). Industry mushrooms are sorted in barrels. Some cutting farms use mechanized sorting lines and automatic stacking of barrels. When harvesting is finished, the beds are emptied mechanically and cleaned by steaming for several hours. Then the cells are emptied and cleaned. The old compost is sold to gardening centres and farms as 'champost' fertilizer.

7.3

Production costs

The costs of production in mushroom cultivation rely heavily on methods and scale. Therefore we distinguish between farms that use handpicking of mushrooms and mechanized 35

cutting farms. The cutting farms produce mainly for the food processing industry. Table 7.1 presents a calculation of critical (average break-even) prices for the two types of firms in 2002.
Table 7.1 Cost of production in eurocent per kilogram, 2002 Direct cost Labour cost Repayments Fixed cost Financing Private spending Critical revenue price Average price 2002 Result Source: ABAB Accountants 2003 (Agriholland) Hand picking 60.70 41.23 5.61 10.16 2.34 8.89 128.93 134.54 5.61 Cutting farms 55.77 14.33 5.37 5.62 3.04 4.72 88.85 88.27 -0.58

Direct costs include inputs like compost, casing soil, water and energy. Fixed costs are independent of production volumes. Repayments are average costs made by mushroom farms to repay mortgages on land and barn-housing. The critical revenue price is the amount per kilogram necessary to cover all expenditures. It therefore includes repayments instead of capital depreciation. Private spending includes all necessary private expenditures for costs of living. Financing costs and private spending differ between the two types mainly because they differ in size. Revenue prices have come under pressure, particularly after 2001. The cheaper produce from Central Europe and the economic situation contributed to a lowering of farm-gate prices by more than 25 percent. Cost prices of compost, energy and labour have, on the other hand increased (Agriholland News, 2003). This has lead to a worsening situation, continuing into 2003 and 2004. By increasing the scale of production and average yield per period and area cost prices can be further reduced. This scaling-up effect continues to take place. Picking the mushrooms by hand yields approximately 20-30 kilogram per employee per hour, whereas mechanical cutting increases the speed many times. In that sense, mushroom cultivation may no longer be a labour intensive activity. However, the cutting farms have not been better off. Further productivity increases are necessary. Of particular importance is the development of a picking robot, suitable to economically harvest high quality fresh mushrooms. This would decrease the threat of cheap Polish labour. Besides that, organizing packaging and transport more efficiently may also contribute to the well being of the sector.

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7.4 7.4.1

Output and employment Production

The number of mushroom producing firms in the Netherlands has dropped from 790 in 1990 to 400 in 2003. Almost the entire Dutch production is focused on button mushrooms. Other mushrooms, primarily flat mushrooms, oyster mushrooms and shii-take were produced on 8 farms in 2002, out of a total of 438 mushroom producing firms. (Berkhout en Van Bruchem (eds.) 2003) While the number of firms is decreasing steadily, the area per firm is increasing proportionally, as a result of which the total area under cultivation dropped only slightly to 90 hectares in 2003 (See Table 7.2). This has increased efficiency in production and will ease the introduction of a (costly) mushroom harvesting robot that is able to pick high quality mushrooms for fresh consumption. On the mechanized farms, scale increases make logistics, production schedules and harvesting more efficient. At the moment about 45 percent of the mushrooms is machine picked, almost exclusively destined for industrial food processing. Approximately 100 farms produce for the processing industry. Because these farms are considerably larger than the fresh mushroom producers, they represent about 50 percent of the total area under cultivation. Together they grow approximately 60 percent of all Dutch mushrooms.
Table 7.2 Mushroom sector structure and the use of full-grown compost 1990 1995 2000 Number of mushroom farms 790 670 520 Area under cultivation (ha) 105 109 95 Average farm size (m2) 1,232 1,547 1,838 Use of full-grown compost (%) 27 75 95 Source: CBS, LEI, PT p preliminary

2001 480 97 2,047 95

2002 440 93 2,105 96

2003p 400 90 2,255 98

Total sector production is estimated at 263 thousand tonnes in 2003 (See Table 7.3). Since 1995 the share of fresh mushrooms in the total production volume has been gradually rising. The industry mushrooms share dropped from 66 percent in 1995 to 58 percent in 2002. Between 1990 and 1998 total production increased by almost 80 percent, mostly as a result of improved production techniques and economies of scale. After 2001, however, output has been decreasing again. Falling prices as a result of international competition and increasing production costs have deteriorated firms' finances.

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Table 7.3 Production of mushrooms (in 1.000 tonnes) Button mushrooms production For industry For fresh market Production value mushrooms (mln. Euro) Source: CBS, PT p preliminary 1990 147 93 54 180 1995 230 152 78 243 2000 265 160 105 319 2001 275 165 110 318 2002 270 157 113 303 2003p 263

Only a small percentage of mushroom production consists of shii-take, flat mushrooms, oyster mushrooms and other 'special' sorts. The following figures give an indication of production capacity and productivity growth. The number of organically producing farms is limited to 14 in 2002.
Table 7.4 Production capacity 1991 Button mushrooms Number of cells 5,198 4,569 3,470 3,269 Cultivation area (m2) 1,110,786 1,089,356 950250 967,590 926,362 Area/cel (m2) 214 238 274 296 Production/m2 (kg) 149 211 279 284 291 Other edible mushrooms* Tons of fresh substrate 849 122,410 134,671 44,460 * Other edible mushrooms (primarily flat, oyster and shii-take) capacity is measured in tons of fresh substrate. Source: CBS Statline 1995 2000 2001 2002

Other mushrooms are often considered to be a means of increasing sales of mushrooms in general, including white button mushrooms. The market for other mushrooms might be divided into a quality segment for button mushrooms and a niche market for other sorts. The first category, includes flat mushrooms, fine (small) mushrooms and large white flat mushrooms or brown Portabella's. In time one expects that this market will grow to about 15-20 percent of total sales. The other group includes mushrooms like oyster mushrooms and shiitake. This niche is expected to grow to about 5 percent of total production. 7.4.2 Employment

Productivity is growing, shown by an increase in yearly yields per m2 and a decrease in employment. Employment in full time job equivalents (fte) is falling, mainly due to the increase of the use of full-grown compost, mechanization and increasing of farm (scale) efficiency. Regular employment has decreased from 5,210 persons in 1990 to little more than 4,100 people, or 2,400 fte in 2003. The number of temporary employees was somewhat more than 1,000 persons, or 384 fte in 2003. Regular employment plus the additional temporary employment sums up to 2,756 full time jobs in mushroom production (See Table 7.5). Only about 300 fte is needed on the about 100 mechanized farms. Total employment in the mush38

room producing and distributing cluster is much higher. Compost manufacturing, handling and packing, distributing, processing and selling mushrooms employs thousands of workers. An estimate for 1995 is 10,000 fte (Van Horen et al., 1997). Picking mushrooms is often done part-time by women. About four out of five employees in the mushroom sector is female. Child-care issues have recently been put on the agenda of employer-employee labour agreement negotiations (Michielsen, 2003). Another important issue is working conditions. Picking mushrooms requires bending and stretching to reach the mushrooms, especially in the middle of the lower beds. Picking employees make use of lorries on the higher beds and sit down on a small chair to pick the lower beds. This is necessary to prevent occupational hazards. Nevertheless, sickness and pain in neck, shoulder and back are common problems.
Table 7.5 Employment in the Dutch mushroom sector Regular Employment (persons) Not family members 1995 1,383 3,827 2000 1,042 4,125 2001 985 3,841 2002 896 3,445 2003 926 3,207 Source: Statistics Netherlands, Agricultural Census Family members Total 5,210 5,173 4,826 4,341 4,133 Total (fte) 3,493 3,076 2,926 2,565 2,372 Non-regular (fte) 59 427 504 489 384 Total (fte) 3,552 3,503 3,430 3,054 2,756

7.5

Investment

Investments in the mushroom sector have been low in 2002 and 2003, due to the disappointing financial results. Furthermore, the market for both cutting farms and hand-picking farms has declined somewhat, due to the fact that processing firms have restricted supply to support prices, and due to increased competition in the fresh market. Another reason for low investments is the lack-of-successor problem. Average firm investments were 35.6 thousand euro in 2001. A year later investments dropped to only 8.1 thousand euro. A large share of farm investments consists of new machinery, installations and other inventory. Picking farms for fresh mushrooms production on the one hand and mechanized firms on the other, are two entirely different kinds of firms, requiring different investments and scale. Switching between the two has become a rare occasion. 7.6 Profitability and income

Money revenues per square metre have declined in 2003, due to falling prices. However, revenues per farm have increased because of a scale effect. Total costs have increased as well. The overall effect is a negative development of the net firm profits. Preliminary figures for 2003 show negative earnings of 67,000 euro per farm (LEI, 2004). Table 7.6 gives an overview of 39

firm results. It shows average profitability (total revenues divided by total costs) of only 89 percent in 2003.
Table 7.6 Average farm profitability and family income of Dutch button mushroom farms (1.000 euro) 2001 2002 2003 (f) Total revenues 524 518 542 Interest and depreciation Energy Labour Compost Other costs Total costs Net farm result Profitability Family income from business operations Extra benefits and costs Family income Family expenditures (on a calculation basis) Family savings Source: LEI Informatienet, May 2004. 57 29 195 190 56 527 -1 100 84 -2 82 53 19 63 30 220 201 51 565 -47 92 33 0 33 47 -22 68 31 239 213 59 610 -67 89 22 0 22 49 -35

Family incomes derived from farm operation dropped significantly from 84 thousand euro in 2001 to 22 thousand euro in 2003. Because the average number of entrepreneurs per firm is 1.94, this is in many cases too little to pay for normal everyday cost of life. Negative savings are the result for some farms. Less profitable farms are forced off the market, leaving others with a bigger share. Concentration and increasing average scale is a direct effect. Ultimately this will lead to enhancing overall productivity and profitability. 7.7 Energy and pesticides

Many aspects of business operations have external consequences that are not included in the price of the product. In that case there are so-called external effects and if these effects or the market for dealing with them have public good characteristics, there is a role for government intervention. Mushroom growers in the Netherlands are being confronted with government regulations daily. Many of those regulations have to do with environmental pollution, other with labour, hygiene and food safety. In this paragraph we use some data on energy use and chemical pesticides use from Statistics Netherlands (CBS) to illustrate the progress the sector has been making. One of the costs to society of horticultural and agricultural production is the use of energy. The use of fossil fuels in energy production cause external effects in the form of global warming and air pollution. In 1998 the sector has signed the so-called 'Meerjarenafspraak Energie' (Long term agreements on the use of energy). The aim is to improve energy-efficiency and increase the use of sustainable energy sources. The agreements are part of the sectors obliga40

tions with respect to the Kyoto protocol. Table 7.7 shows total energy use (in m3 natural gas equivalent units (a.e.)) in mushroom growing since 1995, and energy usage per kilogram. Average use of energy per square metre has dropped considerably, mainly due to better housing and improved production schemes. Productivity increases have lowered the relative input costs of energy. The use of chemical pesticides (kilogram per hectare) has been reduced by almost 30 percent between 1995 and 2000. The lower part of table 7.7 summarizes pesticide use. Almost every mushroom grower nowadays uses special lamps to prevent damage by flies and other insects.
Table 7.7 Energy and chemical pesticide use in mushroom production 1995 1998 Total use of energy (mln. m3 a.e.) 47.7 56.4 Natural Gas use (mln. M3) (Heating) 33.6 43.2 Electricity use (mln. kWh) 81 94 Energy use (m3 a.e. per kg of mushroom) 0.229 Total use of chemical pesticides (kg) Chemical Pesticide use (average dosage per hectare) Source: CBS Statline 50 292 474.7 35 066 387.6 1999 45.4 34.0 76 0.176 2000 57.2 45.5 77 0.216 26 628 337.5 2001 50.8 40.3 69 0.185 2002 41.2 32.3 59 0.153

Another issue of concern is the emission of ammonia into the air. It causes negative external effects to the neighbourhood due to it's unpleasant smell. Ammonia is produced as a sideproduct in compost manufacturing. Innovation in compost production has lowered the amount of ammonia emission to air and soil greatly. Indoor composting has reduced ammonia emission to air to almost zero (PR Bureau Champignons). Almost 4 million kilograms of nitrate (N) from 'champost' is used annually in Dutch agriculture and horticulture as fertilizer (CBS Statline).

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8. Distribution
8.1 Introduction

At least two important trends have had an impact on the development of distribution channels for agricultural products: (i) increased emphasis on product quality and tracking and tracing, (ii) increased emphasis on cost reduction due to international competition. This has led to shortening of supply chains and increased scale and concentration in logistics and marketing efforts. Close relationships and interdependence throughout the chain are the result. The Netherlands produces much more (button) mushrooms than it domestically consumes. About 60 percent of Dutch produce is exported as mushroom conserves, canned, jarred or preserved otherwise. On the other hand, the Netherlands imports both fresh and preserved mushrooms. The size of the production and distribution channel, the experience of the trading companies and the relations they have with producers and customers make the Netherlands the number one mushroom distribution country in Europe. In this chapter the Dutch distribution channels for fresh and industry mushrooms are discussed. 8.2 Distribution channels

Figure 8.1 gives a general picture of the size of the mushroom distribution chain in the Netherlands.
P ro d u ctio n 2 7 0 ,0 0 0 M to n

P ro c essin g In d u stry (6 0 % ) 1 5 7 ,0 0 0 M to n

W h o lesa le Fre sh m a rk e t (4 0 % ) 1 1 3 ,0 0 0 M to n

E x p o rt (9 5 % )

D o m e stic c o n su m p tio n (5 % )

D o m estic c o n su m p tio n (1 7 .5 % )

E x p o rt (8 2 .5 % )

Figure 8.1 Distribution scheme of Dutch button mushroom, 2002 (on fresh weight basis)

Figures 8.2 and 8.3 picture the distribution chains for fresh and industry (button) mushrooms, respectively. The major difference between them is the importance of wholesale trade. The processing industry collects mushrooms directly at the farms. The role of vegetable auctions in mushrooms trade ended several years ago. Both distribution chains only have three stages: 42

production, trade/processing, retail/food service. Preserved industrial mushrooms, however, are being distributed to other food industry as well. 8.2.1 Fresh mushrooms

The distribution chain for fresh mushrooms has undergone many transformations recently. In 1990, the most important auction houses, 'Veiling ZON', 'Veiling Zaltbommel' and the auctions that would later form cooperative auction house and wholesaler 'The Greenery', started the CBH (Champignon Bemiddelingsbureau Holland; Button Mushroom Intermediation Bureau The Netherlands). This intermediary sold a large share of fresh and industry mushrooms and was meant to raise prices for the growers. In 1999, however the cooperation ended when Veiling ZON started to trade mushrooms independently again. Not much later, this auction transferred all mushroom trading and supply operations to the specialised company Heveco. Fragmentation of fresh mushrooms distribution has been a problem for many years. Small producers are still unable to efficiently supply large supermarkets. Although recently concentration in the sector is underway, there are still a number of trading companies that are individually too small to supply the largest (international) retailers. The trading companies are engaged in import and export activities, buying and selling, washing, labelling and packing. One of them is growers' cooperative 'The Greenery', which acquired the other cooperative mushroom trading company 'Bomela Fungi' in 2003. The other big mushroom distributors, 'Banken Champignons', 'Limax' and 'Heveco' operate their own mushroom growing farms.
Superm arkets (85% ) V egetables, greens grocery stores (5% ) O pen m arkets (8% ) O ther (2% )

R etail C a. 16 K ton

Food Service

O ther

A vailable for d om estic consu m ption of fresh button m ushroom s C a. 50 K ton

Im p orts of fresh button m ushroom s C a. 30 K ton

W h olesale trade fresh button m ushroom s T hroughput ca. 140 K ton

E xports of fresh button m ushroom s C a. 90 K ton

P roduction C a. 110 K ton

Figure 8.2 Distribution chain of fresh button mushrooms, 2002

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The traders are supplied by their own producers and other mushroom farms. Mushroom production and trading is concentrated in the South-East of the Netherlands. The majority of Dutch growers are organised in producer collectives. The importance of Poland for the supply of fresh mushrooms is increasing. This has led many trading companies to start operations in Poland. Banken and Limax now operate wholesale activities in Poland, especially in the vicinity of Wolsztyn, near Poznan. The selected Polish producers have upgraded their production facilities, and obtained Eurep-gap and other certificates needed to supply big European retailers. 8.2.2 Processing industry

The processing industry mainly produces canned and jarred white button mushrooms. Other products are frozen and provisionally preserved mushrooms.
Table 8.1 Industrial processing of mushrooms (x 1,000 tonnes) 1997 1998 1999 Total 169.5 169.4 169.2 Sterilization 146.9 141.0 140.6 Source: Vigef (www.vigef.nl ) 2000 172.2 143.9 2001 179.8 148.8 2002 173.2 148.0

The Dutch mushroom processing industry is highly concentrated. In 2002 the two biggest companies 'Holco' and 'Lutce' merged to form 'Lutce B.V.'. CNC (Cooperative mushroom grower organization, See paragraph 10.3) and Agrostar own 65 and 35 percent of the shares in the new company, respectively. The company's market share in the Dutch mushroom processing market is about 70 percent, and it is one of the biggest in Europe. Besides the other big processing firm Prochamps, several smaller firms produce mainly specialties. About 17 percent of available industry mushrooms are frozen. The rest, about 145 thousand tonnes annually, is processed into cans, jars and meals (about 80-90 percent) or semi-finished (provisionally preserved) in buckets and eco-packs (about 10-20 percent). The mushroom processing industry supplies ingredients to other food processing industries, for soups, pizza, sauces and ready-made meals. Another important customer is the food-service market; restaurants, catering and institutional demand. This market mainly consists of blanched mushrooms, cans and jars.

44

Supermarkets (> 85%) Grocery stores Markets Other

Retail Ca. 3 Kton

Food Service

Other

Processed and prepared button mushrooms available for domestic consumption Ca. 8 Kton

Imports of canned, jarred or otherwise preserved mushrooms Ca. 15 Kton Imports of industry mushrooms Ca. 20 Kton + 3 Kton frozen

Canned, jarred or otherwise preserved button mushrooms Production ca. 148 Ktons

Exports of canned, jarred or otherwise preserved Ca.140 Kton

Processing industry Throughput ca. 173 Kton

Exports of frozen mushrooms Inputs to other processing Ca. 25-30 Kton

Production of industry mushrooms Ca. 160 Kton

Figure 8.3 Distribution chain of processed button mushrooms, 2002 in Ktons

8.3

Packaging and labelling

Packaging and labelling of fresh mushrooms is in fact a joined responsibility of growers and traders. When a retailer places an order with one of the trading companies, it specifies the weight, sort and size of the mushrooms. The trader will find a grower that can fulfil the order. The grower than harvests the mushrooms and either directly packs them in the final consumer packing, or packs them in small (cardboard) crates. The mushrooms are then transported to the trading company, either by the grower or by the trader. The trading house will weight and check the packed mushrooms, seal them and label them. Depending on the buyer's wishes the mushrooms are packed in 250 or 500 gram (blue) consumer boxes and sealed with foil or plastic (transparent) cover. Some mushrooms are sold in bigger containers.

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8.4

Retail market structure

The total value of the retail market for vegetables and fruit (V&F) in the Netherlands was 3.7 billion euro in 2003. The total market for fresh mushrooms (all sorts) was about 62.5 million euro in 2002. Hereof, 55 million euro is spend on fresh white button mushrooms, mainly sold in the familiar blue 250 or 500 gram plastic boxes. These retail boxes are sorted according to the EU-marketing norms for fresh button mushrooms. Other mushrooms are also mainly sold packed, sometimes as a mix of different kinds like chantarelles, oyster mushrooms and flat mushrooms. The Dutch retail market for processed mushrooms is about 25 percent of the fresh market in terms of volumes.

Non-retail 3% Open market 11% Vegetables, greens grocery shops 13%

Other shops 4%

Supermarket 69%

Figure 8.4 Market shares of sales channels for vegetables and fruit, 2002 (Source: HBD, 2003)

Figure 8.4 gives a division of market shares in fresh V&F sales among different retailers. Weekly or daily markets and semi-permanent outdoor stands (street trading) make up 11 percent of total V&F sales. In the future the market share of the supermarkets and discounters is expected to grow even further. Discount supermarkets tend to sell ever more fresh vegetables (including button mushrooms). This trend is reinforced by the current lagging economic situation. Looking at mushrooms in more detail, table 8.2 gives an overview of the importance of different sales channels of fresh white button mushrooms. The volume share of supermarkets in the sales of white button mushrooms is growing from 72% in 1994 to 85% in 2002, while the market share of specialized grocery stores is decreasing from 12% in 1994 to 5% in 2002. Weekly or daily markets also lost, from 12% in 1994 to 8% of sold volumes in 2002.
Table 8.2 Household purchases of white button mushrooms according to sales channel, per 100 hh, 2002 Supermarket Market Grocery Producer Ambulant Other Volume (kg) 193 (85%) 18 (8%) 11 (5%) 3 (1%) 1 (0%) 3 (1%) Expenditure () 671 (85%) 53 (7%) 39 (5%) 9 (1%) 5 (1%) 10 (1%) Average price 3.48 3.03 3.52 2.93 3.90 3.19 Source: GFK/PT in: Van den Berg and Cadel, 2003. Total 228 786 3.45

46

Supermarkets form the single most important retail outlet for food products. The Dutch retail market is concentrated around 4 main players. Table 8.3 presents an overview of the biggest Dutch food retail (supermarket) companies. The Laurus Group operates three shop formulas: Super de Boer, Edah and Konmar. Dirk van den Broek and Sperwer Group consist mainly of smaller outlets. Albert Heijn, C1000 and Laurus have a combined market share of more than 60 percent. Aldi and newcomer Lidl are discount supermarkets, which compete with low prices. Their assortments and service are limited.
Table 8.3 Supermarkets in the Netherlands, 2002 Company Formula - Albert Heijn - C1000 - Aldi - Super de Boer - Edah - Konmar Cooperation Dirk van den Broek companies - Dirk van den Broek - Bas van der Heijden - Digros - Jan Bruijns Sperwer Group - PLUS - Garantmarkt - Spar Source: Bijman et al., 2003 Ahold Schuitema Albrecht Laurus Number of outlets 698 487 390 425 287 137 36 26 19 9 1.0 200 61 278 4 Turnover (billion euro) 5.5 3.5 1.9 1.8 1.2 1.1 1.4 Market Share (%) 27 15 8 10 6 5 4

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9. Consumption
9.1 Introduction

From the last chapter it is clear that most mushrooms are consumed fresh and bought in the supermarket. Supermarkets operate in a concentrated market. Only a few buying associations dominate the market. In this chapter we will describe consumption of button mushrooms and other fungi in the Netherlands. Paragraph 9.2 deals with household consumption and the size of the domestic market. Thereafter, in paragraph 9.3 we discuss the most important trends in consumption of vegetables and fruit in recent years. 9.2 Household consumption

Total expenditure of Dutch households on vegetables and fruit in 2003 was 3,715 million euro including value added tax (CBS Statline). This means that annual expenditure per household was about 535 euro and the average expenditure per capita was 232 euro in 2003. About 46 percent thereof or 107 euro per capita goes to vegetables and 23 euro to potatoes. Figure 9.1 gives a division of vegetables consumption into several categories. Mushrooms are part of the groups 'other fresh vegetables' and 'preserved vegetables'. The figure 9.1 shows that preserved vegetables make up about 23 percent of total vegetables consumption.

Preserved vegetables 23%

Leafy vegetables 16%

Cabbage 11%

Fresh legume 6% Other fresh vegeables 29% Carrots and tubors 8% Tomatoes 7%

Figure 9.1 Consumption of vegetables by households (Source: CBS Statline, Budget Research 2000)

Lettuce, tomatoes and cucumbers are the most popular fresh vegetables in the Netherlands, in terms of expenditures (See Table 9.1). Consumption of fresh vegetables in kilogram per cap48

ita has declined during the last decade. Consumption of white button mushrooms on the other hand has been relatively stable. Other mushrooms consumption has even been growing. The white button mushroom holds a fifth place (See Table 9.1). Total consumption of fresh and processed white button mushrooms in the Netherlands equals about 3 kilogram per household, of which 85 percent is consumed fresh. Other mushrooms than white button mushrooms add another 170 gram to total household consumption. This segment is growing rapidly, while canned and otherwise preserved mushrooms lose market share.
Table 9.1 Top 10 Vegetable consumption, 2002 1. Lettuce (including mixed salads) 2. Tomato 3. Cucumber 4. Cauliflower 5. White button mushroom 6. Chicory 7. Green or French Bean 8. Sweet pepper 9. Carrot 10. Onion Source: PT (www.tuinbouw.nl)

9.2.1

Fresh white button mushroom

The average Dutch household bought 2.3 kilograms of fresh button mushrooms in 2002, or about 40 grams per week.1 Here, 'Button mushrooms' refers to all stages of white agaricus bisporus. While volumes have been relatively stable over the last years, prices have risen and total expenditures of households grew from 7.47 euro per household in 1999 to 7.86 euro per year in 2002. Table 9.2 presents figures of average household purchases. Mushroom consumption is slightly higher in winter months October till March than in the summer period. (Van den Berg and Cadel 2003)
Table 9.2 Consumption of fresh white button mushrooms in the Netherlands Volume per Buying Expenditure Average exHousehold Households per penditure per (kg) (%) household kilogram (euro) (euro per kg) 1999 2.32 73 7.47 3.22 2002 2.28 73 7.86 3.45 Source: Van den Berg and Cadel, 2003 Total Sales Volume (1,000 kg) 15,723 16,000 Total expenditures (1,000 euro) 50,706 55,112

The average Dutch household consists of 2.3 persons. The total population amounted to 16.2 million people in 2003, or 7 million households. (CBS Statline)

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9.2.2

Processed button mushrooms

In total the Dutch market for processed mushrooms sums up to about 4.05 million kilograms, or 3 million kilograms in fresh produce equivalent weight. Dutch households buy about 450 gram of processed mushroom annually. Button mushrooms in glass take up a 70 percent share of all processed produce. Figures on consumption of preserved mushrooms other than button mushrooms are unavailable. We can however assume that this is extremely limited in terms of volume. 9.2.3 Other edible mushrooms

Retail organizations recognize that product differentiation is necessary to make the total mushroom assortment attractive. Many products compete for consumer preferences and product innovation can substantially increase demand and willingness-to-pay. Product innovation is not limited to new sorts and varieties, it can also relate to new sorts of packaging or processing. Retailers have started to offer fine cut fresh mushroom, and packages with a selection of different kinds of mushrooms.
Table 9.3 Consumption of other edible mushrooms, 2002 Volume per Expenditure 100 household per 100 (kg) households (euro) Other edible mush16.8 102.62 rooms, total Flat mushrooms 11.4 53.61 Oyster mushrooms 1.7 15.03 Cantharelles 0.3 4.19 Source: Van den Berg and Cadel (2003) Average price (euro per kg) 6.11 4.72 8.86 14.98 Total sales Volume (1,000 kg) 1,177 797 119 20 Total expenditure (1,000 euro) 7,195 3,759 1,054 293

Dutch consumers bought about 1.2 million kilograms of other than white button mushrooms in 2002, worth 7.2 million euro. Since 1999, both quantities as well as expenditures have increased considerably, 53 and 41 percent respectively. Together, all other than white button mushrooms now make up more than 10 percent of total expenditures. 9.3 Trends in consumption

The Dutch society is undergoing constant changes. Households are becoming smaller, more people are living alone and women are integrating into the work force. With growing welfare and labour market demands, more people follow higher education. The share of retired and elderly people in the total population is growing. All of these societal changes also effect consumption patterns. Changes in consumption patterns and trends in consumption behaviour can have an impact on the structure, organization and location of production and distribution. Several trends can be distinguished in the Netherlands. (Bijman et al. 2003, Berkhout and Van Bruchem, 2003)

50

Consumers are looking for convenience. In consumption patterns, convenience means that people want to spend less time on cooking. This is translated in the growth of demand for ready-made meals and washed and cut fresh, cool fresh or frozen vegetables. This trend will presumably also lead to a sustained growth in consumption of meals on the basis of rice or pasta, instead of traditional potatoes (Gezondheidsraad, 2002). For mushrooms, one may consider this as an opportunity. Consumers consider health aspects of food to be important. More than half of Dutch consumers (57%) always or often considers the health aspect in buying decisions. Bijman et al (2003) mention that this trend is expected to have two effects on consumption patterns. First, consumption of organically produced products will increase. For vegetables and fruit, the health aspect is the most important reason for buying organic. Second, it will lead to an increase in demand for functional foods. Functional foods contain health improving additives like vitamins and minerals. The health trend is contradicted by the decrease in consumption of fresh vegetables and fruit. It seems that the convenience trend and shift towards functional foods have the upper hand for now. Consumers demand food safety. Most consumers are confident about the safety of food products. Although Dutch consumers are less worried about food safety than most other Europeans, both producers, retailers and consumers take it very seriously. The emergence of Eurep-gap and special hygiene codes is one result. Producers and distributors that cannot comply with strict standards will not survive on this market.

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10. The Institutional Framework of Dutch Mushroom Sector

10.1 General Introduction Farmers and growers in the Netherlands do not work isolated, but in a complex of enterprises, organisations and institutions, which have taken over part of the business functions of the farmers or support them in pursuing their goals. The agricultural complex consists of (a) cooperative and private enterprises that supply goods and services to the farmers, (b) processing industries and (c) trade and distribution enterprises. It also includes governmental and nongovernmental institutions that are engaged in research, education and extension, the provision of health care, quality control and sales promotion. The most important institutions in the agricultural complex are the supply and processing co-operatives, the co-operative banks, the farmer's associations, the agricultural product boards, and the organisations involved in agricultural education, research and extension. In this part of the study, the most relevant organisations for the mushroom sector will be described, after a short description for the whole agricultural sector in the Netherlands. 10.2 Farmers' co-operative enterprises 10.2.1 General

At the end of the nineteenth century, farmers started to establish co-operatives, in order to improve the supply of goods and services to their farms and the processing and marketing of their produce. The private enterprises did not meet their demand in a proper way. The first purchasing co-operative was founded in 1877, the first dairy co-operative in 1886, the first cooperative auction in 1887 and de first co-operative credit bank in 1896. This approach appeared to be successful and in the middle of this century, the Netherlands was covered with a network of co-operatives. Local and regional notables, including the clergy, have often played an important role in the establishment of co-operatives. The Dutch co-operatives are almost exclusively of the 'single' type, meaning that they are engaged in the processing and marketing of only one product. They were established by those farmers who had a direct interest in these products. This implies that almost all the farmers and growers in the Netherlands are affiliated to at least three of four co-operatives. The following types of co-operatives can be distinguished: a. Credit co-operatives For the required modernisation of the holdings the farmers needed more credit than the private banks were willing to provide or at an exceptional high interest. For that reason, they started co-operative farmers' savings and credit banks.

52

b. Purchasing co-operatives The first purchasing co-operatives have been established for the purchase of fertilisers and feed grains. Nowadays they provide a broad range of products, covering almost al the supplies the farmers need. c. Processing and marketing co-operatives In almost all the sectors, the farmers established co-operatives for processing and marketing, like the co-operative dairies, the co-operative beet-sugar industry, the co-operatives for the production of potato starch, co-operative slaughterhouses, co-operatives for egg marketing and co-operatives for wool processing and marketing. d. Co-operative auction markets In order to get the market functioning more efficiently and more transparently Dutch growers started to organise special market places where they introduced the so-called Dutch auction clock. At the end of the last century almost all the Dutch production of fruit vegetables and flowers was marketed via co-operative auctions, but since then the role of trade companies is increasing. e. Co-operative service providers These are co-operative to provide the entrepreneurs in the sector with the services they need for a proper functioning of their business. Examples are co-operative machine stations, mutual farm help organisations, mutual insurance companies, and co-operative accountancy offices. At an early stage already, the co-operatives within the same sector started to form partnerships in order to increase their efficiency and to strengthen their competitive power. Central co-operatives were established in order to perform certain economic functions on behalf of local or regional farmers' co-operatives. At a latter stage a process of amalgamations and mergers of local and regional co-operatives started. While at the start a co-operative was not more or less than one factory or one bank, currently most co-operatives own several processing plants or branches. This is an ongoing process, although almost ending, because in some sectors only one large nation-wide working co-operative is left. The major reason behind these mergers is the fierce competition both on the domestic and international markets. The Dutch co-operatives have to compete with strong national and multinational companies on both the domestic and international markets, which makes it necessary to continuously improve their performance through modernisation and enlargement of their businesses. Due to their adequate response to the developments in the market, the farmers' co-operatives have a large share in most of the important sectors of Dutch agriculture. In the dairy sector, the cooperatives control the whole market. Until the end of the last centuries, this was also the case in the horticultural sector but private trading companies are increasing their market share. The local co-operative farmers' banks, all member of the central co-operative bank 'Rabobank Netherlands', provide more than three quarter of all loans to Dutch agriculture.

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10.2.2

Co-operative of Dutch Mushroom Growers (CNC)

Founded in 1953 by three farmers, the Co-operative of Dutch Mushroom Growers (CNC) has played a major role in the development of the mushroom sector in the Netherlands. Originally, the organisation was set up to co-operatively produce compost in a more efficient manner than it was possible on the individual holdings. In course time, however, more growers became member of the association and they gave more tasks to the association, so it grew to a diversified organisation. Until 2001, CNC represented the interests of mushroom growers and compost producers in various institutions, with regard to research, education, information and advise, distribution, and environmental and political issues. The core activity of CNC, however, was compost production. CNC owned the biggest compost manufacturer in the Netherlands, CNC Grondstoffen B.V. (CNC Inputs Ltd). As mushroom production expanded fast during the 1990's, other compost producers gradually took parts of the market. Competition increased and CNC was no longer in the position to represent the whole sector, because not all mushroom growers and compost producers were member of CNC. There were also other organisations, such as the Association of Compost Producing Companies (VTP). For that reason a new organisation was founded in 2001, the Association of Mushroom Growers in The Netherlands (VPN), with the specific aim to represent the general interests of the whole sector. From then on, CNC concentrated on its commercial core activities, the production of composts and other inputs (CNC Grondstoffen B.V.) the provision of services to mushroom producers (CNC Grondstoffen B.V.) transports of horse manure, compost and case soil (AMCO B.V), the processing and distribution of mushrooms (Lutce B.V) CNC also initiates research on growing methods and new varieties and it also collects the license fees for the Horst mushroom varieties via Bromyc B.V. CNC has around 300 members. They are divided in three regional groups: Province of Northern-Brabant, Province of Limburg and Region Middle and Northern Netherlands. The members are full owners of the companies in the CNC holding. Lutce Holding owns 65 percent of the shares of the Lutce B.V. mushroom processing company.

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CNC = Co-operative of Dutch Mushroom Growers

CNC Holding B.V.

CNC Grondstoffen B.V. Production of compost and other inputs

AMCO B.V. Transport of manure, compost, casing soil

Bromyc B.V. Spawn production, Research

Lutce Holding B.V.

Lutce B.V. Mushroom Processing

Figure 10.1

Organisational structure of CNC

10.3 Farmers' associations 10.3.1 General

The social-economic development of the farmers is not only dependent on what is happening in the market, but also on the developments in other sectors and on the policies pursued by the government at local, regional and national level. In order to strengthen their position in the social-economic and political arena, farmers established farmers unions. These regional based unions were organised folowing the ideological currents in the Dutch society and co-operated at national level in three central farmers' organisations. In the past, these organisations together with the Farm Employees' Unions formed the so-called Agricultural Board, a Statutory Organisation. The Agricultural Board acted as a permanent consultative body for the Ministry of Agriculture on all issues of interest for the sector, both at national and international level. In 1995 the Agricultural Board was abolished, and the different farmers' unions at regional level created one umbrella organisation, LTO-Nederland, i.e. Dutch Federation of Agricultural and Horticultural Organisations. Two thirds of all farmers and growers are members of an organisation affiliated to LTO. This central organisation took over a larger part of the functions of the Agricultural Board. The organisation looks after the interest of the farmers and growers in national and international policies and is representing them in the case of negotiations with the authorities. LTO has representatives in all important boards and committees in and around market policy, education, information, advice and research in order to promote the interests of Dutch farmers and growers in the decision-making circles.

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10.3.2

Association of Mushroom Growers the Netherlands (VPN)

VPN is a sector wide organization that promotes the interests of mushroom growers and compost manufacturers. Almost all active growers are affiliated to the association, both handpicking and mechanized cutting farms, 290 in total. In addition, Dutch compost producers and Belgian producers delivering to the Netherlands are member of VPN. VPN was founded by representatives of CNC and the former Association of Compost Producers (VTP) in 2001. VPN is an interest organization for the whole mushroom sector and performs many tasks while representing the interests of its members at a national and international level. VPN is one of the members of the Dutch Federation of Agricultural and Horticultural Organisations (LTO-Nederland) and participates in the Product Board for Horticulture (See section 4). VPN represents the mushroom sector in various committees and governmental bodies for policy preparation and implementation with respect to: Social-economic topics, incl. collective labour agreements: Energy issues, such as; Environmental issues; VPN is also involved activities regarding: Promotion of mushroom consumption; Promotion of relevant research; Implementation of market analyses; Harvest mechanisation; VPN is funded by direct member contributions and a surcharge on compost. Research and promotion is mainly funded through the Product Board for Horticulture (PT). Mushroom growers, processors and distributors are also paying a fee to this product board. VPN influences the spending of these funds through its membership of the Branch Commission for Fruit and Vegetables of PT. VPN is also a member of the General Board of LTO-Nederland, which is amongst others things involved in negotiating collective labour agreements with the labour unions. Furthermore, VPN represents the Dutch sector in international bodies, like the European Mushroom Grower Association (GEPC) and the International Society of Mushroom Science (ISMS). The organisation also upholds regular contacts with the Dutch ministry of Agriculture, Nature and Food Quality, whenever the interests of the mushroom growers or compost manufacturers are at stake. Organisation VPN is an association (Dutch: vereniging), which means that it is a non-profit organisation with members with certain rights and obligations. These rights and obligations are written down in the articles of association, registered by a public notary. These articles describe the objectives of the association, the conditions for membership, the organisational structure of 56

the association, procedures for appointing and exchanging the board members and the financial management and reporting. In addition to these articles, the associations have rules and regulations for the day-by-day management. In general, the articles of association can only be changed by a majority of votes in the general members meeting, while the management rules can be changed by the board. The highest authority within VPN is the General Member Assembly, which convenes once or twice a year (See Figure 5.1). The assembly elect the members of the General Board, which consists of four growers, four compost producers and an independent chairperson. New board members are nominated by the sitting board. VPN members are divided into five branches: three regional organisations of button mushroom growers, one division for other mushroom growers and one for compost producers. These branches have a board of three persons, elected by the members in the respective group. These boards have at least four meetings a year. The five branches and the general board are represented in the Consultative Body (fourteen members), which meets about four times a year. The general board meets about once a month. The daily work of the organisation is carried out by the VPN-Office, i.e. the chairperson of the general board and the secretariat (four people). The secretariat is responsible for all the administrative work and represents VPN in various commissions. For some topics, VPN has established internal commissions, to prepare their positions in external consultations and policy preparation, such as: Commission for Social Issues Commission Environment Internal Communication In order to keep posted on the developments in the sector and the expectations of the members with respect to the VPN activities, it is very important for the VPN office to keep in touch with the members. The office uses different channels for communication. Most important are the direct contacts with the members during farm visits, meetings of regional boards and commissions, study clubs and other occasions where members meet. In addition to that, VPN issues a two monthly periodical 'VPNiews' ('VPNews'), publish articles in the monthly magazine 'Paddestoelen' ('Mushrooms') and in the magazine of the Dutch farmers' organisation LTO 'Oogst' ('Harvest'). A website is in preparation. In addition to that, the VPN office informs its members via direct mailings about topical subjects.

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General Members Assembly

Secretariat
1 Independent Chairman 4 Growers 4 Compost Producers

Board Consultative Body

Regional Board Limburg

Regional Board Central-North

Regional Board Northern-Brabant

Board Other Mushrooms

Board Compost Producers

Study Clubs

Growers from region Limburg

Growers from region Central-North

Growers from region N. Brabant

Growers of other mushrooms

Compost producers

Interested growers

Figure 10.2 Organization chart of the Dutch Mushroom Association (VPN)

VPN performs also a facilitating role towards 'mushroom study clubs'. These are groups of growers who regularly meet on a voluntary basis to exchange experiences in mushroom growing, and to study aspects of mushroom growing that they consider being important for the development of their businesses. To date there are about ten study clubs, which meet about 26 times a year. VPN supports these groups with funds and administrative support. Cpoint provides technical and economic advice to the study club, on request. External relations in the Netherlands The major task of VPN office is to support the mushroom sector and to promote the interests of its members, the mushroom growers and compost growers, in all relevant fields. For that purpose VPN, staff and board members have a seat in various commissions that are involved in policy preparation and implementation. Most important in this respect are the commissions of the Product board for Horticulture, because PT is a statutory organisation that issues regulations regarding many aspects of the horticultural sector, including the mushroom sector (see the following section on PT). PT plays also an important role in consultation with the national government, in particular the Ministry of Agriculture, Nature Management and Food Quality. In some aspects PT is also the representative of the sector in commission of the European Union. Another important organisation is the aforementioned Dutch Federation of Agricultural and Horticultural Organisations (LTO), which represents the Dutch growers at national and international level. 58

VPN participates in the following consultative bodies of PT: Sector commission vegetables and fruit Working group Promotion of Mushrooms Program Advise Committee for Research on Mushrooms VPN has the lead in the consultative bodies on promotion and research on mushrooms, in which besides the mushroom growers, representatives of the processing, trade and transport companies participate. VPN is member of LTO and has as seat in: General Board of LTO Consultative body of Secretaries of Commissions in the Plant Production sector VPN participates also in the following commissions, which are lead by different institutions: Consultative group on a Multi-annual agreement on Energy use (ministries and agricultural sector) Commission for standards on Casing soil (VPN, casing soil producers and mushroom growers) Steering Group on (historical) Soil Pollution (VPN and ministries) Besides these formal relations through commissions etc, VPN has also direct contacts with relevant officials and administrators of various organisations, such as: Ministry of Agriculture, Nature Management and Food Quality (LNV) Ministry of Spatial Planning, Housing and Environment (VROM) Ministry of Economic Affairs (EZ) Product Board of Horticulture (PT) Dutch Federation of Agricultural and Horticultural Organisations (LTO) Association of Dutch Vegetables and Fruit Processing Industries( VIGEF) International relations An increasing part of laws and regulations binding for citizens and companies in the Netherlands is shifting from national towards European jurisdiction. For that reason, it is important to have a voice in the various institutions of the European Union, the European Commission, European Parliament, etc. In this respect, the representation via the Dutch government, in particular the Ministry of Agriculture and the other above-mentioned institutions (EZ, PT, and LTO) is important. With respect to the mushroom sector, the 'European Association of Mushroom Growers' (GEPC) is the only organisation that is recognized by the European Commission as for consultation and negotiation on issues regarding the mushroom sector. VPN is a member of this organisation.

59

VPN is also member of the International Society of Mushroom Science (ISMS), in order to keep posted on new developments in science and technology developments. In addition, VPN staff has direct contact with similar organisations in other European countries. Major topics for consultation and negotiation Topic Collective labour agreements (CAO) (wages and labour circumstances) Occupational Health and Safety covenant (ARBO) Multi-annual Agreement on Energy (energy saving measures) Multi-annual Agreement on Pesticide Use (towards integrated pest management) Agreements with Labour unions Mushroom sector represented by VPN and LTO

Ministry of Social Af- LTO fairs Ministry of Agriculture Ministry of Agriculture VPN and PT

Ministry of Environ- PT ment, Ministry of Agriculture Industrial waste/Mushroom stems Ministry of Environ- VPN ment, Ministry of Agriculture Quality standards for Champost (Used Ministry of Agriculture VPN compost) Programme for research activities Ministry of Agriculture VPN and PT Wageningen UR Promotional activities One of the major tasks of VPN is to support the demand for Dutch mushrooms via promotional activities. Important in this respect are the so-called 'Champignon Dagen', a three days event that is organised every year, and since 2002 by VPN. In the course of time, this trade fair have become widely known all over the world. To mushroom growers, managers and researchers these days provide an ideal opportunity to acquaint themselves with the latest developments in mushroom growing. In 2002 more then 4,000 persons visited the fair, 80 firms participated, whilst the attendance included numerous visitors from various European countries, Asia, Australia, Canada and the USA. The Mushroom Days are organised by a foundation, the board of which is the same a that of VPN. The VPN 'Working Group Promotion of Button Mushrooms' is responsible for the other promotional activities, such as General Public Relations and consumer advise 60

Meetings of journalists Publications in various magazines and papers Promotion at large events and fairs in the Netherlands and Germany Sponsoring of 'Silver Champignon', reward for people who have substantially contributed to the development of the sector.

Funding Part of the activities of VPN are financed on the basis the membership fee, which is currently 250 per year. For promotional activities the compost producers pay a fee of 0, 50 per ton compost, which they pass on to the mushroom growers. Apart from that, the mushroom growers have to pay a sub-tax to the Product board, which is 1,64 per m2 mushrooms plus 0,175 % of the total turnover. The contributions to the Product board are mainly used for promotional activities and research. The decisions on how to spend the budget for research and promotional activities are taken in the above mentioned consultative groups on research and promotion. The 'Mushroom Days' are not included in these activities and are financed via fees of participants and visitors. 10.4 The Agricultural Product Boards 10.4.1 General

In order to foster the economic development the Dutch government created the means for the industry and trade to establish bodies with legislative powers under government supervision. After World War II, there was a political consensus that the social-economic interest would be best promoted by the establishment of public authorities in which all major stakeholders in the different sectors were represented. The agricultural product boards are organised accordingly. They are vertically organised which means that they include all the enterprises involved in producing, processing and marketing of the commodities concerned. Practising a certain profession or pursuing a certain trade in a sector where a product board exists makes one subject to the rules of that particular board. The members of a product board are nominated by the organisations of both employers and employees. In principle, they have an even number of seats in the board. The meetings of the board are attended by the representatives of the government (the ministries), who have a voice but not a vote. The authority of the product boards is defined in decrees. In general, their mission is to promote the economic interests of the sector concerned. The boards are entitled to give advice to the government and draw up rules and regulations, which become operative after consent by the government of the Government's Counselling Institution for Social and Economic Affairs (SER). These rules and regulations may apply to production, marketing, processing, professional training, quality and hygienic measures, competition, levies and surtaxes. The boards can be charged with certain tasks in joint administration with the government. Besides the payment for special assignments, the Government is not financing the product boards. Their activities are financed with levies and surtaxes paid by the stakeholders in the sector. This means for example that all the farmers have to pay a small levy on 61

every slaughtered pig or delivered kg of milk (via the slaughterhouses and dairies respectively). The mushroom growers and compost producers pay a levy based on the amount of compost used respectively produced. The co-ordinating role of the product boards in marketing is diminishing because the processing and marketing industry is not fragmented anymore as it was some decades ago and the stakeholders in the production chains are improving chain management. That is one of the reasons for the product boards to merge. The most important product boards are those for Livestock, Meat and Eggs, for Dairy Products, for Arable products, for Horticulture and for Fish and Fish products. 10.4.2 Product Board for Horticulture (PT)

The Product Board for Horticulture (Productschap Tuinbouw, or PT, in Dutch) promotes the collective interests of all businesses within the sector: growers, auctions, traders, horticulturists, breeders, propagators, producers, retailers and their employees. The Product Board tries to facilitate as much as possible all the work in this chain, from producer to consumer. The mushroom sector is also represented by the Product Board for Horticulture (PT). The mission of PT can be summarized as 'promoting the competitive position of Dutch horticulture worldwide'. For that purpose, the PT performs many tasks, such as: Promotion of consumption of vegetables and fruit through promotional activities; Market development and export promotion; Stimulation of and funding of relevant research and development projects; Collecting and provision of sector relevant information; Preparation and implementation of phytosanitary and quality regulations; Implementing and enforcing national and EU-regulations. PT represents the horticultural sector in various committees and governmental bodies for policy preparation and implementation. Besides policies regarding labour, energy and environmental issues, PT also enforces some EU-regulations, notably on quality control, import contingents, subsidies and taxes. The responsibility for these regulations is handed down to the PT through the Ministry of Agriculture, Nature and Food Quality. Many different interests are collaborating in the PT: growers, auctions, distributors, processors and retail organisations are active in the different committees and have representatives in the PT organisation board. The mushroom growing sector is represented in the PT through VPN. The employees are represented through the employee unions. Policies issued by the PT are binding for all firms concerned. Delegates from different sectors collaborate in special branch committees. The mushroom sector is a part of the branch committee Fruit and Vegetables. VPN is a member of this committee. Because members from all stages of the production chain are represented in this committee, it is an important source for chain co-operation and quality improvement. All

62

firms in the horticultural sector benefit from the work of the Product Board. To prevent free rider problems, each firm (primary and distribution) pays an obligatory membership fee. 10.5 The Agricultural Knowledge System 10.5.1 The Agricultural Education System

The educational system in the Netherlands consists of public schools and private schools. The private schools make up more than 75% of the total. Most of them are denominational, representing a wide variety of religions and philosophical approaches. Private schools are subsidised according to the same rules as the public system on condition that they conform to certain standards determined by law. Almost the whole educational system is the responsibility of the Ministry of Education except for the agricultural education, which is part of the Ministry of Agriculture. This exceptional situation is due to the historically close relations between the educational system and the agricultural community in the country. In the agricultural educational system four levels can be distinguished: a. Lower agricultural education In the Netherlands education is compulsory for children between 5 and 16 years old. After having attended the primary school for about 7/8 years, the children can choose for a several types of secondary education. One of the possibilities is the so-called lower agricultural education. This provides the future farmer and grower the basic knowledge, but the lower agricultural school is not an end station for the pupils. It is rather a preparation for intermediate or higher agricultural vocational training and for further training programmes within and outside agricultural education system. b. Intermediate education Intermediate agricultural education takes two, three to four years, depending of the type of the school. In general the educational programs of the intermediate agricultural schools are geared to the type of agriculture in their surroundings. However, the intermediate agricultural education is not only meant for preparing students for the profession of farmer or grower, but for a variety of jobs in sectors connected with agriculture. Students are free in choosing the specialisation they want. Most young farmers in the Netherlands have at least intermediate education. c. Higher education Some of the farmers have followed even higher agricultural education but in the programmes of the five colleges of higher agricultural education in the Netherlands are largely focussed on training for executive functions in agriculture and food industry, research institutions and public and private organisations involved in the agricultural sector. For instance, most agricultural consultants in the Netherlands have studied at one of the higher agricultural colleges. The curriculum, which takes four to five years, covers all aspects of importance for the development of the agricultural sector and the rural area. The students can choose out of several subjects, which makes it possible for them to concentrate their study on those subjects needed for their future functions in the society. Most of the students take a job, after having finished 63

the higher agricultural education, but there are also a number of possibilities for further education, such as the one-year agricultural teachers' training course, and higher management and economic training courses. They are also allowed to start a study at the Wageningen Agricultural University and the Faculty of Veterinary Medicine of Utrecht State University. d. University education The Netherlands has 12 universities, some of them with a famous history. One of them is the Wageningen Agricultural University with about 4500 students. During the agricultural crisis in the late decades of the 19th century the Dutch government founded the State Agricultural School in Wageningen in 1876, which would grow towards the Wageningen Agricultural University. The university has always focused on its own unique domain: the agricultural sciences. Through the years this field has become significantly deeper and broader and as a result, the university includes plant and animal sciences, food and technology science, environmental sciences and social science. Recently, the Netherlands introduced the BachelorMasters system. Like at the other institutions for agricultural education, the students have the possibilities to combine education and training in different subjects, allowing them to adapt their study to their capacities, interests and expected future functions in the society. Veterinary sciences can be studied at the Utrecht University. Special courses and training facilities Agricultural education in the Netherlands focuses on practice, training the students' ability to solve problems independently. In lower agricultural education, the work in each school is closely related to agricultural conditions in the neighbourhood. Nearly all students in intermediate agricultural education and also students at the higher agricultural colleges and the university receive, as part of their course, a two to six week practical training at one of the practical training centres. The students are taught to deal with the real situation in the sector, with modern machines and business systems. These centres do not only provide support to the main-stream education institutions, but they offer also a broad range of special training courses for farmers and others involved in the agriculture and food sector. They give special courses in a number of subjects and they enable teachers, consultants, farmers, industry businessmen and researchers to meet and exchange information. This type of additional training and refresher courses are also given by agricultural experimental stations and extension organisations. They play an important role in the 'education permanente' that is necessary for everyone who wants to keep up with the dynamic developments in the agricultural sector. 10.5.2 The Agricultural Research System

Agricultural research institutes and universities With eight research centres and approximately 3,000 employees the Dutch Agricultural Research Department (DLO), is the most important provider of expertise in the field of agricultural and rural research in the Netherlands. The research institutes are largely engaged in applied and strategic research, while Wageningen university undertakes primarily fundamental research. The research at both levels include plant and animal sciences, food and technology science, environmental sciences and social science. Research in the field of veterinary sciences is carried out at the Utrecht University. 64

Centres for Applied research The research that is closest to the day to day practice of the farmers and growers is the practical research at the experimental stations and the regional research centres. They concentrate on synthesising the available knowledge within and around agricultural research and translating it for use at farm level. The programming of the research is achieved in close consultation with the major stakeholders in the respective branch of the industry, including the agricultural extension service and the Ministry of Agriculture. Farmers, as users of the results and cofinanciers, are intensely involved in this planning process. The practical research stations merged recently into two organisations, one focussing on Plant production (PPO) and the other on animal production (PV) and became also part of Wageningen UR. PPO has a division that deals with the mushroom sector. The research is focussed on the development of sustainable production systems, by means of improving the productivity and the product quality and decreasing the negative impacts on the environment. The research activities includes climate control, substrate development, biological control of pests and diseases, etc. The research activities are for a larger part financed by the mushroom sector itself and hence the research programme is formulated in consultation with representatives of the mushroom sector. Other research centres In addition to the aforementioned institutions many private and co-operative companies carry out applied and strategic research in their own field of interest, often in close co-operation with Wageningen University and Research Centre. Some of them are co-financed by different organisations like the Netherlands Institute for Dairy Research (NIZO), the Sugar Beet Research Institute (IRS), the Netherlands Fertiliser Institute (NMI) and the research institute of the feeding stuffs industry. Also the Institutes for Applied Scientific Research (TNO) and the National Institute of Public Health and Environmental Hygiene (RIVM) undertake research in field of agricultural and rural development. Wageningen University and Research Centre In the year 2000 Wageningen University, the DLO research institutes, and the applied research centres, joined into one organisation, Wageningen University and Research Centre. Recently also one of the largest agricultural colleges joined this group. Wageningen UR is divided into five expertise groups: (1) plant sciences, (2) animal sciences, (3) food and technology sciences, (4) environmental sciences and (5) social sciences, in which the different departments and institutions co-operate under one management board. I addition Wageningen-UR has a unit with institutes that have statutory tasks (e.g. with respect to veterinary control), a unit that provides (post-academic) courses and trainings and the agricultural college. The research activities of Wageningen UR is based on contracts. A major part of the research is still commissioned by the Ministry, amounting to about two third of the total budget of Wageningen University and Research Centre. However the share of other customers is increasing, amongst others by contract research on behalf of the agro-food industry and multinational institutions like the European Union and the World Bank. The applied research cen65

tres are mainly financed by the respective sectors. As it is mentioned above, a larger part the research of the mushroom division of PPO is funded on the contributions of the mushroom growers to VPN and PT.
Supervisory Board

Agricultural College Van Hall-Larenstein

Executive Board

Statutory Tasks Unit RIKILT, CIDC Other units

Long Life Learning Unit IAC, WBS

Plant Sciences

Animal Sciences

Agro-technology & Food Sciences

Environmental Sciences

Social Sciences

Wageningen University

16 departments

10 departments

18 departments

17 departments

20 departments

Research Institutes

PRI

ID-Lelystad RIVO

ATO

ALTERRA

LEI

Applied Research

PPO

PV

Figure 10.3

Organization Chart of Wageningen University and Research Centre

10.5.3 The agricultural extension system At the beginning of the 20th century, farming in the Netherlands was rather traditional, without many changes in technologies and management. The farmers learned how to farm from his parents and neighbours, following the usual farming systems in the region. The agricultural crises and the dynamic developments since then, in particular after World War II, forced them to look out for new opportunities. In order to support them in this respect the Dutch government established the Agricultural Advisory Service (DLV). Started with a few itinerant consultants, the service developed in due time into a large organisation with branch offices all over the country and experts in all fields. The experts of DLV visit farms, organise group meetings, guide farmers' and growers' study clubs, give courses and write articles for farmers' magazines, draft special brochures, etc. The experts provide not only technical advice on the daily running of the farm but also economic advice on long-term business developments. The success of Dutch agriculture is into a large extent based on the direct communication lines between education, research, extension and farmers' unions. In numerous bodies, representatives of these institutions met each other, exchanged information and opinions. In 66

this way, problems observed by the extension services at the farms were submitted to the research institutions for investigation and vice versa, research results could easily be introduced in practice via education and extension. In order to attune its activities to the needs of the sector, DLV was supported by an extensive network of committees at national and international level, in which the most important stakeholders were represented. Untill the eighties, the Agricultural Advisory Service was a governmental organisation, fully financed by the government, but to date DLV is a private expert organisation, which services must be paid by the farmers themselves. Besides DLV, the farmers and growers in the Netherlands can count on a wide range of consultants and experts, employed by the farmers' organisations, the supply, processing and marketing co-operatives, accountancy offices, breeding associations, the animal health service, and private enterprises covering all relevant aspects of farming. In addition to personal advice from these organisations, the farmers can also make use of a number of other sources of information, like magazines in every branch of the sector, radio, television and the Internet. More information on DLV on website www.dlv.nl 10.5.4 Cpoint BV Cpoint Ltd, Training and Consultancy for mushroom growing, was founded in 2000 by combining staff and expertise on mushroom growing from IPC Plant (Centre for Applied Research and Training in Plant Production) and DLV (Dutch Agricultural Consultancy Group). Cpoint 's field of activities include the former activities of both parties. Cpoint offers consultancy and training on mushroom cultivation, composting and business development for farm managers, (starting) self-employed persons and workers of mushroom and composting farms. Training is given during standard and tailor-made courses and theme days on specific topics. Cpoint provides training at the facilities of Cpoint but also on location, i.e. at the farmsand companies. The advice is aimed at improving and optimising the production of mushroom and compost. More detailed information can be found on the website www.cpoint.nl.

Organisation & Strategy

Business support/advice Financial advice Organisational advice Strategic advice Quality systems Projects

Management
Management advice HACCP, EUREP-GAP Personnel and organisation Harvest organisation Projects

Construction & Technology

Construction advice Estimates / requirements Project & Engineering

Organisation & Strategy Management Cultivation Techniques

Cultivation techniques
Cultivation advice Eco-/organic cultivation techniques Hygiene study Projects

Climate & Energy

Climate advice Air measurement Projects

Compost
Composting advice Hygiene study Projects

Eurep GAP

Compost

Climate & Energy

Construction & Technology

Figure 10.4

Core activities of CPoint

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11. SWOT Analysis

11.1 Introduction In this chapter some important elements of the Dutch mushroom growing and distributing sector, as well as the processing industry are presented. This is done in terms of a SWOT analysis. The analysis provides key aspects regarding Strength and Weaknesses, Opportunities and Threats. At the basis of this analysis lies all the information gathered for this report. In each section of the SWOT analysis we mention the most important, most frequently mentioned points in recent reports. We will not further analyse these points. 11.2 Strengths Whole sector Production of high quality (larger button) mushrooms. High level of supplier reliability. Efficient infrastructure. Favourable geographical position in Europe, with respect to logistics. In depth knowledge of trade and logistics. Well functioning innovation and knowledge circulation system. Quality control systems. Most farms and distributors are certified and already fulfil stringent standards with respect to quality control, food safety and tracking and tracing. High degree of chain integration (from compost to consumer). High level of cooperation between sector organizations within the institutional framework. Professional growing techniques and high quality inputs. Indoor composting. The process ensures high quality compost, short production schemes and low levels of environmental pollution. Fresh market Quality control systems are widely used, certification and experience with category management and ECR (efficient consumer response systems) as well as other supply chain cooperation and integration make Dutch producers interesting partners for big European retailers. Mechanized farms/processing industry Strong position in international markets. Strong position in Europe's market for hotel quality conserves. Modern processing firms. Large scale of processing industry enables a strong position towards buyers. Large scale of cutting farms makes mechanization more profitable.

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11.3 Weaknesses Whole sector Small home market. High wages makes higher quality mushrooms more expensive. Other mushrooms production and organic production is relatively underdeveloped. The increasing division between hand-picking farms and mechanized farms decreases flexibility. The Dutch mushroom sector is dominated by only one variety (the button mushroom), and there is a need to broaden the number of varieties for fresh and processed products. The mushroom sector is still more production than demand driven. The market orientation needs to be improved at short notice. Fresh market Competition among distributors/ trading companies on fresh market. This puts the producers and traders in a more vulnerable position vice a vice the big European retailers. Mechanized farms/processing industry Relatively small share of higher quality produce makes the sector more dependent on the market for hotel quality mushrooms. Increasing interdependence between growers and processing industry. This is a weakness because it limits flexibility in supply and production. 11.4 Opportunities Whole sector Development of market towards product quality control systems and tracking and tracing. Consumption trend towards ready-made meals and rice and pasta based meals. Mushrooms fit with almost any cuisine, season or moment. Trade and logistics services for one European Union. Innovation, development of production system for other button mushrooms or other sorts of mushrooms. Fresh market Mechanization or automation in picking, sorting, packing and handling. Mechanized farms/processing industry Production along buyer specific wishes ('tailor-made production'). Growth of the foodservice market. Favourable price-quality balance in hotel-quality conserves possibly enables growth of market share.

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11.5 Threats Whole sector A strong euro might harm exports to the USA and United Kingdom. The processing companies have experienced a decrease of sales turnover to non-euro countries. Increasing concentration on the buying side. Big European supermarkets use central buying organizations. Low market prices. Unless production is rationalised or prices increase, market prices are not covering the costs made by less efficient producers. Government regulation with respect to location, environment and so on. International differences in these regulations can do harm to Dutch competitiveness. Dependency on limited number of mushroom spawn varieties. Fresh market Polish and other Central European imports of fresh button mushrooms are cheaper. Especially a threat to the German market. Increasing labour costs. Mechanized farms/processing industry Decrease of consumption of canned and jarred mushrooms in the retail market. Imports from abroad.

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References
Berg, Wilco van den en Wim Cadel, Product-Info Champignon 2003. PT, Zoetermeer, 2003. Rapport PT 2003-22. Berkhout, P. and C. van Bruchem (eds.), Landbouw-Economisch Bericht 2003, LEI, The Hague, 2003. Bijman, Jos, Bram Pronk en Ronald de Graaff, Wie voedt Nederland? Consumenten en aanbieders van voedingsmiddelen 2003. LEI, Den Haag 2003. CBS Statline. Online statistical database of CBS. Internet http://statline.cbs.nl . De Groote, Y.G.M. and T. Wijtzes, Elsevier Praktijkhandboek, Voedselveiligheid. Reed Business Information, Arnhem, 2002. EU regulation 982/2002. Official Journal EC 8.6.2002. Fischler, F., China and the EU: Working together to promote common interests. Speech for European Chamber of Commerce dinner, Beijing, 25 March 2004. Gezondheidsraad, Commissie Trends Voedselconsumptie, Enkele belangrijke ontwikkelingen in de voedselconsumptie. Gezondheidsraad publicatie nr. 2002/12, Den Haag, 2002. Horen, L. van, 'Gevolgen van EU-uitbreiding voor champignonteelt'. In: Paddestoelen, 6 mei week 19, 2004. LEI, Actuele ontwikkeling van bedrijfsresultaten en inkomens in 2003. LEI, The Hague, 2004. Report 1.03.05 Michielsen, A., Kinderopvang in de paddestoelenteelt: aan arbeidssociologische analyse. Afstudeerscriptie Wageningen Universiteit, Vakgroep Rurale Sociologie, 2003. PR Bureau Champignons, Internet http://www.champignons.nl . Productschap Tuinbouw, Hyginecode voor ongesneden vers(e) groenten, fruit en paddestoelen; een code voor handelaren, importeurs, exporteurs, sorteer- en pakstations, veilingen en telersverenigingen. PT, Zoetermeer, 2003. Productschap Tuinbouw, Hyginecode voor teeltbedrijven van groenten en fruit. PT, Zoetermeer, 2001. Staunton, L., T. Cormican and J. Grant, Examination of production systems for mushroom cultivation in Ireland. Kinsealy Research Centre, Malahide Rd., Dublin, 1998. Vigef, Internet Site, Tables overview of vegetables and fruit processing sector (June 2004). Internet: Agriholland Nieuws (http://www.agriholland.nl/): 'Nieuw kwaliteitsvoorschrift EU voor verse champignons', 18/11/2002 71

'ABAB: Gemiddelde bedrijfsresultaat champignonbedrijven gedaald in 2002', 20/05/2003 'Champignons uit Polen en Ierland overspoelen de markt', 02/06/2003CNC, (http://www.cnc.nl/) CBS Statline. Statistics Netherlands (http://www.cbs.nl/statline) online database, Several statistics

CNC, (http://www.cnc.nl/) Eurep, (http://www.eurep.org/) Lutce B.V., (http://www.lutece.nl/) PT, Product Board for Horticulture, (http://www.tuinbouw.nl/) Vigef, Association of industrial processors of vegetables and fruit the Netherlands, (http://www.vigef.nl/)

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Appendix 1 Marketing standards for cultivated mushrooms

Commission Regulation (EC) No 982/2002 of 7 June 2002 laying down the marketing standards for cultivated mushrooms
THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 2200/96 of 28 October 1996 on the common organisation of the market in fruit and vegetables1, as last amended by Regulation (EC) No 545/2002(2), and in particular Article 22, Whereas: (1) Cultivated mushrooms are among the products listed in Annex I to Regulation (EC) No 2200/96 for which standards must be adopted. To that end, and in the interest of preserving transparency on the world market, account should be taken of the standard for cultivated mushrooms recommended by the Working Party on Standardisation of Perishable Produce and Quality Development of the United Nations Economic Commission for Europe (UNECE). (2) Application of these standards should remove products of unsatisfactory quality from the market, bring production into line with consumer requirements and facilitate trade based on fair competition, thereby helping to improve profitability. (3) The standards are applicable at all marketing stages. Long-distance transport, storage over a certain period and the various processes the products undergo may cause some degree of deterioration owing to the biological development of the products or their perishable nature. Account should be taken of such deterioration when applying the standard at the marketing stages following dispatch. (4) As products in the 'Extra' class have to be particularly carefully sorted and packaged, only lack of freshness and turgidity is to be taken into account in their case. (5) The measures provided for in this Regulation are in accordance with the opinion of the Management Committee for Fresh Fruit and Vegetables,

HAS ADOPTED THIS REGULATION: Article 1

The marketing standard for cultivated mushrooms of genus Agaricus falling within CN code 0709 51 00 shall be as set out in the Annex. The standard shall apply at all marketing stages under the conditions laid down in Regulation (EC) No 2200/96.

1 2

OJ L 297, 21.11.1996, p. 1. OJ L 84, 28.3.2002, p. 1.

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However, at stages following dispatch, products may show, in relation to the requirements of the standard, a slight lack of freshness and turgidity; products graded in classes other than the 'Extra' class may show in addition slight deteriorations due to their development and their tendency to perish. Article 2 This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Communities. It shall apply from 1 January 2003. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 7 June 2002. For the Commission Franz Fischler Member of the Commission ANNEX STANDARD FOR CULTIVATED MUSHROOMS (AGARICUS) 1. DEFINITION OF PRODUCE This standard applies to the carpophores (fruiting bodies) of strains grown from the genus Agaricus (syn. Psalliota), to be supplied fresh to the consumer, mushrooms for industrial processing being excluded. Mushrooms are classified into the following commercial types, whereas these first of all are classified into two groups: - uncut mushrooms, which have the lower part of the stalk uncut, - cut mushrooms, which have the lower part of the stalk cut. The cut must be clean and approximately perpendicular to the longitudinal axis; in both groups a distinction is made between successive stages of development: - closed mushrooms (or equivalent denomination), i.e. mushrooms with the cap completely closed, - veiled mushrooms, i.e. mushrooms, the cap of which is connected to the stalk by the veil, - open mushrooms, i.e. mushrooms with an open cap (open cap or flat; a slight downturn of the edges of the cap is required), - flat mushrooms, i.e. mushrooms which are fully open (but the edges of the cap are neither too cupped nor inverted); mushrooms are further classified into two colour groups: - 'white' - 'brown' or 'chestnut'.

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2. PROVISIONS CONCERNING QUALITY The purpose of the standard is to define the quality requirements of mushrooms after preparation and packaging. A. Minimum requirements In all classes, subject to the special provisions for each class and the tolerances allowed, the mushrooms must be: - intact; cut mushrooms complying with the definition are regarded as intact, - sound, produce affected by rotting, severe browning in the stalk or deterioration such as to make it unfit for consumption is excluded, - clean, practically free of any visible foreign matter, other than casing material, - fresh in appearance, account should be taken of the typical gill colour of the strain and/or commercial type, - practically free from pests, - practically free from damage caused by pests, - free of abnormal external moisture, - free of any foreign smell and/or taste; the development and condition of the mushrooms must be such as to enable them: - to withstand transport and handling, and - to arrive in satisfactory condition at the place of destination. B. Classification The mushrooms are classified in three classes defined below: (i) 'Extra' Class Mushrooms in this class must be of superior quality. In shape, appearance, development and colouring they must be characteristic of the commercial type. They must be well formed. They must be free from defects with the exception of very slight superficial defects provided these do not affect the general appearance of the produce, the quality, the keeping quality and presentation in the package. The mushrooms must be practically free of casing material; uncut mushrooms may also have traces of casing material on the foot. (ii) Class I Mushrooms in this class must be of good quality. In shape, appearance, development and colouring they must be characteristic of the commercial type. the following slight defects, however, may be allowed provided these do not affect the general appearance of the produce, the quality, the keeping quality and presentation in the package: - slight defect in shape, - slight defect in colouring, - slight superficial blemishes provided they are not progressive, - slight superficial bruising, - slight traces of casing material; uncut mushrooms may also have some casing material on the foot. (iii) Class II This class includes mushrooms, which do not qualify for inclusion in the higher classes but satisfy the minimum requirements specified above. The following defects may be allowed provided the mushrooms retain their essential characteristics as regards the quality, the keeping quality and presentation: - defect in shape, - defect in colouring, - slight blemishes, - slight bruising, - hollow stalks, - traces of casing material; uncut mushrooms may also have some casing material on the foot.

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3. PROVISIONS CONCERNING SIZING Size is determined by the maximum diameter of the cap and the length of the stalk, according to the following specifications. Minimum size The minimum cap diameter must be at least 15 mm for closed cap, veiled and open mushrooms and 20 mm for flat mushrooms. Length of stalk The length of the stalk is measured: - from the gills under the cap for open and flat mushrooms, - from the veil for closed and veiled mushrooms. Sizing is compulsory for mushrooms in 'Extra' Class according to following table, mushrooms of Classes I and II having to meet the specified size ranges if the terms 'small', 'medium' or 'large' are indicated: Closed, veiled and open mushrooms Diameter of cap Size Size limits Small 15-45 mm Medium 30-65 mm Large 50 mm and over Flat mushrooms Diameter of cap Size Small Large Size limits 20-55 mm 50 mm and over

Maximum length of stalk Cut mushrooms of cap diameter

Uncut mushrooms 2/3 of cap diameter

Maximum length of stalk Cut mushrooms 2/3 of cap diameter

Uncut mushrooms

4. PROVISIONS CONCERNING TOLERANCES Tolerances in respect of quality and size shall be allowed in each package for produce not satisfying the requirements of the class indicated. A. Quality tolerances (i) 'Extra' Class 5 % by number or weight of mushrooms not satisfying the requirements of the class, but meeting those of Class I or, exceptionally, coming within the tolerances of that class. (ii) Class I 10 % by number or weight of mushrooms not satisfying the requirements of the class, but meeting those of Class II or, exceptionally, coming within the tolerances of that class. (iii) Class II 10 % by number or weight of mushrooms with their stalk missing and 10 % by number or weight of mushrooms satisfying neither the requirements of the class nor the minimum requirements, for other reasons, with the exception of produce affected by rotting or any other deterioration rendering it unfit for consumption.

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B. Special tolerances for the stage of development (i) 'Extra' Class 5 % in total by number or weight of mushrooms of the previous stage of development and of mushrooms of the next stage of development are allowed. (ii) Class I 10 % in total by number or weight of mushrooms of the previous stage of development and of mushrooms of the next stage of development are allowed. (iii) Class II Mushrooms of different stages of development can be mixed in each package. However, when the stage of development is indicated, a maximum of 25 % in total by number or weight of mushrooms of the previous stage of development and of mushrooms of the next stage of development are allowed. C. Size tolerances For all classes: 10 % by number or weight of mushrooms not conforming to the sizes indicated. 5. PROVISIONS CONCERNING PRESENTATION A. Uniformity The contents of each package must be uniform and contain only mushrooms of the same origin, commercial type, stage of development (subject to provisions under IV(B) above), quality, and size (if sized). Sales packages of a net weight not exceeding 1 kilo may contain mixtures of mushrooms of different colours, provided they are uniform in quality, stage of development and size (if sized) and, for each colour concerned, in origin. The visible part of the contents of the package must be representative of the entire contents. B. Packaging The mushrooms must be packed in such a way as to protect the produce properly. The materials used inside the package must be new, clean and of a quality such as to avoid causing any external or internal changes to the produce. The use of materials, particularly of paper or stamps bearing trade specifications is allowed, provided the printing or labelling has been done with non-toxic ink or glue. Packages must be free of all foreign matter including excessive casing material. 6. PROVISIONS CONCERNING MARKING Each package must bear the following particulars, in letters grouped on the same side, legibly and indelibly marked, and visible from the outside: A. Identification Packer and/or dispatcher: name and address or officially issued or accepted code mark. However, in the case where a code mark is used, the reference 'packer and/or dispatcher' (or equivalent abbreviations) has to be indicated in close connection with the code mark.

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B. Nature of produce - If the contents are not visible from the outside: - cultivated mushrooms, - 'cut' or 'uncut', - colour if not 'white'; - Stage of development (optional), - In the case of sales packages containing a mixture of mushrooms of different colours, names of the different colours. C. Origin of produce - Country of origin and, optionally, district where grown, or national, regional or local place name, - In the case of sales packages containing a mixture of mushrooms of different colours of different origins, the indication of each country of origin shall appear close to the name of the colours concerned. D. Commercial specifications - Class, - Sized (if sized) expressed as minimum and maximum cap diameters or by the term 'small', 'medium' or 'large', - Net weight. E. Official control mark (optional)

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Appendix 2 CN Codes Eurostat trade data

Group Mushrooms fresh or chilled CN Codes 07095110 07095130 07095150 07095190 07095100 07095910 07095930 07095990 07108060 07108061 07108069 07115100 07115900 07119040 07119050 07119060 20031020 07123000 07123100 20019050 20031010 20031030 20031080 20031090 20032000 20039000

Mushrooms frozen Mushrooms provisionally preserved

Mushrooms dried Mushrooms preserved in vinegar or other acid Mushrooms processed (cans, jars, etc) and prepared

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Appendix 3 Table of abbreviations

Used Dutch name BRC BRC Global standard - Food CBL CBS CN code CNC Eurep EurepGAP Eurostat FAO GAP GATT GEPC GFSI HACCP IAE IFS ISMS KCB LEI LTO PD PT Q&S UPOV Vigef VPN WTO Vereniging van de Groente en Fruit Verwerkende Industrie Vereniging Paddestoelenteelt Nederland Kwaliteits-Controle-Bureau voor Groenten en Fruit Landbouw-Economisch Instituut Land- en Tuinbouw Organisatie Nederland Plantenziektekundige Dienst Productschap Tuinbouw English British Retail Consortium BRC Food quality certificate Dutch Food Retailer Organization Statistics Netherlands Combined Nomenclature trade classification of the EU Cooperative Dutch Mushroom Growers Association Euro Retailer Produce working group Quality certificate of Eurep European (EU) Statistics Office Food and Agriculture Organization of the United Nations Good Agricultural Practices General Agreement on Tariffs and Trade European Mushroom Grower Association Global Food Safety Initiative of CIES and FMI Hazard Analysis and Critical Control Points Institute of Agricultural Economics, China International Food Standard (German Retail Industry initiative) International Society of Mushroom Science Quality Control Bureau for Vegetables and Fruit Agricultural Economics Research Institute in the Netherlands Dutch Agricultural and Horticultural Producers Organization Phytosanitary Control Agency Product Board for Horticulture Quality & Security (German Retailer Certificate) International Union for the Protection of New Varieties of Plants Association of industrial processors of vegetables and fruit the Netherlands Association of Mushroom Grower The Netherlands World Trade Organization

Centraal Bureau Levensmiddelenhandel Centraal Bureau voor de Statistiek Coperatieve Nederlandse Champignonkwekersvereniging

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