Royalty Mushroom Producer - 1114

Kingfisher School of Business and Finance
Mushroom Farm A Pre-Feasibility Study Page 1

Chapter 1
INTRODUCTION
A. GENERAL CONCEPT
Mushroom farming is a lucrative enterprise that is specifically involved in the following
activities: producing planting spawns (seeds); making good substrate (media); cultivating
different types of mushrooms; and/or adding value to cultivated mushrooms for sale.
Royalty Mushroom Producer (RMP) is a business venture involved in the mushroom
production. It will be located in Mangaldan, Pangasinan. RMP will be the very first
mushroom farm in town. It aims to establish an active market for mushroom in town itself
and to provide additional supply of mushroom in nearby towns.
RMP will offer only one specific strains of mushroom, namely Straw Mushroom or
Banana Mushroom which are commonly grown in the Philippines. Straw Mushroom
cultivation does not need a huge capital requirement. One can also have a harvest of this type
of mushroom in less than two weeks since straw mushroom is the easiest type of mushroom
grown. Aside from selling fresh paddy straw mushrooms, RMP will also produce and sell
planting spawns that will be made by the enterprise to other mushroom growers in
Pangasinan.

B. PRODUCT DESCRIPTION
Mushroom, tough fleshy fungi that has an umbrella like fruiting body, has been used
generally as delicacy from the time immemorial. It is one of mans earliest foods and was
often considered an exotic and luxurious food reserved for the rich. Today mushrooms are
food for both the rich and the poor. They can be grown anywhere as long as the conditions
for their growth and cultivation are provided.
1
Different types of mushrooms have been

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Mushroom-growers-handbook-1-mushworld-com-chapter1-1.pdf Oyster Mushroom Cultivation: Part I, Why Grow Mushroom


cultivated in the Philippines. Among these, RMP will cultivate and sell straw mushrooms,
which is the most commonly grown mushroom in Pangasinan.

Paddy Straw Mushroom
It is the most popular mushroom in the rural areas of the Philippines where substrates like
decaying banana trunks and leaves and rice straw are most commonly found. This species of
edible mushroom is cultivated throughout East and Southeast Asia and used extensively in
Asian cuisines.
2
Straw mushroom is famous for specific bite and watery texture. In color it
ranges 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.
2
The commercially canned or botled mushrooms lasts for 2-5 years.
3
Freeze
Dried Mushrooms will store for 10 to 15 years in a sealed #10 can (oxygen absorber
included) under ideal storage conditions (cool, dry place).
4

SHELFLIFE OF MUSHROOMS
5

Fridge
Fresh Mushrooms (Whole) last for 7-10 Days
Fresh Mushrooms (Sliced) last for 5-7 Days
Cooked Mushrooms last for 7-10 Days

2
Mushrooms Mktg. Economics.docx - Mushrooms: Marketing, Economics and Extension: Booklet No. 456 - Mushroom Cultivation: MCS 5, Dr.
K. T. Chandy, Agricultural & Environmental Education
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http://www.stilltasty.com/fooditems/index/17755
4
http://store.honeyvillegrain.com/freezedriedmushroomscan.aspx#.UmCjDdKBnAQ
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http://www.eatbydate.com/vegetables/fresh-vegetables/mushrooms/


C. HISTORY OF MUSHROOM PRODUCTS IN THE PHILIPPINES
Mushroom cultivation has been introduced in the Philippines during the early 1900. The
first research about Volvariella mushrooms was conducted by a man named Vicencio during
1917, under the supervision of Professor Charles Baker, the first dean in the Agriculture
Department of University of the Philippines. Further developments on the techniques used in
cultivating mushrooms were made at the University of the Philippines Los Baos (UPLB)
with the help of the students who were very much interested in growing mushrooms. Aside
from these, several Chinese citizens in Baguio City has already started cultivating Agaricus
mushrooms, based on the technologies that they have acquired from Taiwan.
6

In the middle of the 70s, deeper understanding and researches were made at UPLB
regarding the cultivation and production of mushrooms. Many farmers have started growing
and harvesting mushrooms, thus increasing the numbers of those who are planting
Volvariella. The production of which increased together with Agaricus mushroom summing
up to 500 metric tons per year.
With the help and financial support of the different government agencies such as National
Research Council for the Philippines (NCRP), Bio Technology (BIOTECH) and Department
of Science and Technology (DOST), together with the training courses and extension
projects made by the UPLB and the International Rice Research Institute (IRRI) for the use
of dayami or rice bran in planting mushrooms, the production of these has increased
incessantly in the Philippines during the mid 1980. Several studies were also made for the
development of technologies used for Volvariella. The method of cultivating Pleurotus and
Auricularia were also developed because of the extensive researches made at UPLB with the
help of Philippine Council for Agriculture, Forestry and Natural Resources Research and
Development (PCARRD). The trainings conducted by the Technology Research Center

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DOST-TRC: Gabay Sa Negosyo, Agribusiness Crops - Pagpaparami ng Kabute (Booklet) http://trc.dost.gov.ph


(TRC) have also contributed much in the increase of the production of mushroom in our
country during 1990.
Because of these developments in the Mushroom Industry, the 900 metric tons of
mushroom products produced during 1986 have increased to 2,000 metric tons of fresh and
canned mushroom products. The Philippine Mushroom Society was established in the UPLB
during that time and many more farmers and businessmen have been interested in studying
and growing different kinds of edible mushrooms.

D. IMPORTANCE OF THE BUSINESS
The business is important in the society because it increases the supply of mushroom
which is ordinarily seldom and seasonally available. It aims to promote mushroom as part of
daily diet of the people. And it implicitly contributes the promotion of a healthy lifestyle.
Mushroom cultivation activities can play an important role in supporting 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
opportunities for processing enterprises (such as pickling and drying). Indirectly, mushroom
cultivation also provides opportunities for improving the sustainability of small farming
systems through the recycling of organic matter, which can be used as a growing substrate,
and then returned to the land as fertilizer.
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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

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i0522e00.pdf FAO Diversification Booklet 7: Make Money by Growing Mushrooms


A stepping stone activity to help make people less poor, or even permanently lift them
out of poverty.

IMPORTANCE OF MUSHROOM PRODUCTS
Mushrooms are being used as food and medicine since time immemorial. Nowadays,
mushroom is being relished throughout the world as food and medicine. Their cultivation on
extensive scale can help solve many problems of global importance such as protein shortage,
resource recovery and reuse as well as part of environmental management. Edible
mushrooms contain a high percentage of protein, all indispensable amino acids, and vitamins
B-complex and other biochemical compounds. This vegetable is also a food source of dietary
fiber and the quantity present is much higher than the crude fiber. The protein value of
mushroom is double of cabbage, potatoes and asparagus, four times that of tomatoes and
carrot and six times that of oranges. They also contain folio acid, which is blood- building
vitamin and counteracts the pernicious anemia with all properties. They serve as a possible
source of antibiotics and anti-cancer agents. They lower the cholesterol level of blood
pressure. Mushrooms constitute an ideal source for reducing body weight
Researches reports revealed that mushrooms are rich in food values being food source,
and out of 100 g, it contains proteins (3.6 g), minerals vitamins B,12 (0.26 mg), fats (0.3 g),
carbohydrates (1.5 g), dietary fibers (2.5 g) and ash (5.0 g) and the vitamin contains are
exceptionally high. The protein contents are significantly higher than those provided by the
foodstuffs like dates, potatoes, lettuce, carrots, and dried mushrooms containing more
proteins than beet.
The protein value of dried mushrooms has been found to be 30-40 per cent comprising all
the essential amino acids. Mushrooms are source of Niacin (0.3 g) and Riboflavin (0.4 mg).


Mushroom is a good source of trypsin enzyme. It is also rich in iron, copper, calcium,
potassium, vitamin D, and folic acid. Mushrooms are valuable health food, which are low in
calories, high in vegetable proteins, zinc, chitin, fiber, vitamins and minerals. Mushrooms are
also having a long history of use in traditional Chinese Medicine to promote good health and
vitality and increasing body's adaptive abilities. Specifically, selected strains of dried
mushrooms are used to produce mushrooms capsules and extracts. The mushroom is a highly
concentrated food and unsurpassed for flavor in addition to being a completely satisfying
meal.
The edible mushroom mycelium (10-20 %) may be put in various sausages, minced meat
and vegetables, soups, pastes and bakery products and many other dietary menus. Mushroom
can be grown by almost anyone and anywhere. However, cultivation of this edible fungus
also consumes agricultural and industrial wastes and produces such as straw and molasses,
which is an excellent fertilizer and soil conditioner. Mushrooms have no coloring matter and
so do not need sunlight to obtain the requisite nutrients for survival. They can grow in
darkness, where no other crop would easily flourish. A crop of mushroom can be produced in
boxes beneath the kitchen sinks and in garden sheds. For large scale cultivation, properly
designed rooms/spaces are needed, which should provide suitable temperature, humidity and
darkness.
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Mushroom LR.pdf


Chapter 2
INDUSTRY PROFILE
A. PRODUCT INDUSTRY IN THE PHILIPPINES
Mushroom culture is gaining popularity in the Philippines. Mushroom is a delicacy and is
really accepted as vegetable. The Philippine is considered as an ideal country for edible
mushrooms which grow all year round. This means mushroom farming has a lot of potential
and can even be considered a revenue-generating industry. But present cultivation in this
country is limited due to insufficiency of planting materials and the limited local knowledge
about its culture.
9
Incidentally, the Philippines still has a long way to go when it comes to
exporting. In 2006, Dr. Renato Reyes of the Department of Science and Technology said
the Philippines has no major mushroom exporting industry as barely 600 metric tons of
mushroom is produced every year, way behind Indonesia, Vietnam and Thailand.
10

B. DEMAND
Mushroom production in the Philippines is growing because of the growing demands on
these products locally and globally. The demand for mushroom remains strong as these are
consumed as healthy alternatives to meat. Based from DOSTs findings, mushroom
demand in national and local markets has been growing at a rate of ten percent per annum for
the past years. This market growth trend is expected to increase as a result of the rapid
increase of population and the growing awareness of the consumer about the benefits derived
from mushroom.
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According to Mr. Rey Rivera, a DTI staff in-charged in conducting
seminars on mushroom cultivation and spawn production in Region I especially in
Pangasinan and in La Union, the demand of straw mushroom for each municipality in
Pangasinan ranges from 10 to 15 kilograms daily. Based from this estimate, there is a present

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http://www.pinoybisnes.com
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http://www.loqal.ph
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FEJC Mushroom farm business plan


demand of about 14,400 to 21,600* kilograms of mushroom monthly in entire Pangasinan
alone.
Mr. Rivera also said that mushroom producers use an average of 25 spawn bags per
cultivation. He also estimated that there are approximately 35 to 50 currently existing
mushroom producers in Pangasinan. Straw mushrooms can be harvested within two weeks,
thus producers can cultivate this type of mushroom twice a month (or more depending on the
size of their business). Based on the data above we can derive a demand for spawns in
Pangasinan of 2,500 spawn bags per month.

The current demand of planting spawn in Pangasinan is considerably lower than the
present supply of it. Mr. Rivera said that this may be due to the growers lack of knowledge
on the spawn suppliers location (especially in Western Pangasinan areas where growers rely
on the planting spawns brought to them by DTI staffs). Some small growers also find it
costly to avail planting spawns because of their distance from spawn suppliers. Mr. Rivera
said that some growers that existed before had stopped their operations because of the lack of
supply of spawns on their areas. Only the growers that can avail consistent supply of planting
spawns were the active producers of mushroom in Pangasinan.
According to Mr. Gabriel Velasco, one of the spawn suppliers in Mapandan, most of the
spawn orders that they received were ordered by growers from outside Pangasinan.
Municipalities and cities outside Pangasinan (Tarlac, Aringgay, Agoo, Dau, Zambales, etc.)
which also lacks in their supply of spawns would come to Pangasinan, specifically in
Mapandan, just to buy planting spawns. The disproportionate distribution of planting spawns
(more spawns were sold outside Pangasinan) causes lower supply of it in Pangasinan
resulting to a low supply of mushroom products in the province.


C. SUPPLY
Mushroom producers need spawns for them to grow mushrooms. Meanwhile, mushroom
dealers also need the mushroom harvested by the growers to supply the needs of their
marketing channels (wholesalers, retailers, wet markets, groceries, restaurants, etc.) from
different places for mushroom products.
Mr. Rivera specified that a bag measuring 7x14 inches that contains planting spawn can
produce 3 7 kilograms of mushroom. Multiplying the kilograms of mushroom that one
planting spawn could produce by 2 (given that growers can cultivate mushrooms twice in a
month), the estimated numbers of existing mushroom producers in Pangasinan and the
number of spawn bags that they use per cultivation respectively will result to a present
supply of 12,500 kilograms of mushroom per month.

The major suppliers of planting spawn in Pangasinan came from Mapandan, Manaoag
and Malasiqui. These major spawn suppliers provide for the planting spawn needs of
mushroom producers inside and outside Pangasinan. According to the right-hand person of
Mr. Milo Abrocio, one of the leading spawn suppliers in Mapandan, they can produce about
1,600 bottles of spawn daily or an average of 10,000 bottles a week. Since five bottles makes
one bag of planting spawn, Mr. Abrocio produces an average of 2,000 bags of spawn. Mr.
Gabriel Velasco on the other hand can produce about 1,440 bottles a day or about 7,200
bottles (1,440 bags) a week. Using the average number of bottles that can be produced by the
two and considering that there were six major spawn suppliers in Pangasinan, we can derive
a present supply of 10320 bags of planting spawn per month. Most of these spawn that were
produced in Pangasinan were sold to growers outside Pangasinan.



D. PORTERS FIVE FORCES
a. BARGAINING POWER OF SUPPLIERS
There are limited numbers of spawn producers in the market but there exists a few
backyard mushroom businesses operated by some persons in the community. The limited
number of major spawn suppliers in the market could be a sign of strong supplier bargaining
power, but the fact that suppliers and producers maintain good relationships, coupled with
the existence of alternate suppliers, reduces supplier bargaining power. To further decrease
the bargaining power of spawn producers, the business could produce their own spawn,
increase their knowledge about different suppliers offers, and find alternate suppliers.
Mushroom supply on the other hand is concentrated in few cities and municipalities such
as Bagiuo, Urdaneta, Villasis, etc. Some mushroom producers have their own contact dealers
while some markets their own produce. The number of existing producers as well as dealers
in the market results to a not too strong supplier bargaining power on mushroom supply.

b. BARGAINING POWER OF CUSTOMERS
In Pangasinan, some customers usually buys in large volume but most of them do not.
There is no concentration of buyers since customers were from different cities and
municipalities in Pangasinan and are from different sector (households, restaurants,
wholesalers, retailers, etc.). Thus, the bargaining power of buyers is not excessive. To further
reduce the forces impact, the business can create relationships with buyers and sustain these
relationships by providing good quality mushrooms, maintaining quality through the supply
channel, being dependable, communicating, and educating the buyers. To maintain a steady
supply and to help market the mushrooms, Royalty Mushroom Producer can create
partnerships with other producers (i.e., dealer for other growers or create marketing
cooperatives).


c. THREAT OF NEW ENTRANTS
The facts that there were few inactive mushroom growers in the target community
(Mangaldan) and there is a high demand of mushroom products in Pangasinan, new entrants
are expected to arise. Growing mushroom does not require high initial investments and fixed
costs. Government agencies even promote growing mushrooms as a means of livelihood for
small growers. And the fact that running a mushroom farm proves to be profitable attracts
others to enter the mushroom industry.
Threats of new entrants can be reduced by employing techniques in growing high quality
mushrooms that are efficient and more productive. RMP would participate in latest seminars
about efficient and more productive way of cultivating mushrooms that would be conducted
by the government agencies or some private institutions. This would improve the efficiency
of the operation. It would also help to create marketing or brand image since only quality
mushrooms will be offered to consumers.

d. THREAT OF SUBSTITUTES
There are substitutes for straw mushrooms, but this commonly used type of mushroom
stands out for its own flavor, nutritional properties, and availability. Straw mushroom is
experiencing the most rapid increase in demand among other mushrooms strains also because
of its unique flavor and availability. Vegetables were also considered as a substitute product
for mushrooms. In order to reduce the threat for substitutes, the business will promote
mushroom consumption even more in the community by accentuating the health and other
benefits of mushroom consumption. The business will also study the customers preferences
by conducting surveys in order to know how to dominate from substitute products.



e. COMPETITIVE RIVALRY BETWEEN EXISTING PLAYERS
The mushroom industry is not considered competitive in the view of the growers. At
some point they even help each other in discovering techniques and method in growing
mushrooms. However, the opinion about competitiveness is influenced by the size of the
business and the number of growers in a given area. Tight competition for mushrooms arises,
especially in wholesale markets. The spawn producers also experience a tight competition
among them. The following persons are the major spawn suppliers in Pangasinan.

NAME ADDRESS BUSINESS
CONTACT
NUMBER
Milo Abrocio
Pias,
Mapandan
Spawn Producer,
Mushroom Grower,
Mushroom Dealer
09153768841
Arlene Daroy
Baloling,
Mapandan
Spawn Producer,
Mushroom Grower,
Mushroom Dealer
09474872095
Gabriel Velasco
Pias,
Mapandan
Spawn Producer,
Mushroom Grower

Marlyn De
Guzman
Sagur,
Mapandan
Spawn Producer,
Mushroom Grower

One spawn maker is located at Manaoag and another one also exists in Malasiqui,
Pangasinan. To compete, the business venture will try to develop a niche market for high-
quality fresh products or produce a value-added product. High quality standards, excellent
service, and consistent supply will help differentiate competitors and create strong
relationships, especially with local customers.



E. SWOT ANALYSIS
a. STRENGTHS
Ease of Formation
Any person or group of persons that has interests in growing mushrooms can easily
enter the industry without difficulty. Whether it may be a small backyard business or a
large scale mushroom production facility. There are no strict regulations or ordinances that
hinder one from forming a mushroom cultivating enterprise.

Small Initial Capital Needed
Mushroom cultivation does not require a huge initial capital requirement in order to
operate. Equipments needed, mushroom incubation house, laboratory supplies and the
laboratory room to be used in making spawns, fruiting bags or beds, and initial raw
materials (to be used for a period of 3 months) only costs a total of about Php 200, 000.00.
These were the only initial asset requirements.

Small Operating Cost
Minimal operating cost is expected to be spent from spawn making to mushroom
cultivation. Spawn bags and other materials to be used as fruiting beds are also available at
low costs. Spawns can be made from scrap products like saw dust, tobacco midribs, hay
stalk, rice bran, and other agricultural wastes. Other operational costs (labor and utilities
expenses) related to maintenance and monitoring of cultivated mushroom was also
reasonably low.

Larger supply of Mushroom spawns
It is expected that about 2,000 - 3000 bottles of mushrooms spawns will be produced
daily. Mushroom spawn production is larger compared to other mushroom spawn growers
making an average of 1000 - 2000 bottles a day. Large supply will attract mushroom


growers to contractually buy spawns from the enterprise since it can supply their
mushroom spawn needs. The enterprise will also focus in Pangasinan, selling spawns to
growers who have difficulties in making their own spawns and to those who have no access
to spawn makers.

Tax Advantage
The nature of the business allows it to enjoy the privilege of being exempted from
VAT. Sale of agricultural food products in their original state, or yielding or producing
foods for human consumption is a VAT exempt transaction (Revenue Regulations No. 16-
2005, Sec.4.109-1).

Small number of human labor needed
A production of an average 3000-4000 bottle of spawns a day will only require 1 full
time worker and three part-time workers. Mushroom cultivation on the other hand requires
one part time grower. Several part time workers can also be hired during harvest periods
depending on the volume of mushrooms grown.

Wide and Temperature Regulated Business Area
The business will be located in a 1.5 hectare Mango Orchard, thus providing a larger
area to operate. Mango orchard naturally makes a cool shade good for cultivating
mushroom abundantly.

First Mushroom farm in Mangaldan
Being first means a big opportunity to catch the eyes of Mangaldan people. It will
introduce mushroom farming to people and will use them as contractual growers. Aside
from that, mushroom growers that will exist independent from the venture will be a good
market for mushroom spawns.
Huge profit margin
Rising trend for fast food items


b. WEAKNESSES
Low Production during Rainy Season
Mushroom farming that uses outdoor cultivation cannot produce mushrooms during
rainy seasons. Too much exposure to sunlight and too much exposure to water can affect
the growth of mushrooms. And since outdoor cultivation requires mushroom beds to be
placed on the bare ground, it is prone to heavy rains or even floods.

Lack of Technical Skills in Making Spawns
The proponents have abundant knowledge and researches about the business but they
would be lacking when it comes to the actual experience of growing mushrooms and
making their own spawns.

Lack of confidence by consumer in products
Since mushroom growers/dealers already have their trusted suppliers, it would be
difficult for the new venture to convince them to patronize their products.

Mushrooms get easily spoiled. Fresh and unprocessed mushrooms only last for 3 to 4
days only.

c. OPPORTUNITIES
High Demand of Planting Spawns and Mushrooms
Municipalities and cities all over Pangasinan and even in other provinces are buying
spawns to be planted on existing spawn producers in Mapandan. The demand is great that
mushroom growers would come from far provinces in order to purchase spawns.
Mushroom products are also in demand. Independent mushroom growers even hire
contractual growers in order to produce a larger volume of mushroom products in order to
meet the mushroom needs of consumers in Pangasinan.


Low Supply of Planting Spawns and Mushrooms
There are currently four major spawn producers in Mapandan and one in Manaoag and
in Malasiqui. These producers can make 1500 to 2000 bottles of spawns daily (which is
equal to 300 - 400 planting bags costing Php 25.00 each). The supply of planting spawns
does not meet the high demand of planting spawns from municipalities and cities all over
Pangasinan and even in other provinces. Mushroom dealers on the other hand, were visiting
different baranggays and municipalities in order to buy mushroom products from growers
(these mushrooms were distributed by to dealers to their marketing channels). But since the
supply is very low, spawn makers even hire contractual growers that would grow
mushrooms for the mushroom supply to increase.

Adopt Latest Technology
Current researches on effective and efficient mushroom cultivation would help the
business to grow mushrooms that would yield abundantly.

Ease of entry
There is an easy entry since it is the first mushroom farm in Mangaldan.

d. THREATS
Vegetable vendors
Vegetable vendors may be one of the possible threats because of the substitutability of
their products. The greater the substitute goods, the greater risks the business may face.

Climate and Fortuitous event
Fortuitous events are highly uncertain events that may cause either by the acts of God
or acts of man. Moreover, these events are beyond the control of the business, thus the
proponents considered it as one of the threats.


Chapter 3
COMPANY PROFILE
A. VISION
Royalty Mushroom Producers aims to be the market leader of fresh Straw Mushroom and
mushroom spawns with low price and best quality that will be established in order to supply
the mushroom and spawn needs of growers and consumers inside and outside Pangasinan
and which also aims to enter the International market for mushrooms.

B. MISSION
To produce quality mushrooms and to promote mushrooms as a part of the daily diet of
the household consumers.

C. BACKGROUND
Royalty Mushroom Producer (RMP) is a business venture involved in the mushroom
production (Mushroom itself and spawns). It will be located in Mangaldan, Pangasinan (it
would become the very first mushroom farm in town). The business venture focuses on
introducing to the community an independent mushroom business which will offer planting
spawns and mushrooms for sale.
The business will be in the form of general partnership of Rose Ann Aragon, Rosemarie
B. Baez, Ruth M. Cabungan, Jerry De Vera, and Donald Velasquez. The source of financing
the project will come from the partners capital contributions.



D. BUSINESS NAME AND LOGO

The business will be named as Royalty Mushroom Producer. The name was used by the
proponents to show what the business does and what is it all about. Basically, the venture is a
kind of enterprise that deals with the production and distribution of quality mushroom
products. The word Royalty was also used to show that the products that we offer are the best
among all others. Since only the best quality products were served to royalties during the old
times, the business therefore strives to produce royalty mushroom to its consumers. Thus, the
name Royalty Mushroom Producers was coined.

E. LOCATION
Royalty Mushroom Producer will be located at
Navaluan, Mangaldan, Pangasinan. The place is
currently a Mango Orchard owned by the Velasquez
Family. The Mango Orchard has a total plot
measuring 1.5 hectares of land. The location for the
said business would be a suitable place for growing mushrooms because the trees would help
in regulating the temperature where the fruiting beds will be placed. Substrate materials such
as saw dust, dried banana leaves and other agricultural wastes used in mushroom cultivation
were also accessible in the area.


Figure 1: Royalty Mushroom Producer (Vicinity Map)

F. LONG-RANGE OBJECTIVES
The business will be established in order to help in supplying the demand of mushroom
products not only in Pangasinan and nearby provinces but to the whole country as well. It
aims to penetrate International Markets, to be the major supplier and the leader in producing
quality mushroom products, and to increase the wealth of its owners.
In order to achieve our goals, the following long range objectives were made by the
proponents;
The business aims to achieve a 10% growth on its annual sales.
To be able to capture market share based on the following percentages:
1
st
Year of operations 25% of the market
2
nd
Year of operations 40% of the market
Following years 65% of the market
The business also aims to penetrate the international market as it stroke the market
leadership in domestic.


Chapter 4
MARKET FEASIBILITY
A. LOCATION PROFILE

Figure 2: Map of Pangasinan Showing Mangaldan

Mangaldan is a Philippine municipality. It is located in the province of Pangasinan in
Region I Ilocos Region which is a part of the Luzon group of islands. Mangaldan is seated
about 19 km east-north-east of province capital Lingayen and about 177 km north-west of
Philippine main capital Manila. The geographic coordinates of Mangaldan are 16 4' 0'' N,
120 24' 0'' E. Administratively the Municipality of Mangaldan is subdivided into 31
barangays.
According to the 2007 census, Mangaldan has a population of 90,391 residents and
belongs to the 294 emerging cities and municipalities in the Philippines which have more
than 50,000 inhabitants but did not reach 100,000 yet. Based on the number of its inhabitants
Mangaldan is number 184 of the most populous cities of the Philippines and at 115 in Luzon
group of islands and at 7 of the most populous cities of province Pangasinan. With an area of
48.47 km Mangaldan occupies a relatively small urban area. Accordingly, there is a high
population density. In Mangaldan, by average, 1,864.89 people live in one square kilometer.
With this value, Mangaldan is only number 63 in Luzon and is nationally ranked 74th of the


most densely populated cities in the Philippines.
12
According to the Philippine income
classification for provinces, cities and municipalities Mangaldan is a 1st class municipality.
The urbanization status of Mangaldan is classified as urban. Their products consist of
processed meat, native cakes, bagoong/patis, cutleries and many more.
13

Among the bigger cities and municipalities in the neighborhood of Mangaldan there
are San Carlos City 16 km south-south-west, Baguio City (Benguet) 44 km north-north-
east, Mabalacat (Pampanga) 96 km south-south-east, Cabanatuan City(Nueva Ecija) 88 km
south-east, Dagupan City 7 km west-south-west, City Of Tarlac (Tarlac) 69 km south-south-
east, San Jose City (Nueva Ecija) 71 km east-south-east, Malasiqui 16 km south, City Of
Urdaneta 20 km east-south-east as well as 86 km south-south-east of Mangaldan the
municipality Concepcion(Tarlac).

B. TARGET MARKET
Mushroom growers in Pangasinan and other cities and municipalities outside Pangasinan
will be the target market for mushroom planting spawns. The existing dealers and
wholesalers of mushroom in Pangasinan are the target market for the mushroom products.
According to Mr. Rey Rivera of DTI - Region I Office (Arellano St., Dagupan City), it is
estimated that there is a daily demand of 10 kilograms of mushroom in every cities and
municipalities in Pangasinan. But the active market for mushroom products can be found in
Bagiuo and Urdaneta where there is a concentration of buyers and sellers of mushroom and
mushrooms were sold in voluminous quantities. Active markets of mushrooms can also be
found in some municipalities in Pangasinan, like in Aguilar, Villasis, Malasiqui, Alaminos,
Sta. Barbara, San Fabian, etc. Mushroom products available on these areas come in small
quantities only.

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Royalty Mushroom Producer aims to get a reasonable share market (about 40% to 65% of
the market) in Bagiuo and Urdaneta. It will also extend its target market on some areas
outside Pangasinan after having a reasonable market share on the active markets here in
Pangasinan.

C. MAIN COMPETITORS PROFILE
The main competitors of the business are the other mushroom spawn makers in other
town. Some of these spawn makers are considered as independent mushroom growers for
they do not just make spawns, but they also cultivate mushrooms and sell their own
mushrooms as well as the produce of other growers in their area (Mushroom Dealers). Based
from the interviews that the proponents have gathered, the following are some information of
some existing spawn producers.

NAME ADDRESS BUSINESS
CONTACT
NUMBER
Milo Abrocio Pias, Mapandan
Spawn Producer, Mushroom
Grower, Mushroom Dealer
09153768841
Arlene Daroy
Baloling,
Mapandan
Grower, Mushroom Dealer
09474872095
Gabriel Velasco Pias, Mapandan
Grower

Marlyn De Guzman Sagur, Mapandan
Grower

Currently, there are four mushroom dealers in Mapandan. One mushroom dealer/spawn
producer also exists in Baritaw, Manaoag, Pangasinan and another one is located in
Malasiqui, Pangasinan.
Below are the strengths and weaknesses of some of the competitors:



1. MILO ABROCIO
Pias, Mapandan
Spawn Maker, Mushroom Producer, Mushroom Dealer
STRENGTHS
Educated in mushroom cultivation (The wife of Mr. Abrocio is an Agriculturist who
studied mushroom cultivation and spawn making)
Larger supply of planting spawns as compared to other spawn makers. They can
make 1,600 bottles of spawns per day using a pressure cooker that has a maximum
capacity of 160 bottles per batch.
Efficient when it comes to their operations
a. They only use one pressure cooker but can supply a larger volume of spawns in
bottles in a day compared to others.
b. They have fewer employees compared to other spawn makers. (They hired only
one full time employee, and several out of school youths)
They have many regular customers coming from inside and outside Pangasinan.
They were consistent with their supply of spawns and mushroom products.
They specialize in making spawns and hires contractual growers to cultivate
mushrooms for them.

WEAKNESSES
They could not meet the demand of their customers of spawns. Only the regular
customers orders and those who have given their orders beforehand could avail of
their spawn products. Walk in customers were not entertained most of the time
because the spawns that they produce were reserved for orders.


The location of their business is in the far end of a compound. New customers who
have heard about their business will have a hard time looking for their place. They
dont even have sign boards indicating that they are spawn makers.

2. GABRIEL VELASCO
Pias, Mapandan
Spawn Maker, Mushroom Producer

STRENGTHS
Experienced when it comes to cultivating mushrooms. They have been operating for
32 years already. Improvement on their operations was achieved because of their
previous experiences.
The location of their business gives them competitive advantage. Their place of
business is passable by any form of vehicle and is right in front of the main road.
WEAKNESSES
They were inconsistent on their supply of spawns to customers; and mushroom
products to dealers.
Inefficient when it comes to their operations. They were using two pressure cookers
but can produce less spawns compared to other spawn makers who use only one
pressure cooker. They can produce 1,440 bottles of spawn a day using two pressure
cookers that has a maximum capacity of 240 bottles per batch. They hired two full
time employees and several children.

D. MARKETING STRATEGY
One of the objectives of Royalty Mushroom Producer is to promote the consumption of
mushrooms. This goal will be achieved through research, advertising, publicity,
merchandising, consumer education and government relations. Royalty Mushroom Producer


would also make connections with mushroom growers within the province as well as outside
Pangasinan in order to reach the target market of our planting spawn products. The business
would also contact the existing dealers of mushroom products in Pangasinan who will serve
as our marketing distribution channels for our mushroom products.

E. COMPETITIVE STRATEGY
Royalty Mushroom Producer will create competitive advantages through quality,
customer service, and consistent supply of mushroom products. The business will be using
the following method for it to establish competitive advantage against its competitors.

Analyzer Approach
This method creates a competitive business strategy that is based on evaluating the
successes of competitors. The analyzer approaches focuses on attempts to copy, and make
improvements upon, successful products and services provided by the competition.

Cost Leadership Approach
This method creates a competitive business strategy that is based on the costs
associated with manufacturing the product or providing the service. The cost leadership
approach concentrates on keeping costs low. With lower costs, the business can offer prices
that are lower than the competition, thus providing greater value to the customer.
14

The proponents believe that the above strategies would help the business to build
competitive advantages against its competitors. Using these approaches, the business will be
differentiated from other existing mushroom when it comes to the quality of their products
which are to be offered at much lower prices.

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Chapter 5
TECHNICAL FEASIBILITY
A. MUSHROOM CULTIVATION PROCESS
Mushroom farming consists of four major activities. Each of these activities is done in
many different ways. The method to be used in each activity relies on the choice of the
mushroom growers based on to what type of mushroom to cultivate and considering also the
location of the business. Each of the major activities in mushroom farming can be done by
different individuals or groups or can be done by only one entity or group (independent
mushroom producer).
The four major activities in mushroom farming were:
1. Starter and Substarters Production
2. Planting Spawn Production
3. Mushroom Cultivation
4. Harvest And Post Harvest Processing

I. STARTER AND SUBSTARTERS PRODUCTION
The starter culture (or pure culture) is a mycelium of a mushroom that grows in a
substrate or an agar medium. It can be made from a fresh and healthy fruiting body or
obtained from a spawn producer or laboratory. There are many kinds of agar medium used.
Some of these are Rice Bran Decoction and PDA Medium (potato, dextrose, and agar).

PREPARING PDA MEDIUMS
a) Prepare materials:
Potatoes: 200 gr.
Dextrose: 20 gr.
Agar powder: 20 gr.
Water: 1 liter.
Cotton (gauze)
Note: Visually check potatoes for spots or rot.
Buy dextrose and Agar of commercial grade


b) Wash and cut potatoes into one centimeter cubes; leave on or remove the skin. Clean
small flat bottles. Place potatoes in one liter of water. Simmer for 15 20 minutes.
c) Remove potatoes & keep the broth as clear as possible. Add water to broth to reach one
liter of liquid PDA. Bring water to stove. Add dextrose followed by agar. Stir
continuously with regular speed until completely dissolved.
d) Pour liquid PDA in bottle until you reach 5 10 mm high. Plug bottle with cotton.
Place bottles in autoclave at 121
o
C for 20 30 minutes to ensure complete sterilization.
Let cool down to around 37
o
C.
e) Place bottles in slanted position as to increase surface area of the medium. PDA should
come close to the neck but must not touch the cotton plug. After PDA medium is settled
in bottle, transfer all bottles to clean shelf in the clean room. Check for contamination.

TISSUE CULTURE (MAKING STARTERS)
a) Prepare materials:
Special needle (insulated handle)
Alcohol lamp and Alcohol
Cotton (gauze)
Matches or lighter
Bottles with PDA
UV lamp
Laminar flow cabinet (or protected environment)
b) Select a strong mushroom for culture. Healthy, Not too mature, not too young. Not too
humid (at least 2-3 hours after watering). With a stiff stalk (Make sure it is clean and
far from any contaminated mushroom)
c) Clean the room, all necessary tools, inside and outside the laminar flow cabinet with
alcohol. Transfer PDA bottles and necessary tools into the chamber.


d) Place all cleaned materials inside laminar flow. Turn on UV lamp and laminar flow.
After 10-15 minutes, turn off UV lamp but leave laminar flow for the duration of the
operation. Clean both hands and bottles with alcohol and insert hands into the cabinet.
e) Hold needle with 2 fingers in a 45o-degree angle, flame needle to disinfect until the
needle turns red. Make sure it does not touch any surface after flaming.
f) While needle cools down (15-20 seconds hold needle not to touch anything or place it
on the clean surface of a glass). Using other fingers, tear mushroom lengthwise (DO
NOT use knife to cut). With the needle, cut a small piece (2 mm x 2 mm) of fleshy
tissue from inside the mushroom (in the middle between the cap and the stalk). Make
sure that it is clean and did not touch the outside of the mushroom.
g) Flame around the mouth of the bottle. Using other fingers, remove cotton plug of PDA
bottle in front of flame to secure against contamination.
h) Insert the needle in the bottle and inoculate by placing small piece of cut mushroom in
the middle of the PDAs surface. Make sure the piece of mushroom does not touch
anything before entering the PDA bottle. Close bottle immediately near the flame with
cotton plug. (Note: the bottom of the bottle should always be lower than the mouth of
the bottle and the mouth of the bottle should remain near the flame at all times.)
i) Label bottles and indicate: Date, type of mushroom, mother spawn #. Keep PDA bottles
with mycelium on clean shelf. After mycelium covers whole PDA medium, keep
mature mycelium in cool place or in the refrigerator in the vegetables section.



TISSUE CULTURE (MAKING SUBSTARTER or MOTHER SPAWN)
Because of the extremely delicate nature of tissue culture, it is highly recommended that
tissue culture be done in only a few bottles of PDA since there is high risk of contamination.
Then, several bottles of PDA can be prepared from the extremely pure mycelium.
a) With the needle, cut a small piece (5 mm x 5 mm) of mycelium on PDA Make sure that
the PDA is not contaminated.
b) Flame around the mouth of the new PDA bottle. Using other fingers, remove cotton
plug of PDA bottle in front of flame to secure against contamination.
c) Insert the needle in the bottle and inoculate by placing small piece of PDA mycelium
on the middle of the PDAs surface. Make sure the mycelium PDA does not touch
anything before entering the PDA bottle.
d) Close bottle immediately near the flame with cotton plug Note: the bottom of the bottle
should always be lower than the mouth of the bottle and the mouth of the bottle should
remain near the flame at all times.
e) Label bottles and indicate: Date, type of mushroom, mother spawn #.
f) Whether from tissue culture or PDA to PDA, from the time of incubation to full growth
mycelium will take about 10 15 days. (Depending on species).
g) Keep PDA bottles with mycelium on clean shelf. Check infection by other fungi in the
bottle everyday. Also check growth rate.



II. PLANTING SPAWN PRODUCTION
The mushroom seed (propagation material) is generally referred to as spawn. If good
quality spawn of the desired mushroom species can be obtained at a reasonable price, it
would be wiser to concentrate on the mushroom growing process. If not, spawn will have to
be produced or multiplied by the mushroom grower.
15

There were two types of spawn, the mother spawn and the planting spawn. The mother
spawns (substarters) were made directly from the pure culture (starter). These mother spawns
will then be used to make multiples of planting spawn. Planting spawn on the other hand was
the actual spawn used to grow mushrooms.
The following are the steps done in order to make mother spawns:
Prepare Substrate Bottles
Pasteurize the Substrate Bottles
Inoculating Substrate Bottles

PREPARE SUBSTRATE BOTTLES
Prepare Materials:
Saw Dust
Tobacco Midribs
Empty Bottles (or pp. plastic bags)
Place the saw dust under the sun to let it dry.
Soak the tobacco midribs on water. After three days of soaking, wash the tobacco midribs
again with water. Chop the tobacco midribs into tiny bits.
Mix the chopped tobacco midribs with the dried saw dust. Make sure to mix well the
ingredients. (Consider the moisture content of the ingredients.)
Fill the empty bottles/ bags with the substrate mixture of saw dust and tobacco midribs.
Make sure that the substrates inside the bottles are compact. Make a whole at the center

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AD40.pdf - A Small Scale Mushroom Cultivation


of the bottle almost to the bottom of the bottle by using a stick or a inch diameter PVC
pipe. Place the covers of the bottles. Make sure that the covers have a tiny hole in the
middle.

STERILIZE THE SUBSTRATE BOTTLES
Check the water content inside the pressure cooker. Refill it
up to the level of water required.
Place the bottles/ bags with the substrate mixture inside the
pressure cooker (Autoclave).
Light the burner or fire up the woods to start pasteurizing
the bottles inside the autoclave. Autoclave with a maximum
capacity of 160 bottles per batch would take about 30
minutes before the bottles would be sterilized thoroughly.
The time should start when the pressure inside the cooker
reaches 18 or 20 PSI (pounds per sq. inch)
After 30 minutes, put the fire out. When the pressure inside the cooker has lowered down,
open the cooker and take the bottles out.

INOCULATING MOTHER SPAWN into PLANTING SPAWN BAGS/BOTTLES
Prepare materials:
Alcohol lamp and Alcohol
Bottles with PDA (Substarter)
Pasteurized substrate bags/bottles
Special needle (insulated handle)
Matches or lighter
Square paper and rubber band



Clean room with broom or dust vacuum. Rub the floor with disinfecting solution.
Bring substrate bottles from pressure cooker to inoculation area. Let the bottles cool first.
Light alcohol lamp. Disinfect hands and pasteurized substrate bottles with alcohol.
Take bottle of agar medium covered with mycelium (all white color).
Flame around the bottleneck. Open bottle very close to flame to take out air from inside.
Using the transfer needle, cut a tiny slice of mycelium plug on the bottle of substarter
then put it on the center of the substrate bottles. Act very quickly and with very little
movement. Then close the bottles as quickly as possible. Repeat for all bottles.
Leave bottle near the flame until all bags have been inoculated. Then close the bottle.
Following inoculation of all bottles, place clean square paper to cover the top of the
bottles and tie with rubber band. Then bring bottles to incubation room. After several
days, mycelium would scatter on the substrate bottle. The substrate bottles containing the
mycelium are now what we call the Planting Spawn.

PACKING THE PLANTING SPAWNS
Mushroom spawns were usually placed on bottles. These planting spawns were then
transferred to 7x14 inches polypropylene plastic bags. Five bottles of planting spawn would
be needed to make one bag of planting spawn. Some pawn producers on the other hand place
the substrate mixtures in spawn bags and not in bottles. This method is more efficient since it
eliminates the work of transferring planting spawns from bottles to spawn bags. This method
will also prevent the distortion of the growth of mycelium caused by transferring.
Planting spawn in bags were then sold to the growers for Php 20 to 25 each.



III. MUSHROOM CULTIVATION
The two production technologies for fruiting body production that are being adopted by
the growers include outdoor and indoor techniques.
16

a) OUTDOOR CULTIVATION OF PADDY STRAW MUSHROOMS
The traditional outdoor method uses the bed-type approach and utilizes a number of
agricultural wastes like dried paddy straw, rice stubbles, water lily, banana leaves, and stalks
(Reyes and Abella, 1993). The use of these wastes as mushroom substrates depends on their
local availability. The following is a description of the step by step procedure for the
preparation of mushroom cultivation beds

Site selection and preparation
Growers should choose an area that is free from
potential insect pests such as ants, termites and rodents.
The selected site should preferably be under trees with
a wide canopy. In order to ensure that the selected site
is pest free, growers can spread rice hulls onto the area
and burn them until they turn into ashes.
Collection and preparation of bedding materials
The bedding materials collected from the field should be sun dried. Growers should trim
and bundle the substrates into bundles 12 inches long with a diameter of 2inches. The
bundled substrates should be soaked for twelve hours and washed with clean water. Bedding
materials consisted of 45cm long and 10cm wide bundled rice straw or bundled banana
leaves. Rice straw that was hard to bundle was chopped and molded into bed. Each 2m bed

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would need at least 60 bundles and each grower had to prepare an estimate of about 20-40
beds per month.

Layering of bundled substrates into bed and spawning
The bundled substrate should be drained of excess water
to attain 65% moisture content. Growers should pile the
bundled substrates one after the other into the bed forms. On
top of every layer, spawn should be sprinkled thinly over the
bundled substrates. An ideal bed size consists of six layers
and has a length of three meters.

Incubation and fruiting
A plastic sheet should be used to cover the entire
mushroom bed. This sheet maintains the appropriate
temperature for the mycelial ramification (30-35) and
fruiting body formation (28-30). It usually takes 10-14
days before the first flush of marketable fruiting bodies
(button stage) come out from the edge of the mushroom bed.



Harvesting
With bare hands, growers should harvest the button stages of paddy straw mushroom by
simply pulling the cluster out from the bed.

b) INDOOR CULTIVATION OF PADDY STRAW MUSHROOMS
A more improved technology that is now gaining
interest among potential growers is the indoor
production technology. This method, which utilizes
paddy straw as the main substrate, has three salient
features: composting, pasteurization, and cultivation
inside a mushroom house. Composting is an important process that allows the microbial
decomposers to loosen the tensile strength of paddy straw. This process also prepares the
paddy straw to be easily colonized by mycelia of paddy straw mushroom. Pasteurization is a
critical process that eliminates the undesirable microorganisms that may compete with paddy
straw mushroom during the production proper. This process also renders the composted
paddy straw more easily able to be successfully permeated by the mushroom mycelia. The
cultivation of mushrooms inside a growing house allows for the control of the fluctuations of
temperature and relative humidity which may be hazardous to the mycelial growth and
fruiting body production.

Soaking
Rice straw of any type can be used as substrate for the indoor cultivation of paddy straw
mushroom. Rice stubbles could also be used. The rice straw should be soaked for 12 hours in
clean water. This procedure loosens the substrates as a prelude to composting.



Composting
The previously soaked substrates should be piled up and sprinkled with 1% molasses and
0.5% complete fertilizer. Growers should cover the pile of substrates with plastic sheets and
compost the pile for 14 days. On the seventh day, the partially composted substrates should
be turned with a spading fork in order to ensure even composting. At this stage, the
population of thermophilic decomposers starts to pile up. Growers should now add 1%
agricultural lime, replace the plastic sheets and continue the composting process until
completing the required fourteen day composting period.

Crating and steaming
Growers should dispense the composted substrates on 12 x 24 x 18 inches wooden crates
that are open on all sides. Moisture content of the substrate should be 65% (no drippings of
water when squeezed between fingers). Growers should make sure that the substrates are
compactly placed inside the wooden crates, and should deliver the crated substrates into the
steaming room by piling them one on top of the other. Growers should then start introducing
the steam into the mushroom house. Steaming usually lasts from four to six hours, and the
temperature should maintained at 60-80.

Spawning for the Tropics 252
The next morning after steaming the substrates, growers should check the temperature of
the steamed substrates. The temperature should be 30 in order not to harm the mycelia of
paddy straw mushroom.

Incubation and fruiting
In order to encourage mycelial proliferation of paddy straw mushroom, the mushroom
house should be sealed. During this stage, it is very important to maintain the desirable
temperature for mycelial ramification (30-35) with no ventilation and light. The spread of


mycelia takes from seven to ten days after spawning. After this period, growers should check
the status of the substrates. Fruiting initials should start to appear. At this point, the
temperature should be lowered from 35 to 28. This can be done by sprinkling clean water
on the floor of the mushroom growing house. Three to five days after the appearance of these
fruiting initials, the first harvest of the button stages of paddy straw mushroom can be
performed.

IV. HARVEST AND POST HARVEST PROCESSING
Harvesting mushrooms should be done with reasonable care and proper handling.
Mushroom products were really sensitive and highly perishable. A small bump on a
mushroom could cause it to rot. The following were the things to consider in harvesting
mushrooms.
Look for mature mushrooms. Pick gently by grasping stalk and pulling out slowly.
(Note: Mushrooms must be harvested at the most appropriate time. If too small, they
cannot fetch a good price. If too big, their conservation period is reduced; they are not
so sweet and tasty.)
Put mushrooms in order in a basket, about 5-8 kg per basket. Trim and peel by cutting
at the base of the stalk to make the mushroom clean. Place mushrooms in basket.
Weigh all mushrooms and label.
(Note: A bag of mushroom planting spawn should yield between 350 450 grams of
mushrooms in 4 to 5 flushes. Planting bags can only be used once because each bag
loses much of their weight once they have exhausted their production. Planting spawns
that is used for the second time is expected to yield poorly and is more exposed pests
and contamination of other types of fungus)



PACKAGING
Before packaging, make sure all mushrooms are well trimmed. For selling fresh
mushrooms on the market, little or no packaging is required. Mushrooms are weighed and
placed in paper or plastic bags.
Mushrooms cannot keep for long and therefore all mushrooms must be sold quickly
following harvesting. They can keep in a refrigerator for 12 24 hours. To avoid humidity
from accumulating in the bag, place mushrooms in bags and blow air in them. Tie bag with
rubber band. If no refrigerator is available, place mushrooms on banana leaves in a cool area,
or put them on top of water under the shade in a well-ventilated place.

MARKETING
Mushrooms can be sold directly to consumers or given to whole sellers. The profit will be
reduced when dealing with an intermediate but if a good agreement can be made, it also
saves on expenses related to marketing.
Prices of mushrooms will depend on the season and the type. Different seasons will give
better yields for certain mushrooms.

Sales outlets:
From the farm Make sure people know you cultivate mushrooms
Community
Local market
Neighboring markets
Restaurants
Hotels
Supermarkets



QUALITY CONTROL:
Mushrooms must be clean - trimming is very important
Collect young mushrooms - longer shelf life
- better tasting
Tip: harvesting after watering at least 2-3 hours will conserve mushrooms longer.
Inoculated mushroom bags can also be sold and generate supplemental income.

CONSERVING MUSHROOMS
Because mushrooms are highly perishable, strategies in conservation techniques are
necessary. Drying is a good option since it allows mushrooms to be used in cooking. Drying
can be done with electrical and solar dryers. Nevertheless, this cannot be done during the
rainy season since dried mushrooms would take in humidity immediately and therefore their
conservation cannot be guaranteed.
Fresh paddy straw mushrooms can be processed and sold to shops and restaurants as
finished products. Many products can be made with mushrooms. Aside from being added to
soups and sauces, mushrooms can be converted into sweets, cookies, candies, various snacks,
and can also be dried. However, facilities in rural areas are not necessarily capable of
supporting such processing techniques.



B. PROCESS FLOW CHARTS

Figure 5.1 Process Flow (Mushroom and Spawn Production)

Table 5.1 Gantt chart (Showing specific tasks against time)
Harvest and Post Harvest Processing
This involves tasks such as harvesting, packaging, marketing, quality control and conservation of
mushroom produce.
Mushroom Cultivation
This includes preparation of the place of cultivation as well as the materials to be used in mushroom
Cultivation. It also includes tasks such as layering of bundled substrates into mushroom beds,
spawning, incubation, and monitoring the temparature and moisture content on the mushroom bed.
Making Planting Spawns
Substrate bottles are then prepared. The substarters that were made will then be in oculated on the
substrate bottles to make a mother culture. Mother culture will now be used to make plantinf
spawns. Planting spawns were the actual spawns used on growing mushrooms.
Making Starter and Substarters
Starters were made from a fresh mushroom's stalk embedded on an agar medium. If a starter's
mycelium covers the whole agar medium, these were inoculated to another agar medium to make
substarters.


SCHEDULES OF OPERATION
STARTER AND SUBSTARTER PRODUCTION (Monthly)
Making PDA Bottles
1 liter of Potato, Dextrose, and Agar (PDA)
mixture makes 25 30 bottles of PDA Medium.
(Materials needed to make 1 liter of mixture is
shown on the previous pages; See Preparing PDA
Mediums, pp. 26)
PDA Medium bottles will be stored on clean
shelves until required for starter and Substarter
productions
1
st
Batch Day 1 of the month
2
nd
3
rd
4
th
(Note: Each batch will use 5 liters
of PDA mixture to make 125 150
bottles of PDA Medium.)
Monthly Prod: 500 to 600 bottles

Making Starter Cultures
Prepared PDA Mediums (in bottles) are brought at
once to the Inoculation and Incubation room
wherein a tiny piece of freshly cut mushroom is
inoculated in each bottle.
Making starter culture is a thorough process. It
requires a clean working environment and precise
execution of tasks. A little contamination on the
bottles would cause spoilage. Initial operations
results to 15% 20% of success. But continuous
production would increase the ventures knowledge
in making starters and would increase the
percentage of successful tissue cultures.
The most of the 1
st
batch of
prepared PDA bottles will be
used in making starters. About
100 bottles of the prepared PDA
Mediums will be used.
Incubation of PDA Mediums
with inoculated mycelium lasts
for 15 days. During this time, the
fungi of the mushroom should
have covered the whole surface
of the bottles.
15 to 20 bottles of successful
tissue cultures are expected.
(Note: Successful tissue cultures
are kept on clean shelves in the
incubation room. These cultures
will be used in making substarters.
Contaminated bottles are removed
from the shelves.)


Making Substarters
Successfully made pure cultures are then inoculated
to new PDA bottles. Tiny pieces of fungus from
PDA Bottles are transferred to a new PDA bottle to
make substarters or Mother Spawn..
Incubation of substarters will also last for 15 days.
Spoilage from contaminations is low in making
substarters if tasks were properly executed. But
compared from making pure cultures (starters),
making substarters usually results about 90% to
95% success.
One Starter Culture can make 25
to 30 substarter cultures.
Remaining batches of prepared
PDA Medium bottles were to be
used in making substarters or
Mother Spawn. The successful
pure cultures are expected to be
consumed on the remaining 400
to 500 bottles of unused PDA
Medium.
Successful substarter cultures
expected is about 360 to 450
bottles.

PLANTING SPAWN PRODUCTION (Monthly)
Substrate Bags / Bottles Production
One bottle of
The venture will be using two Autoclave or
Pressure Steam Sterilizers. One Autoclave can
sterilize ten batches having 160 substrate bottles per
batch (32 to 35 spawn bags).
Daily Prod.: 700 spawn bags
(35 spawn bags x 10 batches x 2)
Weekly Prod.: 3500 spawn bags
(700 bags x 5 working days)
Monthly: 14,000 spawn bags
(3500 bags x 4 weeks)
Inoculation and Incubation of Planting Spawn
Inoculation of Mother Spawn (substarters) into prepared substrates (spawn bags) makes the
so called seeds in mushroom cultivation or the Planting Spawns. Substrate bags with
inoculated mycelium will be incubated for 5 to 15 days.
Planting spawns that were incubated for 5 days can now be offered to mushroom growers
for planting. But for better yield, planting spawns should be incubated for about 15 to 20
days. Full - grown planting spawns yields better that immature or over matured spawns.
Spawn selection is also a critical aspect on mushroom cultivation.



MUSHROOM CULTIVATION
The proponents have decided that a portion of the
planting spawns produced would be used in
mushroom cultivation. It has been discussed that
40% of the planting spawns produced will be used
for mushroom growing
Under normal conditions, the first harvesting of
mushroom will be realized 10 to 14 days after
planting. The harvesting may last for three
consecutive days (about 3 to 4 flushes). After
harvesting, leave the mushroom beds for one-and-a-
half month to let another mushroom flushes to be
harvested.
A five meters mushroom bed at
480 to 500 bundles of dried
banana will need around 10 bags
of mushroom spawn (800 grams.
/bag). Its expected minimum
yield is 10 kgs. to 12.5 kgs*.
(*Based on the estimate given by
existing mushroom growers and
Mr. Rey Rivera STIDS, DTI -
Pangasinan)

Mushroom Production (monthly):
56,000 kgs. to 70,000 kgs
(5,600 bags = 40% x 14,000 bags;
5,600 x 10kgs. = 50,000;
5,600 x 12.5kgs = 70,000)



C. PLANT LAYOUT
Royalty Mushroom Producers Farm Layout (Mango Orchard)

Plant Layout of Spawn Production House



D. EQUIPMENT / MATERIALS NEEDED
Equipments Description

Autoclave (pressure steam sterilizer) Used to sterilize substrate
bottles. About 30 bottles to 160 bottles capacity. (Manufacturer: Mr.
William Cabanlig, Mapandan Pangasinan)

Laminar flow cabinet - With heap filter 1cuft. Used in making starter
and substarters. (Optional: a close environment would do.)

Weighing Scale - 1 set 1 kg, 1 set 100 kg

Glassware (bottles) substrate container for spawns

Sprinklers, Water hose, Water Drums used for watering substrate
beds to ensure that moisture requirements were met.

Materials and Supplies Needed Description
Sawdust For substrate
Tobacco Midribs For substrate
Hay Stalk For substrate
Magnesium sulfate, Calcium sulfate, Calcium
carbonate, pumice, Rice bran
For substrate
Glucose, gelatin, Potato For tissue culture
Polypropylene Plastics (pp)
For covering of mushroom beds (plastic sheets)
and packaging of planting spawns (7x14 pp)
Cotton plugs For plugging bottles
Rubber bands and 7x7 square paper For closing bottles
Laboratory Supplies Supplies used for making starters and substarters.
Kitchenware For making PDA Mediums (tissue culture)

Utilities Needed
Electricity
Water
Gas
Telephone


E. INITIAL INVESTMENT REQUIREMENTS
Description Price
Spawn Production House (Spawn bagging area, small laboratory
room, Incubation and inoculation room and storage rooms)
Php 200,000.00
Autoclave (Pressure Steam Sterilizers) 12,000.00
Laboratory equipments (Laminar Flow Cabinet, Alcohol Lamps,
Needles, Weighing Scale, other Spawn Production Supplies)
8,000.00
Watering equipments (Water Drums, Water tank, sprinklers, water
hose)
7,000.00
Kitchen Utensils (stove, casserole, dipper, basins, knife, chopping
board, funnel, etc)
5,000.00
Initial Operating Expenses
Raw Materials (Tobacco Midribs, Sawdust, dried banana bundles)
Supplies (alcohol, bottles, 7x14 pp bags, plastic sheets, LPG, etc)
Wages & Salary for laborers
Transportation expenses

35,000.00
5,000.00
14,000.00
4,000.00
Total Initial Investment Requirements 300,00.00
(* The price for autoclave (Pressure Steam Sterilizers) was based on the current price for this item that is
available at Mapandan, Pangasinan. Other equipments and corresponding prices were based on DOST-TRC:
Gabay Sa Negosyo, Agribusiness Crops - Pagpaparami ng Kabute (Booklet) http://trc.dost.gov.ph, August
2010, adjusted to match current prices for these items based on the prices in different markets such as malls,
hardware, laboratory and merchandise shops, as well as farms that sells their agricultural wastes.)



Chapter 6
MANAGEMENT FEASIBILITY
A. Organizational Structure

B. Duties and Responsibilities
1. GENERAL MANAGER
The general manager will be responsible for the overall health of the business. He/she
will act as the troubleshooter for the company internally (when there is conflict of interest
between employees) and externally (when a business rival tries to queer the pitch for the
company). Being the general manager, he/she will also manage finances, overall supervision
of the business venture, and keeping the staff in good spirit so as to make them give off their
best to the business organization.

2. MUSHROOM CULTIVATION MANAGER
The manager focusing on mushroom cultivation will be the one in-charged of monitoring
the cultivation and growing of mushrooms. Together with a full time grower (one focusing
on Oyster Mushroom and the other is focusing on Straw Mushrooms), he/she will apply the
best methods and techniques on how mushrooms will grow and yield abundantly.

3. SPAWN PRODUCTION MANAGER
The manager focusing on spawn production is the one in-charged on the production of
planting spawns. He/she should be knowledgeable on how to make quality spawns. He/she
will work together with full time employee and 3 to 5 part time workers (children or out of
General Manager
Muchroom
Cultivation Manager
1 Full-time
Mushroom
Grower
Spawn Production
Manager
1 Full time Spawn Maker
3 Laborers / Workers
Liaison and
Purchasing Officer
Accountant


school youths) in order to make good quality planting spawns that would yield good quality
mushrooms. Spawns produced will either be sold to other mushroom growers or transferred
to the one assigned on mushroom cultivation for growing.

4. LIAISON AND PURCHASING OFFICER
The liaison officer will be the one to deal with mushroom dealers and growers in order
for the business to have good and lasting relationship with its marketing channels and
consumers. And since the liaison officer is also the purchasing officer, he/she will also be
dealing with the raw materials and equipment suppliers of the business. He/she has to look
for suppliers that offer good equipments and raw materials at the lowest possible prices, in
order for the business to have low operating costs.

5. ACCOUNTANT
The accountant is in-charged in capturing all the transactions of the business, recording
each transaction properly, and communicating the results of the business transactions in
order to make sound decision making for the enterprise.

6. FULL TIME WORKERS
Full time workers are considered as the regular employees of the enterprise. These
workers will have different tasks and responsibilities. The following are the tasks that only a
full time worker were authorized to do:

Tasks No. of Full-time worker needed
1. Growing Mushrooms
(For Straw Mushroom)
Preparing the mushroom beds
Putting spawns on mushroom beds
Maintaining and monitoring cultivated
mushrooms in mushroom beds
1 Full time Worker


2. Spawn Production
Mixing agricultural wastes (saw dust,
tobacco midribs, etc.)
Sterilizing bottles filled with sawdust in a
pressure cooker
1 Full time Worker

7. LABORERS / WORKERS
Laborers / workers are responsible for some basic tasks in mushroom production. These
minor tasks can be done by anybody (these can be done by children or disabled, thus creating
employment for out of school youths and disabled). The following were some of the minor
tasks that part time workers can do:

Tasks No. of worker needed
1. Filling of substrates in a bottle (for
spawn of Straw Mushroom)
3 to 5 workers / laborers

C. Manpower Requirements and Compensation
Workers Wage Rate
Full time worker (Spawn Production) Php 400.00 / day
Full time worker (Mushroom Cultivation) Php 200.00 / day
3 5 Laborers (filling of bottles) Php 0.10 / bottle

The wage rates stated above were the current rates used by currently existing independent
mushroom producers in Pangasinan (according to the spawn producers that the proponents
have interviewed in Mapandan, Pangasinan).

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Kingfisher School of Business and Finance

Mushroom Farm A Pre-Feasibility Study Page 1

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