Domestic peat will be needed in the medium term for the Irish mushroom industry, according to a new report.

Opportunities for the Irish horticulture sector, published today (Wednesday, July 13) by KPMG, outlines ways for Ireland to become the most sustainable global leader in primary and value-added mushroom products.

The document explains that this will be driven by increasing demand from consumers for "plant-based solutions".

The report was commissioned last year by Minister of State with responsibility for horticulture, Pippa Hackett.

Sector overviewThere are currently 34 mushroom growers operating from 40 farms in Ireland, employing a total of 3,221 people.The mushroom industry, which has a farmgate value of €124 million, is the biggest direct employer across the horticulture sector.Mushroom exports were valued at €151 million last year and 85% of the Irish produce is exported to the UK.

The report outlines that there has been an 8% decline in the number of Irish mushroom growers since 2016.

Smaller farms have gone out of business with larger units expanding to become more sustainable.

Between 2020 and 2021, growers experienced a significant increase in input costs such as energy, labour, growing media and packaging.

Labour accounts for 42% of the total cost of mushroom production, with compost and casing making up 37%.

As the sector relies on work permit and visas for migrant workers, labour supply is a "weakness for the sector". Some growers reported a delay of up to six months for worker documentation to be processed.

The report highlights the imbalance of power between retailers and suppliers and a downward pressure on prices.

It also outlines that growers will still need domestic peat in the medium term, otherwise there will be a risk of supply and cost pressures.

Among the other challenges facing growers are access to capital and markets, loss of skilled workers, certification and exchange rates.

However, the report said that there are opportunities for growers given the low carbon footprint and sustainability of mushrooms.

There is also potential to add value through innovation and product development and to leverage changing lifestyles and food trends.

In order for Ireland to become a sustainable global leader in mushroom products, the industry will have to prioritise environmental footprint, production system evolution and research and development.

Among the sector needs outlined by KPMG in the report are: