Do you want to know how much money mushroom farms make yearly? If YES, here are 7 factors that determine the income & profit margin of mushroom farm owners. The major motive behind starting any business is money, hence whenever an entrepreneur wants to start a new business, one of the first questions that they usually ask is how profitable the business is.
This narrative also applies to entrepreneurs who are looking towards starting a mushroom farm business. They would want to know how much they are likely going to make annually from their mushroom farm.
The truth is that there is no one-mold-fits-all when it comes to how much a mushroom farm business is expected to make. There are some factors that we are going to look into before giving an estimate of how much an average mushroom farm can make yearly and these factors are;
7 Factors That Determine How Much Money Mushroom Farms Make Yearly
Table of Content
- 1. The Size of the Mushroom Farm
- 2. The Location of the Mushroom Farm
- 3. The Type of Mushroom Species Cultivated in the Farm
- 4. Mushroom Disease
- 5. The Management Style of the Mushroom Farm
- 6. The Advertising and Marketing Strategies Adopted by the Mushroom Farm
- 7. The Number of Years the Business is in Existence
- Estimated Profit Margin for a Mushroom Farm
1. The Size of the Mushroom Farm
One cannot conveniently state the amount a mushroom farm is expected to make yearly if you do not know the size of the farm. The amount a backyard garden mushroom farm is expected to make annually will be far different from the amount a standard commercial mushroom farm will make annually even if they operate in same location.
Of course, the amount invested in a backyard garden mushroom farm is different from the amount invested in a large commercial mushroom farm hence the amount they will both make will be different. The approximate cost of starting a mushroom farm could cost anywhere between $3,000 and $100,000 and even more depending on what you want to achieve.
2. The Location of the Mushroom Farm
When it comes to setting up a new business, location plays a major role which is why feasibility studies and market survey are essential. The yield per square foot in a location that is highly suitable for the cultivation of mushroom will be far greater than the yield per square foot in a location that is not so suitable for the cultivation of mushroom.
So, if you want to make it big with your mushroom business, then you must be ready to rent or lease a land in a farming community, a location that can attract mushroom merchants and of course a location with the right demography.
3. The Type of Mushroom Species Cultivated in the Farm
Oyster mushrooms, a type of gourmet mushroom, are one of the most profitable gourmet mushrooms available. In addition to the high demand for them, growing them is pretty simple. Growing takes about six weeks from start to harvest, so it’s possible to make a big profit fairly quickly.
The rare European white truffle is the world’s most expensive mushroom, with a price tag that can exceed 2,200 euros per pound. Button mushrooms (Agaricus bisporus) are the baby version of shiitake and cremini; they are still very fresh and at an early-life stage.
These white mushrooms are probably the most common—and widespread—variety in the world. In fact, they represent 90 percent of the edible mushrooms consumed in the United States. With the fact stated above, you will agree that they type of mushroom a mushroom farmer decides to farm will go a long way to determine the amount the farmer will make from the business.
4. Mushroom Disease
The global commercial farming industry has continually faced numerous challenges. One of the challenges that have affected the growth and income of these farmers are the various diseases rampaging commercial farms globally; there are various viral, bacterial and fungal diseases plaguing the industry.
The history of the industry has been one of serious, periodic global pandemics. Various diseases will continue to be relevant drivers that influence the profit margin of farmers in the industry.
5. The Management Style of the Mushroom Farm
Another key factor that will determine the amount a mushroom farm is expected to make yearly is the management style of the mushroom farm. Trust me, the results you will get when you have a good manager and an average or bad manager will definitely be obvious and different, even if you give the managers same species of mushroom to cultivate, same conditions to work and same employees.
6. The Advertising and Marketing Strategies Adopted by the Mushroom Farm
Another key factor that will determine the amount a mushroom farm can make yearly is the advertising and marketing strategies adopted by the farm. Trust me, there are several advertising and marketing strategies that can help a business increase their earnings, but you may be expected to spend more.
But the results you will make will far outweigh the amount you spent on advertising and marketing. Of course, you don’t expect a mushroom farm that is engaging in aggressive advertising and marketing to make same amount with a mushroom farm that is passive with its advertising.
7. The Number of Years the Business is in Existence
In business, the number of years you are in existence will go a long way to determine the amount you will make especially if the business is focused and under the management of a dedicated manager.
For example in your first fiscal year (FY1) you might make a hundred and twenty thousand dollars ($120,000), in your second fiscal year (FY2) you might make one hundred and fifty thousand dollars ($150,000) and in your third fiscal year (FY3) you might make two hundred and fifty thousand dollars ($250,000). Interestingly, most businesses including mushroom farms usually breakeven from the third year of operations.
Estimated Profit Margin for a Mushroom Farm
If you have a 500 square foot growing area, in a year that can produce about 12,000 pounds of mushroom. Oyster mushrooms are currently selling for $6-8 a pound wholesale. 12,000 pounds of mushroom at $6 a pound could make you $72,000 in a year’s time.
Different mushroom species yield differently and this singular factor goes a long way to determine the profit the mushroom farm is expected to make. Some yield more while some yield less. If you see Button Mushrooms, they give a total of 10 to 15 kg mushroom yield per square foot.
If you cultivate mushrooms in a 250 square foot, then the total yield is up to 2,500 – 3,750kgs. The Oyster Mushroom which is the other popular mushroom variety yields a total of 12 kg per square foot. The total oyster mushroom yield per 250 square foot is 3,000kg.
Generally speaking, a mushroom farm can make a profit margin of over 50 percent gross margin (profit before labor and overhead costs) if careful planning is done when developing the farm and you have access to cheaper labor, minimal or shared equipment, low cost farming operations and favorable weather.