Competitor-initiated trade action targets standard farming tax policy, setting a precedent that could undermine every U.S. produce grower, far beyond mushrooms

KENNETT SQUARE, Pa., May 19, 2026 /CNW/ -- South Mill Champs, one of the largest mushroom growers in North America, today announced it is contesting a preliminary U.S. Department of Commerce countervailing duty (CVD) determination against fresh mushroom imports from Canada. A trade action was initiated by competitor Giorgio Fresh Co. and based on a flawed legal theory that threatens agricultural producers across the United States and Canada. Beginning May 18, U.S. importers will be required to post cash duty deposits on Canadian mushrooms, costs that will flow directly to consumers paying more at the grocery store and in restaurants.

"We have earned our position by growing the highest quality and most consistent product available, and investing to keep it that way," said Lewis Macleod, CEO of South Mill Champs. "The suggestion that our Canadian operations are propped up by targeted government subsidies is wrong on the facts and wrong on the law. This action was brought by a competitor that has chosen litigation over investment. We will contest it at every stage — for our customers, for our employees, and for the American and Canadian agricultural communities who have a direct stake in how this precedent is resolved."

Added Mr. Macleod: "We are reaching out to representatives of other U.S. produce sectors to make them aware of what Giorgio's actions could mean for them and the legal precedent that could be set. In the meantime, we will continue to deliver the quality and consistency that our customers love and which have earned us our position at the forefront of the mushroom market."

"Frustratingly, even though we believe the trade case has no merit, it is still causing disruption. At a critical time when the entire industry needs to focus on getting more consumers to purchase more mushrooms by investing in quality, Giorgio prefers the industry to waste time and money on divisive litigation."

A trade action built on contested legal ground

The preliminary CVD rate assessed against South Mill Champs is based primarily on provincial sales tax exemptions that apply to all Canadian agricultural producers, in every province, growing every crop. These are not targeted subsidies to mushroom growers, they are standard, sector-wide tax treatment that Canadian governments have extended to farmers as a matter of long-established policy.

More recently, Commerce has opened a supplementary line of inquiry targeting cash-basis taxation — the accounting method used by farmers on both sides of the border to manage the reality that crops and livestock are often taxed before sale proceeds are received. U.S. farming interests have long-held that cash-basis taxation is not a subsidy but an accommodation of conditions unique to agriculture. Forcing producers into accrual-based taxation could create serious, potentially existential, liquidity problems for farms that owe tax on income not yet realized.

The risk extends well beyond mushrooms

The legal theory Commerce has applied here does not stop at the Canadian border. U.S. state governments routinely extend comparable tax treatment to domestic farmers. A precedent established against Canadian mushroom growers today can be cited in a future trade dispute against an American fruit grower, grain producer, or vegetable farmer.

The determination is preliminary, not final — there is still time to correct the record. The U.S. International Trade Commission will conduct its own independent injury determination, separate from Commerce's subsidy findings. If the USITC finds no material injury to the U.S. mushroom industry, all duties are terminated regardless of Commerce's conclusions. Final CVD and antidumping determinations are expected in December 2026.

Quality and investment, not subsidies, underpin South Mill Champs' competitive position

South Mill Champs has built its position as a North American leader through sustained investment in modern growing infrastructure, precision cultivation, and integrated supply chains across its U.S. and Canadian operations. It is also at the leading edge of harvest automation adoption that is reliant on investment in modern growing infrastructure. It directly employs more than 600 people nationwide, with headquarters in Kennett Square, Pennsylvania, the heart of a state that produces approximately 69% of all mushrooms sold in the United States.

The integrated North American mushroom supply chain has served American buyers, retailers, and foodservice operators for decades. Canadian production complements domestic U.S. supply, filling demand that Pennsylvania and other U.S. growers do not fully meet. Disrupting that supply chain raises costs for no gain in quality or supply security.

About South Mill Champs

South Mill Champs one of the largest mushroom growers in North America, headquartered in Kennett Square, Pennsylvania. With growing and processing facilities across the United States and Canada, the company directly employs more than 600 people and has built its market position through sustained investment in innovation and modern agricultural infrastructure. For more information, visit Southmill.com.

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SOURCE South Mill Champs