Costs, sales and cash

Begin with one named crop, one production system and one period. State whether you buy compost or make it, own or rent the building, and sell at the farm or deliver. Otherwise two cost-per-kilogram figures can describe entirely different businesses. Record the units behind each input: dry straw, wet substrate and delivered compost are not interchangeable quantities.

Separate investment from operating expenses. Building work and equipment create assets; substrate, power, packaging and routine labour support production. Include maintenance, owner labour and shared costs explicitly. For a profitability view, account for asset use and financing with a qualified adviser. For cash planning, record when the actual payments fall due. A capital purchase and its depreciation must not both be deducted as the same period's operating expense.

Weigh harvest and record where it goes: sold, held as stock, rejected, used as samples or lost. Split sales by grade and buyer because prices and deductions differ. Revenue from accepted credit sales and cash received are separate measures; an unpaid invoice may be a receivable, not an immediate cash receipt. Returns and bad debts need their own treatment.

Use the denominator that matches your question. Production cost per harvested kilogram describes production. Cost per sold kilogram also exposes unsold and rejected output. Cash collected per kilogram describes collections, not the biological performance of the crop. Label the period so that a payment received this month for last month's crop does not distort this crop's result.

Assume 100 kg harvested, with 10 kg rejected or unsold. Sell 60 kg at ₹150 and 30 kg at ₹110. Assume total operating cost of ₹10,800 and ₹2,000 of sales still unpaid. These are invented teaching inputs, not current market rates or a forecast.

• Sold quantity = 60 + 30 = 90 kg
• Revenue = ₹9,000 + ₹3,300 = ₹12,300
• Operating surplus before omitted items = ₹12,300 − ₹10,800 = ₹1,500
• Operating cost per sold kg = ₹10,800 ÷ 90 = ₹120
• Cash collected = ₹12,300 − ₹2,000 = ₹10,300
• If all operating costs are paid: cash movement = ₹10,300 − ₹10,800 = −₹500

Put anticipated receipts and payments onto a weekly calendar through preparation, growing, harvest and buyer payment. The largest cumulative cash shortfall is the starting point for working-capital planning, with a justified contingency. Include the next batch: selling the first crop does not remove the need to buy inputs for the following one.

Check the calendar against actual bank and buyer terms before borrowing or committing to expansion. Keep a no-subsidy operating case and a delayed-start case. Review the first complete crops against the original assumptions and update the model with observed quantities rather than increasing the forecast to match a desired income.

Money reaching your hand is a receipt. Profit compares recognised revenue with the applicable costs; the timing of payment is a separate cash-flow question.

For sales, record kilograms accepted by the buyer and the agreed price for each grade. Unsold and rejected kilograms do not become sales merely because they were harvested. Record buyer deductions separately. For cash flow, record what has actually been collected and what remains owed.

To compare net realisation per kilogram, state which selling expenses you deduct, such as commission, packing or transport, then divide the resulting amount by the corresponding sold kilograms. Do not deduct those same expenses again when calculating profit. Compare your asked price, invoiced value, selling expenses and receipts without treating them as the same figure.

Costs behave differently in time, so group them before adding them. Some are consumed in every cycle. Some are spent every cycle but do not rise and fall with substrate. Some run all year whether or not a crop is inside.

Put every bill from one finished cycle into one of the three layers below. A cost you cannot place is usually one you forgot to plan for.

• Consumed each cycle: compost or straw, spawn, casing soil, bags, treatment materials.
• Spent each cycle: labour, power, fuel, water, packing, transport, market commission.
• Running all year: rent, depreciation on rooms and racks, loan interest, your own salary.

Label both the cost boundary and denominator. Cost per harvested kilogram measures production; cost per sold kilogram also reflects unsold and rejected product. Payment collection is a separate cash-flow measure.

Keep harvested, saleable, sold and rejected quantities distinct, and record invoices and collections separately. A buyer paying late changes working-capital needs, not the number of kilograms that were grown.

ICAR-DMR's Hindi farmer folders print a cost of production of about Rs 20 to 25 per kg for seasonal white button and Rs 10 to 15 per kg for oyster. Those folders are undated and carry early 2010s prices.

Historical figures do not establish current costs or the relative profitability of different crops. Use current quotations and measured local performance; do not submit historical prices as a current bank estimate.

Your own figure comes from one completed cycle with every bill kept. Until that cycle is finished, label the number plainly: assumed, not measured.

Capital expenditure, or CAPEX, is money spent once on things that stay: site levelling, growing rooms, racks, cooling plant, boiler, chaff cutter and drums.

The MIDH Operational Guidelines 2025 set a cost norm of Rs 30 lakh for a mushroom production unit. Telangana's State Horticulture Mission prints the break-up behind that norm: two PUF panel growing rooms of 60 by 18 by 16 ft with a corridor at Rs 14,00,000, plus an environmental control system at Rs 16,00,000.

Those are the scheme's model figures, published by a state agency, not quotations for your site. Get your own quotations and compare the shape.

Operating expenditure, or OPEX, is what a cycle eats: straw or compost, spawn, casing soil, bags, fuel, electricity, labour, packing, transport and commission. Write OPEX per cycle, not per year. ICAR-DMR's own economics model for environment controlled rooms assumes six crops of 60 days per room per year. That is six separate OPEX events, and each one must be paid before its own sale arrives.

The MIDH low cost route, a 200 sq ft structure with a cost norm of Rs 2 lakh, still buys straw and spawn cycle by cycle.

Working capital is not a third kind of cost. It is money that must sit ready because spending comes before earning.

Count the days. ICAR-DMR states that one tonne of dry straw gives fresh oyster mushrooms in 45 to 60 days, while the same straw taken through button compost needs 80 to 100 days including compost preparation. Your first rupee arrives at the end of that stretch. Then add the buyer's credit period, often another week or two.

So the requirement is one full cycle of OPEX, plus the credit period, plus a reserve for one cycle going wrong.

Working capital comes from your own funds or a separate bank limit. The state implementing agency decides how and when any subsidy part is released.

Market validation means replacing a guess with a written record. Begin with a list: the mandi commission agent, vegetable retailers, a hotel or caterer, a canteen, a processor, direct household sale.

For each one write the name, the phone number, the quantity per week they can absorb, and the pack they want. Then collect one piece of paper from each: a rate slip, a purchase order, or your own dated note with the buyer's name on it.

Three such records over three weeks beat any national market report, because they are about your town.

Buyers pay for a grade, not for mushrooms. Cap size, a closed veil, cleanliness, even colour and correct pack weight decide which price band you land in.

ICAR-DMR records the packs actually used in Indian local markets: retail packs of 200 g or 400 g in thin polythene. TNAU's oyster practice is a 200 g bag. For fresh oyster, DMR specifies perforated bags with a vent area of about 5% of the surface.

Ask each buyer to show you an accepted lot and a rejected one, and photograph both. That photograph becomes your grading standard.

How far you can sell is set by how long the mushroom lasts, not by the road.

ICAR-DMR's farmer folder gives button mushroom about 12 hours at ambient temperature and 2 to 3 days in a refrigerator. The 2011 manual gives fresh oyster 24 to 48 hours at room temperature and milky mushroom 3 to 4 days. Paddy straw mushroom is the trap: DMR's bulletin says it must not be held at 4 °C because it breaks down; hold it at 10 to 15 °C for about 3 days.

DMR also advises chilling button mushrooms at 4 °C for 6 to 8 hours before despatch.

Every channel pays differently. A mandi agent takes volume and a commission, and pays on his own cycle. A retailer takes small daily lots and settles weekly. A hotel wants one fixed grade on fixed days and pays monthly. A processor takes seconds too, at a lower rate.

Old model prices are not a channel. ICAR-DMR's 2011 model used a wholesale price of Rs 45 to 60 per kg for milky mushroom and Rs 50 per kg for oyster. Those are the source's own 2011 planning figures.

Use their shape as a sense check, and your dated local record for the number.

Break even is where a cycle's receipts cover its costs. Work it in kilograms, because kilograms are what you count every morning.

Take the costs that do not change with output for one cycle: rent, depreciation, interest, permanent labour. Then take net price per kilogram and subtract the costs that do change: straw, spawn, casing, packing, commission. Divide the first by the second.

The answer is how many kilograms that cycle must sell before it begins to earn. Write it on the room door. It turns an accounting idea into a daily target.

Published ranges exist because results vary. ICAR-DMR's Table 7.1 gives 10 to 15 kg per 100 kg for long method compost and 18 to 25 kg for short method. The NHB model DPR lists Indian strain yields from 14 to 16 kg per 100 kg for S-11 up to 22 to 27 kg for DMR-NBS-5.

A plan that only works at the top of a range is not a plan. Build three cases on one cost sheet: the bottom of the range, the middle, and one where a whole cycle is lost to contamination.

If the bottom case still pays the loan instalment, the project can survive a bad season.

Annual profit hides the month you run out of money. Lay twelve months across a page. In each month write what leaves and what arrives, using real cycle dates, not an even spread.

Money leaves early: compost or straw, spawn, casing, fuel, wages. Money arrives late, after picking and after the buyer's credit period. In a six cycle year with rooms filled one after another, the next cycle's outflow lands before the last one's inflow clears.

The lowest point on that page, not the yearly total, is the working capital the project truly needs.

A risk list is not a paragraph about uncertainty. It is a table with four columns: the risk, its early warning sign, what you will do, and who does it.

Keep it short and specific to your site. A bad casing lot shows as uneven pinning within a week of casing. A power failure shows as room temperature drifting out of band. A buyer in trouble shows as payment slipping from seven days to twenty.

• Crop risks: contamination, casing lot quality, spawn age.
• Site risks: power, water, labour, cold chain.
• Money risks: buyer default, price fall, instalment date.