CHRISTINE Kubogamell's grandparents started farming mushrooms around Morgan Hill in the 1960s, when the land was cheap and the price was sky-high. Running South Valley Mushroom Farm, just off what is now Condit Road, the Kubo family has become one of the oldest names in Morgan Hill's once booming mushroom industry.But after more than 35 years, she and her family have decided to cash in.

Christine Kubogamell remembers when Highway 101 didn't exist, and Morgan Hill's population numbered less then 10,000. Fields, farmland and orchards prevailed, and small, family-owned mushroom growing operations were numerous. Times have changed. With the golden age of Santa Clara County agriculture long over and development slowly creeping up on all sides, it looks like the end for the South Valley Mushroom Farm.

"It's pretty difficult, even in the best of times, just because there's a lot of factors in mushroom growing and competing in the mushroom industry," Kubogamell says. "As a farmer, we all are barely making it as it is, especially with the gas prices going up. Everything that gets shipped into us, everything we have delivered out to customers—that has gone up. Yet, our prices are still fixed by market costs, which are so low. So, we're caught in the middle."

As the only mushroom farm left within Morgan Hill city limits, South Valley has applied for a planned unit development designation from the city, according to City Manager Ed Tewes. Scheduled to be heard by the City Council this summer, this designation, which allows for commercial use, will be the last step in opening up South Valley's options for sale and development.

Ag to Autos

Morgan Hill's history is linked to the most odorous of agricultural products. Over the past few decades, Morgan Hill's mushroom farms have been diminishing one by one, casualties in an industry hit hard by cheap imports from Canada and rising fuel prices.

This is an area once so famous for its stinky fungus farms that the annual civic party is known as Mushroom Mardi Gras, and the place proudly wore the title of "Mushroom Capital of the World." But now the land is increasingly worth more as a strip mall or housing development. Or a car dealership.The Planned Unit Development (PUD), in the name of Christine Kubogamell's parents David and Akiko Kubo, lays out the commercial plans for their land, illustrating three brand new auto parks. With detailed architectural drawings and precise development plans drawn up by Fred Goree A.I.A Architects, the PUD shows a trio of glass-paneled car dealership buildings, complete with sale lots, display areas, landscaping plans and even a "Sales Avenue" for test drives.

For the last few years, the Kubos have been courting their neighbor to the South, Ford Store Morgan Hill owner Tim Paulus. Considering that the Kubos' land is a prime freeway-front location, Paulus has been interested in expanding his auto dealership north onto the Kubos' farmland.In 2006, while in a contract with the Kubos, Paulus was the proponent of a two-part environmental site assessment (ESA) of the farm, conducted in association with an unspecified financial transaction between the Kubos and Paulus. Though the contract took longer then expected and both parties tentatively pulled out, Paulus is still the main anticipated buyer following the PUD getting passed by the city.

"In a perfect world, I'd love to see Mr. Paulus be the one who wins outright," says John Telfer, the Kubos' real estate broker and owner of South County Reality. "The PUD passing is the last piece to this whole puzzle. Once we get that done, we'd love to invite him back again."

"Frankly, a lot of people in the area would like to see that happen, because their mushroom farming does put out odors some days. The city has grown up around them, and it's not the right place for that kind of use anymore."

Cap on Development

This year's 29th annual Morgan Hill Mushroom Mardi Gras was down 20 percent in attendance. Though the shroom-fest's low turnout was significantly affected by the Summit Fire and a downturn in the economy, it was still a blow locally.

In the 1980s, when land was cheaper and mushroom farming was at its peak, the Mushroom Mardi Gras was started as a fundraising event. "With development, that has gone away, especially with all the building that has been going on," says event director Sunday Minnich. The faltering festival and disappearing mushroom business is just one symptom of the dodgy state of Morgan Hill agriculture. Most local farms are experiencing economic difficulties, and farmers almost universally agree that their agricultural heritage will be nothing but a memory within 15 to 20 years.

Like the Kubos, most Morgan Hill farm owners are gearing up for a future where selling their land to development will be the only viable option.

Many local mushroom farms have already succumbed to this fate. According to Kubogamell, about 10 area mushroom farms have closed in the last 15 years. In a 1982 Morgan Hill Mushroom Mardi Gras recipe booklet, six mushroom farms are listed as being located in South County. Only two of these, San Martin Mushroom Farms and South Valley Mushroom Farms, currently still exist.

Though many of the big mushroom producers have been around for a while, some in the industry are keeping the state of the Santa Clara county fungus trade close to their chests.

Cheryl Abbate, a representative of the San Jose Mushroom Council, says the local mushroom industry has been occupied by the same large companies for the last 15 years, and that she did not know of any major farm closings.The numbers still look good. According to the most recent Santa Clara County Division of Agriculture crop report, mushroom farmers made $57,701,000 in 2007, coming in as the No. 2 most lucrative agricultural product in the county. Nursery stock, the No. 1 most profitable agricultural product in the county, made a whopping $87,891,700 on items like bedding plants, grass, Christmas trees and turf.

Mushrooms have hovered at the top of the Santa Clara County list ever since the mid-1980s, when profits surged from $16,950,000 in 1985 to $22,604,000 in 1986. Though mushrooms had a streak as the top agricultural product in the county from 1992 to 1999, in 2000 they dropped to No. 2, and have remained at that position ever since.

Probably not for long.

The city of Morgan Hill has long been a stickler for preserving the area's open space and agricultural heritage, a tendency that hasn't always been in step with what local farmers believe is realistic for the future of their land. Morgan Hill city officials recently authorized a study on agricultural preservation to delve into whether farming is a sustainable long-term activity in Morgan Hill. Along with two Environmental Impact Reports, the exhaustive agricultural study is currently under way investigating the city's heavily agricultural southeast quadrant, which covers more than 1,000 acres."We want to preserve our open spaces," Tewes says. "We don't want to have our community grow like the cities up the freeway have. We want to have a separate city that is divided from our neighbors by open space. Our planning efforts want to preserve open space and agriculture if feasible. So we're evaluating ways in which we can do that."

While many Morgan Hill farmers argue that current economics are driving them out of business, they are engaged in a debate with the city government about whether some unincorporated agricultural areas should be annexed and converted from agricultural to urban land uses.In late May, the Morgan Hill Planning Commission reviewed a land use proposal that has the potential to block development and determine farmland values. Many locals are apprehensive about the proposal's emphasis on the Santa Clara County Local Agency Formation Commission's (LAFCO) policy on agricultural mitigation. LAFCO's mitigation policy demands that for every acre of farmland that is lost to development, one acre must be set aside for open space. This attempt at agricultural preservation requires developers to pay farmers mitigation fees, which has the potential to make the development of agricultural land quite expensive.

"Most of the agriculture is gone. ... It was gone a long time ago, for the most part," says longtime Morgan Hill fruit farmer Andy Mariani, owner of Andy's Orchard. "The people that have survived so far, they're basically dinosaurs.

"I can't say I'm surviving successfully. It is a precarious existence. You should just see the car I drive. I make less then some of my employees, because the margins aren't there anymore."

Mariani believes that some members of the Morgan Hill City Council need to be educated on the fact that local agriculture is just not working.

"Certain councilmembers, they have this kitschy idea that they're thinking, 'Oh, we'll all work together and everybody's happy.' Well, farmers can't make money the way they suggest they could. The concept is just not there. The concept is absolutely naive.

"What you're doing is locking someone into a land use that can be really, in the future, something that is not compatible with their surrounding uses. You're a dinosaur already, and you'll just be a fossil in the end."

Living Smell

With land prices that continue to rise, Morgan Hill farmers have long found themselves sitting on land that is worth significantly more money then they can make selling produce, making cashing out to development an increasingly attractive option.

"Our only hope as farm owners and as property owners in this area is to cash out one of these days," Mariani says. Small mushroom farms are finding it harder to compete in the market, where cheap imports from Canada and China are driving prices down. Growing mushrooms is labor-intensive and requires massive amounts of electricity and fuel, used to keep growing beds at constant temperatures between 60 and 70 degrees.

And mushroom farmers are dealing with the tribulations of encroaching suburbia. Nearby residents of South Valley Mushroom Farm complain about the proliferating aroma of the horse manure, an unavoidable part of the process essential to mushroom farming. "I feel like, well, we were kind here first—sorry," says Kubogamell. "It's really a process we cannot change."

Some in the community, however, would be glad to see the city's last mushroom farm go.

"It would make a lot of people happy," says Planning Commission member Ralph Lyle, "because that particular mushroom farm does a very poor job of controlling their odors, a very poor job. They are really offensive ... a quarter of a mile or a half mile away, it hits you right in the face."

Andy Mariani says that though people want a rural country atmosphere in Morgan Hill, few actually want to deal with the mess and smell that inherently come with farming.

"We're trying to farm in land that is basically surrounded by urban uses. Soon we're going to be an island of agriculture in the midst of everything, and you just can't farm that way," said Mariani. "The noise, the dust, the spraying, the potential for things like that get a lot of citizen's complaints.

"It's just another nail in the coffin. Each one of those things incrementally just makes it worse and worse, harder and harder to farm."

Mariani says he has come into contact with citizen hostility toward his farm.

"If I go out on the street, on Half Road, with my slow-moving vehicle, and I'm pulling equipment there, a guy buzzes around me in his BMW and flips me off because I'm inconveniencing him while he's making a fast trip to San Jose to go to work," Mariani says. "Its an urban environment. We're the interlopers now. We're done, and they're the people in charge, and that's the way it is."

The Morgan Hill mushroom farmer isn't the first to face these plights in the Bay Area. Just south of Morgan Hill, the town of Gilroy, the self-proclaimed Garlic Capital of the World and home to the Gilroy Garlic Festival, is now almost devoid of the small garlic farms that made the town an aromatic destination. Gilroy's garlic economy is now condensed to just three growers, the market being taken over by a less expensive, lower quality Chinese garlic variety. Added onto this is the infestation of a garlic fungus called white rot, and much of the former garlic fields have been converted to shopping developments. "There are less farmers and bigger farmers, and the farmers aren't getting rich," says Don Christopher, owner of Christopher Ranch.

As for the future of mushroom farming in Morgan Hill, perhaps citizens should take a look at the other side of the Santa Cruz Mountains. Twenty years ago, the Santa Cruz–Watsonville–Moss Landing area used to be a thriving hubbub of mushroom farms. Now, besides a scattered few large operations, the mushroom industry has all but gone away.

But what will happen to the Mushroom Capital of the World if mushroom farms are eventually totally pushed out of the Morgan Hill area?

"Any time you take away a farm from an area and just turn it into commercial-residential, then you just have to rely on food from further and further places," Christine Kubogamell says. "That's bound to happen, I suppose, in this area."If so, will the annual celebration in Morgan Hill become just plain "Mardi Gras?"

"We'll still kept mushrooms as the theme" Minnich says. "It's been our brand name for 30 years, and we're not going to change it."

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