Mushroom Farming Project Report, Cost and Profit Analysis

Mushroom Farming Project Report, Cost and Profit Analysis

Mushroom Farming Project Report:


Mushrooms are a type of fungi, which are consumed as food. Mushroom consumption and cultivation are old practices started some thousands of years ago. 20 different species of mushrooms are commercially cultivated around the world. Mushrooms have gained recognition in the food chain because they contribute nutrient supplements to the food and have high medicinal and pharmaceutical value. Mushrooms are believed to have high protein content and sometimes are known as ‘vegetable meat’. They have very low levels of carbohydrate and fat. Mushrooms also contain polysaccharides, vitamins, and minerals comparable to other fruits and vegetables. The second major importance of mushroom is its wide use in preparing medicines. The acceptance of mushroom medicine in the form of tablets and capsules along with greater customer satisfaction has increased the demand for the mushroom industry further. Overall, there are 2,000 different varieties of macrofungi which are considered as edible out of which 80 varieties are in economical cultivation. The white button mushroom is a commercially cultivated variety throughout the world contributing to 40% of the total mushroom production market. Valley regions are suitable for button mushroom cultivation and the materials required are easily available in the local market. The cultivation of mushroom on a commercial scale requires both indoor and outdoor preparations. Outdoor preparations include wetting of the substrate and compost preparation. Generally, the spawn-run and crop production is done in the valley areas from mid-February to mid-May and from September to November by maintaining a temperature range of 22-25˚C for the first 15 days of the cycle. ‘Bukharies’ are locally made stoves used to maintain the temperature by heating sawdust. The compost preparation for the first crop should begin in the first week of January and the second crop at the end of July. The conditions required for mushroom farming are:

  • A 22-25˚C temperature for spawn-run and 14- 18˚C temperature range for crop production.
  • A humidity level of 85-90%. A saturated atmosphere with moisture is ideal for its growth.
  • Water should not be applied to the compost directly.
  • The rooms that are used for spawn-run should have proper ventilation.
  • The CO₂ levels in the room should be below 0.15% and this is maintained by providing 10 cubic ft fresh air per sq ft or by providing 4 to 6 air charges per hour.
  • There should not be sudden temperature fluctuation in the rooms.

The process of mushroom farming involves compost preparation, spawn-run, casing, and harvesting. Let us discuss Mushroom Project Report, cost and profit analysis at the bottom of this content.


Mushroom Compost Preparation.
Mushroom Compost Preparation.

The compost is used as a substrate for growing white button mushrooms. Compost preparation involves decomposition of organic material by microbes, protein synthesis and fibre conditioning for better absorption and moisture retention. Straw is used as a base material for mushroom farming. These days synthetic substrate made from the low -cost agro- wastes such as the maize straw, paddy husk, leaves of mulberry etc. are being used. Carbon to nitrogen ration should be 17:1 in good compost. Organic sources provide all the required supplements and have a better heating capacity, but it is important to provide adequate nitrogen content also. Wheat flour, rice bran, molasses, etc. are good organic sources of nitrogen. Urea, ammonium salts and cyanomide are good inorganic sources of nitrogen. The compost should have water, air and dry matter in a certain proportion to facilitate heating. SKUAST-K is a technology that produces a synthetic substrate for quality mushroom farming practices. Mushrooms, in general, are grown on decaying organic matter and there are three types of systems which are considered for growing mushrooms.

Saprobic: these fungi grow on dead organic matter.

Symbiotic: these fungi grow with other organisms.

Pathogenic or parasitic: these fungi inhibit disease in plants.

Selection of species for mushroom farming is of great importance because not all mushrooms grow on the same substrate and climatic conditions. It is believed that mushroom farming is not suitable in tropical regions due to high temperatures. Therefore, while selecting the species for mushroom farming certain factors have to be considered.

  • Waste material availability as a growing medium for mushroom farming.
  • Temperature and humidity requirements.
  • Some initial training is required to grow different species of mushrooms.
  • Identification and availability of physical resources in the location of mushroom farming.
  • The local market demand for mushroom.

The commonly grown species of mushrooms are:

  • Agaricus bisporus, known as the white button mushroom.
  • Pleurotus ostreatus, known as the oyster mushrooms.
  • Lentinus edodes, known as shiitake mushrooms.
  • Volvariella volvacea, known as paddy straw mushrooms.


Compost preparation can be done in two ways: the long method (35- 40 days) and the short method (22-26 days).

The long method of compost preparation needs the following steps:

  • Done on a cleaned cemented floor.
  • If it is done in the open then waterproof cover has to be provided.
  • If done in a room them proper air circulation is a must.
  • Chopping of straw into pieces (20- 30 cm).
  • Wet the straw thoroughly by placing it in water drums (overnight).
  • A dry matter like rice bran or poultry manure are mixed with wet straw and piled up. The thickness of the substrate is 1.5 m and width is 1 m. Light pressure is applied to compress the pile.
  • The piles should be turned with an interval of seven days between each turning to facilitate faster decomposition and maximum heating, such that there is no infestation by pests or pathogens.
  • Every turn should be accompanied by sprinkling water.
  • The ready to use compost should be light brown in colour with no smell of ammonia.

Read: Button Mushroom Cultivation; Compost Formula.

The process of compost preparation by a short method involves:

  • The straw is pre-wet and mixed with raw material; the heaps are placed in the open and heat is induced to facilitate faster decomposition.
  • The center of the heap has a temperature of 65 – 70˚C.
  • Turning the heaps at regular intervals is needed.
  • The compost is prepared under controlled environment with a temperature of 52˚C for conditioning the compost.


Sterilized wheat grains are used to prepare the spawn. The quality of the mushroom greatly depends on the purity of the spawn used. The addition of spawn to the compost is done at a rate of 0.5% by weight. The growing medium can have different spawning methods such as a double layer, top layer, through shake up and spot spawning. Spawns from the growing areas show faster growth when compared to spawns stored at 2 ˚C.


Adding an inert material to the top layer of the compost is called ‘casing’, which promotes the spore-bearing structure to the mushroom. The casing is done after 2 weeks of spawn-run and the casing layer is 3.8 – 5 cm thick. The casing layer should either be neutral or alkaline nature. Casing helps to retain water within the area. The fruiting in button mushroom is observed due to the release of iron by Pseudomonas putida bacteria which stimulates the process. Varieties of casing soil are:

  • 2 parts of soil with one part of peat
  • 2 parts of soil with one part of the sand
  • 3 parts of cow dung with one part of light soil.

Sterilizing the casing soil is important to prevent the growth of micro-organisms in the soil. Heat or chemicals can be used to sterilize the soil. Steam is also used sometimes to perform sterilization. The temperature is maintained at 60 ˚C for 5 hours. 2% formaldehyde is used as a chemical sterilizing material. Soil solarisation is another method to sterilize the soil by controlling the growth of parasitic moulds. The casing material is spread on a plastic sheet with 5 cm of thickness and water is sprayed just to dampen it. For 30 days it is kept covered with a polythene sheet. The casing material should be evenly spread over the substrate to prevent the mycelium from coming up and form stoma which may otherwise cause problems during the pin head formation in mushrooms.


Mushroom Harvesting.
Mushroom Harvesting.

At the fruiting stage, air temperature is maintained at 16 – 18 ˚C with CO₂ concentration at 1000 ppm. Also, humidity is maintained at 70 – 80% by spraying water. There should be sufficient flow of air and excessive humidity should be avoided. The volume of mushroom in the room is directly proportional to the amount of fresh air needed in the room. The first flush of mushroom can be observed after about 3 weeks of casing the substrate and flushes occur at an interval of 7 days. Once the pinheads appear, it takes 7 to 8 days for the button mushrooms to develop. Precautions like excess humidity control, too much watering, etc. should be taken care so as to avoid disturbance in the cropping area.

The harvesting of mushrooms is handled in a gentle way. The mushrooms are turned either clockwise or anti-clockwise and then pulled softly, else they are cut using a sharp knife if the mushrooms are surrounded by pinheads. The area from where the mushrooms are picked should be immediately replaced by sterilized soil. The substrate bed should be levelled and the casing should be done if disturbed. Generally, one large farm can generate 4 to 5 flushes of mushrooms. The mushrooms produced in the first flush are of good weight and quality. Mushrooms have a low shelf life so they are either dried or sold fresh in the market.


The different diseases and their control measures in mushroom farming are:

  • Dry bubble – controlled by treating the casing layer with heat at 63 ˚C or by using dithane Z-78 @ 0.5%.
  • Wet bubble – treated by using 2% formalin to sterilize the beds and destroying the diseased mushrooms. Also spraying benomyl @ 0.5 g/m² can control the disease.
  • Cinnamon mould – controlled by maintaining the moisture content in the casing layer and applying 0.5% of dithane Z-78.
  • Brown plaster mould – 1% formalin spray can help or 5% carbendazim application solves the problem.
  • False truffle – avoid high temperatures during casing and spawning. Application of 2% formaldehyde can control the disease.
  • Green mould – 0.2% of dithane spray can control the growth of the mould.
  • Cobweb – 1 g of benomyl diluted in 1 litre water/m² can prevent the spread of disease.

Insects, mites, and nematodes are the main pests that affect commercial mushroom farming. They can be dealt with the following methods.

  • Nematodes – spreading 80 ppm of thionazin over the nematode-infested bed can be a possible solution.
  • Mushroom flies – application of 0.05% of endosulphan can eliminate the breeding of flies. The casing is treated with neem oil spray, 0.05% of dizinon or Malathion etc. to keep the flies away.


Seasonal cultivation of mushroom is done by creating small sheds over a specified area. The size of the shed discussed here is 60’ x 30’ approximately.

The requirements for making the shed are outlined here; the cost of materials may vary depending on the location of the farm and quality of the material used. The figures in Rs mentioned here are a rough estimate of the investment that is required to start a mushroom farm.

Bamboo Poles (length 12’, width 3”) 100 120.00 12,000.00
Bamboo Poles (length 10’, width 2.5”) 220 110.00 23,200.00
Bamboo Poles (length 10’, width 1”) 280 100.00 2800.00
Straw from the paddy fields 1 tonne 4500 4500.00
Sutli (twine ) 10 kg 300.00 3000.00
Polythene sheets 35 kg 180.00 6300.00
Total material cost of the shed (fixed assets)     51,800.00

The investment model for acquiring the raw materials for substrate preparation, casing and labor are outlined here.

Straw of wheat 6000 8.00 48,000.00
Poultry manure 3600 2.20 7920.00
Urea 140 10.00 1400.00
Sunflower cake 480 15.00 7200.00
Wheat Bran 300 15.00 4500.00
Gypsum 1000 9.00 9000.00
The total cost of compost material     78,020.00

Other investments which can be generally used for one crop cycle are given here

Casing soil, 2000 kg @ Rs 2.5/kg: Rs 5000.00

100 spawn @ Rs 70/kg costs: Rs 7000.00

The cost of 6 labour persons @ 300/day: Rs 30,000.00 (for fifteen days)

Other charges like transport, etc.: Rs 10,000.00

Mushroom Farming Project Report – Total charges amount to Rs 52,000.00

Mushroom Farming Project Report – Total investment in mushroom farming is: Rs 1, 81,820.00

There is a 12% and 5% interest and depreciation charged on the fixed assets which amount to Rs 8806.00

So, the total investment is summed up to: (Rs 1, 81,820.00+ Rs 8806.00) Rs 1, 90,626.00

3000 kg of mushrooms are produced per shed and sold @ Rs 100/kg: Rs 3, 00,000.00


The total profit generated in mushroom farming can be estimated as Rs 1, 09,374.00

Farming of mushrooms is believed to impact the livelihood of people positively by contributing to economic, nutritional and medicinal sectors.


  • Trained mushroom cultivators are extended loans after preparing the project report for the cultivation process which has to be approved by the National Bank for Agriculture and Rural Development (NABARD/NHB). These cases are then recommended to the nationalized banks for processing the required loan amount.
  • The National Horticulture Board also provides assistance to the mushroom farmers in the form of credit linked back-end subsidy. The subsidy amount is 20% of the total project cost (maximum of 25 lakhs in normal areas and 30 lakhs in hilly regions).
  • The state government also provides subsidies to the mushroom farmers so as to encourage the unemployed youth. The subsidy on compost is given for maximum of 400 trays @ Rs 20-40/tray. 100% subsidy is given for the transport of compost.
  • The Rashtriya Krishi Vikas Yojna provides assistance of Rs 80,000 for the construction of a mushroom house of dimensions 20 ft x 12 ft x 10 ft, other tools etc.
  • Assistance to the mushroom farmers is given by the Department of Agriculture and Co-operation under the scheme of National Horticulture Mission. The key facts:

For spawn units, compost preparation and training – 100% assistance for public sector and 50% of total cost for the private sector in the form of subsidy (maximum subsidy Rs 50 lakhs).

Spawn production units – 100% of total cost for the public sector and 50% for the private sector (maximum subsidy Rs 15 lakhs).

Compost production unit – 100% of the cost to the public sector and 50% of the cost to the private sector (maximum subsidy Rs 20 lakhs).

Mushroom Farming Project Report – Mushroom Cultivation Training:

Pioneer Mushroom Consultancy

No. 100, Neeladri Layout, Electronic, Bangalore,

Karnataka, India – 560100

Contact No’s: Mobile: +91-9611593357

Land Line: 08042785093

The conclusion of the Mushroom Farming Project Report:

Establishing a commercial Mushroom Farming Project is easy and profitable.

Read Drumstick Farming Project Report.

Read Safflower Farming.

Last Updated: February 19, 2019
Author: Jagdish


  1. Greetings And Happy New Year, My Name Is Paul And I Am The Coordinator For A Cbo Called “Teso Youth And Elderly Development Agency-teyeda”. Right Now We Operate Mushroom Farming But We Have A Plan To Expand. Can You Provide Me With The Substrate And Spoun.

  2. I wish to go for mushroom cultivation project. Can you please guide me. My location is Silvassa of dadra & nagar haveli. Adjent to Gujarat

  3. Hi i am Rahul Ugale, lives in kalyan Maharashtra, I would like to go for mushroom cultivation, in nasik maharashta can u help me out

  4. I belong to a middle class family, and want to be in mushroom cultivation trade. please suggest can i start with 5 lakhs.

  5. hi, I have 1300 sq. feet 3 BHK duplex in Bhopal and I want to use it for mushroom cultivation, as I have so many friends who have restaurants and hotels there so please guide me is it possible to use my house for it. what preparation has to do for it also want to know about threats of it.

  6. You can it. initially u have to get practical training of Oyster / Button Mushroom Production. We provide Practical training on Oyster & Button Mushroom, Organic Farming, Vermicomposting, Lac Production…etc at at our centre.

  7. I am interested to do Mushroom Farming at out skarts of BANGALORE near Doddaballapura.I am in need of complete information including the initial set up cost analysis for one tunnel at the beggining as mentioned like 60ftx30ft. I wish to mainly get trained to do so.Your reply is awaited.

  8. Hi,

    I would like to get into Mushroom Farming, in or near Mumbai and Indore.

    I am in look out for the complete information about farming, getting trained, initial set-up, investment required, If I can get any subsidy

    Kindly reply

  9. Dear Sir,

    The details given in the project report is really excellent. I want to start in Kota Rajasthan. Request guide accordingly for starting this project.

    Kindly send the details on mail.

    Warm Regards

    Amit Singh

  10. Sir I want to start button mushroom cultivation want to know the agency has buy back system. And which mushroom has buy back system please inform me in my mail

  11. Dear respected fellow who interested in mushroom farming please visit nearest krishi vigyan kendra for technical expertise. KVK, Ambala is working on same if anyone near to ambala please visit office.

  12. Dear sir

    I would like to start this kind of project. please guide me and where will i get training near bangalore/karnataka. ?

  13. i want to do a mushroom farm. pls help me with a contact number of an expert who is willing to work on remuneration basis

  14. I am from Kolkata, is mushroom cultivation possible here in a house of 2 BHK. Please let me know the investment cost, procedure of cultivation and is there any harm to the house or not. And is there any buy back scheme present here or not.

  15. I want to set up the plant of mushroom how I can do this and how I can sale the product in market. I have 5 bigas land with me how much cost to bear the plant

  16. I”m planing to start mushroom business in banglore, is it profitable business ..?

    may i know the training process and place in bangalore.

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