1. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us Mushrooms Market, Production, and Analysis of Input and Output December 2008

2. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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

3. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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.

4. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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

5. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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)

6. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us Kentucky Markets and Producers Markets -Mad Mushroom Pizza (URL)URL -Mellow Mushroom (URL)URL -Kentucky Mushroom Co (URL of location)URL Plants and Fruit Suppliers -Mushroom People (URL actually in TN)URL -Sheltowee Farm (URL)URL -Gourmet Mushroom Farmer (URL)URL

7. eFarmer.us Health and Nutrition Data Specially rich in minerals and vitamins Vitamins %DVMinerals %DVCarbohydrates %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 12.1mgZinc 0.4mg 2%Protein 2.2g 4% Betaine 6.6mgSelenium 6.5mg 9%Ash 0.6g

8. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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 )

9. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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)

10. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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)

11. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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.

12. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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.

13. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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)

14. eFarmer.us Production Cost Overview Starting-up costSecond 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)

15. eFarmer.us Gross Revenue, Costs, and Return (500-log operation and 1000-log operation) Yield in pounds1000 (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 Total Production Costs$1796$3326 Interest$173 Total Costs$1969$3499 Return to Log and Cap. (Accounting profit) $1531$3501

16. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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.

17. eFarmer.us Risk Assessment-Payoff Table (accounting profit) Price5001000150020002500300035004000 $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

18. eFarmer.us Risk Assessment-Net Return Years of Operation (Accounting Profit, from 0 to 500-log then to 1000-log) 0123456789 Yield in pound 02605147631000 1260152017502000 Gross return $0$910$1799$2671$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 Total production costs $692$1052$1304$1553$1796$2369$2585$2841$3077$3326 interest $110$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

19. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us 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.

20. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us Appendices Development from 0 to 500-log

21. eFarmer.us Appendix-production detail (500-log operation) Preparation year QuantityUnit$/UnitTotal Gross Returns0$0.00 Variable Costs Logs130logs$1.00$130.00 Spawn5unit$22.00$110.00 Wax15pounds$2.00$30.00 Drill bits3Bit$9.00$27.00 Stop collar1collar$2.00 Variable cost less labor$299.00 Hired Labor33.43hour$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)

22. eFarmer.us Appendix-production detail (500-log operation) QuantityUnit$/UnitTotal Gross Returns260$3.50$910.00 Variable Costs Logs130logs$1.00$130.00 Spawn5unit$22.00$110.00 Wax15pounds$2.00$30.00 Drill bits3bit$9.00$27.00 Stop collar1collar$2.00 Packaging and Bucket/basket$74.00 Variable cost less labor$373.00 Hired Labor59.39hour$7.00/hour$415.00 Total Labor Costs$415.00 Total variable cost$788.00 Fixed Costs Equip Costs$264.00 Total Cost without Interest$1052.00 Interest$173.00 Total Costs$1225.00 Return to Log and Cap. (accounting profit) ($315) First year

23. eFarmer.us Appendix-production detail (500-log operation) QuantityUnit$/UnitTotal Gross Returns514$3.50$1799.00 Variable Costs Logs130logs$1.00$130.00 Spawn5unit$22.00$110.00 Wax15pounds$2.00$30.00 Drill bits3bit$9.00$27.00 Stop collar1collar$2.00 Packaging and Bucket/basket$148.00 Variable cost less labor$447.00 Hired Labor84.71hour$7.00/hour$593.00 Total Labor Costs$593.00 Total variable cost$1040.00 Fixed Costs Equip Costs$264.00 Total Cost without Interest$1304.00 Interest$173.00 Total Costs$1477.00 Return to Log and Cap. (accounting profit) $322.00 Second year

24. eFarmer.us Appendix-production detail (500-log operation) QuantityUnit$/UnitTotal Gross Returns763$3.50$2671.00 Variable Costs Logs130logs$1.00$130.00 Spawn5unit$22.00$110.00 Wax15pounds$2.00$30.00 Drill bits3bit$9.00$27.00 Stop collar1collar$2.00 Packaging and Bucket/basket$222.00 Variable cost less labor$521.00 Hired Labor109.71hour$7.00/hour$768.00 Total Labor Costs$768.00 Total variable cost$1289.00 Fixed Costs Equip Costs$264.00 Total Cost without Interest$1553.00 Interest$173.00 Total Costs$1726.00 Return to Log and Cap. (accounting profit) $945.00 Third year

25. eFarmer.us Appendix-production detail (500-log operation) QuantityUnit$/UnitTotal Gross Returns1000$3.50$3500.00 Variable Costs Logs130logs$1.00$130.00 Spawn5unit$22.00$110.00 Wax15pounds$2.00$30.00 Drill bits3bit$9.00$27.00 Stop collar1collar$2.00 Packaging and Bucket/basket$296.00 Variable cost less labor$595.00 Hired Labor109.71hour$7.00/hour$937.00 Total Labor Costs$937.00 Total variable cost$1532.00 Fixed Costs Equip Costs$264.00 Total Cost without Interest$1796.00 Interest$173.00 Total Costs$1969.00 Return to Log and Cap. (accounting profit) $1531.00 Fourth year

26. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us References Health and Nutrition www.nutritiondata.com/facts/vegetables-and-vegetable- products/2484/2 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

27. eFarmer.us copyright eStudy.us 2008 michael.roberson@eStudy.us References Risk Assessment www.ext.vt.edu/pubs/vegetables/438898/shitakemushroo ms.pdf www.ext.vt.edu/pubs/vegetables/438898/shitakemushroo ms.pdf www.ca.uky.edu/agc/pubs/for/for88/for88.pdf mofpi.nic.in/projectprofiles/EDII_AHMD/ 01%20Fruit%20&%20Vegetable/20%20Mushroom%20Cult ivation%20&%20Proc.pdf mofpi.nic.in/projectprofiles/EDII_AHMD/ 01%20Fruit%20&%20Vegetable/20%20Mushroom%20Cult ivation%20&%20Proc.pdf