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Chapter I

I. Introduction

Growing mushroom that is considered an almost perfect food could be remarkably

profitable yet it remains one of the not-too-much-famous farm-based ventures in the
Philippines.- Department of Science and Technology (DOST) Director.
Mushroom is a nutritious vegetarian delicacy that contains higher quality proteins than green
plants, it contains important minerals such as iron, phosphorus, potassium and calcium and
nearly all vitamins, including vitamin D. It also contains fibers, which stimulate digestion in
humans, as well as other elements favorable for health. However, despite of its nutritional
value, the present mushroom cultivation in this country is limited, due to inadequate local
knowledge about its culture.
Since 1950s, the Philippines has been importing processed or canned mushroom from the
South East Asia like China, Taiwan, Thailand, Malaysia, Korea and Japan, spending about Php
750,000 or more annually. Currently, there are only three companies producing mushrooms
commercially in the Philippines with two in Baguio City and one in La Trinidad.
The countrys mushroom production ranges from 15-20 tons annually. Among the organic
mushroom breeds produced in the country are White button mushroom, Paddy straw
mushroom, Oyster mushroom, Shiitake and Ganoderma with the average farm gate price per
kilo of P290, P250, P160, P300 and P1750, respectively.
Based from DOST findings, mushroom demand in national and local markets has been
growing at a rate of 10% per annum for the past years. This market growth trend is expected to
increase as a result of the rapid increase of population and the growing awareness of the
consumer about the benefits derived from mushroom.
The second district, specifically the city of Legazpi has been one of the major importer of
mushroom from other citys and provinces outside Bicol region due to the fact that there are only
few suppliers in the province and even in the regional scale. Legazpi City has a strong demand
on mushroom evident to the fact that it has the largest number of food chains and restaurants
that use mushrooms in its dishes in the region. Thus, the proponents believe that there is a
need to establish a mushroom culture facility to satisfy this strong demand.
A. Project Title: Feasibility of a Mushroom Culture Facility in Legazpi City
B. Project Proponents:
Franciso, Quennie Mae
Gaid, Gerryl P.
Osina, Dalisay
Sacueza, Ma. Katrina O.

C. Highlights of the Project

Project Cost: Php 55, 398, 039.48

The project cost is comprised of all acquisition property and working capital

Location: Estanza, Legazpi City

The mushroom culture facility shall be stablished at Eztanza, Legazpi City
because there are potential markets for mushroom products among supermarkets, food
chains, restaurants and other consumers around the city. The location is also located on
highland in which most mushrooms suitably grow due to its low temperature.

Source of Financing: Equity Contribution and Debt Financing

To finance the project, the partners will borrow funds from a bank and seek
financial support from the investors.

Return on Investment:
The ROI for the first year is 88.87%.
Payback Period:
D. Summary of Findings

Mushroom is a vegetarian delicacy and a suitable substitute for meat and eggs. It
is easily digestible as well. Many exotic preparations are made from them like soup,
pickles, vegetables etc. It is also used for stuffing several food preparations and for
Basically, the studys target market includes supermarkets, restaurants and fast
food chains in the Province of Albay. All these entities are offering mushrooms in their
business operations. Thus, there is a strong market demand from these entities. Also,
there is a planned extension of operation to provide fresh mushrooms outside Albay
Risk and threats that might arise during the course of operations have been
identified and defined. It is right that is impossible to know the righteousness of all
contingencies that could occur. Accordingly, no reasonable plan to deal with unforeseen
events will provide solutions for all the possible occurrences. Even so, the company has
developed strategies and practical solutions for reducing the level of uncertainty and risk
to which they are exposed.


Any organization wouldnt be as successful as it is not for the person who
composed it. And though affected by external factors, it still depends on those
persons on how they could make the success last as its lifetime achievement.
The entity shall be organized as a partnership type of business organization with
the partners contributing same amount of capital. It has its own business vision, mission
and goals to direct its path to where it is intended to go and it is bound to do.
Employee section is done by setting up standard qualification to hire a better if
not best individual for the position. For the salary and wages, each will receive
compensation based upon the standard salary and benefits of the community. They are
also entitled to seminars and training for the improvement and development of their skills
and knowledge.
Furthermore, all persons that consists workforce of the partnership shall be
entitled to a 13th month pay and shall be registered with SSS, Phil Health and PAG-IBIG
in compliance with the labor code. Nigh shift employees, on the other hand, such as the
farm men and security guard are paid a differential of not less than 10% of the regular
wages for each hour of work performed between 10:00 p.m and 6:00 a.m.


The company shall employ a calendar year accounting period, which shall be the
basis of filing its annual income tax returns. The company will pay income taxes at the
time the return is filed at the rate of 30% based on the net income before taxes.
Since the entity is a partnership type of business organization with capital
exceeding P3000, the Articles of Partnership shall be registered with Securities and
Exchange Commission (SEC). This is necessary for the business to acquire a licensed
permitting the entity to engage in business or trade.
The entity shall also register the business at the Department of Trade and
Industry (DTI) and as well as conduct registration with the Social Security System (SSS),
PAG-IBIG, Philippine Health Insurance Corporation (Phil Health). The entitity shall also
secure permit from the Local Government of Legazpi.


The proposed project is financially feasible based from the analysis of the
financial aspects on its projected operations. It has a payback period of during which
the original investment can be recouped. The partnership business can perform very
well based on its financial statement analysis which covers its profitability, liquidity and
stability analysis.


The business is important in the society because it increases the supply of

mushroom which is ordinarily seldom and seasonally available. It aims to promote
mushroom as part of daily diet of the people. And it implicitly contributes the promotion of
a healthy lifestyle.
The Mushroom culture facility can play an important role in supporting the local
economy by contributing to subsistence food security, nutrition, and medicine;
generating additional employment and income through local, regional and national trade;
and offering opportunities for processing enterprises (such as pickling and drying).
Indirectly, mushroom cultivation also provides opportunities for improving the
sustainability of small farming systems through the recycling of organic matter, which
can be used as a growing substrate, and then returned to the land as fertilizer.
Thus, the mushroom culture facility production already entails an economic push
because of the employment contribution and payment of taxes to be made by the

After going through the projects major components: Market, Technical, Organization
and Management and Financial Study, the project looks good as a whole
notwithstanding the minor uncertainties. Thus, the project is well through-out feasible
and important.


The proponents, therefore, recommend the establishment of the mushroom

culture facility in Legazpi City.


The proponents project is establishing a mushroom culture facility in Legazpi City in

the name of insert name. The mushroom culture facility will be producing organic
mushrooms particularly: (1) White Oyster Mushroom; (2) Shiiitake Mushroom; (3) Wood
Ear Mushroom; (4) Button Mushroom; and Champignon Mushroom. The target market
for the product will be the supermakets, fast food chains and restaurants in Albay.
The Mushroom culture facility shall be organized as a partnership type of
business organization. The business is geared towards attaining the following long-term

1. To provide fast yielding and nutritious source of edible mushroom for market
2. To reduce vulnerability to poverty by providing opportunities for
employment/livelihood and reliable source of income for the community.
3. To provide opportunities for improving the sustainability of farming systems through
the recycling of the organic matters used.
4. To furnish awareness among the members of the community of the nutritional
benefits of mushrooms.
5. To achieve the desired profit and expected market share from the business

The project was identified after realizing that establishing a mushroom culture
facility in Albay is satisfactory to satisfy the strong demand amongst its potential