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                        Section 2: Enterprise Planning

Section2

This section offers a number of resources to support farmers in planning their enterprise. These aspects are often left to the last minute, but the more one can get ahead in their planning and enterprise design, the more the farm can benefit. The topics covered in this section include: Risk Management & Insurance, When am I a farm?, Business Planning, Budgeting & Cash Flow, Record Keeping, Marketing & Channel Assessment, Branding, Certification.

A. Risk Management & Insurance

Identification

For farmers, risk management is a process of identifying risks inherent to farming and also selling crops, so that procedures and measures can be put into place to minimize risks or the consequences of things not going as planned. By identifying risks and taking precautionary action, negative outcomes can be minimized.

Insurance is one way to manage risk. Sometimes policies are required, for instance if a farmer wants to sell to a particular institution, or at a farmers market. But risk management and insurance are not to replace diligence; farmers should always take the precautions necessary to ensure their products are safe for consumption.

This booklet will discuss the issues specific to mushroom production; we invite you to consult factsheets #5 and #6 in the Guide to Farming in New York to look more in depth at larger concerns for the entire farm business.

Primary Risks for Mushroom Cultivation                                                                                                                      There are two main risks for mushroom growers to consider; mis-identification of mushroom species, and the safety of their crop. We have covered safety and sanitation in section one of this guide, so will focus on the issue of proper identification and fears about mushroom poisoning here.

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Identification                                                                       One of the major concerns of consumers and regulators in America is a fear of consuming poisonous mushrooms. When compared to many other cultures, the US is generally more afraid of mushrooms and the potential ill effects of consuming them.

Part of the job of the mushroom farmer then, must be to assure and educate their customer base about the relative safety of eating mushrooms, and instill confidence they are able to properly identify mushrooms safe for consumption.

In the woods of North America, one could potentially come across around 10,000 different species of fungi, of which, less than 5% are poisonous. Further, a very small percentage would look anything like the mushrooms under cultivation, nor would they grow in the same context (where they grow and what they grow on). Even still, it is critical to take extra precautions and to know how to properly identify mushrooms intended for sale.

For the most common specialty mushrooms, identification is pretty easy, and there are only a few dangerous look a-likes. The risk of mistaking one for the other is really only heightening outdoors, where a grower could come across any one of a number of fungi growing nearby in the woods and mistake it for another.

There is an incredibly small chance that any material (logs, sawdust, straw, etc) intentionally inoculated with an edible mushroom strain would also fruit a mushroom of a dangerous mushroom, since commonly cultivated mushrooms only grow if they occupy the majority of the material. What is more likely is that another species might show up on an old “spent” substrate or be simply growing nearby to the area dedicated to cultivation. Careful observation will eliminate most of risk of misidentification.

In order to develop good mushroom identification skills, it is recommended shiitake growers take the following steps:

  • Take a class to learn proper ID techniques
  • Familiarize yourself with basic characteristic of mushrooms you are growing
  • Learn potentially dangerous look-a-like mushrooms

Proper ID Procedure                                                                                                                                                             The basic strategy for proper identification is:

1. Pay careful attention to not just “what” you find, but “where”                                                                                      Many beginners just excitedly grab mushrooms and don’t use their observation skills to capture all the clues needed to properly ID a mushroom. Consider the following when you find a mushroom:

  • Was the mushroom growing on the ground, or in wood?
  • What tree species was it growing on or around?
  • What forest type was it found in?
  • Was it growing by itself or in clusters?
  • What is the color of the cap? Gills? Stem?
  • Does the mushroom have a ring (aka annulus)?

Before harvesting a mushroom, take a picture of it where it is. Note the ecosystem characteristics and habitat it is growing in. Identify the species of trees the mushroom is on or around.

Spore prints are a helpful ID method.

2. Take a Spore Print                                                                                      Back at home, select one of the caps and place it facedown on a piece of aluminum foil, allowing it to sit undisturbed for 24 hours. The mushroom will drop its spores onto the foil, like a fingerprint for the mushroom. The resulting “spore print” becomes one of the more helpful ways to ID.          Keep the other mushrooms in the paper bag and store in the fridge, until you are ready to identify.

3. Confirm Identity with Keys & Experts                                                                                                                           With your good documentation onsite, as well as your specimens and spore print, you are ready to attempt to identify a mushroom.

As with any identification, it is not one characteristic, but at least three to five, that will help hone in on the species. Often, the most important aspects that lead to correct ID are:

  • Whether the mushroom was growing on wood or from the ground
  • If it was found singly or in clusters
  • The tree species/forest type found in
  • Color of spore print
  • Gills “free” or “attached” to stem
  • Gills end at stem, or are decurrent, meaning they run down the stem.

To properly identify, use a key, which basically asks a series of questions and leads you though ID in the process. Getting comfortable with keys also gets you versed in the language and characteristics that will help make identification easier in the future as you discover more mushrooms. DO NOT Google images or use picture-based guides. This can lead to a lot of wrong identification!

Finally, as a beginner, try to confirm your mushroom with an experienced mushroom expert so you can be sure. Mushroom foraging is not an activity to do alone. Find others who have been learning the language and learn from them. 

Characteristics for Shiitake (Lentinula Edodes)

Shiitake Mushrooms growing out of a log

Cap: light to dark brown, often with white specs   Gills: white to very light brown                               Stem: white to very light brown, tough                  Spore print: WHITE                                              Growing habitat: Shiitake will ONLY be found growing from hardwood logs that have been inoculated. There have been no occurrences of other species with a similar form emerging from an inoculated log, though many different types of surface fungus do develop as the log ages (orange, black, white, etc)

Possible Lookalikes:                                                                                                                                                        Galerina marginata; These mushrooms go grow from wild logs in the forest. (again, you will only find shiitake on cultivated logs) The fruit bodies of this fungus have brown to yellow-brown cap, with gills are brownish and give a rusty spore print. This is a poisonous mushroom.

To reliably distinguish a Galerina from a shiitake, make a spore print. Cut off the stem and place the cap, gills down, on white paper. Cover it with a bowl to keep it moist. Galerina always gives a brown spore print after some hours to overnight; a shiitake spore print is always white.  Gill color is not a reliable substitute for a spore print because young Galerina gills can look pale –they’ll darken with age.

Additionally, Galerina usually has a ring (annulus) around the stem, however, it may degrade as the mushroom ages, and that is why a spore print is a more reliable indicator. The ring is the remnant of a membrane that covers the gills of young Galerinas —it runs between the edge of the cap and the stem.  As a young mushroom opens, the membrane tears at the cap edge and becomes the ring.  In the young Galerina at the back of this photo you can see the pale membrane that is breaking to become the ring. Shiitakes never have a ring, no matter what age.

Other possible look-alikes (both edible):

Galerina marginata
Galerina marginata
Armillaria mellea
Armillaria mellea
Kuehneromyces mutabilis
Kuehneromyces mutabilis

There are many species commonly referred to as “little brown mushrooms” that grow from logs or on the ground. Exercise extreme caution during your first harvests. WHEN IN DOUBT, THROW IT OUT

Characteristics for Oyster (Pleutrotus spp.)

Oyster Mushrooms
Oyster Mushrooms

Cap: Oyster or fan shaped, usually 2-10 inches across, often in shelf-like formation, smooth                       Gills: Decurrent (gills are attached to and run directly down the stem)
Stem: May not have one. If they do, often stubby and off-center. No ring around the stem, or bulge at the base.                                                   Spore print: WHITE to LILAC GREY (make on black sheet of paper)                                                        Growing habitat: Oyster will ONLY be found growing from hardwood logs, often beech and poplar and very occasional conifers. They are found in summer and fall. Often they have a slight anise/licorice scent

Possible Lookalikes:                                                                                                                                                 Omphalotus nidiformis: a poisonous look-alike found in Australia and Japan, but not found in North America.In addition, there are many species of poisonous mushrooms that are WHITE in color, but none have the combination of the characteristics above.

Characteristics for Stropharia

Stropharia
Stropharia

Cap: Dark burgundy that becomes more red as the cap opens                                                                               Gills: lilac-grey, black, turns lighter as cap matures Stem: Fiorous white/beige stem with distinctive ring  Spore print: very dark purple brown (make on white sheet of paper)                                                             Other key characteristics: A distinctive ring (annulus) around the stalk that has a jagged edge (like a kings crown?)                                                                    Growing habitat: Stropharia is found growing on wood-chip or duff layer debris in forests, pastures, and lawns.

Possible lookalikes:
None specific, though mushrooms with a reddish cap and/or ring around the stem could be confused for stropharia. In over-mature stages it could be confused with Agrocybe praeox.                                                      Links:
http://themushroomforager.com/2010/10/27/the-sun-loving-king-stropharia/
http://www.waldeneffect.org/blog/King_Stropharia_identification/

Characteristics for Lions Mane (Hericium erinaceus)

Lions Mane

Description: A single, unbranches clump of soft spines hanging from a tough, hidden “base” (stem) that is firmly attached to tree. Generally white with sometimes a brown or yellow discoloring as it ages. Spore print: White                                                Growing habitat: Grows only on hardwoods (Oak, beech common), usually in Fall but sometimes in Spring as well.

Possible lookalikes:                                                                                                                                                              None, generally. All species of Hericium are edible and delicious. Only possible to mistake for something else in a very small form. Make sure teeth are present! it is the only North American species that forms a single clump of dangling spines.                                                                                                                                                                  Links:
http://themushroomforager.com/2010/09/29/lions-mane-a-foolproof-fungus/

Insurance

In 2013, new outdoor mushroom growers came across a startling discovery: insurance companies would deny or drop product liability coverage upon learning the farm was planning on mushroom cultivation, mostly over fears of the liability incurred with wrongful identification of a mushroom species or with the sanitary conditions associated with cultivation.

In 2015, Steve Gabriel, Agroforestry Specialist for Cornell Small Farms, began conversations with Lindsay Wickham, who is area field supervisor for New York Farm Bureau. Wickham and Gabriel then approached Michael Reisinger, with Nationwide Insurance, to discuss the issue.

In conversations it became apparent that the major hurdle was simply that insurance carriers were unfamiliar with the crop, and once informed of the process could see that mushroom cultivation is no riskier than any other vegetable or fruit crop.

Therefore, today growers can get product liability insurance from Nationwide, and several other carriers have since said they were willing to insure outdoor operations. Be sure to check with your local provider before getting started in sales. See the article on the next page to learn more about the importance of product liability.

Small Farm Product Liability: Coverage for Your Farm Products

If farming was to be broken down to its most simple definition, one could describe it as the supply side of a complex ‘manufacturing’ assembly line. Agricultural products raised or produced by farmers find their way into an expansive array of goods. As with any type of manufacturing, a products liability exposure inherently exists. Additionally, the alteration of farm produce can create different liability exposures, and in a time where farmers are looking for additional revenue streams, the insurance conversation quickly lends itself to new, and more nuanced, questions.

If you have begun to engage in farming operations, hopefully you have already realized the need and benefit to insuring your operations via a Farmowners policy. A typical, unendorsed Farmowners policy will provide you with liability coverage for your premises and your operations, including the farm products that you produce. The definition of exactly what qualifies as “farm products” may vary greatly between insurance companies. It is important to verify that your operations fall within the definition of farming and the items you are selling are not outside of the scope of farm products.

For example, Insurance Company A may consider the apples you sell at a roadside stand on your premises as farm products and thus covered for product liability on an unendorsed Farmowners policy, while Company B may consider the roadside stand and the gross receipts you make from this enterprise as a commercial exposure. This may mean you will be compelled to purchase an agribusiness policy to receive the Products Liability coverage you need, or endorse your Farmowners policy to provide coverage for “Incidental Business Pursuits”.
In other situations, Farmowners policies may not provide product liability when a product is sold directly to the public vs. being sold to a contractor or wholesaler. For example, if you raise organic chickens and sell directly to a large integrator, a typical Farmowners policy will be able to provide you with coverage. However, if you sell those same eggs directly to the consumer, many agricultural insurers will require that you declare this as a Business Pursuit on your Farmowners policy, and pay additional premium as consideration for the company providing coverage for the heightened liability exposure inherent with sales to the public. Likewise, products you buy for resale, even if they are the same products you raise on your farm, are not considered farm products. This means if you have a bad tomato crop and need to supplement your supply with some of your neighbor’s tomatoes, the sale of the products bought for resale will (likely) be considered, by your insurance company, as a commercial business pursuit, and as such the products exposure would need to be covered through a Farmowners policy endorsement or a commercial Agribusiness policy.

Differentiating between farm and commercial products becomes easier as soon as the farmer alters their product in some way. This is because insurance companies will rarely consider altered products as ‘farm product’, since it has been changed and is, in the case of food, one step further from the field, and one step closer to the fork. If your roadside stand not only sells whole apples, but also pre-slices them, this simple act has likely made the apple no longer a farm product in the eyes of your insurance company. The altering of the apple has now, presumably, opened it up to a higher risk of contamination and foodborne bacteria. If you are turning your apples into pies, your recipe may call for one of your organic eggs in order to make the crust. Should that pie be undercooked by accident, your customers could be potentially inflicted with food poisoning. The heightened risk that is associated with altered farm products requires the company to assign a rate and a liability classification, based on actuarials and prior loss history, to your Farmowners or Agribusiness policy for your to receive the appropriate coverage for the Products Liability exposure present with your operations.

Disclaimer:

If farming was to be broken down to its most simple definition, one could describe it as the supply side of a complex ‘manufacturing’ assembly line. Agricultural products raised or produced by farmers find their way into an expansive array of goods. As with any type of manufacturing, a products liability exposure inherently exists. Additionally, the alteration of farm produce can create different liability exposures, and in a time where farmers are looking for additional revenue streams, the insurance conversation quickly lends itself to new, and more nuanced, questions.

If you have begun to engage in farming operations, hopefully you have already realized the need and benefit to insuring your operations via a Farmowners policy. A typical, unendorsed Farmowners policy will provide you with liability coverage for your premises and your operations, including the farm products that you produce. The definition of exactly what qualifies as “farm products” may vary greatly between insurance companies. It is important to verify that your operations fall within the definition of farming and the items you are selling are not outside of the scope of farm products.

For example, Insurance Company A may consider the apples you sell at a roadside stand on your premises as farm products and thus covered for product liability on an unendorsed Farmowners policy, while Company B may consider the roadside stand and the gross receipts you make from this enterprise as a commercial exposure. This may mean you will be compelled to purchase an agribusiness policy to receive the Products Liability coverage you need, or endorse your Farmowners policy to provide coverage for “Incidental Business Pursuits”.

In other situations, Farmowners policies may not provide product liability when a product is sold directly to the public vs. being sold to a contractor or wholesaler. For example, if you raise organic chickens and sell directly to a large integrator, a typical Farmowners policy will be able to provide you with coverage. However, if you sell those same eggs directly to the consumer, many agricultural insurers will require that you declare this as a Business Pursuit on your Farmowners policy, and pay additional premium as consideration for the company providing coverage for the heightened liability exposure inherent with sales to the public. Likewise, products you buy for resale, even if they are the same products you raise on your farm, are not considered farm products. This means if you have a bad tomato crop and need to supplement your supply with some of your neighbor’s tomatoes, the sale of the products bought for resale will (likely) be considered, by your insurance company, as a commercial business pursuit, and as such the products exposure would need to be covered through a Farmowners policy endorsement or a commercial Agribusiness policy.

Differentiating between farm and commercial products becomes easier as soon as the farmer alters their product in some way. This is because insurance companies will rarely consider altered products as ‘farm product’, since it has been changed and is, in the case of food, one step further from the field, and one step closer to the fork. If your roadside stand not only sells whole apples, but also pre-slices them, this simple act has likely made the apple no longer a farm product in the eyes of your insurance company. The altering of the apple has now, presumably, opened it up to a higher risk of contamination and foodborne bacteria. If you are turning your apples into pies, your recipe may call for one of your organic eggs in order to make the crust. Should that pie be undercooked by accident, your customers could be potentially inflicted with food poisoning. The heightened risk that is associated with altered farm products requires the company to assign a rate and a liability classification, based on actuarials and prior loss history, to your Farmowners or Agribusiness policy for your to receive the appropriate coverage for the Products Liability exposure present with your operations.