Chester Co.'s powerhouse mushroom farms have a new vision to expand: growing veggies indoors

Chris Alonzo grows 10 million pounds of mushrooms a year in a Chester County warehouse the size of two football fields. It represents only half of his fungal empire. Alonzo, president of Pietro Industries in Kennett Square, owns two more farms that produce an additional 10 million pounds.

He's looking to diversify.

"I'm excited about getting into something else," Alonzo said, sliding open a door of a grow room. Inside the steamy space, mushrooms are fruiting in a loamy mixture of peat moss and compost. The beds —  60 feet long–  were stacked like bunks. Seven levels reached to the ceiling.

"We could grow almost anything in here," Alonzo said. "A few minor adjustments and we could grow lettuce."

That could happen soon. Especially if the county and its farmers choose to embrace vertical farming. Alonzo, chair of the Chester County Agricultural Development Council, is bullish on it.

The mushroom industry faces intense economic pressures, driving producers to look for new ideas if agriculture is going to continue to flourish. The tiny pocket of land centered on Kennett Square, at the edge of Philadelphia's western suburbs,  produces about a half-billion pounds of fresh mushrooms every year; That means half of the mushrooms consumed in the United States come from Chester County.

Mushroom consumption has leveled off across the nation. The Canadians have gained a competitive advantage due to a disparity in currency exchange rates. With the crop selling for about $1 per pound wholesale, farms run on the thinnest of margins.

It's also increasingly difficult to hire Mexican migrants to pick the crop. In recent years, a chronic labor shortage has caused 10 percent of the crop to go unharvested. As federal immigration agencies step up enforcement, that's expected to get worse.

"We have a workforce that's slowly stopping to work in agriculture, and there's no new recruits," Alonzo said.

Green crops could provide a salad of salvation.

About 65 growers dominate the mushroom industry in Chester County. The overwhelming majority of growers are family-owned. Several operations are vertically integrated; they make their own compost and package the crop for retail sales. Alonzo's company, Pietro Industries, partners with a compost company and operates within the Country Fresh cooperative with seven other growers. Sysco, Costco and Pizza Hut are major clients.

Alonzo's grandfather, Peter "Pietro" Alonzo Sr., began mushroom farming during the Great Depression. Through the 1930s, about 500 mushroom houses were built within 10 miles of Kennett Square.

That venerable industry now is looking to grow.

Alonzo said he had looked into applying for a permit to grow medical marijuana but decided against it because of the huge amount of capital —  the third generation mushroom farmer said he would need $15 million —  required to get into the cannabis game. In addition, marijuana came with too many regulatory and legal hurdles.

"It wasn't a good match," he said. "It's very complicated and needed a ton of capital."

But marijuana and mushrooms aren't the only cash crops cultivated in climate-controlled rooms. The U.S. is undergoing a boom in indoor agriculture.

"And we are without a doubt already the largest concentration of indoor agriculture in the world," said Michael Guttman, director of sustainable development office for Kennett Township.

"The only reason we haven't previously diversified is that it was not economical to compete with field crops for greens. We're looking at that market now."

Innovations in LED lighting, environmental controls, and automation now make indoor farming a reasonable alternative to outdoor cultivation for many crops. Growers can produce more product with fewer resources and in less space. "Another crop [of greens] in a same-size building would require a third of the amount of staff," Alonzo said.

Farming under lights and in greenhouses generated $14.8 billion nationwide in 2016, according to Agrilyst. (That figure doesn't include the exploding legal cannabis market.) An expanded indoor farming industry in Chester County could include producers of any number of salad vegetables, herbs, tomatoes, and berries.

It could additionally create a new market for the spent loam used to grow the mushrooms. "We can't grow mushrooms a second time in it. The necessary nutrients are all used up, so it usually goes out for potting soil," Alonzo said. "But maybe we could use it for another crop."

Chester County also has an established distribution network, "the cold chain," and the know-how to attract new companies, Alonzo said. Able to deliver mushrooms and other refrigerated goods anywhere in the continental U.S. in less than 48 hours, the network also supplies an array of imported products from clementines to kiwis.

"Lettuce, cucumbers and tomatoes travel through the same routes," Alonzo said. "There'd be good harmony there. We know how to grow crops indoors and we know how to market it."

Many green crops can be grown robotically.

Mushrooms in the U.S. need to be harvested with care. "Right now, it's all harvested by hand," said Robert Beelmanm director of Pennsylvania State University's Center for Plant and Mushroom Foods for Health. who has made several trips to the Netherlands to examine automated farming.

"In the Dutch system, they have developed a mechanical harvesting system for mushrooms. Initially they were beat up, and they could only be used for processing. But I saw them being harvested last year and I was amazed."

Along with new vertical indoor farms, Alonzo and Guttman envision a national Center of Excellence for Indoor Agriculture that would operate near, and possibly in concert with, the nearby Longwood Gardens. The synergy could create the indoor ag equivalent of Silicon Valley, with Southeastern Pennsylvania becoming a worldwide hub of research, training, and advocacy for the trade.

"Like any economic development project, it's a longer-term play," Guttman said. "But we've been talking to people for over a year."

On an overcast day last week, Alonzo monitored the amount of carbon dioxide being fed into one of his grow rooms.

Computers control the temperature, humidity and CO² levels in each space. The beds are set for a cozy 74 degrees. A new crop is harvested every 56 days.

His father and grandfather once checked each grow room every four hours throughout the day. Though technology could pilot most of the growing cycle, Alonzo said there's "no substitute for being in the room."

"The data gives a basic road map, but the devil is in the details," Alonzo said. "The colors have to look right, the room has to smell right. You can only know that through your senses."

As the industry waits for a feasibility study to be delivered in about three months, it is preparing to goose sales by marketing  mushrooms as a health food.

According to Penn State's Beelman, there's preliminary evidence that eating 100 grams of mushrooms a day might stave off dementia and Alzheimer's disease. "We haven't proved cause and effect, but maybe there's something to this," Beelman said. "I'm trying to get a collaborator and funding to do a double-blind randomized clinical human study."

Mushrooms in Kennett Square were first cultivated more than a century ago by a Quaker carnation grower. Despite the market pressures, no one expects the fungi farms to disappear.

"We're in the infancy of this discussion," Alonzo said. "But we have 120 years of experience in indoor farming here. I don't envision replacing mushrooms, but new crops could grow new profits."