Mushrooms With Dutch ‘Roots’? – Exports of Fully Grown Mushroom Compost Are Increasing
For a few years, Dutch exports of fully grown mushroom compost have increased and we expect this to continue in the next few years. Nowadays approximately 25% to 30% of Dutch compost production is exported. The compost is exported not only to nearby countries like Germany, Belgium, and the UK, but also to destinations farther away like Nigeria, Lebanon, Egypt, and New Zealand. As long as the quality of Dutch mushroom compost is outstanding, this remains a viable business model, although there are some threats.
Dutch exports of mushroom compost: what are the threats?
At first sight, the strongly increased exports of Dutch fully grown mushroom compost to the UK, Germany, France, Italy, and even Lebanon, Nigeria, Egypt, Malaysia, and New Zeeland seems out of this world, but it makes sense considering its attractive price and quality. Nowadays 25% to 30% of all fully grown Dutch mushroom compost is exported, with a production value of 30m EUR.
Every compost company should monitor the stability of its business model. A sensitivity analysis of all characteristics is crucial. First of all, the quality of compost is important. Every percent increase of compost productivity represents an extra margin of 4 EUR per tonne fully grown compost. If the quality of the mushrooms also improves, this will be even higher. The stability of price and availability of raw materials such as wheat straw, horse manure, and gypsum (or urea) in the Netherlands is alright. Fuel prices influence the transport costs of raw materials, and the transport costs of deliveries to destination countries. Most of the compost is transported by truck, with some of it shipped by a combination of truck and cargo vessel or train. CapEx matter. The interest rate of the Netherlands is low compared to other countries. And last but not least, economies of scale are necessary for good profits.
Besides, there are some other risks to exporting mushroom compost. In 2017, New Zealand prohibited the import of fully grown compost. Authorities assumed importing mushroom compost brings with it biosecurity risks, as horse and chicken manure are used as raw materials, even though in general, importing fully grown mushroom compost is considered low-risk.
Cost prices are favourable for composting, but not for growing
The quality of composting and growing in the Netherlands has improved as a result of specialisation. But in the last two decades the relative cost price of both processes has changed compared to producers abroad.
Availability of (cheap) wheat straw and horse manure is important for the production of mushroom compost. Also important: fuel costs for the transport of manure, straw, and compost, as well as electricity costs for climate control during the process. Labour costs are relatively low for compost production because of a high level of mechanisation.
Considering the amount of horse manure in the Netherlands and the proximity to wheat straw in Northern Germany and Northern France, the cost price of Dutch fully grown mushroom compost is relatively low. The quality of the compost (also referred to as ‘producing capacity’) is very high due to its production in modern facilities (‘tunnels’) with equipment for climate control. So the overall competitiveness of Dutch composting companies is good.
This is different for Dutch companies growing white button mushroom (Agaricus sp.) for the fresh market. Fully grown compost is an important part of their costs (30%), but labour costs amount to approximately 40% of the cost price. These costs in particular are high because of high hourly wages in the Netherlands. So the Dutch companies growing handpicked mushrooms for the fresh market have become less competitive.
The competitiveness of both types of Dutch mushroom companies (growing vs. composting) is quite different. Composting companies are in good shape but growing companies (for the fresh market) have weakened compared to international competitors.
The Dutch shelf system is used globally
The Dutch mushroom industry is famous all over the world. After World War II it developed very quickly. One of biggest contributors to this growth was the so-called ‘Dutch shelf system’. This system was introduced in the 1970s. Its main characteristic is the split between production of compost and production of the (white button) mushroom itself. This made it easier to control diseases and plagues, and it meant farms could specialise in composting or growing, depending on their skills.
Nowadays the Dutch shelf system is used globally. But the main suppliers of the equipment are still situated in the Netherlands. They supply turnkey solutions for mushroom companies globally, both for composting and for growing.
Download a PDF version of this article
Where to go from here
Lambert van HorenAnalyst - Fresh Produce Read more