Jobs at Denny Mushrooms farm go up in smoke

KwaZulu-Natal’s largest mushroom farm, Denny Mushrooms, has retrenched all its staff, leaving hundreds of workers jobless after an alleged arson attack brought the operation to its knees last September.

A well-placed source within JSE-listed Libstar Holdings, which owns Denny Mushrooms, and a competitor told Business Day on Tuesday that 315 farm employees, including artisans, pickers, office workers and managers, had been retrenched after a decision was taken in December to shut the operation for good.

However, Denny Mushrooms said on Tuesday that while all its staff had been retrenched, a decision had not yet been made regarding the longer-term future of the farm, saying the insurance claim had not yet been finalised in full.

“The possible redesign and cost of rebuilding the facility are still being investigated and assessed. Our farming operations are energy intensive, hence the evaluation of available infrastructure and options regarding alternative energy generation form[s] a part of this broader assessment.

“Therefore, no decision can yet be made regarding the longer-term future of the farm,” Denny Mushrooms said.

“The fire damage to the property was extensive ... making it impossible to grow, harvest and pack mushrooms.”

The company said that with the Commission for Conciliation, Mediation and Arbitration it had “consulted extensively” with employees. “The unanimous decision of our employees was to accept retrenchment, which meant that all employees, except a small number of core employees who could be deployed in different parts of the business, received termination of employment compensation.”

This facilitated access to unemployment benefits for affected employees, it said.

The firm said it remained focused on servicing the needs of its customers to ensure it was able to meet demand and quality standards.

“This includes servicing the KwaZulu-Natal region from our other facilities at present.”

Denny, which has been in existence for more than 70 years, describes itself as the number one producer and supplier of fresh mushrooms in SA, with farms in KwaZulu-Natal, Gauteng and the Western Cape.

However, the source at Libstar, who asked not to be named, said staff were advised in December that the farm would be closing down permanently. The decision, he said, had been influenced by the civil unrest in KwaZulu-Natal in 2021, as well as labour disturbances at the farm that preceded the alleged arson attack.

The source said word on the ground was that the firm simply did not want to reinvest in the province.

“The message is ‘KwaZulu-Natal is not good for investment and we are not prepared to reinvest our insurance money to get back in and rebuild just so this can happen again at a later stage, especially because of the rioting and looting’,” he said.

Another source in the mushroom industry, who also asked not to be named, said Denny had been deterred by labour unrest and the “astronomical” cost of rebuilding.

Staff clashes

“They have been burnt so many times, it’s not just the arson. They had so many issues with staff. They had riots where staff crashed gates some years ago saying ‘you will only hire from Shongweni’,” he said.

He said it would cost R100m to rebuild the farm and take at least two years.

The Libstar insider said wage-earning workers were retrenched about two months after the fire and the balance of salaried staff in December. He said some employees had been offered transfers to farms in Gauteng and the Western Cape but were reluctant to move away from KwaZulu-Natal.

He said the Shongweni staff had been well paid and many had service of between 20 and 30 years.

Mushroom pickers were earning R8,400 a month.

He said just a handful of staff had caused the labour disturbance. “It was a small group of men who wanted to take on management because they wanted [a] 8.5% pay increase and we were offering 7%.

“The level of intimidation was extreme. Some women got letters saying they must not come to work, they will be killed at the bus stop,” he said.

‘Devastating’

Steven Stewart, co-owner of Forest Mushrooms, which is marketed under the Forest Fresh Brand, Denny’s biggest competitor in the province, said the closure of the factory was

“devastating” for the local economy and production.

Stewart said the closure had affected mushroom prices in

the province.

“It is a huge loss in market share in KZN. In terms of tonnage, they were double our size, producing around 40 to 45-tonnes a week and we are a little more than half of that. But that disappeared out of the market overnight.”

KwaZulu-Natal had been fortunate in that it was oversupplied and prices were a lot lower than the rest of country.

“Mushroom prices have now gone up in line with the rest of the country,” he said.

Stewart said the industry had been battling to recover from Covid-19 and the July 2021 riots.

“Business is booming but any money we are making now is helping us to recover the costs of the last three years,” he said.

The firm had hired a few of the retrenched staff and was considering expanding production as the closure of Denny presented an opportunity.

A spokesperson for the Transport, Retail and General Workers Union had not responded to a request for comment at the time of publication.

No arrests have been made in connection with the arson.