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Black Fungus Upstream Cultivation Essay

1.0 Executive Summary Our cultivation of edible fungus will be located in city, Kuala Lumpur so that it saves transportation cost. We are the first and only in Malaysia market that cultivates edible black fungus. Low operation cost for cultivates fungus and can earn high profit. Nowadays, mushroom cultivation is growing rapidly in Malaysia because our country weather and environment is suitable. The Wood Ear mushroom have a very short life cycle, the first grow is 2 to 5 days then it could have 5 to 7 continuous cycle. We will complete the process of cultivation like heat treatment, spawning, and fruiting then it will be dehydration and packing into special quality polythene bags to keep the mushroom maintain their quality in order send to nationwide.

The cultivation technologies available range from conventional sawdust logs to ensure the production of quality mushrooms. The start-up cost of Wood Ear fungus is low because if we decide produce subtract bag by ourselves the start up cost will be high. Hence, we decide to get subtract bag from suppliers. Our start-up capital total is RM 400,000. There is RM 100, 000 from each of the shareholders, RM 50, 000 loans from bank and another RM 50, 000 from government support. We will expect their growth plan steady revenue by estimate those asset, liabilities, equity, expenses throughout 2years to minimize the loss by financial projection.

2.0 Introduction Why mushroom cultivation are getting popular in Malaysia? There are over 2000 edible fleshy mushroom species worldwide and only about 100 are cultivated. The climate and temperature in Malaysia are suitable for several types of mushroom species to be grown or can be grown in Malaysia and dominant variety is grey oyster. Other species include white oyster, white, brown button, lingzhi for medicinal purpose and more. They are easy to grow and brimming with Vitamins B, minerals and protein. The shortest time between the process of spawning and harvesting is three weeks. Of course black fungus are included because based on the research about the climate and temperature to cultivate mushroom species, black fungus is the most suitable species to cultivate in Malaysia. According to the report provided by Mushroom association for Malaysia, it shown those mushroom growers in Malaysia are increasingly popularity within few year time from 2008. In Malaysia mushroom industry, the mushroom cultures are highly recommended to increase production line in Malaysia and fulfill consumer market in Malaysia.

3.0 Business Idea Mushroom has been cultivated in Malaysia since early 1970s. The black fungus is the one of the species which dealt with Agrodok. The three species of mushroom in Agrodok can only deals with saprophytes mode of living. The scientific names of mushrooms are often used in this Agrodok, as they give rise to less confusion than colloquial names. For example, the name oyster mushroom applies to more than 20 different species, each with its own cultivation characteristics such as optimal temperature range, color and growth rate. (Peter Oei, Bram van Nieuwenhuijzen) The cultures of mushroom for common species which include the black fungus are gaining popularity in Asia. For example, the cultivation on medicinal mushroom is increasingly popular and large growing In China, Taiwan, and India, Philippine and other Western countries as well. It has potential opportunities due to the high nutritional values and profitable of the medicinal mushroom in low cost, short life cycle.

Time between spawning and harvesting can be as short as three weeks. Furthermore, after the cultivation, you can still use the substrate as a good soil conditioner. (Peter Oei, Bram van Nieuwenhuijzen). This would be the reason enough for government to encourage its widespread cultivation. Our business idea is to take advantages on the black fungus culture and take place in the process of growing and manufacturing of the black fungus products. The both upstream and downstream production and manufacturing processes will take place in this business plan. Before start over this culture, we decide to get the spawn and substrate from suppliers. Start-up cost can be high if we chosen producing ourselves, so buy the ready-to-inoculate spawn is the easy way for new-entrant that we may not have much start-up capital.

After preparation of spawn and substrate, the several step will take place which include spawning pasteurized substrate, spawning sterilized bags, spawn run, fruiting, harvesting, packing and product distribution. To make sure the climate of the mushroom culture is suitable to fruits near our country outdoor temperatures, we must also do some clearly research on the climate for different species of mushroom and the research also shown that black fungus is the most suitable species to cultivate in tropical countries where temperature is high. The following table describe about the temperature ranges and techniques for mycelium growth, optimal growth and fruiting for black fungus species.

T mg: The range at which the mycelium stays viable; the growth speed declines at both high and low ends of this range. T optimal mg: The optimal temperature range required for fruiting; the most important temperature. So, after done all the cultivation process, the harvested black fungus were then into grading process and pack into plastic bags. Finished pack mushroom will distribute and supply to different location within Malaysia which include hypermarket, morning market and elsewhere they need more black fungus supply. For additional or unsold mushroom we decide to store and send to manufacture for dried process to maintain its shelf life.

Another plan to reduce the waste of unsold additional black fungus we will process it to nutraceutical, functional food, finger food and also health drinks. For fresh black fungus, we will transport from air-conditioned van in 5 to 10 degree of temperature due to short shelf life of fresh black fungus. The canning process enable us to reduce cost from turn it into waste and moreover, we can take place in more species of mushroom to increase our sales and production thus we can provide to more market even the nationwide in Malaysia to fulfill the market needs. The figure below shows the entire process of the mushroom industry that they normally will do.

4.0 Marketing and Competition Auricularia polytricha known as Wood Ear, Black Jelly or Fungus Mushroom. It is belong to the kingdom of fungi. Wood Ear is a nutrition vegetable to people, it rich of protein, low fat content and free of cholesterol. Besides, it can use as medical purpose. Wood Ear mushroom is highly demanded in Malaysia because of their unique taste, subtle flavor and nutritious values. We will build a green house that is full of fresh air and hygiene for cultivation in order to prevent infected and cause low productivity by poor hygiene. Moreover, we will use black netting to cover flies from entering and kill cockroaches in the mushroom cultivation house as normal practice of pest management. Although many species of mushroom can be cultivated and the market is growing promptly but those mushroom species is still limited.

Malaysia normally imports Wood Ear from other Asia country like China, Vietnam or Philippines and so on. To reduce the imported rate, we will cultivate Wood Ear both downstream and upstream for manufacture to distributors, retailers and distribute our production line to nationwide. Actually, we can market the fresh and dried of the Wood Ear directly to our customer like direct marketing even though we concern in manufacturing. If sell the mushroom directly to end-user we can receive a better price compare to wholesaler. For instance, we can direct marketing of Wood Ear to domestic farmer market, to gourmet chef of restaurant, and offer mail order over the Internet because consumer can make an order directly by advanced technologies. SWOT Analysis

The first strength of this analysis is Wood Ear cultivation is an existence of potential for organic agriculture and low environmental pollution. It does not include any toxic and chemical that polluted our environment. Then, we can engage in rural development by increasing supports of Ministry of Agriculture. Beside that, improve the problem toward balance of conservation utilization of natural resources such as water, forest, land, and fishery resources. However, the weakness of Wood Ear cultivation is lack of technological development because most of the cultivation process is work by manpower.

Secondly, there are inadequacy of modernization requirement and rural infrastructure in order to ensure the quality and quantity of the Wood Ear, reduce manpower, it brings convenient and increase productivity. Furthermore, the opportunities of this cultivation are able to enhance the opportunities to access foreign markets. For instance, we can export or trade internationally with other Europe country. Likewise, there is a goal similar to this opportunity. It can increase the customer consciousness for organic, quality and healthy food. The threat of the analysis is increasing pressure of industrialization and rapid urbanization because nowadays everything is more technological. The price of input rise all around the world and trend in agriculture support policies is changing also the threat of Wood Ear cultivation. Then, migration of young people can affect the loss of ageing population and productive factors. The chance to educate the young about mushroom cultivation is lesser. 5 Porter’s Forces

Firstly, the threat of new entrants is high because cost of establish an agribusiness for mushroom cultivation is low. We just need to create a well Wood Ear farm by providing them hygiene places, moist, full of fresh air and not over production it may affect the growth of the mushroom. Besides, the production and marketing knowledge are acquired toward experience. During the process of cultivation, there is many details need to be taken care well. The environment and the sawdust ratio of the Wood Ear is the example. Next, there are limited spawn suppliers in the market but usually formal contract does not exist between suppliers and producers are the high bargaining power of suppliers. Due to the mushroom production is less, sometime it is difficult to find a substitute supplier if there is any emergency plan. In Malaysia, the bargaining power of buyers is low because the demand of Wood Ear is high. There is limited Wood Ear production do in Malaysia.

Same point with the bargaining power of suppliers, there is no formal contract between producers and buyers. Finally, threats of substitute products are low because Wood Ear fungus difficult to find an alternative product although the price of wood Ear is affordable. Shiitake can be one of the alternative funguses because it is also high nutritional values that are containing high fiber and medically function. Nevertheless, the Porter’s forces can drive the competition in the Wood Ear market. The business can create competitive advantages through customer service and quality, the cultivation is not very competitive but every existing firm has different size and capacity. This is the rivalry of existing firms.

5.0 Business Model

We are agribusiness that cultivated edible black fungus. Auricularia polytricha is the most suitable species to cultivate in tropical regions where temperatures are high. (Oei, 2005) We cultivated the quality black fungus and marketed it nationwide. We able to cultivate black fungus with the cultivation process and distribute to the market needs. Some of the country they may not able to cultivate black fungus due to the climate of the particular countries.

We started our business in city of Malaysia, Kuala Lumpur. As it brings advantages for us that can save transportation costs and easy for marketing purpose. Cultivation of Auricularia polytricha in Malaysia is limited, due to limited knowledge about its culture and insufficient of planting materials. (Tuazon, 2013)But now we are the only one agribusiness of cultivation Auricularia polytricha so we have the chances enter into Malaysian market with an advanced knowledge of cultivation edible fungus in Malaysia.

We are using mass market as our customer segmentation. We do not specify any segmentation caused we believes that someone might be a potential customer. We will target customer who are buy in bulk such as restaurant, medicine suppliers, wholesalers, retailers and so on. We will sell the dried black fungus with lower price compared to imported dried black fungus all the way from China, India or Vietnam. So that, we can generate more sales by sell in low price and monopolize the Malaysian market by distribute of dried black fungus in nationwide.


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