Mushroom Farming Bplan 3cr36

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Mushroom Farming- Business Plan The Perfect Blend of Health and Taste

Table of Contents I.

Executive Summary.............................................................................................................2 Highlights Objectives Mission Statement Keys to Success

II.

Description of Business........................................................................................................2 Company Ownership/Legal Entity Location Interior Hours of Operation Products and Services Suppliers Service Manufacturing Management Financial Management Start-Up/Acquisition Summary

III.

Marketing..............................................................................................................................2 Market Analysis

Market Segmentation Competition Pricing IV.

Appendix...............................................................................................................................2 Start-Up Expenses Determining Start-Up Capital Cash Flow Income Projection Statement Profit and Loss Statement Balance Sheet Sales Forecast Milestones Break-Even Analysis Miscellaneous Documents

Executive Summary

Write this last so that you can summarize the most important points from your business plan. Provide a concise but positive description of your company, including objectives and accomplishments. For example, if your company is established, consider describing what it set out to do, how it has accomplished goals to date, and what lies ahead. If new, summarize what you intend to do, how and when you intend to do it, and how you think you can overcome major obstacles (such as competition). You can also choose to use the following four subheadings to organize and help present the information for your executive summary. Note: to delete any tip, such as this one, just click the tip text and then press the spacebar.

Highlights Summarize key business highlights. For example, you might include a chart showing sales, expenses and net profit for several years. Note: to replace the sample chart data with your own, right-click the chart and then click Edit Data.

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Financial Overview

Sales

Net Profit

Expenses

Objectives Our business focuses on the cultivation of the oyster mushrooms. Along with the health benefits, mushrooms are being widely used by the restaurants and the fast food chains. Our objectives are: -

Provide good quality mushrooms at an affordable price Encourage the restaurants and customers to use fresh mushrooms rather than the processed mushrooms which are sold in cans. To be the market leader in Mushroom Production Export mushrooms globally taking advantage of the production cost benefits Offer job opportunities to the Afghanis and enable women empowerment.

Mission Statement Our objective will be to provide the best quality Oyster mushrooms for the household stores and Restaurants at an affordable price. The objective is also to scale the production and take advantage of the cost benefits of Afghanistan and export Oyster mushrooms globally.

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Keys to Success The key factors that will define the success of the mushroom farming business are:

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The Afghanistan Small and Medium Enterprise Development (ASMED) currently provides a three month training program for

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growing mushroom to women. This will provide the much required skilled workforce for the Mushroom production Marketing and sales assistance by ASMED will ease revenue generation during the early stages of the business The low production costs of Afghanistan will play a key role in capitalizing on the price advantage. Currently unprocessed mushrooms are exported to Pakistan from where they are distributed in the work market with the Pakistan trademark. We will replace this need and handle the processing and exporting of processed mushrooms to the international markets.

Description of Business Mushroom cultivation can help reduce vulnerability to poverty and strengthens livelihoods through the generation of a fast yielding and nutritious source of food and a reliable source of income. Mushrooms both add flavour to bland staple foods and are a valuable food in their own right: they are often considered to provide a fair substitute for meat, with at least a comparable nutritional value to many vegetables. The consumption of mushrooms can make a valuable addition to the often unbalanced diets of people in developing countries. Fresh mushrooms have a high water content, around 90 percent, so drying them is an effective way to both prolonge their shelf-life and preserve their flavour and nutrients.

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Mushrooms are a good source of vitamin B, C and D, including niacin, riboflavin, thiamine, and folate, and various minerals including potassium, phosphorus, calcium, magnesium, iron and copper. They provide carbohydrates, but are low in fat and fibre, and contain no starch. Furthermore, edible mushrooms are an excellent source of high quality protein (reportedly between 19 percent and 35 percent), and white button mushrooms contain more protein than kidney beans. In addition to all the essential amino acids, some mushrooms have medicinal benefits of certain polysaccharides, which are known to boost the immune system. Medicinal Value: Recently, there has been a spectacular growth in, and commercial activity associated with, dietary supplements, functional foods and other products that are ‘more than just food’. Medicinal fungi have routinely been used in traditional Chinese medicine. Today, an estimated six percent of edible mushrooms are known to have medicinal properties and can be found in health tonics, tinctures, teas, soups and herbal formulas. Income Benefits: Mushroom cultivation activities can play an important role in ing the local economy by contributing to subsistence food security, nutrition, and medicine; generating additional employment and income through local, regional and national trade; and offering MUSHROOM FARMING- BUSINESS PLAN -

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opportunities for processing enterprises. Since we plan to become the point of for the farmers and wild mushroom collectors, in order to handle the exports, income from mushrooms can supplement cash flow, providing either: • A safety net during critical times, preventing people falling into greater poverty; • A gap-filling activity which can help spread income and generally make poverty more bearable through improved nutrition and higher income; or • A stepping stone activity to help make people less poor, or even permanently lift them out of poverty. Products and Services Describe your products or services and why there is a demand for them. What is the potential market? How do they benefit customers? What about your products or services gives you a competitive edge? If you are selling several lines of products or services, describe what’s included. Why did you choose this balance of offerings? How do you adjust this balance to respond to market demands? For product-based businesses, do you have or need inventory controls? Do you have to consider “lead time” when reordering any items? Do you need an audit or security system to protect inventory? Note: 

If your products and/or services are more important than your location, move this topic before location and hours of business.

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

If you are providing only products or only services, delete the part of this heading that is inappropriate.

Suppliers If information about your suppliers—including your financial arrangements with them—plays an important part of your business, include the relevant information in this section.

Service Whether your business products or services, use this section to address the level and means of service that you provide to customers, before, during, and after the sale. How do you make your service(s) stand out against the competition?

Manufacturing Process of Cultivation

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For successful cultivation, careful attention has to be paid to three aspects viz. good compost, reliable spawn and right temperature during growing period or else partial or complete failure of the crop may result. Natural compost is prepared from horse dung and wheat or barley straw. Some chicken manure and 3 kgs. urea per ton of compost may be added. Compost preparation is very crucial and advice from an expert may be taken. Mushrooms are grown in wooden trays or boxes of 100 cm x 50 cm x 15 cm. They are filled well with the compost and pressed firmly leaving 3 cm clear space on top of the tray. The grain spawn is scattered on the surface of the compost which is then covered with a thin layer of compost. After that the trays are covered with old newspaper sheets and water is sprayed to provide humidity. The trays are then stacked vertically. At a temperature of around 24 - 25 oC white cottony mycelium spreads and permeate through the compost. It takes around 12 to 15 days for the complete spawn running. Ultimately, the surface of the compost is covered with half to one inch level of casing soil. It is sterilized to kill insects, nematodes and molds. The casing soil is spread over plastic sheets and treated with formalin and stirred frequently for a week to remove formation fumes. After casing, the temperature has to be maintained at 24-25 oC for 3 days after which it must be lowered to 18 oC. Thus, batches of trays must be arranged in such a way that there is a regular daily production. The process flow chart is as follows:

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Fresh mushrooms have very limited life and hence processing is recommended to enhance their shelf-life. Initially, fresh mushrooms are washed in cold water and then blanched in boiling water for about 3-4 minutes. Then they are dehydrated in a drier and packed. It is advisable to pre-treat fresh mushrooms in a solution containing brine to prevent discoloration. Packing is very critical as formation of moisture contaminates mushrooms very quickly. Yield after drying depends upon many factors like moisture content in fresh mushrooms, type of dryer, process employed, moisture content required in the finished product etc. Hence average yield is taken at 25%. Plain cans and a brine of 2% salt and 0.2% citric acid are used for packing. The cans are exhausted at 19 oC for 7-8 minutes, sealed and processed under pressure for 20-25 minutes. The process flow chart is as follows:

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SWOT Analysis Strengths:

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New business model to the Afghanistan market and hence provides us the opportunity to gain the first mover advantage. People are not new to mushrooms and hence selling them the mushrooms is relatively easier. Mushrooms have high profit margins Entering the mushroom processing business will help us gain higher profits as we will be handling the operations right from

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production to export (post processing) There is a rise in the number of fast food chains in Afghanistan which provides better business opportunities The climatic conditions in Afghanistan are ideal for mushroom cultivation.

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Weaknesses:

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There is a limited supply of trained work force for mushroom cultivation Mushrooms have a low shelf life (3-4 days) and hence we run the risk of wastage.

Opportunities:

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Worldwide there has been a decline in the consumption of canned products. There are technological advancements which could be implemented in order to improve productivity. There is a huge international market with a supply demand gap and hence ramping up production has huge potential. Increase the delivery and export efficiency in order to avoid spoilage.

Threats:

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The export policies from the government can change which will influence the costs. Established companies in the food sector can enter the mushroom market as there is no/minimal entry barrier. There is a risk of exceeding the local demand and if unable to export the processed mushrooms we run a risk of wastage. Mushrooms are being widely sold in canned bottles.

Start-Up/Acquisition Summary Summarize key details concerning the starting or acquisition of your business. (If this is not applicable to your business, delete.

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As noted in the preceding section, include your table of start-up or acquisition costs in the Appendix.

Marketing Marketing channels: There are typically three principal marketing routes for mushroom growers: • The grower can sell directly to the consumers either at the farm gate or at local markets; however, the ability to reach distant markets is limited. • The grower can sell to an agent who then sells the mushrooms either to local or distant markets, including exports. • The grower can belong to a cooperative or another farm organization, which offers easy market linkages to both local and distant markets, including export markets. As part of the marketing strategy, we will be working closely with the farmers and encourage them to form a co-operative in order to cultivate mushrooms. We will be handling their mushroom exports. Co-operative has many benefits:

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Villagers become confident as individuals in making decisions on all aspects of farming. They are able to get credits and loans where an individual would have been denied. There is a willingness to exchange knowledge, skills and resources at the practical level. When labor shortages occur, the villagers are willing to share the workload. The marketing costs are shared. The farmers are willing to look beyond competitiveness in marketing to the common good. They are able to make well informed decisions on the basis of shared knowledge. As the number of cooperatives grow, more individuals become involved.

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Marketing strategies For example, locally-grown oyster mushrooms have an advantage over imported ones because of their very limited shelf-life and their fragility, making it difficult to ship them easily. Similarly, mushrooms for fresh use tend to be grown near urban consumers, while farmers situated some distance away from their consumer base, market their product after processing. A successful marketing program means that growers increase their income status, which in turn creates confidence in their ability to grow mushrooms profitably. Steps to successful marketing include: • Being aware of market demand by talking to buyers about volume and prices. • Exploring various marketing options for fresh mushrooms – depending on transport infrastructure - selling directly to local customers, local traders, markets, intermediaries, regional wholesalers, local restaurants, shops or farmer cooperatives. • Adding value and increasing the shelf-life of the mushrooms by creating processed products, including dried or pickled mushrooms, sauces, teas, extracts, etc. • Becoming organized and teaming-up with other producers, to bulk up on volume and the variety of mushrooms, and attract traders regularly to enable reliable sales of the perishable produce. • Sharing knowledge and experiences with other producers and, if a problem or constraint is consistent and widespread, collectively source external advice.

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• Reducing initial capital investment by recycling pieces of equipment and sourcing locally, and sharing costs through informal or formal groupings. • Identifying existing markets and trading routes, and identifying any niches to be filled (for example, organic mushrooms, fair trade or cooperative produce). Establishing a good relationship with a buyer by delivering a reliable quality and quantity of product is fundamental. It is important to start modestly and secure a buyer or small network of buyers to whom one can deliver a reliable supply. The method of storage and presentation of mushrooms at the point of sale should be carefully managed and labelling produce – ‘fresh’ and ‘grown under controlled conditions’ – is a helpful marketing strategy. Unreliable claims printed on the cartons relating to the medicinal value of the mushrooms on sale should be avoided; such claims should be restricted to those species of mushrooms where substantial. Processing can assist marketing, by extending shelf-life for small scale producers until they need to sell their product, and in some cases adding value. Some infrastructural investment may be needed to undertake processing effectively and, once processed, mushrooms need to be packaged and stored carefully. Mushrooms may be frozen and placed in airtight containers; however, unprocessed mushrooms take up a lot of room and this can be a costly way of preserving them.

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Mushrooms are also suitable for drying, enabling them to be stored for long periods without deteriorating; this can be done using solar drying.

Market Analysis

Mushroom is a vegetarian delicacy and a suitable substitute for meat and eggs. It is easily digestible as well. It is very popular in most of the developed countries and being accepted in many developing countries like India. Market for mushrooms is growing rapidly because of their nice aroma, subtle flavor, nutritious values and special taste. Many exotic preparations are made from them like soup, pickles, vegetables etc. It is also used for stuffing several food preparations and for garnishing. But its consumption is still confined to urban and semi-urban population. Mushrooms have very short life after harvesting and hence they are sold in fresh form. Their shelf life can be enhanced by processing them. Processed mushrooms are packed in special quality polythene bags or canned. This variety can be sold to far off places. Consumption of mushrooms is increasing in the North-East region and Guwahati, Shillong, Kohima etc. are potential markets. Market Segmentation We plan to have the fresh Mushrooms for the local market and the processed mushrooms both for the local markets as well as for export. Hence our maket segments are governed by the geographic area. Also,

Is your target market segmented? Are there different levels within the same type of business, each offering a difference in quality, price, or range of products?

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Is this market segmentation governed by geographic area, product lines, pricing, or other criteria? Into which market segment will your primary business fall? What percentage of the total market is this segment? What percentage of this segment will your business reach? Note: A pie chart is a good way to demonstrate part-to-whole relationships, such as the percentage of the target market that falls into each major segment. To change the shape of the data labels, right-click a label and then click Change Data Label Shapes.

Market Segments

Discount; 20% Elite; 25%

Average; 55%

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Competition Who else is doing what you are trying to do? Briefly describe several of your nearest and greatest competitors. What percentage of the market does each reach? What are their strengths and weaknesses? What can you learn from the way they do business, from their pricing, advertising, and general marketing approaches? How do you expect to compete? How do you hope to do better? What indirect competition will you face, such as from internet sales, department stores, or international imports? How will you keep abreast of technology and changing trends that may impact your business in the future?

Pricing How have you developed your pricing policy? Which of the following pricing strategies might best suit your business? Retail cost and pricing, competitive position, pricing below competition, pricing above competition, multiple pricing, price lining, pricing based on cost-plus-markup, or other? What are your competitors’ pricing policies and how does yours compare? Are your prices in line with industry averages?

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How will you monitor prices and overhead to ensure that your business will operate at a profit? How do you plan to stay abreast of changes in the marketplace, to ensure that your profit margins are not adversely affected by new innovations or competition?

Advertising and Promotion How do you intend to your business? Which of the following advertising and promotion options offer you the best chances of successfully growing your business? Directory services, social networking websites, media (newspaper, magazine, television, radio), direct mail, telephone solicitation, seminars and other events, t advertising with other companies, sales representatives, word-of-mouth, other? How will you determine your advertising budget? How will you track the results of your advertising and promotion efforts? Will you on a regular basis or will you be conducting seasonal campaigns? How will your products be packaged? Have you done research to see what type of packaging will best appeal to your customers? Have you done a cost analysis of different forms of packaging? MUSHROOM FARMING- BUSINESS PLAN -

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Strategy and Implementation Now that you have described the important elements of your business, you may want to summarize your strategy for their implementation. If your business is new, prioritize the steps you must take to open your doors for business. Describe your objectives and how you intend to reach them and in what time parameters. Planning is one of the most overlooked but most vital parts of your business plan to ensure that you are in control (as much as possible) of events and the direction in which your business moves. What planning methods will you utilize?

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Appendix Start-Up Expenses Land and Building

A built up area of 200 Sq. Meters may be acquired in the suburban area of a major city like Kolkata for the project. Estimated lease amount is calculated at Rs. 60, 000 and refurbishment of the building at Rs. 2.5 Lacs.

o Plant and Machinery

It is advisable to undertake thorough market survey before finalizing actual capacity. Assuming capacity of 600 kgs per day, the annual capacity would be 180 tonnes considering 300 working days. Following machines shall be required.

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o Miscellaneous Assets

Some other assets like furniture & fixtures, working tables, storage racks, SS utensils, plastic tubs, etc. shall be required for which a provision of Rs. 60,000/- is made.

o Utilities

The power requirement will be 30 HP whereas per day water requirement will be 1000 liters including that for potable and sanitation purposes.

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o Raw and Packaging Material

Material like spawn, wheat or barley straw, formalin, insecticides etc. shall be required for cultivation whereas small quantity of salt and citric acid will be required for processing. Packing materials like cans for processed mushrooms and plastic bags for fresh mushrooms and corrugated boxes, labels, box strapping etc. shall be required.

Working Capital Requirement

The capacity utilization in the first year is expected to be 60% for which the working capital needs will be as under.

Cost of Project:

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Production Capacity & Build-up

The rated capacity will be 180 tonnes whereas the actual utilization is assumed to be 60% and 75% during first 2 years. It is also assumed that proportion of fresh and canned mushrooms will be equal.

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Utilities

Expenditure on power and water at 100% activity level is expected to be Rs. 1 Lac.

o Sales Expenses

Selling prices are taken on lower side as it is envisaged that the promoters would directly cater to some bulk consumers like star hotels, restaurants, clubs, caterers etc. Retailing, to some extent, will be undertaken of canned mushrooms only. Hence, selling expenses are taken at 5% of total sales value.

o Depreciation

The method applied is WDV and rates assumed are 10% on building and 20% on machinery and miscellaneous assets.

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Milestones This is a list of objectives that your business may be striving to reach, by start and completion dates, and by budget. It can also be presented in a table or chart.

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