Create a Business Plan for Mushroom Farming in India

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Mushroom farming is an interesting agricultural venture that yields high profits and requires fewer resources. However, to reap the benefits of growing fungi you must have a robust business plan. This guide will provide you with a starting point and detailed instructions on how to create the perfect business plan for mushroom farming.

Growth of the Mushroom Industry in India

The mushroom industry in India has continuously been growing over the past decade. The majority of the industry is focused on growing White Button Mushrooms, as these mushrooms hold over 73% of the market. This is followed by Oyster Mushrooms that have a demand of 16%. According to a study in 2017, over 94,600 metric tons of mushrooms are produced in India annually.

The study notes that from 2010 to 2017 there was an approximate rise of 25% in mushroom demand in India. This is a significant rise. Moreover, as of 2021, the demand has only increased. Gradually, the market for exotic mushroom varieties is also expanding in the country.

Creating a Business Plan for Mushroom Farming

To start a successful mushroom farm, you need a strong business plan. A business plan is essentially a blueprint of how to start from scratch, the aim, requirements, costs, etc. It helps identify the viability of a business. Additionally, a great business plan will also help in the fast approval of loans.

Market Research

Research is the crux of every business plan. Whether it be agriculture or any other industry, research occupies a large portion of the plan. You must not only identify your target audience but also understand the industry in general. As an aspiring mushroom farmer, you must have a thorough understanding of the ins and outs of the mushroom industry in India.

The demand growth, top companies, different products, etc. are subjects you need to brush upon. It is recommended that you take up a short certificate course (more on that below) to familiarize yourself with this industry and its practices to be fully equipped.


Before you can begin creating your business plan, some things must be checked off the list. Assuming you’ve completed the market research and have undertaken a training course, the next step is registering your business. Following this, you can scout for potential customers. Usually, people wait for their farm to run at full capacity before marketing to customers. Preselling your product and attracting buyers can help you lock in clients even before you start your mushroom farm. Having potential buyers ready has a lot of advantages such as strengthening your business plan and minimizing risks.

Land Acquisition

The most important aspect of an agricultural business is the cultivation area. Having a suitable piece of land or property to grow your mushrooms is the core of your project. Mushrooms grow in dark and damp environments and require less space. Therefore, you can also grow mushrooms indoors. Constructing a shelter over an open field may cost more than renting out a small indoor area. The next thing you need to keep in mind is the area and yield. How much yield do you want annually? Farming in an area of 500 square feet will produce approximately 5 tons of mushrooms annually. Thus, choose a location accordingly.


The equipment and the workforce are two essential factors to include in your calculations. Mushrooms are essentially fungi. Different varieties of mushrooms have different requirements. So, select the varieties that you want to grow and gather a list of equipment. Fertilizers, starter cultures, compost, casing, etc. While mushroom farming is a low-maintenance business, it does need some looking after. Since the volume of mushrooms will be significant, you would require a helping hand or two to manage the farm.

Drafting the Business Plan

Once you’ve shortlisted your resources for mushroom cultivation and completed your training & research, it’s time to put together a business plan. Business plans follow a standard template. Here’s a sample template for reference. You do not have to follow the sample template exactly. You can scale the plan down to fit your business goals and omit some headers if they don’t apply to your model. Include key aspects of your market research, potential clients, target audience, and marketing strategies for a foolproof plan.

Mushroom Farming Requirements

Mushroom farming has a unique set of requirements. Apart from soil and compost, growing, harvesting, and maintaining mushroom farms is vastly different from traditional farming. The following are some of the requirements that you must keep in mind.

Note: Different varieties of mushrooms may have specific requirements. The requirements given below are generalized.

Do you need a license for mushroom farming?

You require three licenses to become a mushroom farmer:

  1. FSSAI registration and license
  2. Trade License
  3. GST Registration

Area/Land required

The area required for mushroom farming depends upon your objective and budget. To cultivate 5 metric tons of mushroom per anum, you will need an approximate area of 500 square feet. However, you can scale up or down based on your yield requirement. If you just intend to create a small-scale mushroom business plan, then an area of 100 square feet will also suffice.

Materials required

Mushroom farming requires the following materials:

  1. 3-6 Racks
  2. Storage Drums
  3. 25-30 Gunny Bags
  4. Thermo Hygrometer
  5. Sand
  6. Vermi Compost or manure
  7. Hay or straw
  8. Polythene Bags
  9. Spawn or Mushroom Culture

Manpower required

Since mushrooms are low-maintenance products, they do not require a lot of labor. However, for a one-acre mushroom farm, around 2 labors will be needed to oversee incubation, irrigation, and cultivation of the mushrooms.

Types of Mushroom Cultivation in India

A variety of mushrooms are cultivated in India. While the majority of production is focused on white button mushrooms, oyster and paddy straw mushrooms are also quite popular. The consumption of exotic varieties is limited but does have plenty of export opportunities.

Button Mushroom

White button mushrooms, also known as Agaricus Bisporus are the most widely grown and consumed varieties of mushrooms in India. Button mushrooms are a great source of potassium, phosphorus, and selenium, making them a healthy choice. The demand for this variety is soaring. If grown organically, button mushrooms offer lucrative profits.

Oyster mushroom

Oyster mushrooms are the second most consumed and cultivated mushroom variety in India. Known for their signature oyster-like shape, these are an exotic variety that sells at a premium. Oyster mushrooms have a unique flavor and are in high demand in restaurants and global chains. These mushrooms are easier to grow as they can thrive on various dry composts like coffee grounds, wood shavings, paper shreds, etc.

Paddy Straw Mushrooms

Paddy straw mushrooms are one of the most consumed mushrooms in the world. Predominantly grown in South-East Asia, they require less investment to cultivate which makes them a highly profitable product. Also known as straw mushrooms, they are grown over a bed of soaked paddy straws. These mushrooms take about 15 – 16 days to appear before they are ready to cultivate.

Shiitake Mushrooms

Shiitake mushrooms are a Japanese variety of mushrooms. This variety is not commonly consumed in India but is one of the most sought-after varieties in the world. Shiitake takes a little more effort to grow compared to other mushrooms. However, if grown on sawdust or wooden logs, the culture will produce fresh mushrooms every month for the next 4-6 years. Therefore, the upfront cost of cultivation is paid off in surplus in the long run. Shiitake mushrooms are extremely healthy and have a delicious flavor profile.

Milky Mushrooms

Milky mushrooms are the third most grown mushroom type in India. Botanically known as Calocybe Indica, these mushrooms are one of the oldest growing varieties in India. They get their name from their striking white color. These mushrooms have a longer shelf-life compared to button and oyster mushrooms. Therefore, these can be stored and consumed for a longer time. Milky mushroom is a nutritional powerhouse and resilient fungi. Thus, you can often spot these mushrooms sprouting in the wild. They are grown in hot/humid climates and do not require a large investment.

Types of edible mushroom in India

Apart from the ones mentioned above, there are several edible varieties of mushrooms. However, the above-mentioned varieties are most commonly consumed in India. Exotic varieties such as cordyceps, wood ear, black trumpets, king trumpet, and chanterelle can also be found in selected farms. Establishing a domestic market for such varieties may be tedious but these sell at sky-high rates in the international market.

Mushroom Farming Profitability

Mushroom farming is a highly profitable form of agriculture. Firstly, mushroom farming does not incur large startup costs. This makes it a cost-effective business. Secondly, due to rising demand, the price of several varieties such as button, oyster, and paddy straw has increased. This makes these products highly profitable. Additional factors such as low recurring and maintenance costs contribute to a profitable business model.

Is mushroom farming taxable in India?

Taxation on mushroom farming has been a debated topic for quite a while. This issue has been disputed by the Income Tax department several times. Since mushroom is a fungus and not a conventional crop, it was not considered as agricultural income in the past. However, in 2018, a Hyderabad court ruled an important judgment. According to the court, since mushroom farming is a natural process it will be classified as agricultural income. Hence, it is exempt from income tax. This judgment was significant and will help in boosting the mushroom industry in India.

Investment required – Cost of Starting a Mushroom Farm

The cost of starting a mushroom farm is comparatively low. Unlike conventional farming, mushrooms require dark and damp environments to thrive. Therefore, mushrooms are grown indoors on racks. If you already own land, you will have to construct rooms for mushroom cultivation. However, if you do not own land, renting or leasing property for mushroom cultivation can raise the costs. Either way, you can start a mushroom farm with an approximate investment of INR 2 lakhs. This includes everything from construction, equipment, recurring costs, etc. You can refer to this cost breakdown for further details.

Top Mushroom Producing States in India

Given below are some of the top mushroom producing states in India:

  1. Uttar Pradesh
  2. Tripura
  3. Kerala
  4. Orissa
  5. Himachal Pradesh
  6. Nagaland
  7. Punjab
  8. Tamil Nadu

Source: National Horticulture Board (NHB)

Different Mushroom Products You Can Sell

Raw mushrooms are not the only products that can generate profits. There are several end products that you, a mushroom farmer, can take advantage of. Given below are a few examples of the different types of mushroom products. Some products may require additional processing facilities.

  1. Sliced mushroom
  2. Canned mushroom
  3. Pickled mushroom
  4. Mushroom powder
  5. Mushroom sauce
  6. Dried Mushroom

Subsidy on mushroom farming

According to the National Horticulture Board, a subsidy is given to mushroom farmers if the farm covers an area over 10 acres. However, state governments have their subsidy models for mushroom farming based on caste and type of plant. For example, the Bihar government provides up to 70% subsidy for mushroom farmers belonging to the general caste. Whereas, in Punjab, farmers get free training for mushroom cultivation in collaboration with the Horticulture Department.

Mushroom Farming Training & Resources

Before you begin creating your mushroom business plan, you must thoroughly understand everything about growing mushrooms. Different varieties warrant different types of practices. Therefore, given below are a few resources that can help you pick up the most essential knowledge about mushroom farming.

Best Books on Mushroom Farming

  1. Growing Gourmet and Medicinal Mushrooms by Paul Stamets
  2. Essential Guide to Cultivating Mushrooms by Stephen Russell
  3. Organic Mushroom Farming and Mycoremediation by Tradd Cotter
  4. Mycelium Running by Paul Stamets

Courses on Mushroom Farming

  1. Indian Institute of Horticulture Research Courses, Bengaluru (
  2. EcolAgro Mushroom Training, Lucknow (
  3. Mushroom Farming Course by Rocket Skills
  4. Institute of Horticulture Technology, Greater Noida (
  5. Haryana Agro Industries Corporation, Haryana (

Experts & Consultants

  1. Pioneer Mushroom Consultancy, Bangalore
  2. Muscons Consultancy, Chennai
  3. Mahagro India
  4. NN Mushroom Consulting India
  5. Sprout India

Government Bodies & Regulatory Authorities

  1. National Horticulture Board (NHB)
  2. Indian Institute of Horticulture Researches (IIHR)
  3. Indian Council of Agricultural Research (ICAR)


India has seen tremendous growth in both the consumption and growth of mushrooms. Mushrooms are not only used in the food industry but some varieties of mushrooms have medicinal use as well. The profit margin in this crop is quite good compared to the investment. Three brothers from Kashipur set up a 3,600 sq. ft. mushroom farm and they now earn upwards of 9 lakh per annum. This is just one of the many examples of mushroom farming done right.

Unlike several western nations, several states in India have an abundance of hot and humid weather conditions all year round which makes mushroom cultivation much easier. With the latest tax exemption ruling and state subsidies, mushroom farming is a highly profitable and upcoming business venture in India.

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