Mushroom Farming Business Plan: Investment, Profit, and Cultivation Steps

Welcome to our blog post about the business plan for mushroom farming! If you want to start a mushroom farming business, you have come to the correct place. The mushroom farming industry is quickly expanding and offers entrepreneurs profitable business opportunities. With mushroom consumption rising in the food industry, there has been a better opportunity to invest in this profitable sector.

Mushroom Farming Business Plan

This article will discuss the investment required to establish a mushroom farm, the potential profits, and the cultivation procedures. We will also advise you on successfully marketing your mushroom products in a competitive market. This article will provide information on launching and expanding a successful mushroom farming enterprise. So, let’s get Started.

Mushroom Farming Business Plan

What is a Mushroom?

Mushrooms are fungi with a cap and stem that grows from the soil or other substrate. Mushrooms come in many colors and sizes, from small to large. Fungi include yeasts, molds, and mushrooms. They decompose dead organic debris and recycle nutrients in many ecosystems. Some fungi grow in symbiosis with plants, supplying them with nutrients.

Mushrooms have been used medicinally and culinary for centuries. Some species contain anti-inflammatory, anti-cancer, anti-viral compounds and other health effects. They are used in many international dishes for their unique flavors and textures.

Demand and Market for Mushroom 

The global mushroom market is expected to grow at a CAGR of 10% from 2022 to 2030, reaching a value of USD 50 billion in 2021. Mushrooms are becoming more popular because there are more vegans, and they are high in nutrients like selenium, vitamin D, glutathione, and ergothioneine. Mushrooms also offer a natural umami flavor that can reduce salt intake, benefiting health.

The US is the second-largest producer, but its production has declined while demand increases. Mushrooms have a limited shelf life, which presents challenges for storage and transportation. The most common variety is button mushrooms, then shiitake and oyster mushrooms. Due to their soft texture, mildly savory flavor, and natural antibacterial compound, oyster mushrooms are expected to have the highest revenue-based CAGR.

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Indoor Mushroom Farming

Why Mushroom Farming Business?

  • Mushroom cultivation needs few resources and can be done in places with less fertile soil. Mushrooms, unlike other crops, do not require sunlight to develop because they get their nutrition from organic matter. Furthermore, mushroom farming is a space-efficient activity because mushrooms can grow on shelves and use vertical and floor space, resulting in greater productivity.
  • One of the most significant benefits of mushroom cultivation is converting nutritionally worthless materials, such as agro-waste, into nutritious and delicious food. 
  • This practice aids in the recycling of agricultural wastes such as chicken manure, straw, and dung, thereby decreasing the environmental pollution. 
  • Mushrooms are also highly nutritious and high in proteins, minerals, vitamins, and antioxidants. They’re also low in calories and fat, making them nutritious. 
  • Starting a mushroom farming business with low investment and high-profit potential is an appealing income-generating option for farmers.

Different Varieties of Mushrooms Available in the Market

  • Button mushrooms: Also known as white mushrooms, these are the most common type. They have a mild flavor and are popular in pizzas, salads, and stews.
  • Shiitake mushrooms: Shiitake mushrooms are native to East Asia and are renowned for their rich, savory flavor and meaty texture. They’re frequently found in stir-fries, stews, and sauces.
  • Portobello mushrooms: With a robust flavor and dense texture, these large, meaty mushrooms are perfect for grilling or roasting. They are frequently used in vegetarian recipes as a meat substitute.
  • Oyster mushrooms: Oyster mushrooms are popular in Asian cuisines due to their delicate texture and mild, savory taste. Because of their antibacterial properties, they are also used for medical uses.
  • Enoki mushrooms: These delicately flavored white mushrooms have a crunchy feel. They’re frequently used in stews and salads.
  • Chanterelle mushrooms: These golden, trumpet-shaped mushrooms with a nutty, earthy flavor are popular in French cooking.
  • Morel mushrooms: These cone-shaped mushrooms are regarded as a delicacy due to their rich, meaty flavor. They’re frequently used in stews and soups.

Mushroom Cultivation Processes

Button Mushrooms

The first step is making compost. Natural compost, such as wheat straw, horse dunk, gypsum, poultry manure, or synthetic compost consisting of urea, gypsum, bran, wheat straw, and ammonium nitrate/ammonium sulfate, can be used. The compost is then spread on a tray and spawned with mycelium. Casing soil, which is a blend of garden soil and rotten cow dung, is then applied on top. After 15 to 20 days of the casing and 35 to 40 days of spawning, the mushrooms start to appear, and they can be harvested by twisting them softly from the soil.

Oyster Mushrooms

Oyster mushrooms are easy and profitable to grow and do not require specific conditions. Banana tree waste, paper waste, cotton waste, and paddy straw are used to produce rectangular blocks or polythene bags. Paddy straw is cut into tiny pieces and blended with spawn in a 0.2:6 ratio. After 10 to 12 days, the buds appear, and the polythene is removed. The mushrooms are watered twice a day and harvested in the same way as button mushrooms.

Paddy Straw Mushrooms

Growing paddy straw mushrooms, paddy straws are soaked and spawned to create a straw spawn. The base of the mushroom bed material is made of bricks and soil strong enough to hold the weight. The spawn is then placed on the edges of the straws, and the process is repeated continuously. After 15 to 16 days, the mushrooms start appearing, and they can be harvested and stored like the other mushrooms. Paddy straw mushrooms require less investment and are the most profitable mushroom to grow.

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Mushroom Farming Business

Tips for Cultivation of Mushroom Farming Business

  • Materials required: You will need grass or bushels of wheat, pesticide, carbonic and nitrogen nutrients, and a moisture-rich environment for cultivating mushrooms.
  • Commercial mushroom growing systems: For large-scale mushroom farming, you will need a larger space, a higher number of seeds, and more raw materials.
  • Mushroom farming process: The process is the same whether you are farming mushrooms at home or on a larger scale. You will need a room or shed; the other steps are similar.
  • How to make mushroom compost at home: Use wheat husk to make it germ-free. Mix 1.5 kg formalin and 150 gms baebistin into 1500 liters of water, and mix the pesticide well. Mix one quintal of 50 kg wheat husk and keep it covered for some time.
  • Mushroom plantation: Spread the husk mixture in an open space, capsize it repeatedly, and punch two holes at the bottom of the polythene bag for drainage. Tie it tightly so that no air remains in it. The ratio of seed to fodder should be equal.
  • Mushroom cultivation precautions: Save the crop from the air for 15 days by packing the room. After 15 days, open the room and arrange a fan. Till this stage, the mushroom crop appears white.
  • How to maintain humidity in mushroom cultivation: Sprinkle water on walls to maintain humidity. The humidity level should be up to 70 degrees, and you should also check the room temperature.
  • Ways to keep mushroom bags: Hang the mushroom bags with the help of wood or rope, or create a netted bed-like structure on which you can place the bags.
  • When and how to cut the crop: After 30-40 days, the crops are ready to be cut. You can see the mushrooms easily and pluck them with your hands.

Developing a Mushroom Farming Business Plan

  • You need a good business plan to start a mushroom farming business that does well. Market research is the basis of any business plan. 
  • It helps you determine your target customer and learn more about the industry. 
  • Before working on the business plan, you must study the market, get training and register the business. Finding a good piece of land or property to grow mushrooms on is important. 
  • Mushrooms do best in damp, dark places and need less growing space. Building a shelter over an open area may cost more than growing plants. 
  • Equipment and people to work with are also important things to think about. To grow mushrooms, you need a Trade License, GST Registration, and FSSAI registration and license. 
  • Creating a business plan is important, and it should include important parts like market research, possible clients, your target audience, and ways to sell your business. 

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The Complete Start-Up Resource for the Mushroom Farming Business

The mushroom farming business is gaining popularity among people who want to start agriculture-based businesses. Here are the steps to get started:

Step 1: Decide on the mushroom variety you want to cultivate. There are different types of mushrooms, such as Button, Portobello, Oyster, Paddy Straw, Shiitake, Lions Mane, White Button, etc. Button mushrooms are cheap and popular worldwide, while Oyster mushrooms are costlier but can bring in more profit.

Step 2: Get ready with your spawn and substrate. Spawn is needed to seed the mushroom farming process, which can be bought from the market or produced at home using sterile culture. The substrate is where the mushrooms will grow. Straw is the most used substrate, which can be chopped into small pieces.

Step 3: Prepare the substrate by chopping the straw into small pieces, wetting it, and heating it in boiling water for half an hour. Drain the straw and spread it on a large surface to cool it down.

Step 4: Prepare plastic bags by putting the straws inside and sprinkling the spawn. Fill the bags and tie them. Make several holes in the bag for air passage.

Step 5: The incubation period requires keeping the temperature at 78 degrees Fahrenheit and placing the bags on shelves without natural light. Use a red “darkroom” light whenever you visit the room. You will see tiny mushroom pinheads popping out from the air holes in the plastic bag, and then move to the next step.

Step 6: Fruiting requires a high temperature of 60-75 degrees Fahrenheit and high humidity. Keep the bags in a cool place for a day, bring them to the fruiting room, cut open the plastic bags, and let the mushrooms grow.

Step 7: Harvesting requires twisting the mushroom from the stem before it uncurls completely. Then, sell the harvested mushrooms to mushroom sellers in your local market or directly talk to restaurants and grocery stores. You can also contact online sellers and start your online sale.

For starting a wholesale mushroom plantation, you need a minimum of 500 sq ft area to produce around 700-800 kg mushrooms, which can earn you a huge profit. The favorable temperature for growing Oyster mushrooms is 15 to 16 degrees Celsius with 80% to 90% humidity.

Investment/ What is the Cost of Mushroom Cultivation

The cost of mushroom cultivation can depend on factors such as the type of mushroom being cultivated, the size of the farm, and the equipment being used. Equipment needed for mushroom cultivation includes a hand chopper, drums for boiling straw, coconut rope, jute rope, plastic ropes, bags, and a sprayer.

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Harvesting Mushrooms
  1. Equipment cost: The cost of equipment for mushroom cultivation can range from Rs. 10,000 to Rs. 30,000, depending on the size of the farm and the type of equipment being used. The necessary equipment includes a hand chopper, drums for boiling straw, ropes, bags, and a sprayer.
  2. Spawn cost: Spawn costs vary depending on the type of mushroom being cultivated. The spawn cost can range from Rs—50 to Rs. 100 per kg.
  3. Substrate cost: The substrate cost mainly depends on the substrate used for cultivation. The most commonly used substrate is straw, and straw costs around Rs. 5 to Rs. 10 per kg.
  4. Labour cost: The labor cost for mushroom cultivation depends on the size of the farm and the number of workers required. The labor cost for a small-scale mushroom farm can range from Rs. 5,000 to Rs. 10,000 per month.
  5. Miscellaneous costs: Miscellaneous costs such as electricity, water, and rent can also add to the total cost of mushroom cultivation. The cost of electricity and water can range from Rs. 2,000 to Rs. 5,000 per month, and rent can range from Rs. 5,000 to Rs. 10,000 per month.

Overall, the total cost of mushroom cultivation for a small-scale mushroom farm can range from Rs. 25,000 to Rs. 60,000 per month.

Profits for Mushroom Farming Business

The profit margins for mushroom farming can be quite lucrative. On average, cultivating 1kg of mushrooms costs around Rs. 100-120. However, the market price of 1kg of mushrooms varies depending on the variety and the region, with prices ranging from Rs. 150-300 per kg. The yield of mushrooms per bag depends on the type of mushroom and the cultivation method used. On average, each bag can yield anywhere from 500-800 grams of mushrooms, and farmers can expect to harvest multiple crops per year.

With proper management and marketing, a farmer can generate a profit of Rs. 50,000-1,00,000 per 1000 bags annually. This Will vary according to Mushroom type and material used for production. If you start growing it in 100-500 square feet, you can make between Rs 1 lakh and Rs 5 lakh annually. Everything is dependent on the equipment used.

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Mushroom Farming


The startup costs for a mushroom farm are cheaper than the potential profit they provide. The cultivation process needs forethought, substrate preparation, and ideal environmental circumstances to succeed. This venture’s potential for huge gains depends on how well it is carried out.


  1. Greetings from here. Please I have got a good quantity of mushrooms ready for the market. Are you ready to buy some? I really want to extend my production but I lack the market. Waiting to hear from you please

  2. i am planning to start Mushroom farming in 800 sqft land in bangalore. i need the guidance to start. KIndly advise.

  3. I have a 300 sq feet Godown space in Mumbai and want to use it for mushroom production
    Can u guide me how to move ahead and future prospects of the same


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