Sweet opportunity for Australian exotic mushroom growers

By Amy Macintyre, Sophie SchmidtFebruary 28th, 2023

Queensland’s sugar cane industry already produces around 95% of Australia’s sugar – but thanks to a new collaboration facilitated by CSIRO, it’s also fertile ground for home-grown exotic Asian mushrooms.

Bundaberg, Queensland is well known for its sugar cane industry but now, thanks to a helping hand from the Innovation Connections program delivered by CSIRO, is also home to a burgeoning industry for high quality exotic Asian mushroom farming.

In fact, the two industries are teaming up to create mushroom growing gold.

With the majority of Australia’s sugarcane produced in the Sunshine State, the versatile sugarcane crop is grown along a 2,000 km stretch of Queensland’s coastline by approximately 4,300 farmers, and Bundaberg is one of the larger centres for production.

A map of Queensland, Australia, with locations of sugar cane growing regions pinned along the coastline.

Sugarcane is grown along a 2,000 km stretch of Australia’s east coast by approximately 4,300 farmers. There are a number of associated operations in the supply chain including mills, refineries and export terminals. Source: CANEGROWERS Australia

The industry already generates over $2 billion in export earnings annually, but it’s up against growing global challenges such as volatile sugar prices and changing consumer demands. These challenges are prompting sugarcane producers to consider new diversification avenues.

However, as it turns out, the industry didn’t need to look far afield to grow a new product.

Mushroom growing gold

Sugarcane’s by-product is bagasse, which can be used to produce an eco-friendly pulp material. The fibrous pulp is made from harvesting the juice from sugarcane and is commonly used as fertiliser.

Enter Australian-based mushroom growers Kenon Corporation, based in Park Ridge in southeast Queensland. With assistance from Innovation Connections facilitator Anna Daniel, they were able to access Ausindustry funding to partner with researchers from CQUniversity Australia in 2022 to prove the viability of bagasse as a substrate to produce premium quality exotic Asian mushrooms.

Kenon Corporation is Australia’s first and largest producer and distributor of Asian mushrooms, and previously imported its mushroom spores and growing substrate from China.

Kenon founder Simon Tang said Kenon wanted to explore ways of growing mushroom varieties such as Oyster, Enoki and Pearl in Australia without the need to continue importing the spores and substrates.

Off the back of the research findings, they were able to establish a new facility in Bundaberg—directly across the road from a sugar mill who were only too happy to enter a mutually beneficial arrangement, providing their bagasse for Kenon to use as their locally sourced and sustainable primary substrate for growing mushrooms.

“We’ve been able to create more jobs, and at the same time help to secure our product from import challenges arising from the COVID-19 pandemic and other supply constraints,” says Tang.

Today, Kenon have expanded their operations and employ 10 staff members including three who have joined in the past year.

Queensland based Australian-based mushroom growers Kenon wanted to explore ways of growing mushroom varieties such as Oyster, Enoki and Pearl, in Australia without the need to continue importing spores and substrates.

Navigating the funding jungle

Premium-quality Asian mushrooms can retail for up to $50 per kilogram. There is growing demand from Sydney and Brisbane wholesale markets, as well as specialty stores, supermarkets and restaurants. Kenon cultivate more than 1.5 tonnes of these varieties per week.

Since teaming up with Innovation Connections and CQUniversity, Kenon have since been able to secure larger-scale federal government funding – an achievement that wasn’t easy to begin with.

“We initially tried to apply for funding but were unsuccessful as we didn’t really understand the funding programs and the processes involved,” says Tang.

Daniel shared the expertise needed to navigate small-to-medium enterprise (SME) funding in Australia. She met with Tang to understand what he wanted to achieve and guided his business through the process of setting up the research project with CQUniversity.

Once the collaborative project was established and going well, CQUniversity then helped Tang to apply for the ‘Securing Raw Materials Program,’ which supports partnerships between industry and regional universities, and helps businesses to expand into regional areas.

Through the project, Kenon and CQUniversity could demonstrate successful collaboration, which holds them in good stead for larger grants.

“We are continuing our relationship with CQUniversity’s Project Supervisor Dr Yujuan (Jady) Li and Researcher Dr Tham Dong to explore whether the composition of substrates can improve mushroom yields, quality and to investigate new processes to protect against fungal disease,” says Tang.

Support for Australian small business

An important part of what the Innovation Connections program does is to help businesses get the most out of their research and development (R&D) journey.

A national team of facilitators assist small and medium-sized-businesses in establishing research priorities, locating researchers to collaborate with, and providing access to funding to fast-track R&D projects.

Kenon aren’t alone on their journey – theirs was one of 200 projects supported by Innovation Connections in 2022.

The Innovation Connections program, which was established by AusIndustry and is delivered by CSIRO, has facilitated 2,200 projects to date with 1,500 SMEs and scientists from across 79 public research organisations nationwide since 2015.


  1. Great story. The thing I worry about is industrial farming not putting anything back into the soil, leading to more fertiliser use

    1. I don’t think that is an issue as mushrooms substrate after growing mushrooms is excellent compost for the gardens.

  2. I like to grow mushrooms, excellent idea

  3. Funny how the article never mentions the pictures mushrooms, which are clearly shiitakes

  4. Where can i buy for home mushroom growing

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