ADS - Mushroom – Bhojpur

AREA DEVELOPMENT SCHEME ON

MUSHROOM CULTIVATION
FY 2018-23

BHOJPUR DISTRICT

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 ADS - Mushroom – Bhojpur

Area Development Scheme – Mushroom Cultivation—(2018-23)

1. Introduction:

Mushrooms are the fruiting bodies of some members of a lower group of plants known
as fungi. The fruiting bodies, mushrooms, are fleshy spore bearing structures of the
fungi. They contain numerous spores, functionally similar to seeds of the higher plants
for propagation of fungi. The cultivation of mushrooms is a relatively new phenomenon
and has picked up across the globe only in the last century that has witnessed newer
innovations and applications. The economic importance of mushroom lies primarily in
their use as food for human consumption. Mushroom is considered to be a complete,
healthy food and suitable for all age groups. Mushrooms are an excellent source of
vitamins and Protein and other essential minerals like Cu, Zn and Mg in traces.
Mushrooms are also known to have medicinal values. Mushroom has great potential for
the production as quality food.

The productivity of mushroom is higher than any other crop. Food, nutritional and
medicinal values a part, mushroom growing can be an efficient means of waste disposal
mainly agricultural wastes, since it can use the wastes as medium of growth and thus
mushroom cultivation is considered as eco-friendly. Further, mushroom cultivation is
highly labour intensive which can help gainful employment to unemployed youths in
rural and semi-urban areas. The activity also requires comparatively less land area.
Naturally, mushrooms are found in diverse agro-climatic conditions ranging from arid
to evergreen forest conditions. Worldwide more than 3000 mushrooms have been
identified as edible, of which 200 types are reported to have been produced under
controlled conditions. However, not more than 60 varieties are being grown widely.
There are about a dozen varieties which are cultivated on commercial scale. India is
home to more than 300 varieties of mushrooms found in the wild.

There are many varieties of mushroom available in the country but only Pleurotus spp.
(Oyster mushroom), Agaricus spp. (Button mushroom) and Calocybe indica (Milky
white mushroom) varieties are being cultivated in Bihar. For the cultivation of
mushroom not much land is required and even the landless farmers could take up the
cultivation of this crop. RAU Pusa , BAU sabour, KVK bhojpur and Rseti Bhojpur
imparts free training to the farmers for popularising mushroom cultivation. In Bhojpur
district, Pleurotus spp. (Oyster mushroom), Agaricus spp. (Button mushroom)
mushroom is being cultivated at present. It is most popular variety both in the domestic
and export market and ranks first in terms of production and consumption. It is grown
both by seasonal growers in low cost structures as well in environment controlled units.

As per 3rd advance estimates by NHM from 2016-17, India produced 459 thousand MT
of mushroom from 183 thousand hectare. The Indian mushroom production is
estimated around 1.5 lakh MT. Bihar was the second highest producer of
mushroom.The potential of the mushroom crop is rated high on account of following
reasons:-

a. Availability of raw material and labour.

b. Appropriate marginal and landless farmer.
c. Availability of Market at Patna, Ara and Sasaram.

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 ADS - Mushroom – Bhojpur

d. Demand–supply gap in trade of mushroom.

e. Domestic market is also growing which can absorb non-exportable surplus.
f. District, bestowed with suitable agro-climatic conditions, has tremendous
potential for production of mushroom. There is increasing demand for quality
products both in domestic and export markets. Country’s domestic market will
expand on account of changing food habits, rising income and rapid
urbanization.
g. District has good set up of Extension Services such as KVK, Horticulture Dept,
Agri Deptt and also an exclusive mushroom training centre being run by an
entrepreneur.
h. Subsidy scheme is also available for cultivation of Mushroom.

2. Objective of the Scheme

The main objective of the scheme is to promote diversification by promoting mushroom
cultivation as a commercial activity among small and marginal farm households of the
district, and ensure increased returns to the farmers on their produce and increase the
production of mushroom in the district. It is proposed to be achieved through the
convergence of efforts of NABARD, Banks, Line departments, and other stakeholders
.The project would help in enhancing the GLC flow of the district, augmenting term
lending and improving CD ratio of the district.

3. Forward and backward linkages:

Bihar has emerged as a major player in mushroom cultivation where small and
marginal farmer/growers are engaged in production. There has been a steady increase
in the area and growers under mushroom cultivation in the state. Since, it is an ideal
state for development of mushroom industry, majority of farmers/growers have taken
up seasonal farming. In addition, several commercial units of medium and large scale
have also come up in the state. Rajendra Agricultural University, Pusa has been pioneer
in developing the technology for through out the year cultivation of mushrooms such as
Pleurotus spp. (Oyster mushroom), Agaricus spp. (Button mushroom) and Calocybe
indica (Milky white mushroom). A new variety of mushroom Rajendra Mushroom
Dudhia-1 for summer season has been released recently by the University. This centre
conduct residential training programmes in the states with the support of progressive
mushroom growers and also arranges exposure visits. Thus, in the vicinity of district,
there are good establishments/ institutions which promote and educate farmers about
mushroom cultivation. In addition, BAU, Sabour is also working from mushroom
cultivation.

In the District, Mushroom cultivation is practiced by a few progressive farmers, major

types being Oyster mushroom. Majority of the growers operate under low input, low
cost cultivation practices. The productivity and product quality under such conditions
are below the desired level. However, the congenial agro-climatic conditions in Bhojpur
district offers potential for cultivation of mushrooms under natural conditions mainly
in winter. Compost, seeds, nearby market of Patna & Banaras and proximity to
Patna,Muzaffarpur like cities where mushroom has good demand and availability of
other infrastructure are some of the factors which lends a tremendous potential for
production of mushroom in the district. The increasing demand of mushroom within

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 ADS - Mushroom – Bhojpur

the state as well as outside the state including export, offers vast opportunities for
enterprising growers to take up cultivation on a large scale. The district has good
network of extension services and bank branches to supplement the handholding and
credit requirements of the farmers.

Marketing : It is seen that people of high income group and restaurants catering them
are the main buyers of mushrooms. Proximity to Patna ,Banaras &Muzaffarpur like
cities where mushroom has good demand and availability of other infrastructure are
some of the factors which lends a tremendous potential for production of mushroom in
the district. Fresh mushrooms have very short shelf-life, cannot be transported to long
distances without refrigerated transport facility and are largely sold in local/nearby
markets in and around production areas.

Increased productivity demands proper post-harvest infrastructure to increase shelf life

and marketability. Since mushrooms are perishable and delicate in nature, these cannot
be kept afresh for more than 24 hrs. To overcome this problem, especially during peak
season, suitable post-harvest management/practices are to be followed to increase the
shelf life and marketability of mushrooms. In district the mushroom is marketed only in
fresh form. There is an ample scope for adoption of modern methods/technology in
Grading, packaging, storage, drying, pickling, canning and processing. With good
innovative practices, farmers can easily have Rs. 100 to 150 per kg of rate in the market.

4. Selection of the area

Since, Bhojpur is a near by district to Patna with Forteen blocks and almost entire
district has very congenial agro-climatic conditions for production of Oyester & Button
Mushroom, therefore, ADS will be promoted in all the forteen blocks of the district. All
the blocks too have good access to nearby local markets and offers potential for Oyester
& Button mushroom production. All the Bank branches of the area will be roped in to
finance the willing farmers.

5. Selection of beneficiaries:

Beneficiaries amongst SHGs, Farmer Clubs, progressive farmers will be identified.

Besides, beneficiaries will also be selected on the recommendation of concerned Line
Departments, during training programmes/workshops being held by various district
bodies. Focus may be given to small farmers, marginal farmers and landless farmers.

6. Unit size

Unit size will be 250 Sq feet and 400 bags (White Button Mushroom)

7. Capacity building of the beneficiaries

District has good training infrastructure for imparting training on mushroom

cultivation. District has KVK, RSETI, ATMA and Horticulture departments which
conduct training programmes for farmers.

8. Techno economic assumptions:

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 ADS - Mushroom – Bhojpur

There are number of varieties of mushrooms for which cultivation practices have been
developed by the Research Centers, the pioneer efforts made by the Directorate of
Mushroom Research. However, the State of Bihar is ideally suitable for cultivation of
white button mushrooms and considering the market preference and predominant
share, the economics of button mushroom has been considered. In the district the
majority of growers are either growing crop only seasonally or on a small scale.
Cultivators are sourcing the compost and spawn from the existing infrastructure
created under the public or private sector. ADS is proposed for seasonal cultivation of
mushroom having unit size of 250 sq feet and 400 bags.

The technical parameters / assumptions for the proposed scheme are as

given below:-

a. The average production of 2 kg mushroom per 10 kg of compost has been

considered.
b. It has been assumed that 10% of the project cost would be brought in by the
entrepreneur as his margin money and remaining 90% will be the bank loan.
c. The rate of interest charged on the bank loan has been assumed @10% and 12.5%
for small and medium sized units respectively.
d. The discounting factor of 15% has been considered to work out the economics.
e. It has been assumed that only 50% of the surplus left after servicing of the
payment of interest would be available for servicing the principal repayment.
f. The Government of India as well as the State Government is providing financial
assistance under MIDH/NHB schemes, however the same has not been
considered for working out the economics.

EXPENDITURE :

S.No. Particulars Qty Rate Yr-1 Yr-2 Yr-3 Yr-4 Yr-5

A Capital Cost
C/O Cropping Rooms incl. Packing Rs.600/
i 250 sft 150000
space sft
ii Cost of Racks etc. LS LS 8000
iii Electric& Other fittings etc. LS LS 8000
iv Sprayer, weighing balance etc. LS LS 2000
Sub-total
168000
B Recurring Cost
i Compost inc. Spawn 400 bags 35/ba g 14000 14000 14000 14000 14000
ii Cost of power, chemical etc. LS LS 4000 4000 4000 4000 4000
iii Labour LS LS 6000 6000 6000 6000 6000
2400
Sub-Total 24000 24000 24000 24000
0
2400
Total Cost 192000 24000 24000 24000
0
Unit Cost 192000

INCOME :
Yield & Price-
S.No. Yr-1 Yr-2 Yr-3 Yr-4 Yr-5
Assumption
i Yield per bag(2Kg) 800 800 800 800 800

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 ADS - Mushroom – Bhojpur

ii Sale Price(Rs/Kg) 100 100 100 100 100

iii Income 80000 80000 80000 80000 80000

Financial Analysis
S.No. Particulars 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr
i Costs 192000 24000 24000 24000 24000
ii Income 80000 80000 80000 80000 80000
iii Net Income -12000 56000 56000 56000 56000
iv Discount Rate(15%) 0.87 0.76 0.66 0.57 0.50
v DiscountedCosts 166957 18147 15780 13722 11932
vi Discounted Income 69565 60491 52601 45740 39774
Internal Rate of Return
35%
(IRR)
Benefit Cost Ratio (BCR) 1.18
Net Present Value (NPV) 41634

LOAN
S.No. Particulars Amt (Rs)
a Unit Cost 192000
b Margin Money (10%) 19200
c Bank Loan (90%) 172800
d Rate of Interest 10.0%

REPAYMENT SCHEDULE
Interest Total Net
Year Bank Loan O/S Interest Surplus Repayment
O/S Outgo Surplus
Interest Principal
I 172800 172800 17280 17280 0 0 0 0 0
II 172800 162080 17280 0 56000 34560 10720 45280 10720
III 162080 142184 16208 0 56000 16208 19896 36104 19896
IV 142184 121293 14218 0 56000 14218 20891 35109 20891
V 121293 99358 12129 0 56000 12129 21935 34065 21935
VI 99358 72877 9936 0 56000 9936 26481 36417 19583
VII 72877 46396 7288 0 56000 7288 26481 33769 22231
VIII 46396 19915 4640 0 56000 4640 26481 31121 24879
IX 19915 0 1991 0 56000 1991 19915 21906 34094
Total 448000 100970 172800 273770 174230
DSCR = 1.6

8. Partners in implementation, convergence of efforts & support from

State Government
a. Various schemes and programmes like State Horticulture Mission, HMNH,
MIDH, NHB, RKVY etc. being implemented in the state
b. State initiatives in respect of budget allocation, technological and policy
initiatives, creation of research and development infrastructure, training of
manpower and even marketing support.
c. Availability of Subsidies
d. Registration of mushroom cultivator
e. Availability and supply of good quality spawn and compost by state govt

9. Financing Agencies:

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 ADS - Mushroom – Bhojpur

All the Bank branches of major CBs, MBGBs will be financing the farmers under the
scheme.

10. Physical and financial programme:

Bank-wise physical and financial programme has been given in below table:
(Amount in Lacs)
1. ADS for FY 2018-19
S.No Particulars Block Units to TFO Bank
be Loan
financed
1 Commercial (Seven 25 48.00 43.20
Banks Blocks)Ara,
2 MBGB Udwantnagar, 20 38.40 34.56
Garhani, Agiaon,
Charpokhari, Piro
and Tarari
Total 45 86.40 77.76
2. ADS for FY 2019-20
S.No Particulars Block Units to TFO Bank
be Loan
financed
1 Commercial (Seven 30 57.6 51.84
Banks Blocks)Ara,
2 MBGB Udwantnagar, 30 57.6 51.84
Garhani, Agiaon,
Charpokhari, Piro
and Tarari
Total 60 115.2 103.68
3. ADS for FY 2020-21
S.No Particulars Block Units to TFO Bank
be Loan
financed
1 Commercial (Seven 31 59.52 53.568
Banks Blocks)Ara,
2 MBGB Udwantnagar, 30 57.6 51.84
Garhani, Agiaon,
Charpokhari, Piro
and Tarari.
Total 61 117.12 105.408
4. ADS for FY 2021-22
S.No Particulars Block Units to TFO Bank
be Loan
financed
1 Commercial (Seven 30 57.6 51.84
Banks Blocks)Ara,
2 MBGB Udwantnagar, 35 67.2 60.48
Garhani, Agiaon,
Charpokhari, Piro
and Tarari.
Total 65 124.8 112.32
5. ADS for FY 2022-23
S.No Particulars Block Units to TFO Bank
be Loan

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 ADS - Mushroom – Bhojpur

financed

1 Commercial (Seven 35 67.2 60.48

Banks Blocks)Ara,
2 MBGB Udwantnagar, 30 57.6 51.84
Garhani, Agiaon,
Charpokhari, Piro
and Tarari.
Total 65 124.8 112.32
TOTAL 296 568.4 511.48

11. SWOT analysis:

SWOT analysis for mushroom cultivation is attempted below. This analysis is not
designed to determine whether an enterprise or activity is “good” or “bad”, but just as a
tool to identify the different forces acting on the industry at the given juncture.

Strengths:

i. Varied Agro-climatic Conditions: The district offers agro-climatic

conditions congenial for mushroom production. This potential needs to be
optimally exploited. Further, the growers can diversify mushroom portfolio
by growing multiple mushrooms in different seasons of the year. This would
not only ensure effective/optimum utilization of created infrastructure but
would also enhance their income level/profitability.
ii. Well established infrastructure facilities: Mushrooms are a perishable
commodity and therefore, production centers should have good connectivity
to the markets. The district has very good rural connectivity linking to
markets within the state as well major markets in northern India.
iii. Booming Domestic demand: The 2/3 rd of the state falls under NCR
which create enormous domestic demand for utilizing the sizable production
within the state. The consumption of mushrooms by the general public has
also increased significantly due to high income level.
iv. Good R&D and extension network: The State has very good R&D and
extension infrastructure with Agricultural University, Horticultural
Universities, KVKs and the State Horticulture Dept. providing technical
know-how and other advisory services to the growers. There is very good
infrastructure base for supply of pasteurized compost, spawn etc. in the
nearby districts. Besides, a large number of Compost Units and Spawn
laboratories have been set up in the private sector in the state which will
benefit the district farmers too.

Weaknesses:
i. Unorganised Market: Marketing of mushrooms is not yet organized. The
seasonal producers directly sell to retailers or consumers. Growers lack
sufficient information about market trends, demands, prices etc. or available
information is ineffective.
ii. Scanty Post Harvest Management: Mushrooms are highly perishable

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 ADS - Mushroom – Bhojpur

and there is need to maintain their quality and freshness. This requires
appropriate handling and proper post-harvest management practices, for
which growers are not fully equipped. The processing infrastructure is almost
non-existent to absorb surplus production during peak seasons to maintain
stability in prices of fresh mushrooms.

iii. High Capital Cost: Mushroom cultivation specifically, high tech cultivation
is capital intensive industry. The cost of capital is much higher than the other
sectors and finance is not easily available.

Opportunities:
i. Growing Market: The demand for mushrooms in the domestic and
international markets has been growing substantially and thus the state and
district must grab this opportunity.
ii. Synergy with govt. priorities: The activity has synergy with the
Government’s focus on creating more employment opportunities in Non-farm
sector to wean away surplus farm labor.

iii. Cost effective appropriate technologies: Well adapted modern

technologies for production and post-harvest management are available
within the state and district.
iv. Increasing awareness, purchasing power and liking for mushrooms in
domestic markets.

Threats:
i. Slow adoption of technology: There is vast scope for the mushroom
industry to adopt modern technology to meet the quality standards
specifically for international trade and productivity level.
ii. Rising Costs of production: The days of seemingly cheap labour may not
continue in future. The units operating in urban areas have started
experiencing labour shortage. This may require more mechanization/
automation of operations in commercial units.
iii. Changing Consumer preferences: The share of button mushroom has
started declining in the world trade with availability and preference for
specialty mushrooms. The necessary adjustments or corrective measures
have to be anticipated and adopted.

12. Implementation and Monitoring:

Active involvement of the DDM /LDM and district branch officials is necessary so that
all the bank branches of the district are made aware and motivated to adopt the project
and the targets are achieved in a time bound manner. Further, it will also be helpful to
have periodic review of the project in various district level and block level meetings. The
review of the project may be made a part of the agenda of the DLCC/ DLRC and BLBC
meetings.

13. Conclusion

Mushroom industry has the potential to contribute significantly in livelihood of landless

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 ADS - Mushroom – Bhojpur

and small and marginal farmers. In the present circumstances, when the conventional
agriculture is beset with many challenges on account of uneconomical land holdings,
deterioration of land and water resources etc. leading to farmers’ distress,
diversification is the only way to impart sustainability to the Indian agriculture.
Mushroom cultivation can be one of those diversification tools to enhance the
disposable income of farmers. Further, the demand for quality food/products is
increasing with the life style changes and increasing income. Mushroom cultivation fits
very well into this category and likely to emerge as an important vocation.
The district has immense potential to be major player, but for further growth, concerted
efforts are required. The further growth of mushroom industry will depend upon
increasing and widening of domestic market, creation of an effective marketing system,
enhancing the productivity level to remain competitive, promotion in non-traditional
areas, diversification of mushroom cultivation by promoting varieties of mushrooms in
tune with market trends, creation of post-harvest management infrastructure etc.

Area Base scheme on Oyster & Button Mushroom cultivation is an attempt to give
focused and undivided attention to this untapped potential activity. It will facilitate
various stakeholders to make use of this scheme in promoting cultivation of mushroom
in the district at large scale.

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