By Maksym Yenchenko, Director of UMDIS Mushroom Information Agency

Introduction
In the three previous years in the Ukrainian mushroom business was a clear tendency towards the enlargement of farms, a continuing shift in focus from production to marketing, technology improvement and an increase in Phase III compost share. COVID-19 and related restrictions have significantly impacted the mushroom market. The main concern of mushroom farms - low product price- has become even more complex over the past few years. The first half of 2021 was marked with especially low prices, which, considering the background of increasing costs on business maintenance, did not allow many farms to maintain profitability. But there are reasons to be optimistic about the future - the consumption volumes of mushrooms are constantly growing, and sooner or later, the market will stabilize at an acceptable price. But for this to happen earlier, the forum participants will have to make some efforts.

The Covid-19 Pandemic
The COVID-19 pandemic made many farms reconsider the way they did business. The total quarantine introduced in March-April 2020 was incredibly shocking.
At one moment, all markets and public catering establishments were closed, some restrictions were introduced in grocery stores, and in general, people tried not to leave their homes. The demand for mushrooms collapsed at once, and with it, sales and prices. All farmers starters canceling compost orders, and many hundreds of tons of compost had to be thrown away. At the same time, the prospects were not clear. But after the initial shock, by the end of March, new supply chains were up and running, and there was a clear need to start making decisions about the next strategic steps.
It is essential to note the difference between the Ukrainian market and most EU countries’ markets. In the European Union, particularly in Germany, the Netherlands, France, and many other countries, the demand for mushrooms has increased with the quarantine introduction. People stopped visiting restaurants, but demand in supermarkets has grown by more than had declined by catering establishments - because people started cooking at home. And farms in Europe felt, and still feel, increased demand for mushrooms. The main problems that quarantine brought them are mostly in the areas of labor resources and logistics. In Ukraine, quarantine restrictions undermined demand, and the price had to be reduced to at least sell the mushrooms. This indicates that we have a lot to work on to popularize mushrooms for households.
In profit were those farms who took the risk in March and April 2020, filled growing rooms with compost, and eventually came out with the great harvest in May 2020. The quarantine restrictions were significantly eased, and demand recovered a bit. At the same time, there was little mushroom on the market, and the price soared to values 2-2.5 times higher than it was in April. But this happy time did not last long, even for those who took a chance. Already in July, the price dropped to its normal values. And those rates were not very joyful.
When the supply on the market increases yearly, there is practically no export, actions to popularize the product are minimal- we can’t expect good prices.

Production
At the last exhibition conference, which was held in the summer of 2018, we announced the volumes of champignon production in 2017 in Ukraine. In 2017, 51.3 thousand of tons of champignon were grown in Ukraine.
Has production volumes increased since then? Yes, and quite significantly!
In 2017, according to UMDIS estimates, the Ukrainian market received 203,000 of tons of compost for mushroom growing. According to our estimates, this year, in 2021, the Ukrainian market will receive 236,000 tons of compost, meaning that 4-year growth is significant - 16%! But that’s not all. In addition to the increase in the amount of compost used, two more factors influenced the increase in the total amount of champignon collected by farms in Ukraine.
Firstly, the share of Phase III compost in the production structure has increased significantly. If in 2017 Phase III in Ukraine was 7% of the total amount of used compost, then in 2020 it was 23%, in 2021, according to forecasts, the share of Phase III compost will be 37%, and in 2022 - not less than 43%.
And even though the harvests obtained using Phase III compost are not yet record-breaking in Ukraine. These amounts still significantly exceed the harvests obtained using Phase II compost. Also, with Phase III, massive diseases are much less likely to occur, significantly affecting the overall yield.
Secondly, an overall improvement in compost quality and in the skills of mushroom growers contributes to an increase in mushroom production. And as a consequence - an increase in the average yield.
Thus, we can confidently say that the amount of mushrooms offered on the market has increased by about 20% over the past 4 years. And all this volume was almost entirely consumed by the domestic market!

Prices and expenses
Compared to 2017, in 2020, the average selling price of champignon increased by 12% - although the incomes of the population over the same period increased by almost 50%, and inflation for was about 40%. Considering the inflation, the price of champignon has decreased by an alarming 20% in 4 years!
At the same time, prices are very unstable. Since the beginning of 2020, the minimum and maximum prices have differed by almost three times. And if we take practically any 3-month period, we can see price fluctuations by 1,5-2 times.
One of the main reasons for price fluctuations is the situation on the market when already grown mushrooms are being sold. The price and volume are determined “for today” or “for tomorrow” by a specific seller and buyer, and if the supply of the mushroom turns out to be excessive, prices can collapse very quickly, and if insufficient, they can rise just as quickly. Considering all this market characteristics, it isn’t easy to maintain a stable and predictable business.
Production costs have increased drastically over the past few years. Staff costs increased by 20-50%, electricity costs by 20-30%, gas and other energy resources costs by 20-50%, and compost costs increased on average by 30%. In 2021, the rise in prices for raw materials and energy resources continued. Especially gas prices, which have rapidly risen three times in 2021! And for those farms that use gas for heating, this increases costs by about 2 UAH per kg.

Number of farms
Decrease in profitability, and in many cases, work “into the red” forced several farms, primarily small ones, to leave the market. About 30 farms and entrepreneurs that cultivated champignon in 2017 stopped growing champignon in 2018-2020. Several farms have been sold and are or will be functioning, but with new owners.
The total number of farms with more or less permanent production in 2021 is estimated by UMDIS at 290.
There have been no significant new production openings over the past three years, but many large farms have increased their capacity - some due to the transition to Phase III compost, others due to an expansion. Or both of those at the same time.
The five largest Ukrainian farms produce about 23% of the total production volumes in the country, and the top ten - about 35% in total.

Export
With regret, we have to admit that there has not been any progress in the export of mushrooms, but there is a significant drop. So, if in 2017 Ukrainian farmers exported 528 tons of champignon (about 1% of total production volume), then in 2020, the export of champignon from Ukraine was only 205 tons, of which 143 tons went to Moldova and 61 tons - to Belarus.
At the same time, mushrooms for freezing mainly went to Belarus (with a correspondingly low price). Eight deliveries were made in January-March 2020, and after that all deliveries stopped. And there is no particular hope for the resumption of supplies to Belarus due to the lowered prices and the surplus of mushrooms in Belarus itself. There are no supplies to Russia primarily because of the ban since 2014, but now also because prices on the Russian market have also dropped sharply due to overproduction.
The largest market for Ukraine was and remained the European Union, but Ukrainian farmers have not yet been able to use this opportunity. Obstacles on the way to efficient supplies, areas before - certification, packaging, small and unstable supply volumes and insufficient marketing on the EU markets. The export of champignon from Ukraine to the EU countries in recent years has been very stable and is equal to zero.
The Ukrainian market remains reliably protected from imports by low domestic prices. The import of fresh champignon in 2020 was a little more than 1 ton - mainly deliveries of 100 kg at a time, imported by companies together with an assortment of other vegetables.
Here, I would like to note the success in the export of one of the companies from Western Ukraine that grows shiitake - its products are sent to the countries of Western Europe in full and in pretty large volumes. The farm management initially oriented their business towards export and coped with the task perfectly. Which is an excellent example to all mushroom producers!

Champignon market in 2021 in figures (UMDIS analytics)
Number of operating mushroom farms: 290 (estimate)
The amount of compost used by Ukrainian farms (2020): 227,000 tons
Share of Phase III compost production: 23% (37% in 2021)
Export of compost for mushroom growing: 17 400 tons
Import of compost for mushroom growing: 0
Champignon production in Ukraine: 61,000 tons
Share of brown champignons from total production volumes: 5%
Export of fresh champignons: 205 tons (207 tons in 6 months 2021)
Import of fresh champignons: 1.3 tons
Processed champignons (canned, frozen, dried) 3 600 tons
The average yield on Phase II compost: approx. 27% (23 kg / m2)
The average yield on Phase III compost: approx. 32% (27 kg / m2)
Mycelium used: 2.4 million liters
Including locally produced 1.6 million liters
Import production 0.8 million liters
The average price of mushrooms from the farm: 34.7 UAH / kg incl. VAT
Average selling price in retail chains: 45.0 UAH / kg incl. VAT