"Anti-competitive behaviour" has led to temporary closure

Mercer Mushrooms says anti-competitive behaviour has led to temporary closure

5 August 2016: Mercer Mushrooms, one of New Zealand’s leading mushroom growers, says it has to temporarily close its business, as a result of anti-competitive behaviour.

Waikato-based Mercer Mushrooms which recently embarked on a $12.5m expansion plan is temporarily closing down its facilities due to an inability to secure the key ingredient for its production process.

The company, the second largest grower of mushrooms in New Zealand, is in the process of discussing implications for its 75 staff.

Chief Executive Jeff Hadwin says the decision to temporarily close hasn’t been taken lightly.

“We have been on an exciting journey to secure the sustainable future of our business. We have committed to spending $12.5m on building a new world class growing facility on our Mercer site as well as upgrading our existing facility including the latest environmental technology so we become better environmental citizens,” says Hadwin.

But while the future looks promising, Mr Hadwin says the business had to make some tough decisions in the short term which will unfortunately impact its staff and customers in the short to medium term.

“Mercer Mushrooms is a young, innovative and responsible business. We were thriving and working to create jobs for many people as the business expanded, but now we are having to close temporarily and sadly some people will be losing jobs,” says Hadwin.

In keeping with its strategy of using latest technology, Hadwin says earlier this year the company transitioned from manufacturing its own compost to importing substrate from Europe. With the importation of substrate underway, it began expanding mushroom growing rooms and closed its old compost yard.

“However, following the threat of a judicial review by a competitor, we have not been allowed to continue importing substrate as was previously allowed. As a result we have been unable to import our main growing ingredient.”

Hadwin says that Meadow Mushrooms’ threat of a judicial review of the MPI directive which allowed his company to import the substrates was sadly driven by an anti-competitive agenda.

“Substrates are a tried and tested product globally and importation of substrates is approved by many countries around the world as the most sound and safe method for growing mushrooms.

“MPI inspectors have undertaken thorough inspections of our imports as well as extensively reviewing our processes and those of our European supplier and were satisfied that these far exceed requirements and do not pose any biosecurity risk. So one can only ask why our competitor was so keen to overturn the decision of the experts at MPI?”

Hadwin notes that Mercer Mushrooms has put in an Official Information Act request to MPI.

“This is specifically in regard to Meadow Mushrooms’ contact with MPI in relation to our permits. Surprisingly MPI have advised us they require two extensions of time and will respond no later than 30 September 2016 in relation to our request for information. We expect that information to be quite telling. Crown Law contacted our lawyers and advised us that Meadows Mushroom’s lawyers contacted them with threats to issue judicial review proceedings. It was shortly after that threat that MPI decided to no longer allow us to import substrate under our permit and the direction of MPI’s Chief Technical Officer, which MPI had allowed to continue knowing that while there were traces of animal products in the substrate, their thorough heating and cooling treatment in Europe meant that theye were not a risk.”

Hadwin adds that the imported substrates are produced using a safer, more environmentally friendly process than composting.

“Not only are substrates free of contaminants and processed in a secure environment but they are also economic and will rapidly increase production of high quality mushrooms for Kiwis.”

While the company works with the Ministry of Primary Industries (MPI) to secure an import permit once again, it has decided to close its plant to coincide with the end of this current growing cycle later this month.

“Our team has done an impressive job in our upgrade process and delivery of extremely high quality product to our valued customers. When we began our expansion project, we did not envisage that we would need to temporarily close our plant.

“We look forward to MPI progressing the new standard which appears to have been further delayed from initial indicative time frames.”

“But without substrates we cannot grow mushrooms, and without mushrooms we can’t afford to continue to operate on a daily basis. We have considered other options but as a small family-owned business are unable to continue to keep the doors open without any product to sell at the moment,” says Hadwin.

Hadwin expects that some staff will continue to work for the company during the temporary closure of the plant, focusing on the expansion and upgrade of facilities instead of growing mushrooms.

“We are now focused on doing everything we can to support all our impacted staff over the coming weeks and to inform our valued customers.”

Hadwin adds that he still believes in the future of the mushroom industry and the company is committed to invest in its business for the future.

ENDS

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