Beginners Find Their Business Mushrooming : Entrepreneurs: Illinois company grows almost overnight from lumberyard to fancy fungus producer specializing in shiitakes.

Jeff Parker spends hours in a dark, humid warehouse that smells like it’s full of old, sweaty gym socks--but he doesn’t mind the scent.

The president of Three River Farms Inc. is holding his nose all the way to the bank, reaping millions of dollars in sales from a blossoming business growing tons of exotic mushrooms.

“Smells like greenbacks to me,” said Parker, who started growing the specialty mushrooms three years ago at his lumberyard after hard economic times slowed housing construction.

The company near the banks of the Wabash River in southeastern Illinois is hoping to sink its roots into a big chunk of the growing market for specialty mushrooms, most notably the shiitakes.

Parker and partner Dan Teague expect $2.5 million in sales this year--a threefold increase over 1994. And their business has potential to grow even more as specialty mushrooms become a bigger part of the health fad.

“Mushrooms sort of fit the bill for that kind of healthful approach to eating,” said Paul Wuest, a plant pathology professor at Penn State’s mushroom research center.

The specialty mushroom business got its boost about a dozen years ago as part of a cultural shift to foods high in fiber and vitamins and low in fat and calories, Wuest said.

U.S. mushroom growers produced more than 5.56 million pounds during the 1993-94 season, more than twice the previous year’s total, according to the U.S. Department of Agriculture. The total value of the crop rose by 93% to $20.6 million.

Three River Farms grew from Parker’s need to do something with his lumberyard. Teague, an electrical engineer, proposed using the 3,000-square feet of indoor space to grow mushrooms.

Both men each invested $50,000 and struggled to teach themselves an ancient art with a capitalistic twist. They were up against tough competition from Pennsylvania and California, which dominate the mushroom market.

“We like to call it hillbilly ingenuity,” Teague said. “You just don’t go out and buy a mushroom maker. We designed and built and retrofitted what we needed.”

Their secret is in the sawdust--eight tons of the stuff every three weeks.

Mushroom spawn is put in plastic bags with a closely guarded formula of sterilized sawdust--preferably oak--and other ingredients. After eight weeks sitting on shelves in dark, temperature-controlled rooms, the sawdust gets hard as a log and the mushrooms are ready to pick.

Three River Farms, which has 22 employees, grows an average of 3,500 pounds of shiitakes a week. A $2.5-million expansion is expected to boost production to 10,000 pounds a week by next summer.

Shiitakes sell for about $3 to $4 a pound. And Three River farms is hoping to double the price of its crop because the company recently was certified as an organic grower.

Teague and Parker sell nearly all their produce to wholesalers, mostly in Chicago. But some crop also goes to Los Angeles, St. Louis, Houston and other markets.

The two men are confident the boom times have only just begun.

“Now when we got everything done, now that we know what the market does, when the highs and lows are, now it’s starting to get fun again,” Parker said.