Colorado Mushroom Farm closes, marooning Guatemalan workers without pay

A Colorado mushroom magnate’s mega-farm that for decades infused fresh fungi into the Rocky Mountain West has collapsed despite receiving $1.7 million in COVID aid — mired in debt, environmental disputes and a federal lawsuit — marooning 100 Guatemalan workers without pay.

Some workers for this Colorado Mushroom Farm northeast of Alamosa haven’t been paid wages they’ve been owed for months as company owners explore re-organizing under a Chapter 11 bankruptcy filing in late December.

The shutdown may force mushroom lovers to pay higher prices unless grocers, including Whole Foods and Sprouts, can import sufficient fresh Portabella, Crimini and White button mushrooms from elsewhere.

It also removes an economic mainstay, one of the largest employers in Colorado’s lowest-income area, the San Luis Valley.

But 77-year-old Baljit Nanda, the celebrated entrepreneur who began running the farm in 1985, said he is determined to revive it — and pay off workers, contingent on a loan coming through. Nanda blamed the pandemic, which caused a sudden drop-off of sales to restaurants that provided 70% of revenues, and problems with failing equipment used to make compost.

“The company is in the process of arranging a loan. And, hopefully, the loan will come through by the end of this month – and so everybody will be paid by that time,” Nanda said in an interview after the Denver Post contacted his attorney.

“I’m trying to do everything I can to get that farm opened back up again — and create employment for these people,” he said. “It is a vital business for this valley.”

The Colorado Mushroom Farm (previously called the Rakhra Mushroom Farm) became the state’s biggest producer of fresh mushrooms, ranking among the larger mushroom-growing operations in the country — relying on a unique workforce of up to 260 Guatemalans of Mayan descent who primarily speak the indigenous language Q’anjob’al.

Many had worked at the farm for more than 10 years when it shut down in June. Workers recalled good times harvesting up to 13 million pounds a year, encouraged by steady pay, holiday gifts, food delivered to crews working overtime, and visits by Nanda — even as burdens of relying on aging equipment increased.

But now in a frigid winter — temperatures in Alamosa plunge as low as minus 20 degrees — unemployed workers say they’re struggling. Rather than return to Guatemala’s highlands, where a long civil war led to the persecution of Mayans, they’re scrambling to stay in Colorado and find new jobs while waiting for unpaid wages.

“If you love your people, pay them,” said one longtime worker who calculated he’s owed $2,500 and asked that his name not be printed to prevent worse problems. “The law is the law. And the law is going to force you to pay.”

The workers claim they’re owed as much as $10,000, and some who received paychecks couldn’t cash them at banks, said Flora Archuleta, executive director of the San Luis Valley Immigrant Resources Center.

“These people are getting really disappointed. They haven’t heard anything. People are just, like, ‘When am I going to get my money? Am I ever going to get my money?’ Those are the questions we hear. And I don’t have any answers.”

Nanda told the Post he’s talking with supervisors who will keep workers apprised of the loan process. “Paying the workers is our top priority.”

Alamosa County officials confirmed buildings at the 51-acre farm site are closed.

A portrait of Nanda titled “the mushroom magnate” was featured in an exhibit at the Colorado Photographic Arts Center in Denver. In 2014, when the farm reopened following a previous shutdown after Nanda tried to retire, he was quoted in a local newspaper declaring, during a visit by then-Gov. John Hickenlooper, “I am a firm believer that employees are the biggest asset of any business.” He’d planned to expand beyond 270 workers.

Yet troubles mounted.

U.S. Department of Justice officials in March filed a lawsuit demanding repayment of debts topping $137,000 owed to the U.S. Department of Agriculture Mushroom Council, an agency created by Congress for improving the marketing of mushrooms. The company “has gone out of business,” according to U.S. District Court records from a Sept. 7 hearing. The bankruptcy filing in December pauses this federal case.

USDA Mushroom Council officials, through a spokesman, declined to comment.

Representing the farm in that case, attorney Jim Sherer said “no comment.”

Colorado Department of Public Health and Environment records show water quality officials in June sent the farm a notice of “failure to cease and desist from violations” in discharging wastewater. Nanda said the problem should be fixed by this summer after experts he hired can demonstrate that wastewater lagoons are not leaking.

A Colorado Department of Revenue list of businesses delinquent on taxes, reviewed by the Post,  shows the Rakhra Mushroom Farm owes $1,898,408 from the period between 2007 and 2011. Nanda said those taxes have been settled.

Alamosa County records show the company also is delinquent on property taxes, owing more than $260,000 from the past three years, a debt that a tax lien investor has purchased, Treasurer Amy McKinley said.

Farm debts include a loan from the San Luis Valley Development Resources Group, which funds local enterprises. The amount was $1 million, money that hasn’t been re-paid as required, director Anne Jones said Thursday. “We will start legal proceedings.”

The Colorado Mushroom Farm also received federal loans designed to cover payroll expenses during the COVID-19 pandemic, according to Small Business Administration records. The records list two loans totaling more than $1.7 million that now are forgiven.

Payroll expenses during the pandemic reached $2.5 million “and all the money that came from the Payroll Protection Plan loans went to pay the employees,” Nanda said.

The owners of the farm are unidentified investors who in recent years infused more than $4 million for modernization, he said. Those owners include Baljit Nanda’s son, Jaspreet Nanda, who was listed as the registered agent on state documents.

If financing based on one private loan and one from a state agency cannot be secured, Baljit Nanda said, fallback options include the creation of an employee-owned cooperative.

“The plan for the future is to line up the funding, pay off the current debts, and then complete our renovation project” by installing “the latest Dutch technology,” he said. The farm eventually should be able to hire “over 250 employees.”

For mushroom lovers — U.S. consumers spend more than $1 billion a year on mushrooms —  prices will depend on whether grocers — in the past also including King Soopers and Safeway — are able to import more mushrooms from other states and Mexico.

“Your prices for grocery store mushrooms may go up. This was one of the mega-farms in the United States,” said Austen Brinker, owner of Fungus Farm Colorado, a small-scale grower of gourmet mushrooms in Colorado Springs.

However, large-scale growers in mushroom hubs such as Pennsylvania likely can fill in to meet demand, said Michael Nail, owner of Mile High Fungi, a Denver-based producer of gourmet mushrooms for the past eight years. “Surely this has a regional impact in the San Luis Valley but, for consumers in metro Denver, there probably won’t be much impact,” Nail said. “It doesn’t take much for King Soopers or Albertsons to make a few phone calls and say: We’re going to bring in 100,000 pounds more from Pennsylvania.”

The shutdown created havoc for workers and their families, including children in schools.

It’s complicated because some workers lack legal documents, Archuleta said. “They are very vulnerable. Many don’t have any place else to work. Those who are undocumented will struggle to find other employment,” she said.

Some applied years ago for asylum based on alleged persecution in Guatemala, where the three-decade civil war devastated Mayan villages as guerilla fighters and U.S.-trained government forces vied for control. The adjudication of asylum claims can take years.

San Luis Valley communities have stepped up, supporting the families.

They’ve delivered boxes of food — rice, beans, cooking oil. They’ve paid rent and utility bills at a trailer park that was up for sale and has been purchased by the San Luis Valley Housing Authority to prevent evictions. But the help doesn’t cover gas, and commutes to schools and agricultural facilities around the valley can exceed 50 miles.

Federal immigration law enforcers indicated that, unless a worker already was wanted on a criminal warrant, they won’t immediately pursue deportation, Archuleta said. “They’re just not making deportation a priority. There are no promises.”

Agricultural businesses around the valley, arid terrain between high mountain ranges where irrigation water is depleted, widely seek workers.  Potato industry operators reportedly have been considering recruiting in Mexico to try to line up enough workers under special visa programs.

Colorado laws and the federal Fair Labor Standards Act require payment of at least the minimum wage. But farm workers often struggle to receive their full pay for all hours worked. And immigrant workers whose legal status remains uncertain often are reluctant to press claims for unpaid wages.

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