I have done reports on small and massive growers alike. Almost monthly for the past two years I have traveled across Japan, reviewing and studying growing operations spanning from southern Kyushu Island to the northern Tohoku region of Honshu Island. In the process I’ve learned about the growing systems for over a half dozen varieties of exotic mushrooms up close. One thing I’ve noticed is that I enjoy dealing with small, family-owned operations the most. The owner always knows all the employees, and everyone works with little sense of hierarchy. The environment is much easier for an outsider to enter.

Small operations are always pretty egalitarian, friendly, and easy to step into and report on. As a journalist and business writer I can see everything, take pictures of anything, and the workflow is also generally more laid back. Fun workplaces are fun to cover, and in that regard, Nakano City, Nagano Prefecture is extremely unique. Nakano City is famous for its high-value agriculture; the city has a wide range of terroirs amidst the mountains, hills and wide valleys of the region, with radical differences in snowfall, rainfall, sunlight, and even temperature variations of three to four Celsius in the same city.

Nakano City and Enoki Cultivation
Renown products of Nakano City include roses, apples, peaches, cherries, grapes, Japanese pears, and asparagus. In terms of total value and per household value of Nakano’s agricultural production, the city ranks among the top municipalities in all of Japan. Situated in between the prefectural capital of Nagano City and neighboring Suzaka City, and separated from Iiyama City in the north by Mt. Kosha, most tourists to Japan might only notice Nakano City while driving to the popular Nozawa Onsen ski resort area or passing through it on the way to the Yudanaka Onsen area, home of Nagano’s famous “snow monkeys.”

Indeed, many Americans and Europeans may be confused by how a city produces so much agriculture. The fact of the matter is that in Japan agriculture and suburban homes, agriculture and everything from massive factory complexes and apartment towers, coexist together. Groves of apple trees stretch in between gas stations and convenience stores across the street and a clustered neighborhood of ninety homes on the other side. Many farmers walk out their front door and within twenty meters are in their fruit orchards, or have rows upon rows of greenhouses in their backyard. There are rice fields next to high-tech printer factories. There is little tradition in Japan of segregating agricultural land far away from industrial and residential land. Agricultural land in Japan is compact, high-yield and labor-intensive, and is, by necessity, close to the labor and the families that manage it or the transportation networks that direct it to larger markets.

I talk about the special component of agriculture to Nakano City’s (and the wider region’s) economy because the mushroom industry is a supplementary component to that agriculture. As another aside, mushroom cultivation in Japan, other than Agaricus varieties such as common white and chestnut button mushrooms, are classified as forestry products not agricultural produce. Why? Because they were traditionally grown in forests through log cultivation and then until the late 1980s were cultivated using primarily sawdust mediums, meaning the mushroom industry in Japan is indelibly linked bureaucratically and economically with the forestry industry, not with agricultural business streams.

Nakano City, as I have mentioned in this journal before, is a small town of 41,000 people that produces about 70% of the entire nation of Japan’s supply of enoki, itself the most popular variety of mushroom with annual sales averaging around 130,000 metric tons for most of the past 20 years. This is hardly an accident or a random quirk of economic development. In the 1960s the regional government and agricultural collectives were looking to increase incomes for farmers in Northern Nagano Prefecture, which is in one of the heaviest snowfall regions in the world and thus where farmers have a long off-season. Farmers otherwise had to pick up side gigs as ski instructors or seasonal hospitality workers (something that is still a staple of household income for many farmers) or otherwise make enough profit on their harvest to support their household for the next year. Given the tendency of Japanese farms to be quite small and compact, and automation and large-scale equipment either unsuitable or too expensive, this is often quite difficult even with high value produce.

What the government settled on was mushroom cultivation. Specifically, a mushroom that grows well in cold environments and required minimum heating and humidification systems to cultivate during the long months of cold in late autumn and winter. Thus, enoki cultivation was born, and Nakano City, and the regional branch of the Japan Agricultural Co-operative, created a superb system of centralized incubation centers that enabled small growers and everyday folks to enter the mushroom industry and also profit, a model that was later closely studied and followed by several Chinese mushroom cultivation initiatives.

Present-day Nakano City benefits from that system of incubation centers_emdash_not one, not two or three, but seven_emdash_that sell incubated bottles of enoki substrate to farmers. The incubation centers operate at economies of scale, with the huge buildings and millions of dollars’ worth of machinery necessary to process dozens of tons of substrate and bottle hundreds of thousands of bottles a day and also to incubate those bottles. The incubation centers then deliver those incubated bottles to growers via truck, and growers help load their old, post-harvest bottles containing spent substrate onto the same trucks after delivery of new substrate. The incubation center then handles the substrate removal and bottle cleaning, and sells the spent substrate as fertilizer or animal feed. The before and after of the mushroom cultivation process are all handled by very large, automated facilities operating at efficient economies of scale that a mom-and-pop operation could never hope to match.

The system has been remarkably effective, as the more labor-intensive middle and end processes of enoki cultivation are spread out between the sixty or seventy growers of all sizes in the city, while the more machinized and technical elements of growing, including spawn production, inoculation, and incubation are all done in centralized facilities. Everyone profits. A funny thing happened along the way, which was that many of the smaller farmers that entered into the system, soon found that enoki production was simply more profitable than farming, which was the case with Mr. Takeuchi and Takeuchi Kinoko Labo, the first case study I wrote about for this series in the first issue of the Japanese Exotic Mushroom Journal. Especially farmers who weren’t in more profitable sectors like fruit or roses, enoki was not only a bigger earner, but because it was done indoors in controlled environments, it was a far more reliable earner at that.

The 2023 February issue of Tokusan Jyoho, the premier Japanese agriculture and commodities journal, had a special business outline of enoki management that I feel puts the mind-boggling difficulties that enoki growers have to deal with into clear focus. The journal outlined the total business costs for producing 10,000 cultivation bottles worth of enoki. The aim is 340 grams of production per bottle. The cost outlay then projects three different scenarios. In scenario 1, the grower mostly hits the production goal, with 3,366 kg produced, and a price of 229 yen per kilogram. The total profit, after costs are deducted, for the three plus metric tons of enoki is 26,533 yen, which in real purchasing power terms is roughly 250 USD. What’s worse, is that if a grower manages the same yield, but prices fall to 210 yen, which is not an unheard-of price, they are 36,054 yen in the red for their production. Likewise, even at 229 yen per kg prices, a grower whose total production slips *slightly* to 3,218 kg is then 6,107 yen in the red. Two common and realistic scenarios, both send a grower immediately into the red, while good conditions are just barely sufficient to make a profit.

Even the biggest, most giant, efficient enoki growers with hundreds of employees and bustling multi-acre growing operations, are rarely generating daily profits in excess of 2000 USD. Then the survival of the dozens upon dozens of small growers in Nakano City is nothing short of miraculous. Nakano City is singular in that it dominates national production of a certain variety of mushroom without having a single giant, ultra-dominant grower. Instead, everyone in Nakano City works together. The incubation centers are constantly researching ways to further cut costs, while growers are working together and with government researchers to make whatever changes they can to the production process to reduce costs and increase consumption.

In Nakano City, growers have collectively decided to reduce production in summer. The weather from November to mid-March is consistently cool and growers have to expend minimal energy cooling or heating outside air ventilated into growing rooms. This is the consistent climate advantage, along with the vast network of local experts, that has kept Nakano dominant in the face of stiff competition in the rest of the country. The reverse is that Nakano City is also quite hot and humid in the summer, starting in May and lasting into early September. This also coincides with the demand slump for enoki, which has the strongest seasonal bend to its demand of any major mushroom variety in Japan.

Cooling costs that are high, and demand that is low. The problem is such that growers essentially have no choice but to produce at under 50% capacity, otherwise prices fall even further and they are growing at a loss. The situation is an ironic reversal of the very issue enoki cultivation was instituted to solve: the need for income sources in winter after growing season was over has now been replaced by the need for income sources in the summer after the peak enoki season is over! Only the options are fewer, because it doesn’t make sense to leave half of your growing rooms and half of your facilities unused for half of the year, especially not when you are a small grower and might be averaging just under 200 dollars profit a day even during your peak season prices.

Taichi, in his early forties, is a young man by the standards of Nakano’s mushroom farmers, and cuts a trendier figure with his well-trimmed goatee. I, having mistakenly called him Mr. Kobayashi in the midst of the usual Monday morning fog, immediately interjected to clarify the difference between his name and the farm’s. Taichi is a third-generation enoki farmer, but he himself grew up in Takarazuka City near Kobe and Osaka in the Kansai region. Kobayashi Mushroom Farm is his wife’s family operation that they have succeeded. The two met in college in the Tokyo area, and he previously worked as a cellphone engineer and lived in Yokohama City next to Tokyo.

Taichi’s own father also relocated from his roots in rural Kyushu, the southernmost island of Japan, and became a salaryman in Takarazuka and married into his wife’s family as well. Taichi chuckled when he described his decision to go into the mushroom business, saying he knew his parents would be adamantly opposed so he didn’t mention it to them until after everything was formally decided. There were a lot of reasons involved. His wife’s parents wanted someone to take on their farm. The current production facility was, until that point, part of a joint lease, and right around the time he was looking at taking over for the family business, the lease was set to end and the other partner was retiring from the business entirely. It worked out well. They tore down the much older, original mushroom growing facility that dated back to when the family first started growing enoki in the 1960s, and used that land to build a new house for Taichi and his family (that he quipped is probably too big), while buying out the old partner and shifting over all of the mushroom growing operations to the more modern facility.

In a country where most people seem to want to flee to Tokyo or a big city, Taichi went the opposite direction. He shrugged when asked about whether he regretted leaving Yokohama, a metropolis of two million people that borders Tokyo, one of the world’s biggest and brightest cities. He has two children here in Nakano, he noted, and said frankly, he and his wife wanted another child but probably would have never had a second child in Yokohama because of how prohibitively expensive getting a larger house or condominium would have been. He loves the fresh air and delicious water in Nakano, and has finally got around to trying his hand at skiing recently and found he quite likes it. Most of all, it feels good being his own boss and getting to make something, an actual physical product, and then get to go out and sell what he makes.

Moving from a big company’s cellphone design and engineering department in the Tokyo metro to running a mushroom farm in the rural “Snow Country” of Japan was quite a culture shock. Taichi described how sore his arms and shoulders were for the first few months from the labor of loading trays, sixteen-bottles of incubated substrate each, onto the five-level shelves in the growing rooms. I’ve done this as well. Having to load several hundred trays of substrate, each weighing in excess of fifteen kilograms, at five levels, starting from floor to above your head, in a matter of fifteen minutes is a grueling task. Even as a hiker, runner, and avid exerciser, the first time I unloaded a room at Takeuchi Kinoko Labo, my shoulders and forearms were throbbing the next day. At large-scale enoki farms this is all automated, but for small family operations that kind of automation simply isn’t affordable or practical.

Harder still was learning the fine details of enoki cultivation parameters and becoming attenuated to the tiny changes and signals that have to be watched over the course of pinning, then fruiting and finally harvesting. The cultivation settings and temperatures have small but critical fluctuations, and the timing of the workflow is never exactly the same. This is a problem when, as the previously mentioned Tokusan Jyoho piece establishes, even a 5~7 percent drop in bio-efficiency is enough to put a grower in the red for the growing cycle. Taichi proudly showcased the tall, hefty clusters of enoki about to be harvested in one of his growing rooms, noting that with care, observation, and a little extra time, he’s able to average closer to 400 grams yield per bottle, rather than the standard 340 grams. This took him several years of learning from his father-in-law and studying enoki cultivation independently, before he could finally handle the process himself and maintain peak yields.

Not long after arriving, Taichi experienced the summer glut firsthand. The farm had to reduce the number of growing rooms in operation as part of the collective effort to keep prices from falling too low. Meanwhile in a hot summer the costs of cooling and treating air can sometimes put a farm in the red, and even in good years growers are barely breaking even. The biggest problem for small and big growers alike, in my mind, has to be labor management. For Mr. Yaoka, the small farm has only four part-time workers to start with, but with halved summer production there is simply not enough work for everyone.

In 2017, an opportunity emerged to try cultivating black abalone mushrooms when the incubation center that Kobayashi Mushroom Farm uses contacted several growers about potentially taking on the new project. There were no guarantees that growers would even be able to find sufficient buyers for the new, little-known variety, and cross-contamination is always a worry when your profit margins are almost nonexistent. Taichi was undaunted, though, and took the gamble. After he started out mainly selling to restaurants, he has now built a brand around his black abalone mushrooms, which even feature on the company’s t-shirt and his business cards. Demand has been steady and shown good growth.

Kobayashi Mushroom Farm now grows a small amount of black abalone mushrooms even during the winter, whereas they first only cultivated them in summer. There is some demand throughout the year, and from a small summer project, black abalone mushrooms have grown to the point where they use up half the farm’s ten fruiting rooms in the warm months and harvest 2.5 tons monthly during the summer. Unlike with enoki, Taichi feels comfortable leaving black abalone cultivation to his long-term workers for short stretches of time. Thus, the summer months give him a chance to get away from the farm and to meet with other people in the industry, make sales, and even have the occasional (but needed) break from work.

Right now, Taichi is still searching for the right balance on the farm. He admits that the hectic pace of production and work during the winter peak of enoki seasons would simply be too exhausting to maintain year-round. In a manner of speaking, the slow season is a crucial period to rest and recuperate. Still, his success with black abalone mushrooms has deepened his convictions that the enoki industry in Nakano has to diversify, and find high value, lower volume mushroom and mushroom-related products (supplements, cosmetics, mushroom leather, and so on), to fill in the gap in summer.

I had a chance to harvest a few black abalone mushrooms in the fruiting room and was surprised at how firm they are, and relatively easy to clip. Black abalone mushrooms are firmer than a typical oyster mushroom, but not as tough as eryngii. The distinctive gills and hefty weight of each mushroom made the variety stick out from any I had dealt with before. Taichi explained how they can even get a second flush just by resting the substrate bottles for several weeks after harvest, with no other special labor or shock treatment required like with shiitake. We took a few more pictures after I harvested mushrooms. First of Taichi and his wife, and then with the other two staff members who were working that day.