Mushroom Contract

Farming
AECO 241
Jim Leandro Cano

Assumptions
1. Mushroom is a good source of protein (34%CP by dry
weight, UC Davis) and can be an alternative to meat.
2. Mushroom industry is not a well-recognized industry in the
Philippines, hence data are very dependent on the research
and studies available.
3. 8,600,000 tons of rice straw are burnt every year in the
Philippines.
4. Mushrooms can be grown from rice straw, hence the
primary target contract farmers are well-established rice
farmers.

MARKETING

Product Description
Chosen product of this study is oyster mushroom
(Pleurotus sp.) chicharon.
There is more value in mushroom made into
chicharon compared to selling fresh mushrooms. The
difference can go as high as 400% based on retail
price difference.
The product is normally found sold at weekend
bazaars, food fairs, and restaurants that have
contracts with mushroom chicharon producers.

Demand Situation
90% of mushrooms are imported; average volume of
150 metric tons per year from Southeast Asia: Taiwan,
Thailand, China and Japan Dr. Emily Soriano, Central
Luzon Integrated Agricultural Research Center (CLIARC)
Type of industry: supermarkets, trade fairs, restaurants,
health shops
Use of mushrooms: eaten fresh, dried, and processed
(e.g. canned, chicharon)

Supply Situation
No consolidated details of the producers across the
country
In the CALABARZON region, there are sporadic
producers.

Supply Situation
Cavite more than 20 producers; probably less than 40;
no clear government records on how many producers
Los Banos 2 (occasional)
Calauan 2
Siniloan - 2
Import: 90% = 150 metric tons annually
Export: NA

Demand-supply analysis
Data gathering techniques:
Referrals and information from first-hand contacts, who are
mushroom producers or mushroom farming advocates
Research publications
Studies (FAO)
Government agencies (Bureau of Plant Industry, Bureau of
Agricultural Statistics, DA Regional Office)

Demand-supply analysis
From the mushroom producers only a few are engaged
in mushroom chicharon production:
JALees Farm
Satya Graha Caf

Target market share: supplying 10 establishments for

the first year, with an increase of 20% every year for
the next 2 years.

Price studies
Historical trends of mushroom prices are hard to find
since the industry is not well recognized by the
department of agriculture.
Some regions have their records, but still need to
access.
But recent studies in the past 3-4 years:
farm-gate prices can range from Php 100-150/kg;
retail price range from Php 250 to 300/kg.

Marketing program
Government programs: mushroom training (DA-Bureau
of Plant Industry)
Research institutions: PhilRice Rice Ag-bio systems;
LSPU Kabutehan program (mothers are given jobs to
make fruiting bags)

Marketing program
SWOT
Strengths:
available technical people who can readily help boost the growth of the
industry;
high value product;
alternative to meat

Weaknesses:

highly perishable;
laborious;
complex production chain;
not all Filipinos are mushroom eating people (unlike other cultures);
lack of data with regard to producers, yield, area planted to the crop

Marketing program
SWOT
Opportunities:
tons of rice straw from the harvests can be used to produce mushrooms;
mushrooms in the country are currently being imported, meaning that
there is a demand that is not being met yet by local supply.

Threats:

insect pests;
Calamity;
market penetration;
lack of political will to promote the industry

Marketing Plan
Tin foil packages
Different flavors: salted, garlic, spicy
Price range: Php 120/100 grams
Distribution network:
highly urbanized cities, specifically gourmet stores and
restaurants;
health shops;
organic shops;

Marketing Plan
Marketing will create strategies on how and where to
promote the product product positioning
Advertising: the product can initially be promoted by
displaying in novelty/health/organic stores

Product Name
IKAKABUTE
Mushroom farming will open up extra revenue
streams for the farmers

TECHNICAL

IKAKABUTE

Project output
Final product for consumption
Bite-sized
Different flavors
Nutritional content will be promoted

IKAKABUTE

Project location and assessment

Location:
Processing area: Bay, Laguna
Contract Farmers: Bay, Laguna

Basic inputs:
mushroom spawn at the initial year of the project, farmers will
receive spawn and will be taught how to inoculate fruiting bags.
The following two years will include training on how to make
their own spawn, with the help of community-based mushroom
farming models developed by LSPU Siniloan.

Project location and assessment

Project location: viable to start off since there are a
number of rice farmers already established.
Common pasteurizing facility will be provided for the
contract farmers, where they can place the fruiting bags
in before the inoculation of the spawn.

Description of the project location

and assessment
Processing area will be on a leased 1 hectare lot, which can be
the site for technical training, mushroom processing,
packaging, and the point of origin for deliveries to target
market areas (e.g. cities Calamba, Sta. Rosa, Alabang, Manila)
Proposed site sits on a 30+ hectare area, hence the option to
expand is viable
Environmental attributes:
use of rice straw will reduce rice straw burning, which poses health
risks for the family and for the neighborhood as well as releases carbon
emissions that accelerate the effects of climate change

Scale or size of the project

Number of contract farmers involved:
Year 1 = 10
Year 2 = 15
Year 3 = 20

Size of land for processing: 1 hectare

Utilized space initially 1,000 square meters

Design or layout of the project

Growing
House

Farm lot

Farm lot

Design or layout of the project

Packing

Storag
e

Processing
Delivery Area

Design or layout of the project

CF
CF

CF
CF

Processing

Market

Investment items
Drums for soaking rice straw
Bagging equipment / machine
Pasteurization machine
Growing houses for contract farmers
Sprayers
Harvest/Delivery trucks
Processing machine
Building for processing

MOOE cost items

PP Bags
Sawdust
Mushroom Spawn
Personnel
Utilities (e.g. electricity, water, internet, phone)
Processing machine maintenance

Waste disposal
Mushroom substrates of farmers can be utilized for
vermicompost yielding them biofertilizer

ORGANIZATIONAL

Organizational structure

Various positons
General Manager
Oversees the whole operation of the project and determines way
forward
Develop links with possible clients and contract farmers (c/o
cooperatives)

Secretary/HR
Administrative works

Accountant (retainers fee)

Bookkeeping services will be availed for quarterly and annual reports

Marketing
In charge of developing relationships with potential clientele

Various positons
Production
Create relationships with contract farmers and oversee
production that meets the companys needs

Processing people 2
Working with the machine and the subsequent packaging

Deliverymen 2
Each one will work with a harvester for the pickup/harvest from
contract farmers as well as delivery of finished products to clients

Harvesters 2
Each one will work with a deliveryman for the pickup/harvest
from contract farmers as well as delivery of finished products to
clients

Compensation packages
General Manager*
Php 40,000/month

Secretary/HR
Php 20,000/month

Accountant (retainers fee)

Based on agreed retainers fee with
accountant

Marketing*
Php 30,000/mo.

Production*
Php 25,000/mo.

*with car service

Compensation packages
Processing people 2
Php 10,000/mo/person

Deliverymen 2
Php 8,000/mo/person

Harvesters 2
Php 8,000/mo/person
**all will receive a 13th month pay that will be
disbursed in two tranches one in the middle
of the year and next at the end of the year.