Mushrooms

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Mushrooms

Market, Production, and Analysis of Input and OutputDecember 2008

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Overview• Species distribution: Shiitake, Button mushroom and

oyster or Abalone (worldwide); Enokitake and shiimeji (mainly cultivated in N. America)

• France began cultivating mushroom in the 18th century

• Main production method: Natural log production (the most mainly used), stump production, wood chip production, artificial production (not economically)

• A common sense: More brilliant a mushroom is, more possibility it could be toxic



Mushroom in America• Sales of the 2007-08, mushroom crop are 809 million

pounds, down 2 percent from the 2006-07 season and 4 percent below 2 years ago. Value of sales for the 2007-08 U.S. mushroom crop is $964 million, 8 percent above the 2005-06 season.

• The average price is $1.19 per pound, up 3 cents from 2006-07.



Market Opportunities• Direct Marketing• Fine restaurants (Continental, French or Asian Cuisine)• Organic or health food stores• National chains (internet or mail orders, especially for dried

mushroom)• Grower to wholesaler markets directly under controlled

environmental conditions (consistent year round supply)

• Processed mushrooms• Dried mushroom• Dried soups• Sauces• Dip mixes and teas



Local Market Opportunities (Kentucky)• Locally owned supermarkets (small-scale enterprise)• Pizza parlors• Retail sales• Farmer’s markets• Community Supported Agriculture (CSA)• Pharmaceutical or nourishment industries• Harvest festivals• Agritourism booths• Other exotic and native species (maitake, reishi, lion’s

mane or king stropharia)



Kentucky Markets and Producers• Markets- Mad Mushroom Pizza (URL)- Mellow Mushroom (URL)- Kentucky Mushroom Co (URL of location)• Plants and Fruit Suppliers- Mushroom People (URL actually in TN)- Sheltowee Farm (URL) - Gourmet Mushroom Farmer (URL)

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Health and Nutrition Data• Specially rich in minerals and vitamins

Vitamins %DV Minerals %DV Carbohydrates %DV

Vitamin C 1.5mg 2% Calcium 2.1mg 0% Total Carbohydrate 2.3g 1%

Vitamin D 12.6mg 3% Iron 0.3mg 2% Dietary Fiber 0.7g 3%

Riboflavin 0.3mg 17% Magnesium 6.3mg 2% Sugars 1.2g

Niacin 2.5mg 13% Phosphorus 60.2mg 6%

Folate 11.2mcg 3% Potassium 223mg 6% Others

Pantothenic Acid 1.0mg 10% Sodium 3.5mg 0% Water 64.7g

Choline 12.1mg Zinc 0.4mg 2% Protein 2.2g 4%

Betaine 6.6mg Selenium 6.5mg 9%

Ash 0.6g



Production Characteristics• The most mainly and economically method to produce

mushroom is natural log production (many other special species can also be produced by this method), and most species can be harvested average in 1 year.

• Logs should be approximate 3 to 8 inches in diameter and 3 to 4 feet long. Besides logs, several other essential activities are necessary, including laying spawn, drilling and inoculating with hot cheese wax.

• Mushroom is best to be planted under cool and moist condition.• Mushroom can also be harvested 3 times a year under artificially

forced condition (immersing logs under water for 8 to 24 hours, tradeoff between large output and damage to logs must be taken into account )



Production Characteristics• When using artificially forced production, there are

three producing-and-harvesting cycles in a year (November, January and March in Kentucky). Logs need 8 weeks to be resumed between each cycle, and need long period to be resumed after 3 producing-and-harvesting cycles in a year.

• If the producers don’t have their own forestland, logs must be purchased from other log suppliers, and the cost of transportation would be incurred.

• Labor is needed if it doesn’t family member enterprise, especially the substantially harvesting costs except the first production year. (In small operations, family members can do the labor so that large labor cost can be saved)



Production Characteristic• Several other main production method which are not

economically enough but suitable to produce some special species.

1. Stump production: The cut surface if the stump is inoculated by filling drilled holes with dowel or sawdust spawn. (maitake, lion’s mane and reishi mushroom)

2. Wood chip production: An area about 4 feet by 8 feet is cleared, disturbing the underlying soil to a depth of 8 inches. A two-inch layer of wood chip is added, watered, and then inoculated by broadcasting spawn. An additional two- to three –inch layer of wood chips is added and the bed is gently stirred . (King stropharia mushroom)



Production Characteristics• Mushroom are harvested by either cutting with a sharp

knife or twisting them off at the base of the stem.• Harvesting mushroom in cluster is not only easier, but

also reduces the amount of handling and damage that occur to individual mushroom.

• Each log can produce 2 pounds mushroom per harvest, and each log can be used about 4 years; thus, with proper management, each log should produce 6 pounds mushroom over its life (first year for preparation).

• Mushroom can also be dried, a process that extents their shelf-life for 6 to 12 months. Once dried, mushrooms can be frozen until sold.



Production Characteristics• Damage management: Potential disease threats is specially

harmful to outdoor production.• Damage are mainly from three things 1. Other fungus: Trichoderma, hypoxylon and polyporus versicolor 2. Pests including termites, bark beetles and springtails. 3. Direct damage to the mushroom caps can occur as a result of feeding by slugs, snails, birds, squirrels and deer, if the logs are left unprotected. In conclusion, mushroom production can eliminate many of

difficulties in log-produced mushrooms.



Production Opportunity Cost• Items needed to start production logs, spawn (sawdust or dowel), wax, drill bit, utilities• Capital equipment-short term use (5 years) log drilling stand, inoculation tool, wax melting pot,

glass baster to apply the wax, spring scale, extension cord, drill, water hose and sprinkler, scale (to weigh mushrooms), brackets and bag covers to maintain the correct temperature and condition for log, soak tank

• Capital equipment-long term use (10 year) refrigerator• Labor for harvesting (packaging and labels, stamps,

bulk mushroom boxes, advertising or marketing charge, transportation, picking and storage baskets)

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Production Cost OverviewStarting-up cost Second year

(including harvesting and storing)

Full production year

Variable cost

Logs

Spawn

Wax

Drill bit

Utilities

Hired labor (if needed) $7.00/hr

Fixed cost (equipment for short term use)

Variable cost

Increased variable cost

More logs

More hired labor for harvesting $7.00/hr

Fixed cost (equipment for short term use and refrigerator for storing in long term use)

Variable cost

Increased variable cost

More logs

Marketing cost

More hired labor for larger production scale $7.00/hr

Fixed cost (equipment for short and long term use)

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Gross Revenue, Costs, and Return (500-log operation and 1000-log operation)Yield in pounds 1000 (500-log) 2000 (1000-log)

Gross Revenue (Price $3.50/LB) $3500 $7000

Variable cost less labor $595 $1190

Explicit labor Cost $937 $1872

Total variable cost $1532 $3062

Fixed Costs $264 $264

Total Production Costs $1796 $3326

Interest $173 $173

Total Costs $1969 $3499

Return to Log and Cap.(Accounting profit)

$1531 $3501



Risk Assessment• Market Risk: Because mushroom is not so prevalent

as the other main fruit or vegetables (like apple and potato), the price of mushroom could be fluctuated from $3.50 to $4.50 (wholesaler market), from $6.50 to $8.50 (restaurant and grocery market), from $9.00 to $10.50 (direct market to individual)

• Production Risk: poor quality or damaged log would directly influence the production quality of mushroom.

• Some special mushroom species are attractive now; however, it may not be so easy accepted by customers who traditionally accept the original species.

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Risk Assessment-Payoff Table (accounting profit)

Price 500 1000 1500 2000 2500 3000 3500 4000

$2.00 - $203 $31 $265 $501 $735 $970 $1204 $1511

$2.25 - $78 $281 $640 $1001 $1360 $1720 $2079 $2511

$2.50 $47 $531 $1015 $1501 $1985 $2470 $2954 $3511

$2.75 $172 $781 $1390 $2001 $2610 $3220 $3829 $4511

$3.00 $297 $1031 $1765 $2501 $3235 $3970 $4704 $5511

$3.25 $422 $1281 $2140 $3001 $3860 $4720 $5579 $6511

$3.50 $547 $1531 $2515 $3501 $4485 $5470 $6454 $7511

$3.75 $672 $1781 $2890 $4001 $5110 $6220 $7329 $8511

$4.00 $797 $2031 $3265 $4501 $5735 $6970 $8204 $9511

pounds

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Risk Assessment-Net ReturnYears of Operation (Accounting Profit, from 0 to 500-log then to 1000-log)

0 1 2 3 4 5 6 7 8 9

Yield in pound 0 260 514 763 1000 1000 1260 1520 1750 2000

Gross return $0 $910 $1799 $2671 $3500 $3500 $4410 $5320 $6125 $7000

Variable cost less labor

$299 $373 $447 $521 $595 $894 $968 $1042 $1116 $1190

Explicit labor costs $234 $415 $593 $768 $937 $1211 $1353 $1535 $1697 $1872

Total variable cost $533 $788 $1040 $1289 $1532 $2105 $2321 $2577 $2813 $3062

Fixed costs $158 $264 $264 $264 $264 $264 $264 $264 $264 $264

Total production costs

$692 $1052 $1304 $1553 $1796 $2369 $2585 $2841 $3077 $3326

interest $110 $173 $173 $173 $173 $173 $173 $173 $173 $173

Total costs $802 $1225 $1477 $1726 $1969 $2543 $2758 $3014 $3250 $3499

Return to log and Cap. (accounting profit)

-$802 -$315 $322 $945 $1531 $957 $1652 $2306 $2875 $3501



Basic Summary• Market Opportunity- Fine exotic restaurants- Regional Organic or health food stores- Farmer’s market- Locally owned supermarkets- National chains

• Advantages of Kentucky• The market for log-grown specialty mushrooms continues to develop in

Kentucky. Specialty mushrooms, which are relatively new to the U.S., are becoming very popular as a gourmet food item

• Shiitake can represent a supplemental income source to the landowner with low initial costs compared to other food enterprises.



Appendices Development from 0 to 500-log

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Appendix-production detail (500-log operation)Preparation year

Quantity Unit $/Unit Total

Gross Returns 0 $0.00 $0.00

Variable Costs

Logs 130 logs $1.00 $130.00

Spawn 5 unit $22.00 $110.00

Wax 15 pounds $2.00 $30.00

Drill bits 3 Bit $9.00 $27.00

Stop collar 1 collar $2.00 $2.00

Variable cost less labor $299.00

Hired Labor 33.43 hour $7.00/hour $234.00

Total Labor Costs $234.00

Total variable cost $533.00

Fixed Costs

Equip Costs $158.00

Total Cost without Interest $692.00

Interest $110.00

Total Costs $802

Return to Log and Cap. (accounting profit)

($802)

eFarmer.usAppendix-production detail (500-log operation)


Gross Returns 260 $3.50 $910.00

Variable Costs

Logs 130 logs $1.00 $130.00

Spawn 5 unit $22.00 $110.00

Wax 15 pounds $2.00 $30.00

Drill bits 3 bit $9.00 $27.00


Packaging and Bucket/basket $74.00





Fixed Costs

Equip Costs $264.00


Interest $173.00

Total Costs $1225.00


($315)

First year



Gross Returns 514 $3.50 $1799.00

Variable Costs

Logs 130 logs $1.00 $130.00

Spawn 5 unit $22.00 $110.00

Wax 15 pounds $2.00 $30.00








Fixed Costs

Equip Costs $264.00


Interest $173.00



$322.00

Second year



Gross Returns 763 $3.50 $2671.00

Variable Costs

Logs 130 logs $1.00 $130.00

Spawn 5 unit $22.00 $110.00

Wax 15 pounds $2.00 $30.00








Fixed Costs

Equip Costs $264.00


Interest $173.00



$945.00

Third year



Gross Returns 1000 $3.50 $3500.00

Variable Costs

Logs 130 logs $1.00 $130.00

Spawn 5 unit $22.00 $110.00

Wax 15 pounds $2.00 $30.00








Fixed Costs

Equip Costs $264.00


Interest $173.00



$1531.00

Fourth year



ReferencesHealth and Nutrition• www.nutritiondata.com/facts/vegetables-and-vegetable-

products/2484/2

Market Opportunities• www.americanmushroom.org/nass.htm• www.uky.edu/Ag/NewCrops/introsheets/gourmet.pdf• www.ca.uky.edu/agc/pubs/for/for88/for88.pdf

Production characteristic• www.uky.edu/Ag/NewCrops/introsheets/gourmet.pdf



ReferencesRisk Assessment• www.ext.vt.edu/pubs/vegetables/438898/

shitakemushrooms.pdf• www.ca.uky.edu/agc/pubs/for/for88/for88.pdf• mofpi.nic.in/projectprofiles/EDII_AHMD/ 01%20Fruit

%20&%20Vegetable/20%20Mushroom%20Cultivation%20&%20Proc.pdf

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Mushrooms