§1What this business is
Oyster mushroom, called dhingri, is the cheapest and easiest edible mushroom to grow. It needs no compost: chopped wheat or paddy straw is treated with hot water, steam or chemicals, mixed with grain spawn and filled into polythene bags. The bags sit on racks in a dark room at 22-26°C until the white growth covers the straw, then get light, fresh air and 70-85% humidity for fruiting. One crop takes about 60 days, so 5 to 6 crops fit in a year. Mushrooms are twisted off before they shed spores and sold fresh in 250 or 500 g perforated pouches, or dried.
Capacity: 400 kg of fresh oyster mushroom a year from 5 quintals of wheat straw and 100 bottles of spawn.
§2Is it right for you?
Who it is for
A farm family or self-help group with spare straw and a shed, wanting a side income close to a town market.
Who it is not for
Anyone who expects a full-time income from one small room, or who cannot sell fresh mushroom quickly.
Advantages
- Needs no compost and no controlled-climate rooms, unlike button mushroom
- Grows on straw and other farm waste that costs little
- A crop is ready in about 60 days
- Spent straw can be reused as cattle feed, for biogas or as manure
Drawbacks
- The model's profit is small — ₹9,200 a year
- Less known to buyers than button mushroom
- Grows for only 6 to 8 months a year without extra humidity
- Fresh mushroom keeps only 1-2 weeks even at 0-5°C
Skills you need
- Treating straw so moulds do not take over
- Clean spawning in a fumigated room
- Holding temperature, humidity and fresh air in the room
- Picking at the right stage and packing or drying
Why difficulty 2/5: The method is simple and cheap, but cleanliness and daily attention decide the crop.
§3Market
Who buys
- Local vegetable markets and shops
- Hotels and households in nearby towns
- Processing units that dry and powder mushroom for export
How it sells
- Fresh mushroom in perforated polythene pouches of 250 or 500 g
- Pouches on crushed ice in trays or baskets, sent by truck or bus
- Dried mushroom in sealed pouches, which keeps 3-4 months
Good to know
- India produced only about 1,500 tonnes of oyster mushroom when the report was written; low home demand was the reason given.
- Export orders are too big for one grower, so the report asks growers to pool produce through co-operatives.
§4Raw material & machinery
| Item | Qty | Cost |
|---|---|---|
| Growing room of high-density polythene sheet (300 sq ft at ₹50 a sq ft) | 1 | ₹15,000 |
| Iron racks | 9 | ₹9,000 |
| Sprayer room | 1 | ₹1,500 |
| Galvanised tubs | 4 | ₹1,000 |
| Thermometers | — | ₹400 |
From: National Horticulture Board model bankable project — Oyster Mushroom (2005)
- Wheat straw5 quintals a year at ₹150 a quintal = ₹750
- Wheat or rice bran for supplementation50 kg a year at ₹2.5 a kg
- Polythene bags (125-150 gauge)15 kg a year at ₹80 a kg = ₹1,200
- Grain spawn100 bottles a year, ₹800; spawn 20-30 days old is best
- Bavistin and formaldehyde₹210 a year, for treating straw and fumigating the room
From: National Horticulture Board model bankable project — Oyster Mushroom (2005)
§5Licences & registration
- No licence is needed to grow mushrooms
- FSSAI registration to sell packed fresh or dried mushroom
- Udyam registration if you run it as a business and want a bank loan
- APEDA registration if you export
Start it in your state
Pick your state: today’s cost, central + state subsidy, raw material, land and help, on one page.
§6Schemes & subsidies
The model funds ₹49,800 as farmer's share ₹24,900, capital subsidy ₹10,000 and term loan ₹14,900. A unit this small is usually paid for from savings or a small loan; a MUDRA Shishu loan goes up to ₹50,000. NHB's present subsidy is for large integrated mushroom units with a bank term loan, not for a 300 sq ft room.
§7Money
How the investment is worked out: Land ₹20,000 + levelling ₹1,470 + growing room of high-density polythene sheet, 300 sq ft at ₹50 a sq ft, ₹15,000 + plant and machinery ₹11,900 (sprayer room ₹1,500, 4 galvanised tubs ₹1,000, 9 iron racks ₹9,000, thermometers ₹400) + 5% contingency ₹1,420 = ₹49,790. Unlike the NHB orchard models, this one includes land.
Working capital: Recurring cost is ₹6,830 a year: raw material ₹2,880 (straw ₹750, bran ₹130, polythene bags ₹1,200, spawn ₹800), chemicals ₹210, labour ₹3,200, water, electricity and packing ₹300, general expenses ₹250.
Prices from 2005 — racks, polythene, spawn and labour cost much more now. The model counts labour at only ₹80 a day.
§8Export potential
Confirm the HS code in the DGFT ITC(HS) lookup before you export
Export council / board: APEDA
- India exported about 11,797 tonnes of fresh and 4,099 tonnes of preserved mushrooms in 2001-2002, to the USA, France, Ireland, UAE, Russia and others; most of it was button mushroom.
- Oyster mushroom is traded abroad mainly as dried powder.
§9Risks — where people fail
- Competitor moulds spoiling the bags
- Flies and mites in the cropping room
- Old or poor spawn giving a weak crop
- No ready buyer in a small local market
§1030 / 60 / 90-day plan
A general plan that applies to any business. A plan for this business will be added after research.
- Days 1–30: Visit a working oyster mushroom (dhingri) farming unit, ask 10 buyers about price and quantity, and get quotations from 3 suppliers.
- Days 31–60: Udyam and the licences you need (No licence is needed to grow mushrooms, FSSAI registration to sell packed fresh or dried mushroom), a project report (DPR), and the scheme or loan file.
- Days 61–90: Space and machines, trial production, and first deliveries to 10 customers.
§11Who to connect with
§12Watch
There is no episode on this business yet. Shows are coming soon on the Podcast page.
Want to start Oyster Mushroom (Dhingri) Farming?
DPR, loan file or registration — ask us on WhatsApp.
¶Sources
Data review: 6 October 2026. Spotted a mistake? Report it. For information only — not legal or financial advice.