In the cool mountainous forests of east Asia, strange edible mushrooms grow wild, feeding on dead native oak trees away from the sunlight. In mushroom-growing facilities in China, Japan and South Korea, scientists work at re-creating that environment, using the same basic elements.

But in 1987, when Noel Arrold decided to try to grow exotic mushrooms in Australia, he was wading into unchartered waters. For a start, oak trees are not native to Australia, a fairly significant challenge to the fledgling farmer.

But Arrold was already something of a mushroom expert, having studied fungal genetics in Germany. Working in a commercial laboratory back in Australia, Arrold was selling mushroom culture to farmers, many of whom were facing tough financial times and struggling to pay him. When someone sent him culture for Swiss brown mushrooms, which were not being grown in Australia, Arrold saw a way of diversifying his business.

He had also recently inherited the Mittagong railway tunnel from a friend, who had been using it to grow bog-standard mushrooms for canning. The disused single track tunnel between the NSW towns of Mittagong and Bowral was built in 1866 and fell out of use in 1919, when a two-track tunnel was built next to it, to accommodate trains running between Sydney and the newly-minted capital, Canberra. It was consistently cool and dark, and therefore perfect for growing mushrooms. Arrold started with the Swiss browns, then moved on to shiitake. But it took Arrold many months of trial and error to find the Japanese mushrooms would happily grow in the well-rotted eucalyptus sawdust from the old mills that had been closed down in towns across southern NSW. From that success, he expanded to other Asian mushroom varieties.

It was tough going to begin, as Australians were unfamiliar with Asian varieties, but Arrold found a market in the big hotels catering to Asian tourists in Queensland.

He now works with a team of 12, cultivating swiss brown, shiitake, oyster, shimejii and wood ear in the tunnel, and enoki, coloured oysters, chestnut and king brown mushrooms in climate-controlled cropping rooms.

First, Arrold develops culture in a lab, then he and his staff prepare and sterilise strong plastic bags with a combination of sawdust, rice bran and straw. The bags sit in neat rows in the tunnel, where most mushroom varieties will grow quickly, within about seven days. Once the mushrooms are picked, the bags are left for three weeks.

''Then they throw them in a bathtub of water, that gives them a shock, and then they're ready to go again,'' he says.

They grow mushrooms three times in each bag before throwing out the remains and starting again.

Locally grown Asian mushroom varieties are still relatively rare in this country, although Li-Sun supplies one of the big supermarket chains and local markets. Most Asian mushrooms are imported. ''There are only two growers [of shiitake] in Australia, and we only grow 30 per cent of Australian consumption,'' Arrold says.

Noel Arrold's Li-Sun Exotic Mushrooms has tours of the mushroom tunnel during the Flavours festival, $35, highlandsfoodiegroup.com.au

Larissa Nicholson is a staff feature writer.