Monterey County mushroom farm to close, cutting over 600 jobs

USA – Monterey Mushrooms, a major producer based in Watsonville, California, has announced the closure of its Royal Oaks facility in Prunedale, leading to 605 job losses.

The closure is attributed to increasing costs and regulatory pressures that have made it difficult for the company to keep this site operational.

The company cited the challenging business environment in California as a key factor in its decision to shut down the facility.

“The growing costs of labor, raw materials, and compliance with California’s regulatory requirements have made it impossible for the Royal Oaks farm to remain competitive,” the company said in a statement.

The facility will cease operations by December 9, 2024, according to a WARN (Worker Adjustment and Retraining Notification) letter sent to the state’s Employment Development Department (EDD).

The farm, one of the company’s older and smaller sites, had become less economically viable due to its size and infrastructure.

Monterey Mushrooms has been navigating industry-wide challenges such as fluctuating consumer demand, rising operational costs, and adverse weather conditions.

These issues are affecting mushroom growers across the U.S. as demand for fresh produce increases but the cost of maintaining production becomes unsustainable.

While the closure of Royal Oaks will result in significant job losses, Monterey Mushrooms plans to invest in its remaining four farms to boost efficiency and sustainability.

The company said it intends to modernize its operations and pursue new biotechnology innovations. “By shifting our focus and resources to our other facilities, we aim to strengthen our position in the market while reducing operational inefficiencies,” a company spokesperson explained.

Monterey Mushrooms has committed to upgrading its other locations and forming partnerships that will allow it to enhance its operations.

Although no specific details have been provided on the scale of these upgrades, the company mentioned that further announcements regarding financial commitments and new partnerships will follow.

The mushroom industry as a whole has seen both growth and challenges in recent years. The United States produced approximately 702 million pounds of mushrooms during the 2021-2022 season, with a total crop value of around USD 1.02 billion.

Pennsylvania is the top producer in the country, contributing 44% of the national output, followed by California at 17%. Despite California’s notable contribution to U.S. mushroom production, its high operational costs are causing significant strain on producers like Monterey Mushrooms.

The U.S. has also witnessed a significant rise in mushroom imports, with around 76,000 tons of mushrooms and truffles imported in 2019, a 12% increase from the previous year.

These imports, valued at over USD 300 million, account for approximately 15% of the U.S. mushroom market. Much of the imported processed mushrooms come from countries like the Netherlands, Poland, Italy, Spain, and France, increasing competition for domestic producers.

Despite the closure of Royal Oaks, Monterey Mushrooms reassured its partners and customers that it remains committed to the mushroom industry.

“We are deeply grateful for the continued support from our retail and food service partners and look forward to strengthening our operations in the coming years,” a representative said.

The company plans to maintain its position as a leading producer by focusing on sustainability and innovation, ensuring that it can meet the challenges of the evolving market.

“Our goal is to continue delivering high-quality mushrooms while adjusting our operations to meet changing industry demands,” the company concluded.

The closure marks a significant shift for Monterey Mushrooms but reflects broader trends within the agricultural sector as companies adapt to rising costs and regulatory demands.