How former farmworker built his own mushroom empire

Nyathi will tell you that it was not only because he took a leap of faith and decided to run solo, but also because he was able to tap into the experience of seasoned professionals.

“You cannot read from the book and start a mushroom farm, that is very risky. Experience and exposure helped me a lot. Those looking to get into this sort of farming must have a couple of years of experience,” Nyathi believes.

The owner of Tropical Mushrooms, an agribusiness whose mushrooms make their way onto the shelves of hundreds of retail stores in Mzansi, says he knew from a young age that he would end up a businessman.

At that time, however, what kind of business he was going to pursue was not clear to the young boy who would turn out to become a passionate fungi farmer.

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Building a mushroom empire

Tropical Mushrooms is an independent, privately owned mushroom producer in partnership with Absa’s Resource Initiative Trust, which provided the initial financial support.

The production facility is located on a 19-hectare farm in Gauteng and supplies retail stores in Gauteng, Mpumalanga, Limpopo, Free State and the North West.

Nyathi, a Zimbabwean national, has over 15 years’ experience in the mushroom industry. He got his start after working for years as an agricultural economist in the agricultural ministry of Zimbabwe.

Tired of what he was doing, Nyathi made his way to SA and turned to primary agriculture. In 1993 he started working at Denny Mushrooms in Gauteng. The South African household brand operating for more 40 years produces their mushrooms under perfect conditions on three farms.

He joined the mushroom producer as a trainee grower, and it is there where he began dreaming of starting his own farm. Eventually Nyathi became responsible for the company’s entire production.

By 1999 he wanted more, so he asked his boss about his future at the company and was not happy with the answer.

“I decided to take a leap of faith and start my own thing. Let me tell you, it wasn’t easy,” he says about those early days.

Tropical Mushrooms commenced operations that year in August as an independent, privately owned mushroom producer.

Having an anchor

Nyathi believes that without God, his business would fail.

“When you don’t have a strengthening point that supports you when you are really down, one can easily fail. Some people have mentors for that, but even mentors are limited in what they can help you with.

Nyathi says he remembers many a time when his faith was tested.

One such moment was when his business had been struggling for months. It got so bad that he feared not being able to pay the salaries of the 175 workers he employs. However, in the nick of time, SARS made a large pay-out to Tropical Mushrooms and he was able to pay salaries.

“Someone would say that it was coincidence, but for me, because of my faith I believed that that was God intervening in my situation. Let me tell you, there’s quite a number of these stories that I can tell,” Nyathi says.

When he started out, he spent about three-and-a-half years looking for funding. He eventually pitched his business plan to Absa and received financial support from them.  

Nyathi’s business is run in partnership with Absa’s Resource Initiative Trust that provided the initial financial support.

“Mushroom farming is very scientific, and it has a lot of pitfalls.”

Funding, he explains, is always a problem because of security. Funding institutions want farmers to have security, but most farmers do not have any because of their backgrounds, Nyati says.

“But I guess you have to strategise around it and ask yourself how I handle and deal with the insufficiency of security. I just hope that my children will be in a better situation than where I am,” Nyathi states.

Mushroom farming is tough. Countrywide, there are less than 15 commercially operating mushroom farmers. Nyathi believes that this is indicative of how tough the space is.

“Mushroom farming is very scientific, and it has a lot of pitfalls,” he says.

“I started with R5 million 21 years ago and it was not enough, and that was on a minimum entry level. Today R10 million is not enough to get you started – that’s why people don’t bother. If you start smaller than that you will never shift and grow. You will eventually close down.”

The technical challenges, he says, are also huge. Nyathi’s advice to those looking to get into this sort of farming, is to have a couple of years of experience.

RECIPE: Seasonal mushroom and chicken pasta

Never stop learning

While the road has not been easy, Nyathi says he is proud that he is able to share his profits with his employees.

In 2005 he created an employee trust that allows his workers to take a share of the dividends at the end of a good year. Government bought a 18% share on behalf of the workers through the department of land affairs’ LRAD grant programme.

This transaction saw the establishment of the Tropical Mushrooms Employees’ Shareholder Trust (TEST).

Along the road, Nyathi has also scooped a number of awards. In 2003 he was awarded the Africa SMME (small, medium and micro-enterprises) award for agriculture through the Africa Centre for Investment Analysis.

Two years later, he was first runner-up in Sanlam’s business owner of the year competition. 2007 saw him walking away with the entrepreneur of the year award in Absa’s incubator fund and in 2009 he was declared “emerging farmer” of the year for Gauteng in the Agricultural Writers SA awards.

“I think I am where I am because of the efforts that I’ve made. Also, you can never stop learning. For you to grow you have to continue learning. You can’t (use consultants) on everything; at some stage you need to be able to do the majority of the things in-house because you have the knowledge. Consulting means more money is going out of your business.”

Peter says he would like others to learn from his journey and understand the importance of mapping out their future.

Tropical Mushrooms is still small, he says, and has only 10% of the South African market.

“We still have scope to grow and look at diversification. This is important, because if things do not work out in one area, there is something else to keep us going.”

Nyathi recently ventured into vegetable farming and also owns a cosmetic company.

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