Feasibility Study_Group 1_C.docx

A Feasibility study on:
Mushroom Cultivation in Bangladesh
Course: Contemporary Issues in Accounting
Course code: 6201
Submitted to:
Dr. Mahfuzul Hoque
Professor
Department of Accounting & Information Systems
University of Dhaka
Submitted by:
Group no: 01
MBA, 2nd semester, 23rd batch
Name ID Section
Aameer Khasroo Shahansah 23-068
C
Md. Zahidul Islam 23-039
Al Azaz Rafi 23-162
Md. Shakhayat Hossain Akhand 23-151
Ishtiaq Ahmed Timon 23-203
Md.Shahidul Islam 22-332
Deadline of Submission: 15 September, 2022

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A Feasibility Study on:
Mushroom Cultivation in Bangladesh

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Acknowledgement
First of all, we would like to thank the Almighty Allah for granting us the ability to finish this
feasibility study on “Mushroom Cultivation in Bangladesh”. Then we want to show our
profound respect to our honourable course teacher Dr. Mahfuzul Hoque for his instructions,
guidelines, and valuable information that assisted us in completing the study. We are also
grateful to our parents, friends, group mates, and others who have been supportive all the way
along.

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Executive Summary
Mushrooms are a nutritious food that naturally grows in the wild and have both medicinal and
dietary benefits. Landless people can even grow it on a small basis in their own houses. The
climate in Bangladesh is perfect for mass mushroom cultivation. This paper contains the results
of a feasibility study to determine whether growing and selling mushrooms in Bangladesh
would be profitable. More than 40,000 MT of mushrooms are currently needed. However, only
40–50% of those mushrooms are supplied by domestic producers; the remaining mushrooms
are expensively imported.
The Sigma Squad members are motivated by this, and they suggest starting a mushroom
cultivation farm called "GreenAgro Mushroom Supply" in Bangladesh. The marketing
feasibility study shows that the market is less competitive as there are very small number of
big firms, the country has the potential to produce more than hundred MT mushrooms.
Economic feasibility study shows a very high profit margin of more than 40% and benefit-cost
ratio of more than 1.7. That means the project is economically viable. Besides all these, the
necessary costs and resources are also mentioned and discussed in this report.
Overall, it is found that all the necessary requirements of implementing this project can easily
be fulfilled. Cultural feasibility study shows that people are now getting aware of the nutrients
and vitamins of mushrooms and therefore, by forgetting all the myths, they are now pursuing
to eat mushrooms. The schedule feasibility study shows that each harvesting period would
generate sufficient profits thus the payback period of the working capital investment will be
near about 50 days. And, within a single year the project expects to reach its breakeven point.
Considering all these, this report highly recommends the members of Team RECTUS to go for
the implementation of this mushroom cultivation project

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Contents
Executive Summary.................................................................................................................. iv
1. Background ............................................................................................................................3
2. The Project .............................................................................................................................4
2.1 Products of GreenAgro ....................................................................................................5
2.2 Proposed Business Model................................................................................................5
2.3 Techniques .......................................................................................................................5
2.5 Employment Generation..................................................................................................5
2.6 Organizational Profile......................................................................................................6
3. Feasibility of GreenAgro Mushroom Project in Bangladesh.................................................6
3.1 Market Feasibility ............................................................................................................6
3.1.1 Market Description and Competitiveness.................................................................7
3.1.2 Market Potential........................................................................................................7
3.1.3 Access to Market.......................................................................................................8
3.1.4 Target market ............................................................................................................8
3.2 Technical Feasibility........................................................................................................9
3.3 Economic Feasibility .....................................................................................................10
3.3.1 Project Cost-Benefit Summary and Profitability Analysis .....................................11
3.3.2 Project Financing ....................................................................................................11
3.3.3 Project Cost.............................................................................................................12
3.4 Schedule Feasibility.......................................................................................................12
3.5 Operational and Resource Feasibility ............................................................................12
3.5.1 Space Requirements................................................................................................13
3.5.2 Personnel Requirements..........................................................................................13
3.6 Cultural Feasibility.........................................................................................................14
3.7 Legal Feasibility.............................................................................................................14
4. Project’s SWOT Analysis ....................................................................................................15

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5. Marketing and Sales Strategies............................................................................................15
6. Financial Projections............................................................................................................16
6.1 Projected Balance Sheet at the Beginning .....................................................................16
6.2 Projected Cost Statement for Harvesting Period ...........................................................16
6.3 Projected Income Statements for 3 Years......................................................................17
6.4 Projected Cashflow Statements for 3 Years...................................................................18
6.5 Projected Balance Sheets for 3 Years ............................................................................19
6.6 Breakeven Point Analysis ..............................................................................................19
7. Intellectual Properties ..........................................................................................................20
8. Environmental Issues ...........................................................................................................20
9. Critical Factors.....................................................................................................................20
10. Conclusion and Recommendations....................................................................................21
References................................................................................................................................22

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1. Background
Mushroom is an amazing food that is classified as a fungus in the textbooks and vegetable in
stores and markets. It is low in fat and carbohydrates, but high in protein, minerals, good-
quality fibers, and antioxidants; it can also help control diabetes, blood pressure, and other
diseases. There are no negative effects from the food. Furthermore, eating vegetables on a
regular basis can help one stay healthy. In Bangladesh, Mushroom cultivation has been rapidly
rising, with productivity expected to reach 40,000 Metric Tons by 2020 (Express, 2021).
Agriculture Minister Dr Muhammad Abdur Razzaque stated that the government had made
many efforts to take use of the potential of Mushrooms due to increased consumption and
output of the fungal species. According to the minister, this product's farming would be
increased across the country. Enhanced Mushrooms kinds and growing techniques have
already been developed, according to the minister, and these should be available to
entrepreneurs. Following the depletion of cropland, the administration has been concentrating
on crops that require less land, with Mushrooms being a particularly ideal crop for Bangladesh,
according to the minister. The followings are some highlights;
As from the above figure it can be seen that, near about 30,000 growers are there in Bangladesh
including giant companies such as Sriha enterprise, Mushroom Agro Concern, Ahmed
AgroFisheries Ltd, and many more (Uddin et al., 2011). According to industry insiders (2020),
the sector employs between 90,000 and 100,000 individuals. According to government
Figure 1: Mushroom Business in Bangladesh (2020)
Source: (The Dhaka Tribune, 2021)

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statistics (2020), Mushroom output has surged thrice in the last ten years. According to
NAMDEC data, it increased by 300 percent from 10,500 tons in 2009-10 to 42,000 tons in
2018-19 fiscal year. The production increased by 25-30% on average per year, according to the
data. According to the Mushroom Development Institute in Savar, the country produces around
40,000 tons of Mushrooms each year, worth roughly Tk. 800 crore in the market.
According to industry experts, demand for the extremely nutritious Mushrooms is growing by
the day, but the country is unable to meet it (Abla and A., 2007). They claim that local
manufacturing can fulfil roughly 40-50 percent of total demand, with the balance coming from
imports. Badrul Alam, the executive of Meena Bazaar in Magbazar in the capital, stated that
the demand for Mushroom was increasing, but that they did not have enough of the product.
When we spoke with several restaurants and hotels, we discovered that the majority of them
obtained the item from imports because the local Mushrooms was not consistently available in
the market. That means Mushroom cultivation is a promising business concept in Bangladesh.
The climatic condition is also favourable and completely suitable for Mushroom cultivation.
Furthermore, the production process does not require any cultivable ground and may be grown
vertically in a room. So, the consideration of starting a Mushroom cultivation business in
Bangladesh is worth thinking in Bangladesh.
2. The Project
We, the TEAM RECTUS came up with our very own project plan of establishing a business
“GreenAgro Mushrooms”, a Mushroom cultivation and selling business in Bangladesh.
GreenAgro Mushroom is a partnership business and will be located at Dhaka, Bangladesh that
will produce different varieties of Mushrooms and sell them in the local markets.
The mission and vision statement of this business is as follows:
Vision: “Bringing an agro revolution in the country and to be the best and most innovative
Mushroom Producer in Bangladesh.”
Mission: “To enlighten consumers on the virtues and benefits of Mushrooms from our
business. Promote and drive category growth for our customers. We will do this through an
efficient, fair and sustainable supply chain striving always to optimize returns, innovate and
provide best value services to our producers”

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2.1 Products of GreenAgro
Initially, our business will focus on cultivating Oyster Mushrooms and Button Mushrooms.
Later on, we have plan to include Vitamin-D Mushrooms, baby Mushrooms, Portobella
Mushrooms, Brown Mushrooms, Giant Mushrooms, and some other types also.
2.2 Proposed Business Model
2.3 Techniques
Because mushroom lacks chlorophyll and does not produce photosynthesis, they are grown
indoors. It's cultivated on agricultural and manufacturing wastes with a few gypsum and lime
additives. We will rent a place or room, and try to produce mushrooms in there. We will directly
buy Spawns (Seed that grows mushrooms) and directly start production without any further
process. This will reduce our efforts on producing Spawns. The Spawns will be kept in the
room until it produces mushrooms. The process normally takes 28 – 42 days.
2.5 Employment Generation
The project expects to generate employments for 3 people who will have to role of taking care
of the production houses and other necessary maintenances. Besides, the six partners of the
projects will also directly involve to the operation of the business.
Figure 2: Business Model

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2.6 Organizational Profile
GreenAgro Mushroom Supply
GreenAgro Mushroom Supply
Savar, Dhaka, 1340
Telephone: 02-922##428
Mobile: 01752-15##28
Web: Greenagro.com.bd
Email: GMF@yahoo.com
3. Feasibility of GreenAgro Mushroom Project in Bangladesh
A feasibility study determines if a proposal or project is feasible or not. Feasibility study
examines a project's viability to see if it has a chance of succeeding (Orsmond, 2015). The
study will also look for any challenges and problems that may occur as a result of the project's
implementation. We must establish whether we have adequate personnel, financial capabilities,
and technical assistance as part of the feasibility study. The return on investment must also be
determined, whether it is assessed in terms of monetary gain or societal benefit, as in the case
of a non-profit.
In this part of our report, we have shown the feasibility study of out Mushroom Cultivation
project from seven key aspects.
3.1 Market Feasibility
Market feasibility studies widely are used to examine a project proposal by identifying market
competition, possible markets, and market analysis. They are very essential to us because we
intend to start a new business project. We have tested the market feasibility for our project and
the followings are found:

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3.1.1 Market Description and Competitiveness
In Bangladesh, mushrooms are
not a traditional food item. In
Dhaka, sophisticated urban
ho26mes, corporate customers
such as NGOs, large mushrooms
farms, Chinese restaurants, and
university, college, school, and
cantonment canteens, as well as
expats, still make up a small
niche market (Easin et al., 2017).
The small niche market is
captured by some well-
established Mushroom firms.
The following table shows the
industry behavior of mushroom
business; The chart in the left shows that no single company dominates the mushroom industry
in Bangladesh. That means there is a huge prospect of mushroom farming in our Bangladesh.
Therefore, Small to medium companies like our GreenAgro Mushroom can easily starts
business and make money from it. Thus, the industry indicates that the project is feasible.
3.1.2 Market Potential
Due to rising demand, restaurants, and families, approximately 0.15 million persons in the
country were now active in mushroom farming (Dhaka Tribune, 2020). People are also active
in this industry by offering product compatibility on the market. Bangladesh may export a large
quantity of mushrooms to the worldwide market in addition to the home market. Our research
found some key issues that may describe the market potential;
• Country's mushroom market is worth of Tk 800 crores.
• Almost 1.5 lakh people are involved in mushroom farming.
• Country's annual mushroom production is 40,000 tons.
• Country has huge potentials to increase production to one lakh tons.
The above data indicates that there are huge potentials of mushroom farming in Bangladesh.
The demand is there, the people are there, the market is also supporting, these are what we need
37%
11%
9%
7%
10%
26%
Market Share in Mushroom Industry
Mushroom Bangla
Marufs Mushroom
Asia Mushroom
Nata Mushroom
Green House Mushroom
Others
Figure 3: Market Share of Firms
Source: (National Mushroom Development and Extension
Center, 2021)

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to start our project. So, this also indicates that the market of Bangladesh is in favor for starting
our GreenAgro Mushroom cultivation project.
3.1.3 Access to Market
The existing market outlets of mushroom business reveals involvement of three intermediaries;
such as retailer, mushroom training center and wholesalers as shown below:
The market for mushroom is all over the country because in almost all the districts of the
country, there is huge demand for mushrooms. Most of the demands come from restaurants,
and families from all over the country. The current market has a chain that allows business to
access to any market outlets of the country. Producers can directly sell to consumers of any
market outlets, or through the wholesalers and retailers. Even the Mushroom Training Center
located at Savar also sells mushrooms. Producers can send the mushrooms to the center and
they will deliver them to any market outlets. Thus, the country’s market has enough ways of
getting access to the outlets. If we start the business, the current ways of getting access will
support us.
3.1.4 Target market
Under natural conditions, the whole production cycle for mushroom cultivation is 1.5 months.
Under artificially managed conditions, an additional crop of 2 months can be obtained.
Supermarkets in Dhaka, Gazipur, Narayanganj, Chittagong, Rajshahi, Barishal and Cox’s
Bazar sell fresh mushrooms. The excess produce is dried and canned before being sold to
hotels, restaurants, and bakeries. Those are the initial potential target market for the business.
However, the business aims to sell mushrooms all over the country.
Figure 4: Marketing Channel

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Therefore, from the overall market feasibility study, we conclude that the marketplace of
Bangladesh is in favor of our projects. Any new producers, such as GreenAgroo Mushroom
can enter the market, starts production, and sell the mushrooms with proper support from the
current Bangladesh market situation. The market description says there is no single dominating
business, the market potential is also there because there are huge demands, the project expects
to have sufficient access to market outlets, and the target markets can be clearly defined as
well. So, the project is feasible considering the market conditions.
3.2 Technical Feasibility
This is the process of proving that the concept is technically possible. Its objective to confirm
that the product will perform and to verify that there are no production barriers. Our project
‘GreenAgro Mushroom’ is technically feasible because the necessary technology and other
technical stuffs are available in our country and we have access to all of them. The cultivation
will be carried out in a traditional manner. Because unpasteurized compost is usually utilized,
yields are minimal. However, improved agronomic practices have resulted in a rise in
mushroom productivity in recent 14 years. The cultivation of the common mushroom
necessitates a high level of technical expertise as well. Mainly two things must be kept in mind
(Higgins et al., 2017).
• Temperature for spawn or vegetative growth: 22-280C.
• For fruit body formation: 15-180 Humidity: 85-95% and enough ventilation during.
We will have workers who will be given proper training before starting production of
mushroom in our firm. Besides, there are some other technical issues that we must have. Those
are as follows:
• Compost preparation.
• Spawning.
• Crop management after spawning.
• Harvesting.
The National Mushroom Development and Extension Center at Savar, Bangladesh provides
training to workers on how those technical tasks can be done in effective and efficient manner.
Therefore, the labor and workers of our business will get training from there and become expert
in technical stuffs. Furthermore, Mushroom is indoor cultivated crop because it has no
chlorophyll and there is no photosynthesis required. It is grown on agricultural and industrial
wastes with the little amendments of gypsum and limes. Besides, the facility, production
technology such as Spray Pump, Humidity Sensor, Tool Kits, Weighting Machine, all are

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available in country like Bangladesh. Thus, we can conclude that our project is technically
feasible.
3.3 Economic Feasibility
Mushroom cultivation in the country has grown steadily, with production exceeding 40,000
tons, valued at 8.0 billion tons, by 2020, according to government figures (Express, 2021).
Mushroom growing is both a source of public revenue and a strategy for poverty reduction.
Mushroom cultivation and sale generate a wide range of direct and indirect jobs, as well as
opportunities for processing enterprises. Mushroom growing requires little capital, low
expertise, and sometimes even enclosed mushroom gardening is practical on a small scale and
can yield large returns with minimal effort; women can grow mushrooms in their homes like
they would do poultry (Akter et al., 2019). Mushroom production rose in our country as a result
of local market demands and export potential. A decade and a quarter ago, less than 10,000
tons were produced (Express, 2021). The following graph shows the demand of mushrooms
over the year:
Since the demand is there, it means the project is economically viable. The financial aspects of
the project also seem promising because the project is expected to be financially viable also.
Easin et al., (2017) reported a very high Benefit-Cost Ratio (BCR) of 2.24. That means the
benefit is twice of the costs. A number of trials have disclosed that mushroom production is
convenient, since only a little effectiveness and a profitable agricultural enterprise are needed,
which are evident for their lucrative benefit cost ratio (BCR) that ranges from 1.55 to 3.25
Figure 5: Demand of Mushrooms in Bangladesh

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which is very high comparing other agricultural product such as paddy, wheat or anything else
(Zamil and Cadilhon, 2009).
3.3.1 Project Cost-Benefit Summary and Profitability Analysis
The following table shows the expected profitability ratios and benefit-cost ratio of the project
GreenAgro Mushrooms. Detailed analysis and data are given in the financial projection section
of this report.
Descriptions Year 1 Year 2 Year 3
Project’s Gross Margin 61% 65.96% 70.05%
Project’s Net Margin 42.17% 48.08% 54.05%
Project’s Cash to Liability ratio 1.81 2.32 2.83
Project’s Benefit-Cost ratio (BCR) 1.73 1.93 2.18
Table 1: Project’s Profitability Analysis
Based on the financial projection (Shown on latter part of this report) that we have made, the
above table shows the financial viability of the project. All the figures look promising and
indicate a strong financial viability of the project. The industry benefit cost ratio, as discussed
before, is somewhat between 1.55 to 3.25. And the BCR of our project is 1.73 in the first year
and going upward thereon.
3.3.2 Project Financing
Equity and loans will be the two sources that will be used to finance the projects. We want to
rely on equity financing more as it will bear less costs. The following tables shows the sources
and amount of financing required to commence and carry out the projects along with the ratio
of each of them:
Descriptions Details
Total Equity (2/3) 400,000
Term Loan (1/3) 200,000
Time period of the loan 3 years
Debt-Equity ratio 0.5: 1
Table 2: Project Financing
Equity will be provided by 6 partners of the business and they will share the profit according
to the agreement. Besides, a loan will be taken as well to carry out the preliminary tasks and
other requirements. Since the financing is ensured, therefore, the project will no longer suffer
from financial insolvency.

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3.3.3 Project Cost
The following cost requirements have been identified before the commencement of the
operations of the proposed projects:
Capital investment Amount (Tk.)
Office Building 50,000
License fee 5,000
Other legal requirements 10,000
Spawns and other resources required for Mushrooms 235,000
Initial working capital 300,000
Total project cost 600,000
Table 3: Project Cost
3.4 Schedule Feasibility
The schedule of producing mushrooms is different for each type. We need to identify which
mushrooms grow better in which season of the year and then proceeds with our operation. As
a cultivation program, mushroom production definitely has some time schedules which needs
to be maintained thoroughly.
• Summer season – Straw Mushrooms.
• Winter season – Bottom Mushrooms.
• All season – Oyster Mushrooms.
From preparing the substrates for growing mushrooms, preparing the seeds of different types
of mushrooms, bagging them and storing them in the shelves where the mushrooms would
grow- all these would require a time span of 26-42 days depending on the temperature of the
room, the quality of the seeds and other factors (Ferdousi et al., 2020). So, we can say that the
payback period (PBP) of our working capital investment will be around 50 days. The PBP is
very low and it indicates that after almost 50 days we will get our invested working capital
money back. Thus, the project passes the schedule feasibility test.
3.5 Operational and Resource Feasibility
Mushroom production requires less resources and the operational activities are very simple and
straightforward. Agricultural disposal is a best choice of mushroom production, including
wheat straw, paddy straw, rice straw, sawdust, etc. The substances must be created from these
and in our country, these are relatively available. A mushroom spawn is required to start the
culture. This can be made using a sterile culture, or readily available spawn can be purchased

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from government and suppliers. These are some of the most vital resources for mushroom
culture, even if some additional things are needed for healthy growth. Some of them: barrels,
ropes, gunny sacks, sprayers for water, straw storage shelter, store of mushrooms, and so forth
(Ferdousi et al., 2020).
3.5.1 Space Requirements
Area Required Area (Sq.ft) Monthly Rent Charges (Tk.) Yearly Rent (Tk.)
Mushroom farm 3,000 4,000 48,000
Total Rent 48,000
Table 4: Space Requirements
Eventually, the production process has to be started in a proper place like a house. If the
production is started at a low budget, the lower amount of production volume may require little
space to grow. With the growing profitability of the business, the production may also grow
simultaneously and thereon the farming house may also be expanded.
3.5.2 Personnel Requirements
Stages/ Activities Full-time workers Part-time workers
Farming 3 workers 3 workers
Growing 3 workers 2 workers
Harvesting 1 worker 2 workers
Storage 2 workers 2 workers
Distributing 3 workers 3 workers
Official Activities 5 Partners 1 worker
Table 5: Personnel Requirements
If the matter of human resources is pondered about, in Bangladesh, mostly young, educated
people and rural women are adopting mushroom farming as commercial basis. From
production activities to selling the mushrooms in the marketplace, adequate number of people
might be found who would work in this sector, as there are still a lot of unemployed people in
our country.
So, it can be clarified that there is abundance of required resources for farming mushrooms in
our country even if the producer is intended to start the production in a small amount. That
means our project passes the operational and resource feasibility test.

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3.6 Cultural Feasibility
Despite the fact that mushroom demand is increasing in our country, it is still unable to attract
a big number of clients. Many elderly individuals are uncomfortable eating mushrooms,
regardless of how healthy and nutritious they are. People believe mushrooms are a "toad-stool,"
which is why they haven't garnered much attention as a cuisine (Zamil and Cadilhon, 2009).
Furthermore, some people in our country are unsure if it is ‘Halal' or not. As a result, due to
the cultural factor in this scenario, gaining that set of people as target customers may be tough.
However, in recent times, people are getting aware of the fact that mushrooms are very healthy
food and very good for health and the demand is increasing. It is low in fat and carbohydrates,
but high in protein, minerals, good-quality fibers, and antioxidants; it can also help control
diabetes, Table 5: Personnel Requirements 19 blood pressure, and other diseases. There are no
negative effects from the food. Furthermore, eating vegetables on a regular basis can help one
stay healthy. This is a very good sign for the mushroom industry and we believe that cultural
barriers will not be there if we start out business.
Therefore, GreenAgro Mushroom project will not face any cultural barriers and we conclude
that the project is culturally feasible. Even if any barriers arise, we will try to eliminate those
by providing necessary information to the customers of different cultures.
3.7 Legal Feasibility
The project will comply all the legal requirements of National Agriculture Policy of
Bangladesh, all the rules and regulations of Partnership act, Local policies, etc. First, the
partners of GreenAgro Mushroom will create an agreement in written form that includes Name,
Address, Duration of partnership, Partner’s details, Partner’s capital contribution, Share of
profit, Dissolution of partnership, etc. RJSC (The Registrar of Joint Stock Companies and
Firms) is the sole authority to Register Partnership Firm in Bangladesh. We will apply to RJSC
for registration and take the name clearance certificate of our partnership firm. Furthermore,
we will take trade license, TIN certificate, Bank accounts, VAT registration certificate, and
Export registration certificate (ERC) from the corresponding authorities.
GreenAgro will not be involved in any activities that the constitution of Bangladesh does not
support. Besides, no illegal means will be used in financing, operating, and selling activities of
the business. The business will abide by the Bangladesh Food Safety Laws and Regulations as
well. Therefore, there is no chances that the commencement and operation of GreenAgro
Mushroom business will get any restrictions. Therefore, the implementation of our project is
also legally feasible in Bangladesh.

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4. Project’s SWOT Analysis
SWOT analysis is an important part of a project’s feasibility study. In this part the strengths,
weaknesses, opportunities, and threats are listed.
Strengths and Weaknesses
Strengths Weaknesses
• Lower cost.
• Chemical free products.
• Huge productions.
• Strong distribution channel.
• Shortage of capitals.
• Lack of insufficient HR.
• Lack of sufficient knowledge and skills.
Table 6: Strengths and Weaknesses of the Project
Opportunities and Threats
Opportunities Threats
• Less competitors.
• Heathy products and mushrooms help
control diabetes, blood pressure, and other
diseases.
• High demand but less supply.
• Political Crisis.
• Economic instability all over the world.
• Threats of new entrants.
Table 7: Opportunities and Threats of the Project
SWOT analysis found some key strengths, weaknesses, opportunities, and threats. But the
strengths of the project are capable of eliminating the weaknesses. The business will try to take
the maximum advantages from the opportunities and try to avoid the threats.
5. Marketing and Sales Strategies
We have classified our market according to their class, needs, behaviors. We will satisfy our
all customers by different service. There are three types of customers, they are general people,
middleman, and industry market. We have to capture the whole market. For this, we have done
a marketing research regarding mushroom among people. In that research something is found
these things are given below:
• Customers want quality products, nutritious products at a reasonable price.
• Our target customers are consumers, retailers, food industries, and super stores.
• Promotional strategies must be there as part of marketing to reach more people.
• People mostly nowadays want home delivery. This needs to be considered.

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6. Financial Projections
In this part, the estimated financial projection of GreenAgro Mushroom company is given for
consecutive three years. The projections are completely based on market information and if
situation changes in the future, the projection may not be exactly accurate.
6.1 Projected Balance Sheet at the Beginning
First of all, the operation is expected to be started with the followings:
Balance sheet at the beginning of the period
July 1, 2023
Assets
Office Building
Cash
Preliminary Expenses
Total assets
Liability and equity
8% Term Loan (5 Years)
Capital (Will be provided by 6 partners)
Total Liabilities and Equity
50,000
500,000
50,000
600,000
200,000
400,000
600,000
Table 8: Projected Balance Sheet at the Beginning
6.2 Projected Cost Statement for Harvesting Period
The production of mushroom will require Spawn (Raw materials) that will be directly bought
from the supplier on cash. The Spawn normally takes 28 – 42 days to produce mushrooms.
Therefore, we will consider harvesting time of 1.5 months cycle and repeat the process 8 times
in a year. The cost calculation for 1.5 months harvesting time is given below:
Projected cost statement for one harvesting period (2 months)
Raw materials (Spawn) (600 kg at 80 Tk per)
Add: Labor (direct)
Direct Expense
Add: Factory Overhead
Production house rent
Maintenance
Electricity and others
Total Overhead
Total Production Cost
48,000
1,000
49,000
6,000
2,000
1,500
9,500

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58,500
Table 9: Projected Cost Statement for Harvesting Period
The above cost statement shows that it will take 58,500 Tk each harvesting period as production
cost. We assume that there will be no ending inventory therefore, the total cost of goods sold
for 1 operating year will be (58,500 x 8 times) = 468,000 Tk.
6.3 Projected Income Statements for 3 Years
In each harvesting period, at a cost of 58,500 Tk, the Spawn will generate 600 Kg of
Mushrooms which can be sold at market for 250 Tk per Kg. So, the total mushroom production
in 1 operating year will be (600 Kg x 8 times) = 4,800 Kg. We expect to increase the production
by 25% each year. And the cost of goods sold is expected to increase by 20% each year. And
the price is expected to increase by 10% each year. Considering these, the following projected
income statements are given:
Mushroom Production (kg) 4,800 6,000 7,500
Price per Kg 250 275 300
Particulars 31st Dec 2022 31st Dec 2023 31st Dec 2024
Sales
Less: Cost of Goods Sold
Gross Profit
Less: Operational Expense:
Marketing expense
Interest on loan
Depreciation
Office Rent expense
Transportations
Write-off of Preliminary expenses
Miscellaneous
Total Operating expenses
Net Income
1,200,000
(468,000)
1,650,000
(561,600)
2,250,000
(673,920)
732,000 1,088,400 1,576,080
20,000
16,000
5,000
120,000
40,000
10,000
15,000
20,000
16,000
30,000
144,000
60,000
10,000
15,000
25,000
16,000
65,000
144,000
80,000
10,000
20,000
226,000 295,000 360,000
506,000 793,400 1,216,080
Table 10: Projected Income Statements
Marketing expenses are likely to be increased over the years. Depreciation is calculated using
the estimated useful life of the corresponding assets. Office rent is per month 10,000 Tk for
year 1 and 12,000 later and it will be used for administrative purposes. Transportations
expenses are mainly Freight out expenses for delivering the mushrooms at buyers’ destination.
The preliminary expense is expected to be written off in 5 years. Miscellaneous expenses
include the other minor and small day to day expenses. Based on these assumptions, the above
income statements are projected.

18
6.4 Projected Cashflow Statements for 3 Years
In this part, the projected cashflow statements are given. We assume that the 60% of the sales
of one period will be collected on that period and the remaining 40% will be collected in the
next period. We expect to pay all our expenses on cash; therefore, all are included in the
cashflow statements. After 1 year, the company will buy one Delivery truck at 250,000 Tk
(useful life 10 years) and after 2 years, the company expects to buy another Delivery Truck at
350,000 Tk (useful life 10 years). All the purchase will be made on cash. The projected
cashflow statements are as:
Particulars 31st Dec
2022
31st Dec
2023
31st Dec
2024
Sources of funds:
Equity capital 400,000
Loan 200,000
Sales (60% current year + 40% previous
year)
720,000 1,470,000 2,010,000
Total Cash available (A) 1,320,000 1,470,000 2,010,000
Use of funds:
Cost of goods sold 468,000 561,600 673,920
Operating expenses 211,000 255,000 285,000
Capital expenditure (Building) 50,000
Preliminary expense 50,000
Partners profit share 180,000 300,000 600,000
Delivery Truck (Mini) 250,000 350,000
Total cash use (B) 959,000 1,366,600 1,908,920
Opening cash balance 361,000 464,400
Changes in Cash (A-B) 361,000 103,400 101,080
Ending cash balance 361,000 464,400 565,480
Table 11: Projected Cashflow Statements
Looking at the above projected cashflow statement, the project expects to have an end cash
balance of 361,000 Tk in its first year of operation, 464,400 Tk in second year, and 565,480
Tk in the third year of the operation.

19
6.5 Projected Balance Sheets for 3 Years
Taking the information from the above income statements, cashflow statements, the balance
sheets for the respective 3 years are projected. The project expects to have net assets of
(926,000 – 200,000) = Tk 726,000 after first year of the operations. And the overall balance
sheets projection shows a very strong future of the business.
Particulars 31st Dec 2022 31st Dec 2023 31st Dec 2024
Assets
Cash 361,000 464,400 565,480
Account Receivable 480,000 660,000 900,000
Delivery Truck (Mini) 250,000 575,000
Less: Depreciation (25,000) 225,000 (60,000) 515,000
Building 50,000 45,000 40,000
Less: Depreciation (5,000) 45,000 (5,000) 40,000 (5,000) 35,000
Preliminary Expense 50,000 40,000 30,000
Less: write-off (10,000) 40,000 (10,000) 30,000 (10,000) 20,000
Total Assets 926,000 1,419,400 2,035,480
Equities & liabilities
Capital 400,000 400,000 400,000
Retained Earnings 0 326,000 819,400
Add: Net profit 506,000 793,400 1,216,080
Less: Drawings (180,000) 326,000 (300,000) 819,400 (600,000) 1,435,480
Loans 200,000 200,000 200,000
Total E/L 926,000 1,419,400 2,035,480
Table 12: Projected Balance Sheets
6.6 Breakeven Point Analysis
BEP analysis will tell how many units of mushrooms must be sold in order to cover up the
fixed costs of the projects. The selling price in 2022 will be Tk 250. The variable cost and fixed
costs calculations are shown below:
• Total variable cost per Kg = (468,000 + 16,000 + 40,000 + 15,000) / 4,800 Kg = 112.29 Tk
• Total Fixed costs in year 1 = (48,000 + 20,000 + 5,000 + 120,000 + 10,000) = 203,000 Tk
Contribution Margin = (Selling Price per Kg – Variable cost per Kg)
= (250 – 112.29)
= 137.71 per Kg
Breakeven Point = Fixed cost per year / Contribution margin per unit

20
= 203,000 / 137.71
= 1,475 Kg (Approximately)
So, in year 1, GreenAgro project needs to sell at least 1,475 Kg of mushrooms to cover up its
fixed costs and get away from making loss. The project expects to sell 4,800 Kg in year 1,
meaning that the safety of margin is = (4,800 – 1,475) = 3,325 Kg.
The project expects to reach breakeven point within 3 harvesting periods because each
harvesting periods will produce and sell 600 Kg of mushrooms. Therefore, 3 harvesting period
will generate and sells 1,800 kg of mushrooms. Note that the project will have 8 harvesting
period in a single year.
7. Intellectual Properties
For our GreenAgro Mushroom company, we will submit the registration form for registering
our partnership business. Our firm focuses on agricultural knowledge, experience and training
for our full-time staffs and as well as their continuous development to sustain in the long run.
Our license for growing different types of mushrooms and authorization from BSTI will add
value and make our potential consumers trust our products. Rather developing brand value
proving quality products and service will make us sustain in the market for longer period of
time. Trademark will be another intellectual property of our business. We will register the
trademark from the concerned authorities or parties.
8. Environmental Issues
Mushrooms play an important ecological role in the management of ecosystems. Indirectly,
mushroom cultivation is a bioconversion process of organic substances which provides
opportunities for the recycling of organic matter thus reduces pollution (Dorr et al., 2021). And
as it's cultivated on agricultural and manufacturing wastes with a few gypsum and lime
additives all of those substances used in cultivation are applied as organic manures to the land
after harvesting of mushrooms. Though cultivating mushrooms is eco-friendly, we must be
aware of following every environmental guideline provided by respected authority.
9. Critical Factors
Mushroom cultivation is done in a natural setting. The current climatic state (cold temperature)
in the region where the mushroom farm will be developed economically is a significant issue.
The heating requirements for mycelial growth and fruiting vary depending on the type of
mushroom 26 that can be grown artificially. Lighting, temperatures, and moisture must all be

21
properly regulated in order to get high-quality mushrooms. Another important consideration is
the placement of the mushroom farm; the proximity between the farm and the source of the
substrates should be considered; the longer the distance, the higher the cost of transportation
and, as a result, the higher the manufacturing costs (Korsten, 2016). The availability of markets,
taking care of production, and proper sales strategies determine the success of mushroom
growing and selling. For postharvest handling, drying, and packing of the mushroom before to
market, skilled people are necessary.
10. Conclusion and Recommendations
In Bangladesh mushroom cultivation is still an unfamiliar business. Most of the people are
unknown to this business. But the demand of mushroom has inspired us to start a mushroom
firm like ours “GreenAgro Mushroom Firm”. Mushroom production can be an appropriate job
for the poor landless both men and women and also students in Bangladesh. Mushrooms can
be grown in the small space of a farmer’s own house for small scale production and generate
income that aids in the family support. Mushroom cultivation is a most popular activity for
development programs targeting income generation among women in Bangladesh because it is
suitable for the women’s lifestyle. The product is highly nutritive and a good food for their
children and old parents, and because of its high economic value they can also earn some
income from the production. Thus, mushroom cultivation may reduce poverty and improved
the lifestyle of many poor male and female in Bangladesh.
This report shows the feasibility study of the mushroom cultivation project in Bangladesh and
finds that it can be easily done. The feasibility study shows positive sign from market
perspective, technical perspective, economic perspective, operational and resource perspective,
and all others. Market analysis shows there is enough market potentials, economic analysis
shows the project is financially viable as the expected benefit-cost ratios, profit margin is very
high. Within 1 year, the project will reach its breakeven point as well. Financial projections
show very high net profit and positive cashflows for the respective years. Resource
requirements can be easily fulfilled, labor is cheap in Bangladesh, the production cost is
relatively low compared to other agricultural products, and the price is also relatively high.
Therefore, this study recommends going for mushroom cultivation and establish the firm
GreenAgro Mushroom. The project will be successful in very short period of time as found in
this feasibility study.

22
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