What Fungi Do?
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Introduction
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Fungi are often viewed in different ways, as a spoiler of food in the fridge, as an object of beauty to be photographed, or as some tasty morsel to be cooked and eaten. There true purpose in nature is in recycling of dead organic matter.

Fungi together with bacteria fill an essential role in nature by decomposing complex organic compounds and returning their minerals to the soil and gases to the air, thus making them available for the next generation of plants and animals and ensuring the continuous natural cycle of life. Without this natural recycling process we would be knee deep in shit compost, and life on earth would come to an end.

Species of fungi are divided into the following three categories
1 - Mycorrhizal fungi form a partnership with some plants,but mostly with living trees.
2 - Parasitic fungi prefer the living host; this category is fairly small.
3 - Saprophytic fungi prefer dead and decaying material.
 
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Mycorrhizal
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Mycorrhizal fungi form a partnership mainly with trees but also with some plants, but rather then harming the tree, their presence significantly increases the roots' effectiveness. Fungi send their hyphae in and about the little rootlets of the tree until its difficult to tell them apart. The tree supplies the mycelium with moisture and carbohydrates, and the mycelium returns the favour with minerals and other nutrients from the surrounding soil. Mycorrhiza fungi are beneficial both in nature and agriculture; plants with them tend to grow better than those without.
Amanita muscaria
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Related Links
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The Biology of MycorrhizasMycorrhiza.com 
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Parasitic
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Parasitic fungi are the second largest group, of whose members do a lot of serious damage. Rather than obtaining their food from dead animals or plants, they prefer a living host, often attacking and killing, it then living on as a saprophytic fungi.
Armillaria sp.
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Saprophytic
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Saprophytic fungi are the largest group of fungi, they grow on dead organic matter such as fallen trees, cow patties, dead leaves, and even dead insects and animals. These fungi have enzymes that work to "rot" or "digest" the cellulose and lignin found in the organic matter, with the lignin being an important source of carbon for many organisms. Without their digestive activities, organic material would continue to accumulate until the forest became a huge rubbish dump of dead leaves and trees.
Coprinus micaceus
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