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Mushrooms: Marketing, Economics and Extension

Booklet No. 456 Mushroom Cultivation: MCS - 5


Content Preface I. Introduction II. Production and Areas III. Marketing IV. Viability of the Farm V. Production Costs VI. Extension Service VII. Organisation VIII. General Aspects in Implementing Projects IX. Conclusion Preface A prospective grower would like to know the economics of mushroom growing before he takes on this venture. In previous booklets on mushroom, the discussion was on cultivation and post harvest aspects. In this booklet various aspects regarding marketing, economics, extension and organization of mushrooms are described. By knowing all these facts a grower can make this venture successful. Dr. K. T. Chandy, Agricultural & Environmental Education I. Introduction Before starting any new venture, it is most necessary to know about the economics, marketing and extension works of that particular venture. The question which strikes the mind "What will be the capital investment and how much profit will he make in a year?" Before answering the question it is necessary to be aware about all other relevant economic aspects. It is necessary to understand that there will always be a variation in inputs, production per sq. ft. of bed area, marketing set-up, extension cost and the price at which the produce is sold. The price of raw material and the labour cost also varies from place to place, thereby affecting the economics. However, management of the farm is the most important aspect which would have a bearing on the profit or loss at the farm. Mushrooms differ very much in their appearance and marketability. Most people think of white button mushrooms only, but there are other mushrooms more suited for cultivation in developing or tropical countries. A good feasibility study should determine the production target figures on different mushrooms. Such a study also provides us differentiated import figures, which mushrooms are imported, how are they preserved etc. It may be profitable to grow only small amount of one mushrooms and much larger of others, depending on the demand. II. Production and Areas

According to commercial estimate, global output of fresh button mushroom is around 1.41akh tonnes annually. The bulk of India's mushroom production emanates from Himachal Pradesh and Jammu and Kashmir. Small quantities are produced in Patiala and Tanda of Punjab, Sonipat, Glirgaon and Faridabad of Haryana; Nainital, Dehradun, Meerut and Ghaziabadof U.P.; Delhi, Ooty, Bangalore and Pune. Several growers has taken it up as a subsidiary occupation and some private entrepreneurs have also taken mushroom cultivation on a cottage industry basis. Some estimates of production have been mainly on the basis of spawn supplies to growers by the major spawn-production centres in the country. III. Marketing The present consumption of mushroom in North India alone comes to 1000 tonnes per year. This is because of the increase in purchasing power, change in tastes and marketing efficiency. However, there is every reason to believe that in the immediate future, this consumption may increase to 1500 tonnes. In India, Delhi provides the largest market of fresh mushrooms estimated to 250 tonnes per year. The production in Delhi itself has been increasing at a growth rate of 10% annually. From the various production centres, Delhi receives approximate 1000 kg/day during winter and 300 kg mushroom/day during rest of the year. The large growers have their agents ill Delhi. Rail and road transits are made in icepacked containers or ordinary cardboard boxes. The wholesalers sell their consignments to the retailers and hotels. Although it is relatively cheaper to produce mushrooms at the hills, their disposal poses difficulties because there is a limited market for the fresh mushrooms in vicinity. These mushrooms have to be transported tp long distances at considerable cost, besides, the possibility of their deterioration in the hills. However, mushroom produced in the summer in hills call be profitably sold in big cities in plains since no local crop is available then. A. Consumption pattern Of all the mushrooms, from among those cultivated the button mushroom holds the main attraction for consumers. Maximum sale in India as in most countries is of fresh mushrooms. Only a fraction of the produce is canned in India. Belgium, the UK and Denmark ar the biggest consumers of fresh mushroom. In most countries the white variety is preferred to the cream or brown one. However, in California, the USA, brown mushrooms are preferred. The mushrooms after harvest are graded as buttons, cups and opens or flats. Buttons are generally preferred for canning. Consumers of fresh mushrooms have preference for closed cups. Open mushrooms or flats are considered to be low grade and sold cheaply. In India the mushrooms are generally served in good hotels and restaurants, foreigners living in the country included those attached to diplomatic missions, at feasts and of late they are eaten by a majority of upper middle class. B. Marketing aspects of different mushrooms Marketing aspects of fresh mushrooms offer very much from dried mushrooms. The products need to be consumed with in a few days after picking. The following details gives general informations on the mushrooms. 1. Agaricus bisporus and A. bitorquis This most commonly cultivated mushroom called button mushrooms. It has weak flavour, nice texture and its colour is white, off white, cream and brown. It is marketed in fresh,

brined and canned. Its grades are buttons, cups and T. formed. It is most accepted mushroom and relatively easy to market. Most countries prefer white appearance, smaller market for offwhite appearance. Fierce competition allover the world. 2. Lentinus edodes It is commonly called shiitake mushroom and there is ready market for its dried product. A good quality brings relatively high prices. It has a specific taste which becomes much stronger after drying. It is more substantial than Agaricus. Flash depends on strain and temperature. In lower temperature, cap flesh is thicker and vice-versa. The cap is red to red-brown in colour which turns brown to black after drying. The colour of fresh gills is white and turn yellow on drying. 3. VoIvarielIa volvacaea Its common name is paddy straw mushroom. It is famous for specific bite and watery texture. In colour it ranging from white to dark brown. It is available in fresh, canned and dried mainly for overseas markets. Paddy straw mushroom is easily cultivated at high temperature. Its consumption is still limited to oriented market not well suited for western market. It has very short shelf life. 4. Tremella fuciformis It is commonly known as white jelly fungus, silver ear or white wood ear. It is very weak in taste, rubbery in texture and nice in appearance. It is usually sold in dried product. Its market value is very low and also less suited for western market because of rubber texture. 5. Auricularia Commonly it is known as mouse ear or wooly ear mushroom. It is weak in taste, rubbery in texture and ear-like appearance of two sizes: Auricularia auricula (mouse ear) 1- 4 cm and Auricularia polytricha (woolly ear) up to 20 cm. Its marketability is mainly limited to Asian communities. The larger species grows faster and at higher temperatures, but the local cooks often prefer the more expensive smaller ones. It is mainly available as dried producers. 6. Flammulina velutipes It is commonly known as gold needle or velvet stem collybia mushroom which is nice in taste. It is substantial in bite but not as rubbery as Aurbcularia. Mushroom is nice in appearance. The stem is long and cap is small. The colour is either white or yellow. It is marketed in detuxe Western market or in Asian communities. It is sold in fresh and canned. 7. Hericium erinacaeus It is famous with different names in different countries, like lion's mane (USA), coral truffle (Netherlands), pompom blane (France) and monkey heat mushroom (China). It is slightly bitter in taste and liked by few people who tried it. It is nice in texture and appearance and white hairy clump in colour. Its products are fresh, dried and brined. Little is known about marketability's of this mushroom. C. Marketing aspects of oyster mushrooms The many different species of Pleurotus (Oyster Mushroom) ask for a separate approach. Their temperature range is very broad. For each climate a suitable species and strain can be found. There are considerable variations in taste and appearance. Most of the species with the beautiful colours break easily and require careful handling and packing. Marketing potential of dried oyster mushrooms is still limited, though the taste becomes stronger after drying. Only Pleurotus cystidiosus (identical to P. abalonus) is suited for canning. The other

species lose texture and flavour when dried. Even with in the same species considerable variations in temperature, light and CO2 sensitivity, yield and taste are possible. 1. Pleurotus sajor-caju Taste is stronger than Pleurotus cystiodiosus. Flesh is rather thin and colour after maturity is pale grey. Generally product is fresh and have promising market potential, easy to row and some strains can stand high temperature. 2. Pleurotus cystidiosus and P. abalonus Taste is sweeter than P. sajor eaju rather nice in taste. Colour of P. cystidiosus is light while P. abalonus is white in colour. The product is available in fresh or canned and have promising market potential. It can be easily grown at high temperatures. 3. Pleurotus ostreatus It has similar taste to sajor-caju and nice in texture. It is variable in colour ranging from steel blue to mouse grey and almost white. The product is generally sold as fresh. It is a low temperature strains take a long time to fruit. The time between flushes is quite long. 4. Pleurotus Oabellatus The caps are thin and beautiful rose like appearance in colour. The product is sold in fresh and used as edible decoration. commonly found on markets in Bangkok. 5. Pleurotus eryngii It is very nice in taste and texture. The stipe is typical, strong, funnel shaped and sepia grey to buff in colour. The product is available in fresh and has promising market potential. 6. Pleurotus pulmonarius The taste is similar to sajor-caju. Stipe is rather tough and cream to light brown in colour. The product is sold as fresh and have promising market potential. Mushrooms typically grow one by one out of the substrate. 7. Pleurotus comucopiae The taste is something like between cucumber and water melon. The structure is funnel shaped, brittle and beautiful yellow to china in colour. The product is sold fresh and should be packed in sturdy boxes and can be used as edible decoration. The colour fades when prepared for cooking. Commercial cultivation only on small scale. 8. Pleurotus cosmos The taste is pleasant and flesh in thin, leathery texture and nice appearance. It has rose colour and produced very limited as commercial. D. Export potential The International Monetary Fund (IMF) emphasizes the importance of exports for developing countries with foreign currency related problems. Because most countries follow the IMF recommendations, exports of goods like coffee, sugar etc. have increased. The price however, went down, leaving only the buyers in an advantageous position. If mushroom growing is solely dependent on export, external factors can easily disturb the market. Quotations changes in regulations, shifts in patterns of spending in the export markets all have definitive effect on export possibilities. It is best to try distributing at least part of the harvest on the local market.

Another negative aspect of exporting products is that in developing countries multinationals are often producing standard goods at the lowest possible price for the world market. In relation to pineapples, two companies dominate the world market. Canning pineapples is not very difficult, but Dole and Del Monte have succeeded in developing a trade name. They do not sell pineapples, they sell Del Monte and Dole. Both trades have invested heavily in quality, reliability of delivery and market communication, It is nm easy to develop a trade name. It requires both patience and expertise. In relation to mushrooms, the dominance of a small number of large companies is felt less than in relation to other communities, but this might change In the future. Big trade companies have much expertise to offer, but as soon as they can obtain the product cheaper at another place, they are gone. If export is considered, it is important to have direct contact between producer and buyer. Middlemen will make for the buyers higher, without having the original producer benefit. The producers have to communicate directly with the canning factory or importer about quality, way of packing and other specifications. An advantage of mushrooms is their high added value. Export may result in earning foreign currencies without reserving arable land. 1. How to find an importer for mushroom products a. Ask the embassies or consulates of a number of countries to supply a list of importers of canned products. b. Participate in international agricultural fairs and exhibits for example in Paris or Cologne. Send products and basic informations to the Mystry of Agriculture in your country, if it organizes stands at fairs. A selection of possible importers can be made in advance and appointments can be made to meet the importers. The bureaucratic ways are often time consuming the direct way is expensive. A usual strategy for export to the European Community is to focus on one country firs. The product may be repacked in this target country before shipping to there EC countries. 2. Quality and packaging A good and constant quality of the product is most important Exporters should be well aware of the demand for a consistent high quality product. The western market demands different ways of packaging. In Germany, for example, an environmental friendly packaging is required now-a-days. Un packing should be efficient without mush waste material. Relatively new developments are environmental protection measures all packing good to be sent to Germany must meet specifications concerning disposal. Consumers in the European Community are more and more buying nice-looking products at a higher price. Mushrooms packed in glass look much better than those lacked in cans. However, the shape of the glass is important. For a ample, the bottles used in China are out of date by European standards and are therefore not suitable for the European market. In comparison with tin cans, glass is more expensive and because of its weight, also more expensive to transport. It will be impossible to export goods which do not meet the specifications of the importing countries. Ask the Councils for Agriculture of the European Community in Brussels or the Food and Drug Administrations in the USA and Canada to send the specifications for imported goods. These specifications give the different quality grades, the drained weight, ways of packing and how to label the cans.

Big trading companies have their own staff of quality watchers. Iska (Schraeder KG GmbH) in Hamburg (Germany) is a big importers of vegetables from allover the world. It guarantees quality of appointing quality watchers in the producing countries. Another way to control quality is by hiring ISR, a company specialized in quality controls allover the world. Hiring this expertise is rather expensive. 3. Prices Prices fluctuate, following demand and supply. Some mushroom journals mention the prices in their own countries but only for different grades of Agaricus. Prices for Oyster mushrooms and dried shiitake are more difficult to find out. A general view on developments in the food market sector can be found in magazines like FOOD NEWS. E. Market potential of local consumption The local situations are too differentiated to discuss, even in a general way. This may be assessed by the study of following points. 1. Existing situation Mushrooms are generally more expensive than other vegetables. They contain valuable proteins and vitamins and this fact should be used in promoting them. In many countries mushroom consumption is limited to the upper-class few and foreign residents. Local people sometimes only eat mushrooms collected in the wild. The distribution is therefore also very limited. If the product has to become more popular, then it should be easily available at a reasonable price. The people should also know how to prepare them in an acceptable way. Much depends, of course, on the acceptance of mushrooms as a food. 2. Market survey A market survey will reveal the acceptance of mushrooms. If the product is unknown, a small quantity can be imported to check acceptance. Be sure to compare the right figures, The market for oyster mushrooms differ considerably from shiitake or Agaricus, Even within the group of oyster mushrooms there is quite a lot of difference in appearance, texture and taste. The consumption of wild mushrooms indicates some acceptability of the product, but many wild mushrooms cannot be cultivated, Both their tase and texture ,are different, but sometimes a name derived from a locally consumed wild mushroom can be used to label the product. 3. Questions to be answered The answer to following questions will determine the market potential for mushrooms: -Is there already any import of mushrooms -At what price and quantity are imported mushrooms sold and which conservation method is employed? -Where are mushrooms currently available? -Which places lack mushrooms although there is a demand (supermarkets, restaurants,' vegetable whole salers, the vegetable market) ? -Which mushrooms do people usually eat ? -Do people collect mushrooms in the wild ? Which mushroom species and in what quantities ? -Which mushroom colour, shape and size will be appreciated most ? -Is it possible to distinguish specific target- groups that consume larger amounts of mushrooms for example, overseas Chinese or specific tribes ?

F. Promotion on a local level Many mushroom can be cultivated but the production has to meet the demands, otherwise the price will be too low. Mushrooms are quite costly to produce in comparison to vegetables. If the income level of the people is rather low, then most mushrooms will be eaten by tourists and the upper class. It may however, contribute to the income level of at least some farmers. Usually following four factors are considered in marketing: price, product, physical distribution (availability) and promotion. An effective promotion campaign must first of all localize the target. Is the intention to sell to restaurants, wholesalers and supermarkets or to individuals, at a market? What do they demand from the product? From the market survey the demands have been determined. The problem then is how to, package and how much to ask for the product? If the mushrooms are sold to wholesalers then try to let them do the promotion. A common way to promote mushrooms is by supplying recipes, nutritional value and medicinal effects with each package. Another effective promotion method may be a cooking demonstration in a restaurant or at a market. Especially in rural areas cooking demonstrations work well. Mind the social situation who normally takes care of the cooking, who buys the food each day? Recognize gender patterns in the community and react accordingly. Advertising in newspaper and on television is too expensive for one grower unless he controls the whole market. Farmer's associations may put a tax per m2 of growing surface and calculate a tax for each grower to pay. From this tax the advertising is paid or a portion of the price of spawn can be collected for this purpose. The farmer's associations may print leaflets, posters etc. and hand them over to the growers who can distribute them to their customers. IV. Viability of the Farm With the existing cultivation practices no mushroom farm with less than 100 trays is economically viable. Medium farms with 100-200 trays are economically viable. The average cost of production per kg declines progressively with the increase in the size of the farm. However, for the small farmers the use of existing mud houses and free (family labour and on the support of subsidize and other incentives less than hundred trays can make some profit. V. Production Costs The organizational structure of the producers of the required materials differs from one locality to another. There are a number of factors which effect production rost. These factors may be quality control of the spawn production and harvested product, training and extension services, social aspects, efficiency in marketing, finance and credit programs and research and development. A. Cost assessment Mushroom cultivation involves the following steps: 1. spawn production, 2. substrate preparation and 3. tending the substrate and the mushrooms. It depends on the costs and the availability whether a mushroom producer will buy spawn, substrate (or may be even full-grown substrate) or produce everything himself. Therefore the cost assessment is divided into three steps:

1. Costs of spawn making 2. Costs of substrate preparation 3. Cost of growing Costs of divided into fixed costs (depreciation of investment) variable costs and labour. The investments for the establishment of the farm are included in the investments. As the amount of labour depends very much on the available equipment only some techniques are mentioned and the number of hours involved when using this technique in a particular situation. The figures are given in rupees. They serve to give an idea about relative costs. Government regulations will sometimes interfere with plans to import machines. For example, in India a large Agaricus producers had to export his products first and could only then get per mission to import machines, after he earned sufficient foreign currency. 1. Spawn production The average costs involved in spawn production are as follows. Table 1 : Costs involved in spawn production (Variable according) to local situations and prices) Sl.No Particulars Investment Life span Depreciation Yearly Rs % depreciation Rs 1 Housing 3,50,000 10-20 5-10 35,000 2 Autoclave 35,000 10-15 6-10 3500 3 Steam boiler 17500 10 10 1750 4 Laminar flow 17500 10 10 1750 inoculating Cabinet or Simple Wooden 3500 5 20 700 Clean room Additional costs: Filters, flames, test tubes, agar, substrate material (grain or saw dust, wood plugs etc.), cotton plugs, energy for sterilization and washing are items of additional costs. Optional costs: mechanical mixing of the substrate. Labour: depends on technique followed. Trained laboratory assistants are necessary to maintain a constant high quality of the spawn. 2. Costs in substrate preparation: The cost depends very much on the technique applied. At each section on the cultivation of the specific mushrooms, different set of material is required which can be collected from booklet cultivation practices for mushrooms. For substrate preparation, usually the bulky material is quite cheap, but the supplements are more expensive. There will be some additional expenses on energy for heat treatment, spawn, plastic bags and cotton plugs etc.

3. Costs involved in growing The costs very much depends on technique applied. At each section on the cultivation of specific mushrooms various equipments are needed which decides the costs. In general cost may be put under following heads. a. Water facilities b. Depreciation of the mushroom house and equipments c. Pesticides d. Substrate including spawn ... e. Electricity and f. Labour : tending, harvesting, packing, filling and emptying the house B. Economics Mushroom cultivation, which is highly technical and skilled activiry, involves investment depending upon the size of the unit/production targets. In India, mushroom growing is a seasonal activity for marginal and small farmers around cities. These farmers prepare compost either by long method or purchasing from reliable composting units. They sale fresh mushroom in near-by market or on the cannier of the locality me commercial large scale, year round mushroom production units of the country are equipped with compo sting, growing, spawn production and processing units. Following is the economics based on the information given by marginal, small and big mushroom farmers of Uttar Pradesh, India. 1. Economics of mushroom cultivation at marginal scale by long method. Price may vary according to local conditions. Given ex- ample is a rough estimation. a. Fixed cost i. Cost of 1 mud cropping room (40 x 20 x 14 ft) Rs. 16000.00 ii. Materia] for shelf making Rs. 8000.00 iii. Cost of compo sting platform (25 x 15 ft) Rs. 6000.00 made up of brick and pointed with cement & sand iv. Cost of forks, thermometers, spray pumps Rs. 2000.00 -----------------------------------------------Tota] Rs. 32,000.00 b. Recurring expenditures (Two crops in a cropping season) i. Wheat straw 80 qt]x @ l00/qt. Rs. 8000.00 ii. Calcium ammonium Nitrate2.4 qtl x @ Rs. 350/qt] Rs. 8400.00 iii. Urea 0.3 Qt]s @ Rs. 350/Qt Rs. I05.00 iv. Super phosphate 0.8 qtIs@ 350/0t Rs. 280.00 v. Muriate of Potash ' 0.8 qtis @ Rs. 350/0tl Rs. 280.00 vi. Wheat bran 8.0 qtls/Rs. 450/0tl Rs. 3600.00 vii. Gypsum 4.0 qtls/ Rs. 50/0tls Rs. 200.00 viii. Spawn 720 bottles @ Rs. 12/bottle Rs. 8640.00 ix. Pesticides Rs. 300.00 x. Casing Soil 60 qtis @ Rs. 25 of Otis Rs. 1500.00 xi. Labour charges 480 mandays @ Rs. 35/day Rs. 16800.00 xii. Misc. expenses Rs. 1000.00 ----------------------------------------Total Rs. 49,105.00 c. Over head cost i. Interest on 'a' @ 15.5% Rs. 4960.00 ii. Depreciation @ 10% Rs. 3200.00

iii. Interest on 'b'8 months @ 15.5% for Total d. Gross income Mushroom Yield 24 qtis @ Rs. 3000/Qtls e. Net income d -(b+c)

Rs. 5142.38 Rs. 13,302.00 Rs. Rs. 72000.00 9593.00

2. Economics of mushroom cultivation at small scale a. Fixed capital investment i. Cost of construction of two crop rooms (40 x 20 x 12 ft each) ii. Cost of construction of a bulk pasteurization chamber (including mojor, blower and ducting) iii. Cost of compo sting plate form (50 x 25 ft) iv. Cost of four tier racks for two crop rooms v. Cost of boiler and pipe fillings Total b. Recurring expenditure for two crops i. Wheat straw 200 qtIs @ Rs. 100/QtI ii. Chicken manure 120 qtIs@ Rs. 25/qtl iii. Urea 3 qtl @ Rs. 350/QtI iv. Wheat bran 20 qtIs @ Rs. 450/QtI v. Gypsum 10 qtIs @ Rs. 50/0tI vi. Spawn 2000 bottles @ Rs. 12 each vii. Polythene bags 2000 bags @ Rs 2.0 each viii. Casing soil 240 qtIs @ Rs. 25/QtI ix. Pesticides x. Power & Water xi. Labour 1200 manday @ Rs. 35 each xii. Fuel for boiler xiii. Misc. Exp. Total e. Over head cost i. Interest on 'a @ 15.5% ii. Depreciation on 'a' @ 10% iii. Interest on 'b' @ 15.5% for 8 months iv. Gross income Mushroom yield 90 qtls@ Rs. 3000/Qtl v. Net Income d -(b+c)

Rs.1,20,000.00 Rs. 1,00,000.00 Rs. 15,000.00 Rs. 25,000.00 . Rs. 70,000.00 Rs. 3,30,000.00

Rs. 20000.00 Rs. 3000.00 Rs. 1050.00 Rs. 9000.00 Rs. 500.00 Rs. 24000.00 Rs. 4000.00 Rs. 6000.00 Rs. 1500.00 Rs. 2000.00 Rs. 42000.00 Rs. 1500.00 Rs. 5000.00 ------------------------------------------. Rs. 1,19,550.00 -----------------------------------------Rs. Rs. Rs. Rs. Rs. 51,150.00 33000.00 12,353.00 2,70,000.00 53,947.00

3. Economics of large scale controlled mushroom project (250 tons per annum) a. Land building i. Land price for one acre Rs. 5,00,000.00 ii. Registration and other incidental expenditure Rs. 50,000.00 iii. Crop glowing room(60 x 22 x 12 ft) Rs. 23,76,000.00 iv. Corridor (13 x 14 x 12ft) @ Rs. 150/sq. ft. Rs. 3,27,600.00 v. Packing, A/c equipments and office room @ Rs. 150/sq. ft. -1500 sq.ft Rs. 2,25,000.00 vi. Compost tunnel @ each of 14 x 10 x 15 ft one pair

800 sq. ft. @ Rs. 200/sq. ft. Rs. vii. Basement for blower and duct 25 x 12 x 18 ft, 300 sq. ft. @ Rs. 200/sq. ft. Rs. viii. Spawning chamber 25 x 12 x 12 ft .300 sq. ft. @ Rs. 200/sq. ft.Rs. ix. Composting .;hade 100 x 50 x 15 ft 5000 sq. ft. @ Rs. 80.00/sq. ft. Rs. x. Pre-wetting area 50 x 50 ft 2500 sq. ft. @ store 4000 sq. ft. @ Rs. 80.00/sq ft Rs. 30.00/sq.ft Rs. xi. Wheat straw and chicken manure Rs. xii. Control room" boiler room, generator room, and guddy pit 2000 sq. ft. @ Rs. 150/sq. ft. Rs. xiii. Spawn lab 1080 sq. ft. @ Rs. 200.00/sq. ft. Rs. xiv. Canning area and store 2600 sq ft. @ Rs. 150/sq. ft. Rs. xv. Office and ~rtico 96;Z sq. ft. @ Rs. 200/sq. ft. Rs. xvi. Miscellaneous construction a. Road and boundary Rs. b. Water tank Rs. c. Tube well room 1200 sq. ft. @ Rs. 80/sq. ft. Rs. d. Security room 200 sq. ft. @ Rs. 1S0/sq. ft. Rs. xvii. Insulation for 41,000 sq. ft. @ Rs. 25/sq. ft. Total, b. Machineries and equipments i. Boiler 350 kg stearn/hour ij. Blower fitted with 7.5 H.P. Motors 2 nos iii. Air handling units including compressure, chiller, condensor ducting etc. iv. Generator-set 100 KV A cap v. Racks in growing room vi. Compost turner and filling line vii. Electrical and elect. fittings in control room viii. Casing soil @ Rs. 25/qtl. 400 M. T ix. Canning cost for 230 M.T. mushrooms i. Cost of cans (1 kg cap) 2,99000 Nos @rs. 9.50/can ii. Brine solution, citric acid, stickers and other packing materials @ Rs. 3.00/can x. Salary and wages/year Rs. 45000/month xi. Cost of energy (electricity & diesel) Rs. 50,000/month Total Sl No. 1 2 3 Rs. Rs, Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

1,60,000.00 60,000.00 60,000.00 4,00,000.00 75,000.00 3,20,000.00 3,00,000.00 2,16,000.00 3,90,000.00 1,92,400.00 4,00,000.00 75,000.00 16,000.,00 30,000.00 10,25,000.00 7,198,000.00 2,50,000.00 40,000.00 20,00,000.00 4,00,000.00 7,20,000.00 16,00,000.00 2,00,000.00 1,00,000.00 28,40,500.00 8,97,000.00 5,40,000.00 6,00,000.00

1,01,87,500.00 . Amount/annum (Rs) 85250.00 1362840.00 10,18,750.00

C. Over head cost: Interest and depreciation/annum Particulars Total cost Rate (Rs) (%) Land 5,50,000.00 15.5% Building 66,48,000.00 5%+15.5% (depr+Int) Machineries 1,01,87,500.00 10% (depreciation)

4 5 6

Preliminary & pre-ope- 2,20,000.00 rative expenses Raw material, wages & 13,57,500.00 salary for 4 moths Raw material per annum --Total

15.5% (Interest) -----

34,100.00 13,57,500.00 5430000.00 93,16,880.00

d. Return/annum 100% capacity utilization at 18% yield of compost weight. i. Canned mushrooms 2,99,000 cans. @ Rs. 40. 00/can ii. Fresh mushrooms 20 M.T. @ Rs. 25,000/M.T Total

R.s.1,19,60,000.00 .Rs. 5,00,000.00 Rs 1,24,60;000.00

e. Repayment per annum Rs.15,00,000.00 f. Net Income per annum [d-(c+e)] Rs.16,43,120.00 VI. Extension Service Under ideal circumstances the extension service can support or initiate mushroom growing activities by following measures. 1. Doing research to adapt the technology to local circumstances. 2. Supplying reliable informations to the target group. 3. Organizing reliable spawn production. 4. Solving the cultivation problems of the farmers when they enrol in the project. 5. Organizing marketing aspects of the product, like grading quality control, contracts with canning factories, promotion. 6. Organizing financial aspects like credit. 7. Taking social aspects of the implementation into account, for example, who is reached by the service, are they the ones that carry out the work, does the scale fit the local tradition, are the farmers really interested in the project or is it planned from above? This ideal situation rarely exists in developing countries. Sometimes the extension workers are poorly paid and will try to get a commission from the input supplying agency. They will of course advise the farmers to use inputs heavily. Much depends on the personality of the extension officers. If they are really interested in improving the farmers position, they still have to cope with the farmers limited resources. VII. Organization The organization structure of the producers and required material differs from country to country and place to place with in a country. There are several models developed by individuals and country levels. To make it understand better we are giving some examples from overseas: However, NGOs can enter into commercial mushroom production without profit motive and ! be a great service to poor people. 1. An example from Dieng Djaja, Indonesia One of the biggest mushroom producers in South-East Asia can be found at the Dient plateau in central Java, Indonesia. It produces and cans 20 tones of rice straw mushrooms and 45 tones of white button mushrooms a day. The producer developed its own method of prepare the compost. The spawned substrate is sold to contract growers who tend the mushrooms and harvest them when they are still rather small. They sell the mushroom back to the company at a fixed price and the company cans the mushrooms. The company arranges the marketing of the

canned goods and trains the growers on how to take care of their farms. It has also a credit scheme for the farmers that enter the project so that they can build a farm and a house. 2. An example from the Philippines A similar approach is followed in a oyster mushroom growing project in the Philippines. The Ayala Foundation started two projects with contract growers of which one is working quite well. The growers are mainly housewives with in a distance of 500 to 700 meters form substrate producers. In the other project, distances are bigger and it is more difficult for the contract growers to bring the harvest to the collecting station every day. The contract growers are free to market the product for themselves, if they can get a higher price. The Ayala Foundation supplied the funds for credit for the contract, growers. The company also sells spawned substrate to mushroom producers who market their products themselves. The structure is as follows:

3. Agaricus production in Fujian province China One of the main producers of Agaricus in the world is the province of Fujian in China. This is an interesting area to study, because the production comes from tens of thousands of small farmers, who prepare and spawn the substrate themselves. The product is sold to collecting stations for canning. Selling other cultures or spawn than provided by the provincial institute is illegal. The organization structure as follows:

Knowledge is also transferred according to the organisational structure shown above. The production per m2 is still rather low, but the production will rise rapidly with increasing technology transfer and more suitable strains. If all the farmers would apply a heat treatment to their substrate, the total production would at least be doubled. 4. Hierarchic organizational structure A completely different way is to keep the whole production in one person's hands. This hierarchic structure is efficient on the level of marketing and producing but there is usually a large difference in income between the director and the workers. Structure is as follows Spawn Substrate --- Growing -----Marketing 5. Individual growers A more individual approach can be found in many countries where growers can easily buy the spawn and prepare the substrate themselves. They also sell their product individually. In this case there is a need for external support, for example, training and extension by government and non-government organizations. Marketing the product may also be more difficult to achieve. A problem at times is the poor quality of the spawn. 6. NGOs Instead of a multinational NGOs can grow mushrooms with the help of organised poor and unemployed people (men or women) as contract and collaborative growers. This will enable the growers to get better remuneration for their work. Like the multinationals NGOs have to operate with a business mindedness and technical excellence but without profit motive: They have to provide all the inputs and marketing. VIII. General Aspects in Implementing Project In general, it is very important to think from the situation of the farmers and have them participate in the project on an equal basis. 1. Project proposal First the objectives and needs of the community have to identified, then appropriate technologies have to be sought. A small-scale pilot plant can be started with in the community to demonstrate the technology, then more farmers can decide to enrol in the project. The following order can be followed to establish self- sustaining projects. First supply the spawned substrate, then teach the farmers how to make the substrate themselves. If the project is still running well, supply knowledge and materials for spawn making, The last step does not necessarily have to be performed. One spawn factory could serve a whole country. So if the conditions for transportation and availability are good, then it is not necessary to make spawn at all locations where mushrooms are grown. If the amount of spawn is limited, then universities or agricultural institutes may supply spawn, since they usually have the equipment to produce it. Spawn manufacturing is where many problems are encountered but actually, it is not really that difficult. A trained staff, however, is necessary to establish a good quality continuously. ' 2. Supporting organization The organization that has to support the project is very important. Generally speaking non-governmental organizations (NGOs) perform better than governmental organizations. Large

projects usually consume a lot of money, but an actual improvement of the situation is often reserved for the ones who were already privileged. Local organizations should determine whether a project is really suited for the area and benefits their target groups. Who came up with the idea of establishing the project? Can local structures be used? Using local structures is for more effective than organizing completely new networks. IX. Conclusion For starting an enterprises, it is necessary to make out project thoroughly, to make the enterprise viable. The general aspects of an enterprise is infrastructure, raw material, marketing and off course extension. The developers of mushroom projects have to be aware of the villagers environment. They have to recognize the relationships between social, economic, political, environmental and agricultural factors that affect the implementation of a project. Mushrooms are the good source of alternative income for women, small and marginal farmers and other poor sections of our society. But villagers have often had bad experiences with badly planned projects. They are usually hesitant to cooperate and do not trust what people outside their community will say. Their resistance to change is quite strong. They are sensitive and will recognize the officers that are honest. If they are accepted, then the villagers will lose their role as 'recipients' and are able to make the decision to reject, modify or completely accept the proposed project. %%%%%%%%%