Some Canadian mushroom farmers are raising concerns over how the latest American tariffs on the product could impact their sales on both sides of the border.

On July 14, the United States government announced plans to slap an 8.26 per cent anti-dumping tariff on Canadian mushrooms following a U.S. Department of Commerce probe into whether Canadian mushroom growers are selling fairly.

Mushrooms Canada, formerly the Canadian Mushrooms Growers Association, confirmed to CBC News that the U.S. began collecting these duties on July 17.

The latest tariff follows a previous 2.84 per cent tariff announced in May.

Some of the mushroom growers who don’t export to the U.S. worry bigger companies who do will now look to increase the amount of product they sell in Canada.

“What’s going to happen is that there’s going to be an oversupply within Canada.… It’s going to drive that price point down, which is going to hurt the farms even more,” said Mike Medeiros, a partner with Carleton Mushroom Farms.

The Carleton Place, Ont.,-based company produces roughly 136,000 kilograms of fresh mushrooms a week. Medeiros said the company currently only ships within Canada, supplying major retailers like Costco and Loblaws.

Possible production reduction

Mushrooms Canada said Canadian fresh mushrooms make up roughly 20 per cent of the American market. 

“As a result of Canadians doing well [in] the American market because of our higher quality … That’s why we have some upset mushroom growers in the U.S.,” said Mushrooms Canada CEO Ryan Koeslag.

Some Canadian mushroom exporters say their American customers are generally willing to eat increased costs, for now. 

“The last bit, we passed everything to the customers. So they initially accepted it, and our orders are a little bit lower,” said Agnesh Marsonia, general director of Champag Mushrooms. 

“We’ve heard rumblings about some of our customers talking to American farms to transition over, but they haven’t told us anything yet.”

Champag near Montreal produces nearly 62,000 kilograms of mushrooms per week and ships roughly 40 per cent to the U.S.

Marsonia said he predicts Champag and other exporters would scale back production to not to saturate the Canadian market and drive down its price of mushrooms.

WATCH | The local mushroom market and U.S. tariffs:

Eastern Ontario mushroom farmers worry about new U.S. tariffs

Last week, the U.S. introduced a new eight per cent tariff on Canadian mushroom imports, on top of a previous three per cent tariff. Some Canadian growers are worried about how that will affect their businesses. The CBC’s Liam Baker reports.

The U.S.-based group that petitioned the commerce department to launch the investigation, Fresh Mushrooms Fair Trade Coalition, claims Canadian growers are unfairly subsidized in part due to government sales tax exemptions. 

Mushrooms Canada counters that farm products on both sides of the border benefit from tax exemptions.

Currently, its CEO Koeslag said he thinks there will still be a demand for Canadian mushrooms in the United States, but the higher costs could result in lower demand there and cut into farm profits.

That’s despite what these growers describe as Canada’s wide adaptation of Dutch growing methods that encourage a hardier mushroom that’s grown faster.

While Canada’s consumption of mushrooms may have decreased in recent years, Koeslag said eastern Ontario remains an important area for cultivation, largely due to nearby Quebec’s strong appetite for them.

Still, Koeslag said he predicts the costs of mushrooms to increase in the U.S. in coming years, mainly because of tariffs, causing trickle-down effects that could threaten smaller farms.

“Anytime we see some kind of a big shift in the market demand, there could be implications at the local markets and the local producer,” Koeslag said. 

“We could definitely use [a] price increase in our industry,” said Medeiros in Carleton Place.

“With inflation over the past five to six years, we’ve been absorbing all that, so our margins have eroded.”

Mushrooms Canada is appealing both tariffs to the U.S. Department of Commerce, which is expected to make a final determination on both tariffs in the fall.

Canadian fresh mushrooms were also not included in the latest 50 per cent tariffs proposed by the U.S. government on Monday.