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SHITAKE MUSHROOM CULTIVATION BUSINESS PLAN Glimpse of Shitake

Mushroom Business Plan (Nepalese context, Far west Nepal)

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SHITAKE MUSHROOM
CULTIVATION
BUSINESS PLAN

JULY 8, 2022
SHITAKE MUSHROOM CULTIVATION NETWORK PRIVATE LIMITED
Mangalsen, Achham, Nepal
 Glimpse of Shitake Mushroom Business
Plan (Nepalese context, Far west Nepal)

1. Name of Business firm: Shitake Mushroom Farmers Networks (SMFN) Pvt. Ltd
2. Target of production: 1000 kg per lot (2000 kg per year)
3. Employment generation (Person): 7
4. Total fixed Capital (Nrs): 1,051,400.00
5. Total running cost ( Nrs): 1,158,972.33
6. Total cost (Nrs): 2,330,372.33
7. Per unit production cost (Nrs): 725.47
8. Per unit selling cost (Nrs): 1000
9. Gross profit per year ( Nrs): 225,564.82
10. Return on Investment ( ROI): 16.97%
11. Break Even Point (BEP): 66.38 %

pg. 1
Table of Contents
Background ................................................................................................................................................... 3
Market analysis ............................................................................................................................................. 3
Production Target ......................................................................................................................................... 3
Production plan............................................................................................................................................. 4
Fixed Assets ............................................................................................................................................... 4
Raw materials............................................................................................................................................ 6
Labor cost:................................................................................................................................................. 6
Other expenses: ........................................................................................................................................ 7
Pre-research and Development cost: ....................................................................................................... 7
Per Unit Cost ............................................................................................................................................. 7
Per Unit Depreciation & Interest .............................................................................................................. 7
Total capital............................................................................................................................................... 8
Fund Source .............................................................................................................................................. 8
Interest calculation ................................................................................................................................... 9
Production and Selling Cost ...................................................................................................................... 9
Profit and loss per cycle ............................................................................................................................ 9
Annual profit and Loss ............................................................................................................................ 10
Returns on Investment (ROI) and Break Even Point (BEP)...................................................................... 10
Loan Payment Plan.................................................................................................................................. 10

pg. 2
 Shiitake mushroom ( Lentinula edodes )
Cultivation Business plan
Background
Shitake Mushroom Farmers Networks (SMFN) Pvt. Ltd is an enterprise to produce Shitake
mushroom in natural condition above the 1100msl altitude in Nepal. Shitake mushroom can
produce in everywhere with the control of humidity and temperature. In Neplease natural
climatic situation and altitudinal variation, Shitake mushroom can farm from September/ October
to March in above 1100 meter in natural condition. Micro climate and regular shade and
humidity area, it can be produce 700-800 mean sea level too. In Nepalese case, it can cultivate in
sub-tropical, sub-temperate and temperate climatic zone. The available main raw materials
species for Shitake mushroom cultivation like Walnut (Juglans regia), Chest nut (Castanopsis
indica), Alder ( Alnus nepalensis), Payoo ( Prunus cerasoides), Saur ( Betula alnoides), Ash
(Fraxinus floribunda),
Nepal economy is based on agriculture and forestry resources. Hence, local resource utilization
for the production of feed resources is equally important. Forest resources especially softwood
valued less than the timber wood. The new value of resources can be increased by technology
intervention and production of valuable things. Shitake production is one of them for technology
intervention and value adding of relatively less valued tree ( Kukath) species. Here, this business
plan was made for the production of Shitake mushroom in such less valued soft tree species and
encourage people to participate in small scale business and contribute in economy by creation of
employment and utilization of such species. This business plan can guide and establish a
reference for them who are willing to do green based enterprises and contribute to adapt
ecosystem based adaptation, sustainable development and climate change resilience activities.

Market analysis
The organic market is growing in Nepal as like a global scenario. Mushroom are considering veg
items and most valued items in hotel and restaurant in recent days. Mushroom considering
beneficial for health maintain view. Shitake mushroom demand find in the growing hotel and
restaurants in recent days and those Shitake recipe substituting meat items too. Shitake
mushroom's demand is increasing from the higher economic groups rather than poor and
marginalized community. However, poor and marginalized groups can consumed from the self-
effort utilizing in the production level in onsite due to the high selling cost in the market. The
demand of Shitake is growing in the urban and rural market center in Nepal.

Production Target
The production target is 1000 kg per shift. It is considering that the production will occur two
shifts in a year from the 2000 logs. Hence, 2000 kg production per year is targeted production.

pg. 3
Production plan
Shitake Mushroom production plan developed for guiding entrepreneurs who are interested join
in Shitake mushroom in Nepal. This Business plan is developed as per Nepal context. It covers
fixed assets, raw materials, working labor, other expense, research and development cost, cost of
capital calculation, banking loan, per unit cost calculation, profit calculation of one shift, Return
on investment (ROI), Break Even Point (BEP) calculation and the Loan payment schedule,
balance sheet calculation of one year are developed for the guiding.

Fixed Assets
S. Fixed assets Uni Qty Rate Total cost Lif Mont Depriciat
N. t (NRs) e hs ion cost
(monthly
basis)
1 Wooden piers No 50 10 6
(Column) for hut 500.00 25,000.00 416.67
making for staking
room
2 Rafters for hut No 100 10 6
making for staking 300.00 30,000.00 500.00
room
3 Roofing plastics for No 20 5 6
hut for staking 3,000.00 60,000.00 2,000.00
rooms
4 Bricks/stone for No 100 10 6
flooring for hut for 00 30.00 300,000.00 5,000.00
staking rooms
5 Log sucking water No 4 10 6
portable drums/tank 3,000.00 12,000.00 200.00
6 Wood cutter/ chain No 1 10 6
saw 30,000.0 30,000.00 500.00
0
7 Drilling machine No 1 10 6
10,000.0 10,000.00 166.67
0
8 Log drilling stand No 1 10 6
30,000.0 30,000.00 500.00
0
9 Innoculator for No 1 10 6
seeding in log 8,000.00 8,000.00 133.33
10 Gloves Sets 10 10 6
150.00 200.00 3.33
11 Wax boiling utensil No 1 10 6
800.00 800.00 13.33
12 Wax sealing No 2 10 6
brush/device 200.00 400.00 6.67
pg. 4
13 Iriigating pipes met 100 10 6
er 100.00 10,000.00 166.67
14 Sprinkaler No 50 10 6
400.00 20,000.00 333.33
15 Temerature No 1 10 6
recording 5,000.00 5,000.00 83.33
thermometer
16 Humidity recording No 1 10 6
meter 5,000.00 5,000.00 83.33
17 Humidity and No 1 10 6
temperature control 132,000. 132,000.00 2,200.00
room ( production 00
room)
18 Temerature No 1 10 6
recording 5,000.00 5,000.00 83.33
thermometer for
production room
19 Humidity recording No 1 10 6
meter for 5,000.00 5,000.00 83.33
production room
20 Sprinkaler for No 50 10 6
production room 400.00 20,000.00 333.33
21 Plastic trays No 5 10 6
300.00 1,500.00 25.00
22 Rubber glove No 10 10 6
during mushroom 150.00 1,500.00 25.00
picking
23 Electric weighing No 1 10 6
machine 8,000.00 8,000.00 133.33
24 Transporting No 1 10 6
vehicle ( 300,000. 300,000.00 5,000.00
Motorcycle/Scooter 00
)
25 Apron No 7 10 6
3,000.00 21,000.00 350.00
26 Chair No 2 5 6
3,000.00 6,000.00 200.00
27 Table No 1 5 6
5,000.00 5,000.00 166.67
Total
1,051,400.00 18,706.67

pg. 5
Raw materials
S.N. Materials Unit Qty Rate (NRs) Total monthly cost
(Nrs)
1 Logs of Utish, No 2000.00
Katus,Okhar, 150.00 300,000.00
Lankuri, Saur,
Payoo ( 1 m length
and 18-24 cm
diameter)
2 Shiitake mushroom kg 285.71
(Lentinus edodes) 350.00 100,000.00
seed (1 kg=7 logs)
3 Water Litre 50000.00
0.05 2,500.00
4 Plastic bags No 2000.00
(500gm=1 log) for 1.00 2,000.00
packing
5 Wax kg 5.00
4,000.00 20,000.00
6 Level No 2000.00
1.00 2,000.00
7 Sanitizer litre 2.00
1,000.00 2,000.00
8 Electricity kg 1000.00
5.00 5,000.00
Total
433,500.00

Labor cost:
S.N Labor type Labor Qty Working Rate/day total Monthly
. type days cost
1 Direct labor
231,000.00
1.1 Regular labor Person
(production) 1 180 700.00 126,000.00
1.2 Temporal labor Person
5 30 700.00 105,000.00
2 Indirect labor
1 45,000.00
2.1 Manager/Technician Person
1 60 750.00 45,000.00
Total cost
1 2,150.00 276,000.00

pg. 6
Other expenses:
S.N. Other Cost headings Total cost (NRs)
1 Advertisement cost 2,000.00
2 Audit cost 5,000.00
3 Electricity cost 140.00
4 Travel cost 600.00
5 Telephone 4,480.00
6 Rent cost 1,500.00
7 Guest respect 500.00
8 Insurance (2% of fixed asset) 1,752.33
Total cost 15,972.33

Pre-research and Development cost:

S.N. Description of cost Cost (NRs)
1 Training and study 110000
2 Enterprise registration cost 10000
Total 120000

Per Unit Cost

S.N. Descriptions Cost (NRs)
1 Cost of raw materials
433,500.00
2 Labor cost
276,000.00
3 Other cost
15,972.33
4 Total production cost
725,472.33
5 Total targets (500 gram per log )
1,000.00
6 Production cost per Kg Shitake
Mushroom 725.47

Per Unit Depreciation & Interest

S.N. Description Total cost
(NRs)
Loan interest
1 7,703.72
Depreciation in fixed assets
2 18,706.67

pg. 7
 Total interest and depreciation
26,410.39
Target of production
1,000.00
Interest and depreciation cost per kg Shitake
Mushroom 26.41

Total capital
S.N. Description Total cost (NRs)
Fixed capital
1 1,051,400.00
Pre-development cost-Research and
2 Development cost 120,000.00
Total running cost
3 1,158,972.33
Raw Materials
3.1 867,000.00
Labor cost
3.2 276,000.00
Other expenses
3.3 15,972.33
Total cost
23,30,372.33

Fund Source
S.N. Description Total investment (NRs)
1 Self-investment and donation
1,560,000.00
1.1 Self-investment
100,000.00
1.2 EbA support from Division Forest
Office 500,000.00
1.3 Municipality support
200,000.00
1.4 CF share from 40 CFUG (40*10000)
400,000.00
1.5 Share from Cooperative
300,000.00
1.6 Ward fund supports
60,000.00
2 Loan
770,372.33
Total cost
2,330,372.33
pg. 8
Interest calculation
Interest Monthly
S.N. Description Total capital rate interest(NRs)
Self investment and
1 donation 1,560,000.00 0% -

2 Loan 770,372.33 12% 7,703.72

Total interest 2,330,372.33 7,703.72

Production and Selling Cost

S.N. Description Cost
(NRs)
1 Interest and Depreciation 26.41
2 Production cost 725.47
3 Total production cost 751.88
4 PES 37.59
5 VAT 97.74
6 Profit 112.78
Selling cost per kg Sitake 1000.00

Profit and loss per cycle

S.N. Description Unit Sale Selling Amount Total amount
target cost (NRs) (NRs)
(NRs)
1 Seles income
1,000,004.02
1.1 Seles income from Sitake kg 1000 1000.0 1000004.022
Mushroom
1.2 Selling of Sitake Mushroom kg 0 0.0 0
2 Direct cost ( Variable cost )
664,500.00
2.1 Raw material cost 433500
2.2 Direct labor cost 231000
3 Total profit
335,504.02
4 Indirect cost ( Fixed cost)
222,721.61
4.1 Indirect labor cost 45000
4.2 Other cost 15972.33333

pg. 9
 4.3 Depreciation cost 18706.66667
4.4 Interest 7703.723333
4.5 PES 1000 37.59 37594.13617
4.6 VAT 1000 97.74 97744.75403
5 Gross profit
112,782.41

Annual profit and Loss

S.N. Description Unit Sale Selling Amount (NRs) Total amount 12 Total amount
target cost (NRs) month (NRs)
(NRs)
1 Sales income 1,000,004.02 2 2,000,008.04
1.1 Sales income from soap Pkt 1000 1000.0 1000004.022
1.2 Sales income from seed Pkt 0 0.0 0
2 Direct cost ( Variable cost ) 664,500.00 2 1,329,000.00
2.1 Raw material cost 433500
2.2 Direct labor cost 231000
3 Total profit 335,504.02 2 671,008.04
4 Indirect cost ( Fixed cost) 222,721.61 2 445,443.23
4.1 Indirect labor cost 45000
4.2 Other cost 15972.33333
4.3 Depreciation cost 18706.66667
4.4 Interest 7703.723333
4.5 PES 1000 37.59 37594.13617 2.00 75,188.27
4.6 VAT 1000 97.74 97744.75403 2.00 195,489.51
5 Gross profit 112,782.41 225,564.82

Returns on Investment (ROI) and Break Even Point (BEP)

S.N. Description %
1 Returns on 16.97
Investment
2 Break Even Point 66.38
(BEP)

Loan Payment Plan

Payment Loan Loan to Interest Loan and
plan Amount pay rate Interest Interest

pg. 10
 0 770,372.33 38,518.62 12% 7,703.72 46,222.34

1 770,372.33 38,518.62 12% 7,703.72 46,222.34

2 731,853.72 38,518.62 12% 7,318.54 45,837.15

3 693,335.10 38,518.62 12% 6,933.35 45,451.97

4 654,816.48 38,518.62 12% 6,548.16 45,066.78

5 616,297.87 38,518.62 12% 6,162.98 44,681.60

6 577,779.25 38,518.62 12% 5,777.79 44,296.41

7 539,260.63 38,518.62 12% 5,392.61 43,911.22

8 500,742.02 38,518.62 12% 5,007.42 43,526.04

9 462,223.40 38,518.62 12% 4,622.23 43,140.85

10 423,704.78 38,518.62 12% 4,237.05 42,755.66

11 385,186.17 38,518.62 12% 3,851.86 42,370.48

12 346,667.55 38,518.62 12% 3,466.68 41,985.29

13 308,148.93 38,518.62 12% 3,081.49 41,600.11

14 269,630.32 38,518.62 12% 2,696.30 41,214.92

15 231,111.70 38,518.62 12% 2,311.12 40,829.73

16 192,593.08 38,518.62 12% 1,925.93 40,444.55

17 154,074.47 38,518.62 12% 1,540.74 40,059.36

18 115,555.85 38,518.62 12% 1,155.56 39,674.18

19 77,037.23 38,518.62 12% 770.37 39,288.99

20 38,518.62 38,518.62 12% 385.19 38,903.80

(0.00)

pg. 11

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