A FEASIBILITY STUDY ON

VOLVARIELLA MUSHROOM PRODUCTION

Prepared by:

Eda H. Del Agua

Young Farmer Entrepreneur

Indahag, Cagayan de Oro City

 PROJECT SUMMARY

Project Title: Volvariella Mushroom Production

Proponent: Eda H. del Agua

Project Site: Sitio Kamakawan, Indahag, Cagayan de Oro City

Project Cost: Php 264,702.35

Sources of Funds:

Proponent Equity: Php 26,470.235

YFP Grant: Php 105,880.94

Quedancor Loan: Php 132,351.175

Location:

Accessibility to the proposed project site:

14 kilometers from downtown Cagayan de Oro City

1.5 kilometers from Indahag Brgy. Hall

Accessible to any transportation facility

Employment Generation:

4 regular employees
 PERSONAL PROFILE

Name: Eda Hidalgo Del Agua

Address: Zone 7, Acacia St., Carmen, Cagayan de Oro City
Citizenship: Filipino
Birth Date: February 12, 1975
Contact Number: 09174815063
Civil Status: Single
Religion: Born Again Christian
Ethnic Group: Ilocana
Dialect Spoken: English, Tagalog, Visaya, Maranao

Professional Exam Passed:

PRC Licensure Examination for Agriculturist (July, 2003)

Educational Attainment:

School and Address Year Graduated

Elementary: Kitcharao Central Elementary School

Kitcharao, Agusan del Norte April , 1987

High School: Cagayan de Oro City National High School

Nazareth, Cagayan de Oro City April, 1994

Vocational: Agricultural Technology

Mindanao State University
Marawi City April, 1997

Degree Course: Bachelor of Science in Agricultural Education

Mindanao State University
Marawi City April, 2002
Employment:

Faculty Marawi Foundation Academy Inc.

Marawi City

Laboratory Assistant College of Agriculture

Xavier University
Ateneo de Cagayan
Cagayan de Oro City
Laboratory activity includes Mushroom Production
Seminar Attended:

Seminar Workshop on “Techniques of Plant Breeding”

Aggie Pavillion, MSU, Marawi City

2nd Philippine Bromeliad Congress

Grand Caprice, Limketkai Center, Cagayan de Oro City ( July 23-28, 2004)

Seminar on “Updates of Tissue culture/Hands-on Training”

SEARSOLIN, Masterson Ave., Cagayan de Oro City (Aug. 17, 2004)

Training on “Techniques on Bulb Onion Production”

All Farms, Mambatangan, Manolo Fortich, Bukidnon
INTRODUCTION

Mushroom are achlorophyllous fungi that belongs to class Basidiomycetes, order

Agricales. It has fleshy umbrella-shaped fruiting body. These fungi are named for their
specialized club shaped reproductive cells called basidia, which form spores called
basidiospores. These basidia may line gills or tubes on the under side of fleshy fruiting bodies,
which consists of a stalk and cap.
Many basidiomycetes are saprobes, which play a vital role in the decomposition of litter,
wood and dung. Other mushrooms are known for their poisonous qualities and there are also
edible mushroom.
There are 19-22 edible mushroom species in the Philippines but not all can be grown on a
commercial scale. At present time, there are only four commercial species. One of these edible
mushroom is the Volavariella commonly known as paddy mushroom which is one among of the
species of edible mushroom cultivated throughout East and Southeast Asia and used extensively
in Asians cuisines.
Paddy Straw Mushrooms (Volvariella Volvacea) are cultivated on Rice Straw in South
Asia. Straw Mushrooms are an indispensable ingredient in many Asian dishes. Though not
available fresh outside of Asia, cried mushroom are delicious, and their bite-size shape make
them easy to prepare.
Straw mushrooms are reconstituted like other mushrooms. The entire mushroom is
edible. If the stems are tough, discard them. The crunchiness of straw mushrooms makes them
ideal for stir-fries and Asian-style soups and broths.
There are thousands of regularly harvested edible mushroom in the world. Some species
are highly prized because they are not or cannot be cultivated and must be harvested from natural
settings. These edible mushrooms belong to a primary division of the plant kingdom called
Thallophyta, commonly known as fungi. Because they can’t produce their own food, mushrooms
derive nourishment from organic & inorganic matter. They grow best in warm, moist, humid
places. It can be grown easily in the backyard anytime of the year. With the use of mushroom
seeds technically called “mushroom spawns”. Successful growing of mushroom requires good
spawn, temperature & moisture.
For a long time, the mushroom was a mystery. Even today, there are people who believe
that the poisonous species comes from the stools of frogs & toads, that the edible ones are
produced by thunder & lightning. In the Phillipines, mushroom culture was introduced in the late
1950’s, but few Filipinos ventured into mushroom production because of lack of an efficient
technology especially in producing spawns.
The Paddy Straw Mushroom, known simply as a Straw Mushroom and more formally as
Volvariella volvacea, is a type of mushroom found widely distributed throughout Asia. The
thumb sized mushrooms are heavily cultivated for food and export in Asia, and can be found in
canned and dried forms in other parts of the world. Straw Mushrooms are often used in stir fries,
and add a distinctive slightly musty flavor to food.
The mushroom takes its name from paddy straw, the straw left over after growing rice,
which happens to be the mushroom's favorite habitat. In addition to its traditional growth
medium, the Straw Mushroom can also be found growing on many types of vegetable material
such as other straws or grasses, compost, and wood piles including banana leaves. Usually the
Straw Mushroom is cultivated for consumption on a mixture of cotton fiber and paddy straw.
When mature for eating, a Straw Mushroom is approximately thumb sized, and distinguished by
its pale pink gills and white spore print. The mushrooms have long white stems with bulbous
bases, and drooping yellow to brown caps with a partial veil.
Many agricultural by-products and waste materials will be used to produce straw
mushroom. Some of these are banana leaves and saw dust. Volvariella is well suited for
cultivation in the tropics because of its requirements for higher production temperature. In
addition, this mushroom can be grown on non pasteurized substrate- more desirable for low input
agricultural practices.
Many people are intrigue by mushroom nutritional and medicinal properties, in addition
to their culinary appeal. Mushroom contains many essential amino acids, some unsaturated fatty
acids, provide several of B vitamins and Vitamin D as well as minerals like potassium,
phosphorous, calcium and magnesium.
Mushrooms are highly prized for their flavor & nutritive value. Mushroom are highly rich
in protein content, vitamins & minerals & a lot of fiber. Low in calories, no cholesterol content,
contains all the essential amino acids. Consider as health food & medicine. It provides stamina &
function well as resistance builder against diseases because of its abundant pytochemical content.
Regular diet of mushroom has a prophylactic effect on the human body, generating the
production of enzymes that prevent hypertension, cancer & even pellagra.
Some of the benefits attributed to mushrooms; 1.) Enhance formation of red blood cell
protecting against anemia, hypertension & heart ailment. (mushroom contain amino acid or
protein in simple form). A hypertension needs 100g of mushroom in his weekly diet to reduce
bad cholesterol level in his blood. Mushroom, though high in protein have no cholesterol & is
therefore the best substitute for meat for people suffering with high blood pressure 2) Prevent
diabetes, fight cancer. (antioxidants) 3) Relieves constipation. (high fiber) 4) Enhance sexual
performance. (aphrodisiac) 5) Improves sperm production 6) Reduced fatigue, increase stamina
& strengthen the general physical condition.7) Improves mental condition, preventing neurosis &
nervous breakdown. 8) Relieves menopausal symptoms. 9 )Normalizes blood pressure &
improves hyperlipidemic condition (presence of excessive amount of lipid in the blood, resulting
to hypertension.10) Rids the blood of toxins such as alcohol.(antioxidants) 11) Prevents skin
irritation, inflammation & other skin diseases. It is almost a complete food & a health food as
well comparable with milk.
Mushroom production is completely different from growing green plants. Mushroom
does not contain chlorophyll and therefore depend on other plant material (the “substrate”) for
their food.
Small-scale mushroom production presents an opportunity for farmers interested in an
additional enterprise and is specialty option for farmers without much land. Mushroom
cultivation as a way to extract value from woodlet thinning and other “waste” materials.
With the help of Yung Farmers Entrepreneur, the proponent will be equipped with
appropriate technical skills, marketing support and assist in capital formation.

OBJECTIVES
This project hopes to insure availability of mushroom for walk-in buyers, restaurants,
hotels, wholesalers and local markets. Specifically the project will aim to:
• Produce a safe edible mushroom.
• Establish quality standards for mushroom products.
• Create job and employment in the community.
• Encourage farmer to grow and produce high quality mushroom.
• Provide year round indoor production.
MARKETING ASPECT

A. Product Description

The project will be called Jireh mushroom production and will produce 180 kilos of
marketable fresh mushroom in a day within the 14th day after planting of spawn. This will be
grown in a 30 beds every cycle. In a year there are 6 cycles to insure availability of materials
needed for production and with a proper preparation and cleaning of the mushroom house for the
next planting.
One fourth kilogram, one half and a kilogram of cleaned harvested mushroom will be
packed into a self sealing transparent plastic bag for market.

B. Demand

People now are more conscious of their health thus the demand dramatically increasing.
Nutritative value of mushroom encourage consumer to purchase more mushroom either fresh,
dry or processed. Good source of farmers income. It also solve the problem of malnutrition
problem in the Philippines.

C. Pricing and Grading

The basis for pricing will be based on quality grading. Grade A (unopened mushroom)
120 pesos/kilo while Grade B (Opened mushroom) is 100 pesos/kilo.

D. Marketing Channel

Mushroom will be sold to the contract buyer, wholesalers, restaurants, hotels, local
markets, walk-in buyers, and processor and within Cagayan de Oro City and of the entire
province of Misamis Oriental.
Distribution Strategy:

PRODUCER

Contract buyers

processor walk-in wholesal Retailer

Restaurants Hotels
er local market
buyers

Figure 1 Distribution of Product

PRODUCTION ASPECT

A. Project Location

The project is located at Sitio Kamakawan, Indahag, Cagayan de Oro City. It is 14

kilometers away from the city proper. Moreover, the area has an accessible farm to market road.
This will ensure good transportation for the inputs and products.

B. Required Start-up Capital

The total project cost is Php 264,702.35. It will be divided into three which is 10% of the
total cost will be the proponents equity, 40% will be coming from National Agriculture and
Fishery Council (NAFC) as a grant and 50% is loanable from Quendancor. This loan will have a
9.5% interest per year. Interest will be paid to Quedancor on the first year of operation ant the
rest will be on the following year of operation.
 C. Business Idea

The project will not just produce fresh mushroom but will also produce dried mushroom
and spawn to farmers who wish to grow mushrooms.

D. Production Facilities

Volvariella mushroom will be produces using indoor cultivation. A water tub will be
constructed on the side of the mushroom house for the soaking of the substrate.

The following are the facilities to be used in the production:

Particular Unit Unit Price Total

Refrigerator 1 15,000.00 15,000.00
Inhaust Fan 1 700.00 700.00
Weighing Scale (10kg) 1 500.00 500.00
Weighing Scale (2kg) 1 300.00 300.00
Banana leaf cutter 1 500.00 500.00
Cellophane cutter 5 50.00 250.00
Garden Hose 1 1,800.00 1,800.00
Scalpel Holder 4 80.00 320.00
Scalpel blade 1 430.00 430.00
Knives 3 50.00 150.00
Gloves 5 50.00 250.00
Mask 5 30.00 150.00

TOTAL AMOUNT 20,350.00

E. Cultural Management

1. Substrate Collection

Collect banana leaves those are still hanging on the banana plant and not those on the
ground. These substrates can be collected for free from the banana plantations.

2. Media Preparation

Banana leaves to be prepared should not have stalk. Soak substrates in the prepared water
tub for 12 hours. Water is needed for fungal survival. Drain excess water of the substrate in 30
minutes. File the banana leaves in the prepared racks inside the growing room according to the
size of the bed or racks.
3. Spawn Planting

Distribute spawn at both sides of the bed 1 inch inward from the edges or side. Spread a
small amount of urea fertilizer linearly along the center in each layer of the bed. Alternative
fertilizer can be madre de cacao or other nitrogen rich plants. Repeat the above procedure until
reaching ________. The last layer should no be planted with spawn as it will served as
protection and covering of the last layer with spawn. Cover beds with cellophane immediately
after planting to prevent moisture loss.

4. Monitoring

High humidity and moisture within the best must be maintained. Checking the moisture
daily is necessary. The moisture in the substrate is maintained by sprinkling water at relative
temperature of 35-38 degrees celsius to promote fruiting. The average mushroom yield is around
7 kilogram per bed.

5. Harvesting

Evidence of success in production is noticeable in the 14th day. Harvesting begins on that
day thereon. A scalpel will be used in harvesting to assure that the remaining spawn will not be
damaged.

6. Preparation for Market

Harvested mushroom should be cleaned right after harvest. Mushroom with slight
damage due to harvest handling should be discarded to attain high quality product. It will then be
packed in a self sealing transparent plastic bag for market.

FINANCIAL ASPECT

A. Financial Assumption:

• Initial of 30 beds in first cycle.

• 120 bottles of Spawn.
• Gate price of fresh mushroom is Php70.00 /kilo. There will be an increase of
10.00Php/year.
• Average of ___ kilograms harvest/cycle.
• 5 cycles every year.
• Losses rate of 2%.
Production Cost

PARTICULARS TOTAL AMOUNT (Php)

I. Initial Capital Outlay

A. Mushroom House
Materials 142,943.00
Labor Cost (35%) 50,030.05
Contingency (10%) 14,294.30
Sub-Total 207,267.35

B. Tools and Equipment 19,950.00

Contingency (10%) 1,995.00
Sub-Total 21,945.00

C. Supplies and Materials 4,000.00

Contingency (10%) 400.00
Sub-Total 4,400.00

II. Operational Cost

A. Labor 7,000.00
B. Land Rental 10,000.00
III. Other Expenses

Pre-Operating Expenses 3,000.00

Misc. Fee 2,000.00
Notarial Fee 3,000.00
Water Bill 900.00
Electric Bill 1,000.00
Transportation 2,000.00
Sub-Total 21,900.00
Contingency (10%) 2,190.00
Total 24,090.00

Total Project Cost 264,702.35

Proponent Equity (15%) 39,705.35

Grant (25%) 66,175.59
Loan (60%) 158,821.41
Proposed Loan Amortization

The proponent proposed a 3 years of 9.5% interest with 1 year grace period. Loanable
amount is Php 132,351.175

Loan Repayment Schedule

Year Principal Amortization Interest Expense Total Payment

1 44,117.058 12,573.36 56,690.418

2 44,117.058 12,573.36 56,690.418

3 44,117.058 12,573.36 56,690.418

Depreciation Table

PARTICULAR DEPRECIABLE COST LIFE DEP. COST

Mushroomhouse 207,267.35 2 103,633.675

Tools and Equipment 21,945.00 2 10,972.5
Total 114,606.175
Budgetary Allocation

PARTICULARS EQUITY GRANT LOAN TOTAL

Mushroom House
Materials 71,471.50 71,471.50 142,943.00
Labor Cost 16,571.525 33,458.525 50,030.05
Contingency 7,147.15 7,147.15 14,294.30
Tools and Equipment 19,950.00 19,950.00
Contingency 1,995.00 1,9950.00
Supplies and Materials 2,380.235 2,380.235
Operating Cost
Labor 6,676.00 324.00 7,000.00
Land Rental 10,000.00 10,000.00
Other Expenses
Pre-operating Expenses 3,000.00 3,000.00
Misc. Fee 2,000.00 2,000.00
Notarial Fee 3,000.00 3,000.00
Water Bill 900.00 900.00
Electric Bill 1,000.00 1,000.00
Transportation 2,000.00 2,000.00
Contingency 2,190.00 2,190.00

TOTAL 26,470.235 105,880.94 132,351.175 264,702.35

Projected Mushroom Production

YEAR TOTAL Price/kg

(No. of Kilos harvested (70.00/kg)

Year 1 1,050 63,000.00

Year2 1,050 73,500.00
Year 3 1,050 84,000.00

* Price will increase at Php 10.00/year.

Income Statement

PARTICULARS Y1 Y2 Y3
INCOME
Gross Sales
OPERATING EXPENSES
Spawn
Labor Cost
Salary/Wages
Electric Bill/Water Bill
Misc. Fee
Interest
Amortazation
Depreciation
Pre-Operating
Expenses
Transportation
Land Rental
FIXED INVESTMENT
Mushroomhouse
Tools and Equipment
OTHER EXPENSES
Supplies and Materials
Notarial Fee

TOTAL EXPENSES

Net Income before Tax

Less Tax (32%)
Net Income after Tax
Cash Flow Statement

PARTICULARS Y1 Y2 Y3
CASH INFLOW
Sales
Loan
Grant
Equity
TOATL CASH INFLOW
CASH OUTFLOW
Capital Outlay
Housing Cost
Total Material Cost
OPERATING EXPENSES
Spawn
Labor Cost
Salary/Wages
Electric Bill/Water Bill
Misc. Fee
Interest
Amortazation
Depreciation
Pre-Operating Expenses
Transportation
Land Rental
OTHER EXPENSES
Supplies and Materials
Notarial Fee
TOTAL CASH OUTFLOW
NET CASH FLOW
BEGINNING CASH BALANCE
ENDING CASH BALANCE
ORGANIZATION AND MANAGEMENT ASPECT

A. The Management

The proponent will act as the manager and at the same time will work on the production
area. Two will be assigned for the collection of substrate, one will prepare the substrate from
soaking up to piling and the other one will maintain the cleanliness and orderliness of the entire
production area.

Organizational Structure:

PROPONENT
(Manager)

4 REGULAR EMPLOYEES

Figure 2 Organizational Structure

Requirements:

Manager - Must have a broad knowledge of the entire business operation.

Possess good human relation.
Willing to work overtime.
Responsibilities:

Responsible for the entire business activities.

Impose policies.
Negotiate with prospect buyers.
Seek new market.
Attend seminars and trainings conducted government and non-government organizations in
relation to the business.
Responsible for the delivery of the product.
Responsible for the collections of payments and other related activity.
 B. Compensation Scheme

The proponent will give a salary of Php 200.00 a day with 8 hours work and is not free of
meal, board and lodging. The proponent will also pay her services at the same rate since she will
also be working in the production.

C. Production schedule

First Cycle
ACTIVITY July Aug Sept Oct Nov Dec Jan Feb Mar
1. Training and
approval of the
proposal
2. Purchasing of
materials
3. Building
Construction
4. Collection of
Banana Leaves
5. Purchase of
spawn
6. Soaking of
Substrates
7. Piling of
media to racks
and planting

8. Harvesting

Second Cycle

4. Collection of
Banana Leaves
5. Purchase of
spawn
6. Soaking of
Substrates
7. Piling of
media to racks
and planting

8. Harvesting
Socio Economic Study

The concern of this project proposal is not only to profit but also to help small farmer
who wish to produce volume to supply the demand for market. This can generally generate
employment, and share something to farmers of the recent agricultural innovations which will
lead them to produce more for them to indulge on export business.
Mushroom production can play an important role in managing farm organic wastes when
agricultural and food processing by-products are used as growing media for edible fungi. The
spent substrate can then be composed and applied directly back to the soil.
Producing nutritious food at a profit, while using materials that would otherwise be
considered “waste”, constitutes a valuable service in the self-sustaining community we might
envision for the future.
Furthermore, the project will soon emerge not just to produce fresh mushroom to local
markets, walk-in buyers, restaurants/hotels, wholesalers and contract buyers but also to indulge
in spawn production for small scale farmer who wish to grow volvariella.

Prepared By:

EDA H. DEL AGUA

Agriculturist