What is a mushroom project report?
A mushroom project report is a detailed project report (DPR) for a unit that makes compost from straw and chicken manure and grows white button mushrooms in climate-controlled rooms. It sets out the growing cycle, equipment, raw materials, buyers, project cost, loan structure, five-year projections, DSCR and break-even a lender or horticulture office reviews.
Growers use it to size the unit and apply for a term loan or horticulture subsidy; banks use it to judge whether the crop cycle can repay the loan.
Also known as: mushroom farming project report, button mushroom project report, mushroom cultivation DPR, mushroom business plan.
What a bank checks in a mushroom project report
A mushroom unit earns from a perishable crop grown in rooms that cost a lot to build and cool. Lenders reading a project report on mushroom production look hardest at the figures below, shown as the values in our sample report.
DSCR (debt service coverage ratio) is cash available for loan payments divided by those payments. The sample's weakest year is 1.31, so there is little room for a failed crop.
Straw, chicken manure, spawn and casing material. A report that shows much less has usually assumed a yield per 100 kg of compost the rooms will not reach.
Punnets, film and cartons cost more than power and fuel in the sample. Banks check that the packing line matches the share sold in punnets.
Straw is cheapest just after the wheat harvest, so growers stock it ahead. That stock sits in working capital and must be funded.
Values are the assumptions in our illustrative sample. Your report uses figures for your rooms, strain, suppliers and market.
Mushroom plant cost in India by scale
Cost depends on whether you make your own compost and how many climate-controlled rooms you build. The sample unit sells ₹330 lakh in Year 3 at 70% capacity and earns a net profit of ₹47 lakh. The smaller tiers are indicative.
One-room unit
₹2–10 lakh
1–2 growing rooms on bought-in compost
- Insulated room and racks₹1.5–6 lakh
- Air conditioner or small AHU₹0.5–3 lakh
- Compost, spawn, casingBought per crop
Often helped by state horticulture schemes
Mid-size unit
₹50–150 lakh
About 300–700 kg per day
- Growing rooms and AHUs₹25–70 lakh
- Building and site₹15–50 lakh
- Working capital margin₹3–10 lakh
Bank term loan, with MIDH assistance where eligible
Integrated unit
₹306 lakh
1,400 kg per day, 4,62,000 kg per year
- Plant and machinery₹139.60 lakh
- Building and civil works₹87.27 lakh
- Land and site development₹33.39 lakh
Term loan ₹229.84 lakh (75%), promoter ₹76.61 lakh
One-room and mid-size ranges are indicative and exclude land. The Bihar horticulture department's model one-room unit is costed at ₹2.10 lakh.
Mushroom manufacturing process, from compost to punnet
White button mushroom (Agaricus bisporus) grows on pasteurised compost, not soil. The conditions below are those published by ICAR-Directorate of Mushroom Research for its recommended strains.
- Phase I composting
Wetted wheat or paddy straw is mixed with chicken manure, wheat bran, urea and gypsum; indoor bunker composting takes about 6 days.
- Phase II pasteurisation
Compost is pasteurised in tunnels at about 59 °C for 6–8 hours, then conditioned until ammonia clears, about day 12.
- Spawning
Grain spawn is mixed in at about 1% of wet compost weight and filled into bags or shelf beds.
- Spawn run
Beds are held at 24–26 °C and 90–95% humidity for 12–13 days while mycelium spreads through the compost.
- Casing
A layer of about 1.5 inches of soil mixed 1:1 with aged farmyard manure is spread on top; the case run takes 6–7 days.
- Cropping
Rooms are cooled to 14–16 °C with 800–1,000 ppm carbon dioxide; picking starts 13–14 days after casing, at the 4–5 cm button stage.
- Grading and packing
Mushrooms are trimmed, pre-cooled and packed in polypropylene punnets for dispatch the same day.
Raw materials for mushroom compost and cropping
Straw is the largest raw material cost in the sample, followed by chicken manure and spawn. Units close to wheat and poultry belts buy both cheaper and with less freight.
| Raw material | Share of cost | Year 3 (₹ lakh) |
|---|---|---|
| Wheat or paddy straw | 32% | 33.67 |
| Chicken manure | 22% | 23.14 |
| Wheat bran, urea and gypsum | 12% | 12.62 |
| Mushroom spawn | 20% | 21.04 |
| Casing material | 14% | 14.73 |
| Total | 100% | 105.20 |
The spawn strain sets the yield range, so buy from a known spawn lab and name the strain in the report.
Machinery for a button mushroom unit
Climate control is the core of the plant. Air handling units and chillers are the biggest machinery item in the sample, ahead of the insulated growing rooms.
| Equipment | What it does | Sample cost (₹ lakh) |
|---|---|---|
| Compost turner and front-end loader | Mixes, wets and moves Phase I compost | 19.54 |
| Phase II pasteurisation tunnels with blowers | Pasteurise and condition compost | 25.13 |
| Insulated growing rooms with shelf racks | Hold beds through spawn run and cropping | 30.71 |
| Air handling units and chillers | Hold room temperature, humidity and fresh air | 33.50 |
| Spawn mixing and compost filling line | Mixes spawn and fills bags or shelves | 8.38 |
| Steam boiler for pasteurisation | Supplies steam to tunnels and casing | 8.38 |
| Pre-cooling cold room and packing equipment | Removes field heat and packs punnets | 8.38 |
| Climate controllers and electrical panel | Run and log each room's settings | 5.58 |
| Total plant and machinery | 139.60 | |
Costs are the sample report's estimates for a 1,400 kg per day unit. Get current quotations before you finalise.
Who buys button mushrooms, and when prices move
Fresh button mushrooms keep only a few days, so a unit sells within a day's drive of the farm. Cities, hotels and pizza chains take most of the volume, and buyers judge on whiteness, closed caps and steady daily supply.
Prices dip in winter, when seasonal growers in the plains harvest in huts. A climate-controlled unit can supply through the summer, when that seasonal supply stops.
- Vegetable wholesalers and mandi commission agents
- Supermarkets and online grocery platforms
- Hotels, restaurants, caterers and pizza chains
- Canning, frozen and dried mushroom processors
- Nurseries and farmers buying spent compost as manure
Plan the grade mix: punnets of closed buttons fetch more than loose or B-grade mushrooms. Show the share of each in the report, because it moves revenue more than a small change in yield.
Licences and registrations for a mushroom unit
| Business and tax | Udyam (MSME) and GST registration. Fresh vegetables under heading 0709 are nil-rated; processed mushroom products carry GST, so check the rate for your product form |
|---|---|
| Food safety | FSSAI registration or licence under the FSS Act, 2006 when you pack or process mushrooms for sale; canned mushrooms must also meet FSSAI product standards |
| Pollution board consent | Consent to establish and operate from the State Pollution Control Board for the compost yard; the category varies by state |
| Horticulture department | Registration with the state horticulture mission if you claim MIDH assistance for production, spawn or compost units |
| Power and factory | Sanctioned load for chillers and AHUs, plus factory or labour registration where worker thresholds apply |
Loans and subsidy for a mushroom unit
MIDH
Production, spawn and compost unitsAssistance through the state horticulture mission, as of the April 2025 guidelines. State committees can sanction integrated projects up to ₹80 lakh.
Bank term loan
Mid-size and integrated unitsBanks look at DSCR, collateral and promoter margin. The sample takes 75% as term loan.
PMEGP
Check eligibility firstThe negative list excludes cultivation and horticulture. A mushroom processing unit may still qualify; ask the DIC.
Scheme rules and limits change. Confirm current terms with the bank, the horticulture office or the District Industries Centre before applying.
Mistakes that weaken a mushroom project report
- Taking the best yield as the base case
Strains yield about 18–25 kg per 100 kg of compost. Plan near the lower end until your rooms have a track record.
- One price for the whole year
Winter prices fall when seasonal growers harvest. Use month-wise prices, or revenue and DSCR look better than they will be.
- Under-costing summer power
Chillers work hardest from April to June. Cost power from the connected load and your tariff, not a flat share of sales.
- No allowance for crop loss
Green mould, wet bubble and flies can cut a flush. Budget for hygiene, pest control and some lost crops.
- Leaving out the straw stock
Buying a season's straw at harvest ties up cash for months. Without it, working capital is too small.
How NPCS helps you set up a mushroom unit
- Scale and compost routeDecide between bought-in compost and your own yard and tunnels for your budget.
- Rooms and climate equipmentSize growing rooms, AHUs and chillers, and compare supplier quotations.
- Bank-ready project reportYield, month-wise prices, DSCR and working capital in your lender's format.
- Subsidy and approvalsThe MIDH, pollution and FSSAI steps that apply in your state.
NPCS's client list shows 67 assignments in fruit and vegetable processing, including 2 for mushroom projects. The NPCS project team has prepared project reports since 1994.
What's inside the mushroom sample report
- Introduction
- Uses and applications
- Market potential
- Manufacturing process
- Raw materials
- Plant and machinery
- Land, building and utilities
- Manpower
- Licences and approvals
- Project cost and means of finance
- Working capital
- Projected profitability
- Cash flow statement
- Projected balance sheet
- Depreciation
- Term loan repayment
- Debt service coverage
- Break-even analysis
- Financial ratios
- Key assumptions
- Conclusion
- Monthly loan repayment schedule
18 pages, five-year projections, illustrative figures.
Open sample reportFree sample or a report for your project?
| What you get | Free sample | NPCS report for your project |
|---|---|---|
| Capacity and location | Typical unit | Your capacity, site and state |
| Figures | Illustrative | Built on current prices and quotations |
| Machinery suppliers and quotations | No | Yes |
| Market survey for your region | No | Yes |
| Bank or scheme format (PMEGP, term loan) | No | Yes |
| Use for a loan application | No | Yes |
Real NPCS mushroom project reports
These are mushroom project reports NPCS has prepared, with the plant capacity, total capital investment, rate of return and break-even worked out in each. Costs have moved since some were written, so we bring any of them up to date for your capacity and location.
| Project report | Plant capacity | Total investment | Rate of return | Break-even | Action |
|---|---|---|---|---|---|
| Button Mushroom Cultivation | 150,000Kgs/annum | ₹1.64 crore | 1% | 1% | Get this report |
| Mushroom Cultivation & Processing | 2.0 Tons/Day | ₹2.1 crore | 63.1% | 37.9% | Get this report |
| Dehydrated Vegetables, Mushroom and Soup | Dehydrated Vegetables, Mushroom & Soup: 3130 Packs/Day | ₹3.94 crore | 27% | 62% | Get this report |
| Canned Foods Chopped Tomatoes, Cheeked Beans AND Mushrooms | 12000 Cans/Day(Chopped Tomatoes, Cheeked Beans, Mushrooms) | ₹5.49 crore | 46% | 32% | Get this report |
| Button Mushroom Cultivation | 5000 Kgs./day | ₹12.77 crore | 28% | 34% | Get this report |
Figures as worked out in each NPCS report. Total investment includes plant and machinery, land and building, and working capital.
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Mushroom project report: frequently asked questions
How much does it cost to set up a mushroom plant in India?
A one-room unit on bought-in compost can start at about ₹2–10 lakh, a 300–700 kg per day unit needs roughly ₹50–150 lakh, and a unit with its own compost yard and tunnels costs more. Our sample report models 1,400 kg per day at ₹306 lakh. These are indicative figures; your report prices your own rooms, equipment and site.
How much mushroom do you get from 100 kg of compost?
ICAR-Directorate of Mushroom Research gives yields of about 18–25 kg of button mushrooms per 100 kg of compost, depending on the strain. Yield also depends on compost quality, casing and how well room temperature, humidity and carbon dioxide are held. A bank report should use a yield your strain and rooms can reach, not the top of the range.
Which machines are needed for a button mushroom unit?
A full unit needs a compost turner and loader, Phase II pasteurisation tunnels with blowers, a steam boiler, a spawn mixing and filling line, insulated growing rooms with shelf racks, air handling units and chillers, climate controllers, and a pre-cooling cold room with packing equipment. Smaller units buy pasteurised compost and skip the yard and tunnels.
Is mushroom production profitable?
In our illustrative sample, a 1,400 kg per day unit earns a 16% return on investment in Year 3, breaks even at 41% of capacity and pays back in about 4.3 years. Real results depend on yield per 100 kg of compost, summer power cost, how much is sold in punnets, and price swings in winter.
Can I get a PMEGP loan for mushroom farming?
Check before you apply. The PMEGP negative list excludes businesses connected with cultivation, horticulture and floriculture, so a growing unit may not qualify, while a mushroom processing unit may. Growers usually look at assistance under MIDH through the state horticulture department, along with a bank term loan. Confirm eligibility with your District Industries Centre and the horticulture office.
Mushroom ka business kaise shuru kare?
Start by choosing the scale: one room on bought-in compost, or a full unit with its own compost yard and tunnels. Take training on button mushroom growing, fix your buyers in the nearest city, then get a project report showing yield, costs and loan repayment. Apply to your bank and the state horticulture department with that report.
Is the sample report free and can I use it for a loan?
The sample is free to view and download. It is an illustrative report that shows the format and depth of an NPCS report; its figures are representative and not based on a real project, so it should not be submitted to a bank. For a loan, NPCS prepares a report for your own capacity, location and loan scheme.
Sources and references
- Technologies developed by ICAR-DMR for commercial use (June 2020)ICAR-Directorate of Mushroom Research, Solan, checked Oct 2026
- Mission for Integrated Development of Horticulture: Operational Guidelines (April 2025)Department of Agriculture and Farmers Welfare, Government of India, checked Oct 2026
- Prime Minister's Employment Generation Programme (PMEGP) guideDistrict Industries Centre, Ganjam, Government of Odisha, checked Oct 2026
- Small mushroom unit project reportDirectorate of Horticulture, Government of Bihar, checked Oct 2026
- Rate of GST on goods (schedules)Commercial Taxes Department, Government of Goa, checked Oct 2026
- FSSAI regulations for canned mushroom (PMFME)NIFTEM, Ministry of Food Processing Industries, checked Oct 2026
- Mushroom production: lesson 12, entrepreneurial skills and economicsNational Institute of Open Schooling, checked Oct 2026
The NPCS project team, led by Ajay Kumar Gupta
This page and its sample report are prepared and reviewed by the NPCS project team, which has written techno-economic feasibility studies and detailed project reports since 1994.
Ajay Kumar Gupta founded Niir Project Consultancy Services (NPCS) and leads the organisation. With 40 years of experience in MSME project consulting, he has built the team that has delivered more than 28,000 project reports for clients worldwide, helping entrepreneurs plan and finance profitable manufacturing businesses.
- Published
- Last updated
- Next review
- Oct 2027
- Reviewed by
- NPCS project team
This page is reviewed every 12 months, or sooner when scheme limits, GST rates, BIS rules or pollution categories change. The sample report is illustrative: its figures are generated from industry-typical ratios for a unit of this size, checked so every statement balances, and are not taken from any client project.