Monterey Mushrooms plans to shutter California farm before holidays

Monterey Mushrooms plans to close its Royal Oaks, California, farm in December, citing multiple challenges, including adverse weather, increasing labor and raw material costs, and California’s unfavorable regulatory environment.

“After decades of operation, the Royal Oaks farm’s footprint and complex operating model has become less competitive,” the company said in a statement. “It is not viable to invest capital into the farm’s aging infrastructure, compared to planned investment at other farms in the Monterey Mushrooms network.”

The facility, which employs 605 people, grows conventional and organic white, baby bella and portabella mushrooms, said Bruce Knobeloch, vice president of marketing and product development. The Watsonville, California-based company is transitioning production of those items to its other facilities, he said. Monterey Mushrooms continues to operate four additional farms in locations across the country.

Bruce Knobeloch, vice president of marketing and product development, Monterey Mushrooms

According to a Worker Adjustment and Retraining Notification (WARN) Act filing with the California Employment Development Department, Monterey plans to phase out work at the Royal Oaks facility over a two-week period from about Dec. 9 through Dec. 23. Some of the affected workers are represented by the United Farm Workers union, according to the filing. Following the closure, the company will continue to employ about 2,000 people across its remaining facilities, Knobeloch said.

In its statement announcing the planned closure, Monterey Mushrooms cited the challenges of operating in the Golden State and pressures on the produce industry—in particular at a time when consumers are seeking value.

“California's increasing regulatory burden and high cost of doing business left the company with no other options for maintaining profitability,” the company said.

In the past year, the company has also shuttered farms in Princeton, Illinois, and Orlando, Florida, resulting in a total of more than 500 layoffs, according to WARN filings in those states. Knobeloch said those closings were made “for similar reasons” to the closure of the Royal Oaks facility.

Among its remaining four facilities, Monterey Mushrooms continues to operate a farm in Morgan Hill, California, and it currently has no plans for additional closures, Knobeloch said.

“The company has conducted a detailed strategic analysis and recognizes the need for investment across its entire value chain,” Monterey Mushrooms said in a statement. “Several million dollars will be allocated to enhance efficiency, sustainable quality and industry-leading biotech capabilities.”

The company said that, going forward, it expects to make further announcements about its plans for the future. “The closure of Royal Oaks is a strategic step toward sustainable growth and continued excellence in mushroom production,” the company said.

Monterey Mushrooms was founded in 1971, and produces a variety of fresh, dried and marinated mushroom products, in addition to mushroom powders, that it supplies to retailers, foodservice operators and manufacturers.

Shah Kazemi, who previously had been the general manager of the Royal Oaks farm and is now the company’s CEO, acquired the company in 1988. It remains family owned.