Dinkum Journal of Natural & Scientific Innovations (DJNSI)

Publication History

Submitted: November 03, 2023
Accepted:   November 10, 2023
Published:  January 31, 2024




Mahesh Dutta Chaulagain & Mr. Shiva Chandra Dhakal (2024). Value chain analysis of Button mushroom in Chapagaun Village Development Committee. Dinkum Journal of Natural & Scientific Innovations, 3(01):81-100.


© 2024 DJNSI. All rights reserved

Value chain analysis of Button mushroom in Chapagaun Village Development CommitteeOriginal Article

Mahesh Dutta Chaulagain 1* , Mr. Shiva Chandra Dhakal 2

  1. Himalayan College of Agriculture Science (HICAST) , Purbanchal University, Nepal;  maheshchaulagain358@gmail.com
  2. Department of Ari-economics , Agriculture and Forest university, Nepal; scdhakal@afu.edu.np

*             Correspondence: maheshchaulagain358@gmail.com

Abstract: There are different problems of mushroom production and marketing, insufficient technical manpower, insufficient technical know-how, lack of specific organization to coordinate the technical activities and disseminate technologies, lack of appropriate technologies, lack of awareness on sanitation/clean cultivation, price information, lack of post-harvest technology and lack of organized market. In absence of sufficient information about pricing mechanism and market potentiality, the farmers are facing difficulty in obtaining remunerative profit of their product. Effective marketing system may help them in fetching better prices for their produce. The study determined the economics of the mushroom cultivation and provide a comprehensive value chain analysis of button mushroom. The survey conducted in the Chapagaun VDC of Lalitpur district of Nepal. Total N=50 respondents including N=34 in household survey of VDC N=3 each NGOs officials and GOs officials, N=5 each wholesaler and retailer of Lalitpur district were interviewed in three different interview schedules. The survey tools like KII, semi-structured questionnaire model, observation were used to collect the primary data while secondary information were collected from different NGOs and INGOs as well as by surfing in internet. The data were analyzed in SPSS and MS. Excel. Economic analysis of the button mushroom cultivation was done in which the maximum BCR realized was 6.49 and minimum was 0. The average BCR was found to be 3.04.The gross margin was found out by subtracting the total variable cost from gross farm income and which was realized to be NRs.103742.64 with the gross income of NRs.295051.47. The average production of button mushroom from firm was found to be 1220.59 kg and with its selling price of NRs.255.44. Thus the higher gross margin and higher and positive BCR is assurance for the farmers of Chapagaun to withstand on this business, being profitable.  This research attempts to examine the impact of mushroom production on smallholders’ livelihoods taking their integration into value chains into account. International value chains would offer higher benefits to the smallholders but these chains also have higher entry barriers for the smallholder producers due to low upgrading. Farmers in Nepal depend upon the conventional subsistence system of farming having no proper modernized tools or technology thus, resulting the poor performance.

Keywords: value chain analysis, mushroom, Chapagaun Village


Button Mushroom Agaricus bisporus is the most cultivated mushroom in the world. 4600 years ago Egyptian believed that the mushroom were plants of immortality. So the consumption of mushroom started from prehistoric period. The mushroom was thought to be of supernatural origin and thus Roman called them as the food of god. “Soma” the divine drink of the Vedas is supposed to be obtained from some species of mushroom. Rig Veda has numerous hymns praising “soma” and says that with the help of “soma” we may be free from diseases and demons [1]. Japanese and Chinese used mushroom as medicine. The first cultivation of mushrooms is in China around 600 AD with the Auricularia auricula on wood logs. In India, cultivation of mushroom started by the year 1943 with Volveriella diplasia variety. In Nepal the cultivation of mushroom and research was begun in 1854. J.D. Hooker collected and recorded 36 species of macro fungi from western Nepal. A Japanese team had collected 160 species of macro fungi from central and eastern Nepal in 1966. About 709 species of mushrooms has been identified so far. 35 percent was tropical and sub tropical zone and 65 percent in temperate zone. Cultivation of mushrooms in Nepal is Agaricus bisporus (1979/1980), Volveriella volvacea (1982) and Pleurotus sajor-caju -1983/84. Shitake (Lentinus edodes) has also been cultivated though on a very limited scale. Production is concentrated in urban and periurban areas [2].World total production was 3497 thousand metric tons in 2008. Out of total production China has 45.89 percent share and followed by USA 10.4 percent of world production.  Since few years, there is rapid development of mushroom in Nepal. The production is limited quantity as well as not found timely. Farmers are unknowingly cultivating different mushroom varieties and have not knowledge about which variety is economically better. Nepal became the 147th member of the World Trade Organization in April 2004. In the context of globalization and free trade it has many opportunities to be grabbed through the export of high value commodity like mushroom relatively at cheaper cost of production in all parts of Nepal to make the product profitable and competitive [3].  Mixed farming that includes crop farming, livestock rising and forestry is typical of Nepalese agriculture. Past efforts in the developments of agricultural sector have been largely concentrated on production aspects. However, there have been gradual changes in the scope of agricultural marketing with the increased production in some pockets, increased urbanization and production. Despite the substantial emphasis given on production aspects, past efforts have been failed to achieve the significant productivity gains [4].


Mushrooms, with other fungi, are neither plants nor animals. They have been placed in a kingdom of their own called Myceteae. The word mushroom may mean different things to different people of different parts of the world. In a general sense “Mushroom is a macro fungus with a distinctive fruiting body large enough to be seen with naked eye and to be picked by hand” [5]. In botanical sense, mushrooms can be defined as fungi, which lack chlorophyll and so cannot photosynthesize. However, mushrooms produce a wide range of enzymes that degrade the complex substrates on which they grow following which they absorb the soluble substances for their own nutrition. This absorptive nutrition is a characteristic of fungus.  Mushroom can also be poetically described as a plant “Without leaves, without buds, without flowers: yet they form fruit. As a food substance, as a tonic, as a medicine: the entire creation is precious” [6]. Mushroom always has been regarded with a high value in culinary, medicinal and ceremonial history of humans all over the world. Mushrooms are nutritionally functional food and a source of physiologically beneficial medicine of folk legend, which is being increasingly corroborated by modern scientific research. Fungi are regarded as being the second largest group of organisms in the biosphere after the insects. Known fungal species constitute only about 5% of their species in the world. Thus, the large majority of fungi are still unknown. Out of about 70,000 described species of fungi, it has been suggested that around 14,000-15,000 species produce fruiting bodies of sufficient size and suitable structure to be considered as macro fungi (mushrooms). Of these, about 5,000 of the species are considered to possess varying degrees of edibility, and more than 2,000 species from 31 genera are regarded as prime edible mushrooms. But only 100 of them are experimentally grown, 50 economically cultivated, around 30 commercially cultivated, and only about 6 to have reached an industrial scale of production in many countries. Furthermore, about 1,800 are medicinal ones [7]. The number of poisonous mushrooms is relatively small (approximately 10%), of these are considered to be lethal.  Nepal has numerous microclimates that are suited for mushroom. In Nepal, till now near about 1150 species of mushrooms have been investigated belonging to near about 100 families. The wild edible species numbers around 147 species and the poisonous species are recently recorded to reach near about 100 species. The medicinal are 73 species, while 20 species can be utilized in decoration and with only 4 to 5 exotic species are under commercial production [8]. Many more are yet to be discovered and scientifically investigated in Nepal and all around the globe.  The term ‘Value Chain’ was used by Michael Porter in his book “Competitive Advantage: Creating and Sustaining superior Performance”. The value chain analysis describes the activities the organization. The value chain is different for different firms and industries [9] and the primary activities chain adopted for this study, input supply, production, processing, marketing and trade and consumption, differs from the general agriculture value chain stages (input supply, farm production, assembly, processing and logistics) adopted. “The value chain describes the full range of activities which are required to bring a product or service from conception, through the different phases of production, delivery to final consumers and final disposal after use” [10]. Therefore, Value chain is a perspective in which business is seen as a chain of activities that transforms inputs into outputs that possesses customer’s value and thus, value chain analysis is described as an analysis that attempts to understand how a business creates customer value by examining the contributions of different activities within the business to that value. Cultivation technologies for the cultivation of button mushrooms (Gobre Chyau) were recommended to farmers by Plant Pathology Division (PPD) of NARC in 1977. Cultivation technology was transferred in different locations of the Kathmandu valley like Balambu, Chapagaun, Harisiddhi, Koteshwor, etc and then to various places outside the Kathmandu valley including Chitwan, Illam, Sunsari, Jhapa, Dhankuta, Bara, Makawanpur, Nawalparasi, Pokhara, Kaski, Mustang, Dang, and Dhading districts [11]. PPD of NARC introduced cultivation technology of Oyster mushrooms (Kanye Chyau) in 1981. Then, PPD started research on different substrates, sterilization process and climatic conditions, etc. In 1984, developed technology for cultivation of Oyster mushroom was recommended to the farmers in Kathmandu valley. At that time, Pleurotus sajor-caju was found better strain of Oyster mushroom for cultivation purpose. Later, the technology was extended to Kavrepalanchowk, Chitwan, Nawalparasi, Bhairahawa, Pokhara, Nepalgunj, Dang, Dhankuta and Sunsari districts. Gradually, other strain of Oyster mushrooms (Pleurotus florida, Pleurotus ostreatus) was also brought into cultivation. Among these, Pleurotus ostreatus is getting popularity among the farmers [12]. The Directorate of Industrial Entomological Development (DoIED) has the main responsibility of formulating policies, norms, monitoring and supervision of mushroom development programs in Nepal. The programs are implemented through the District Agriculture Development Offices (DADO). Nepal Agriculture Research Council (NARC) and a few private organizations are the major resources centers for supplying the quality spawn to the farmer/growers.  The government of Nepal does not have a separate Division/Department to look after mushroom cultivation as of now. Mushroom cultivation has been placed under Directorate of Industrial Entomological Development of Ministry of Agricultural Development, which conducts monitoring, and evaluation of spawn producers and mushroom production sites to check the operational quality and to disseminate necessary technical advice [13]. Some norms regarding mushroom cultivation has been approved and the directorate is working towards the development aspects of mushroom cultivation through District Agricultural Development Offices (DADO), District Development Committees (DDC), private sector and commercial farmers. The Mushroom Research Unit of the Plant Pathology Division of National Agricultural Research Council (NARC) looks after the research aspect of mushroom cultivation. Initially, all the cultivated exotic species were researched and introduced to the farmers by the efforts of the Unit. But it is the farmers themselves and private sector in general that have been seen to be the increasingly vibrant innovators and resource centers regarding knowledge on and experience of commercial mushroom cultivation [14]. The raw materials have expanded from a few hardwoods to a variety of woods and increasing more into agricultural residues and wastes. The average annual growth rate has been over 10% over the past 30 years in China. Authors describe the rapid growth of mushroom cultivation and its contribution to food security and rural sustainable development. The roles of bio-innovation, technological dissemination and marketing are also examined. It is believed that mushrooms could potentially be very important in future food supplies and in new dimensions of sustainable agriculture and forestry [15].


Chapagaun is located in the outlying area of the south part of Kathmandu Valley 27.59oN 85.33o E and 1490 masl in Lalitpur district. It is dense traditional settlement area inhabited predominantly by the Newars. It is taken one of the fastest growing VDC in Kathmandu Valley having VDC household of 3710 and total population of 18470 (NPHC 2023). This area has been an attractive place for the mushroom cultivation as this place has easy access to the market and almost all the infrastructures for mushroom cultivation are developed.

Figure 01: Study site -Lalitpur district and Chapagaun VDC

Figure 01: Study site -Lalitpur district and Chapagaun VDC

N=34 farmers were selected purposefully and N=6 governmental and non-governmental officials and N=10 traders, wholesaler and retailer were selected from the Chapagaun VDC. The snowball sampling techniques was applied to find the local traders. The semi-structured informal interviews with key informants and a number of participants at different stages of the market chain including the producers of the mushroom was the reliable method that was adopted to conduct this assignment. The individual interview was conducted within the farmers. The methodology was applied to (1) obtain a scenario of how the commodity was produced, organized, operates and performs; (2) identify various constraints and opportunities; (3) identify specific market chains that are most appropriate for a consumer group and investor; and (4) prescribe interventions in the organization, technology and management of the commodity. Secondary sources of data such as geographical map, land system map, land utilization map, land capability map obtained from different GOs, NGOs were utilized.  The collected information from HH survey and KII was analyzed using statistical package for social sciences (SPSS) computer program and Microsoft Office Excel. Descriptive statistics using percentage and frequency tables were used in the analysis for the socio-economic characteristics of the sampled farmers.  The economic analysis of the mushroom production was done with different analytical tools and formula.

3.5.1 Gross Margin and Benefit Cost Analysis

Important variable cost items like labor, spawn, chemical fertilizers, ropes and plastics were taken under study in the local market and to make comparisons more scientific prevailing market price was used for each input used and also for price of output.

Cost of button mushroom production = (C labor+ C spawn+C straw+C ropes+ plastics + C chemical fertilizers+ C soil)


C labor = Cost of labor used

C spawn = Expenditure on spawn

C chemical fertilizer = Expenditure on chemical fertilizer i.e. cost of urea+ Potassium +DAP

Cropes +plastics = Expenditure on purchase of ropes and plastics

C soil = Cost of Sterilized soil

Gross Margin (NRs.) = Gross farm income (NRs.) – Total Variable cost (NRs.)

Gross income (NRs.) = Price of button mushroom (NRs.) × total quantity sold (Kg.)


Total variable cost (NRs.) = Summation of cost on all variable inputs.

The quick and easiest and effective method to determine the economic performance of farm business is Benefit cost ratio (BCR). This ratio was calculated by finding total variable cost and gross return from the button mushroom. Cost of production was calculated by summing all the variable cost items in the production process. For calculating gross return, income from the sale was taken into account.

Thus, using following formula, benefit cost analysis was carried out:

BCR=(Gross return in NRs/Total variable + fixed cost in NRs)

3.5.2 Production Function and Return to Scale Analysis

Cobb-Douglas type of production function was used to determine the contribution of different factors on production and to estimate the efficiency of the variable factors of producing button mushroom before and after the adoption of SSM practices.

Y= aX1b1X2b2X3b3X4b4 X5b5eu


Y= Total button mushroom production (Kg.)

X1= Labor (Man-days)

X2= Expenditure on spawn in NRs.

X3= Expenditure on Chemical fertilizers (NRs.)

i.e. cost of urea+ Potassium +DAP

X4 = Expenditure on purchase of ropes and plastics

X5= Cost of sterilized soil

u = Random disturbance term

b1,b2,…..b5 are the Coefficient to be estimated.

The above Cobb-Douglas production function when linearized in to a logarithmic function one can express as below:

lnY= [lna+b1lnX1+b2lnX2+b3lnX3+b4lnX4+b5lnX5+u ]


ln= Natural logarithm,

a= constant and  u= Error term For the calculation of return to scale from sustainable

Return to scale (RTS)= ∑bi

Where, bi = Coefficient of ith variables

3.5.3 Problem ranking by Indexing/Scaling method

Problems related to button production and marketing was ranked with the use of index. Scaling techniques, which provides the direction and extremity attitude of the respondents towards any proposition (Miah, 1993) was used to construct index. The intensity of problems being faced by the farmers with button mushroom were identified by using five point scaling technique comparing most serious, serious, moderate, a little bit and no problem at all using scores of 4 3,2,1 and 0 respectively.    The formula given below was used to find the index for intensity of production and marketing problem faced by producers and traders, respectively.

Problem ranking by Indexing/Scaling method



Iprob = Index value for intensity of problem

 ∑   = Summation

Si = Scale value of ith intensity

fi = Frequency of ith response

N = Total number of respondents


4.1 Demographic characteristics:

 In a survey of 34 household randomly selected 7(20.6%) were female and 27 (79.4%) were male respondents. The minimum age of the respondents was 19 and maximum age of the respondents was 50 years old while average age of respondent was 35 years old who were experienced for 1 to 13 years. The average experience of farmers is 4.95 years.

Table 01: Demographic characteristics in study area

N Minimum Maximum Mean Std. Deviation
1.Age of respondent (years) 34 19 50 34.94 8.25
2.Family size 34 2.00 9.00 5.41 1.76
3.Experience in business (years) 34 1 13 4.97 3.56
4.Number of Huts 34 1 22 7.35 5.46
5.Land required for one hut 34 0.23 0.34 0.27 .03

This shows that the economically active group people of mid age 35 years are mostly engaged in button mushroom cultivation in which the average numbers of huts are 7 while some have maximum number up to 22 huts too. This result supports that mushroom production could give employment and business investment opportunities for youth and mid-age people in rural area in developing countries (CELIK, Y. and K. PEKER, 2009). The average land required for the construction of a hut is 0.27 ropani. The average number of family size of the respondents was 5 which exactly agrees with the (NHPS, 2022).

4.2 Education level of respondents in study area

 The following chart obtained during field survey shows that 29.4 % respondents were illiterate while only 8.8% had obtained university level education. And most of the farmers (35.3%) had only secondary level education.

Figure 02: Education level of respondents in study area

Figure 02: Education level of respondents in study area

This shows that the experience and certain minimum level of education are sufficient for the establishment of the button mushroom cultivation. They may need short time training on mushroom production. This result exactly agrees with the finding of given (CELIK, Y. and K. PEKER, 2009) who studied on benefit cost analysis of mushroom production for diversification of income in developing countries.

4.3 Occupational character of the respondents in the study area

There were 12 respondents (35.3%) who were intensively involved in mushroom cultivation while 22 (64.7%) respondents were working with mushroom cultivation beside their main job. The farmers who has mushroom cultivation as side job or side source of income were engaged in agriculture other than mushroom and in other services of government and non-government organization (31.8%). However the remittance was also another source of income (4.5%) as shown in figure 03.

Figure 03: Source of income other than button mushroom in study area

Figure 03: Source of income other than button mushroom in study area


4.4. Economics of Button mushroom

4.4.1 Cost of production of button mushroom

This result revealed that 1/6 of total cost required for fixed input (land rent, sprayer and bamboo) whereas Labor cost (35.23%) was found to be highest among different variable input this was followed by purchase of paddy straw and for the purchasing of the sterilized soil respectively.

Table 02: Cost of production of button mushroom per household in study area

Input use        Cost Expense %  Of TC
 Fixed input
Land rent 4911.76 7.22
Sprayer 1373.52 2.02
Bamboo 3342.20 4.91
TFC 9627.48 14.15
Variable input
Paddy straw 21082.35 30.99
Plastic and ropes 1615.47 2.37
Chemical (Nuvan, Formalin, Lime) 892.05 1.31
Spawn 1274.26 1.87
Labor 23970.59 35.23
Chemical Fertilizers(Urea, DAP, Potassium) 1137.04 1.67
Sterilized Soil 8035.29 11.81
Other 391.17 0.57
TVC 58398.22 85.85
TC 68025.70 100

The table depicts that average cost of production of a firm is formed by 85.85 % of the variable cost and 14.15% of the fixed cost. This shows that mushroom can be grown up at lower cost.

4.4.2 Return from button mushroom cultivation

The average production of the button mushroom in Chapagaun VDC in the last year (2022) was 1220.59 Kg. The gross return from button mushroom was found to be Rs. 295051.47 while total cost of production of button mushroom in Chapagaun VDC was Rs.68025.70. The gross margin was Rs.103742.64. The survey data and its analysis have revealed that the B: C ratio is 3.04. The unit price of button mushroom was found Rs.255.44.

Table 03: Return from button mushroom cultivation per household in study area

Description Unit Amount
Average production Kg 1220.59
Unit price Rs/Kg 255.44
Gross return Rs. 295051.47
Total cost Rs. 68025.70
Gross margin Rs. 103742.64
BCR ratio 3.04

This result is similar to the price of oyster mushroom in the market that year was Rs. 150- 200 per kg, the price of button mushroom around Rs. 400 per kg  however the time of research, and species of mushroom and increase in numbers of suppliers can be taken in consideration in the variation of price of mushroom. However the price of mushroom in Rwanda also ranges from RWF 2460 to RWF 4920 [15], which is equal to Rs339.77 to Rs.679.55. This shows that mushroom in Nepal are cheaper than foreign nation.

4.4.3.Production economics of mushroom

The average value of the benefit-cost ratio value is positive i.e 100% respondents recorded positive values with maximum 6.49 and minimum 0 because one of the respondent had just started to cultivate. This is an indication that the venture is profitable similar to Balambu, Kathmandu [16].

Table 04: Production economics of mushroom in study area

Explanatory variable Coefficient t-value Significant
Labor 0.34 3.93 0.00
Spawn -0.07 -1.06 0.30
Sterilized Soil 0.66 7.16 0.00
Other inputs 0.06 .81 0.42
R2 0.87
Adjusted R2 0.86
F- value 51.68
RTS 0.72

The inputs like labor and sterilized soil are significant to the production of button mushroom that gives RTS of 0.72 which means if all inputs are increased by 100% the return from mushroom enterprise will increased by 72%. When there is increase of 100% labor and sterilized soil the production will increase by 34% and 66% respectively. Similarly the 100% increase in other inputs like chemicals, chemical fertilizers, water, paddy straw, ropes and plastic increases in the production by 6%. This result is similar to [17] who reported decreasing return to scale in cauliflower production with value 0.802. Also, [18] reported decreasing return to this is also similar to Shrestha (2014), the financial analysis of fresh mushroom production in Nepal indicated more than 50% internal rate of return. This then points to the fact that commercial mushroom cultivation is economically profitable.

4.5 Button mushroom cultivation constraints

The constraints of button mushroom production in study area are reveled by table 05.

Table 05: Major constraint of Button mushroom production in study area

Constraints Index value
Lack of credit 0.94
Lack of technology 0.78
Disease and contamination 0.67
Expensive spawn 0.57
Lack of paddy straw and input 0.55

The major constraint of Button mushroom production in Chapagaun is lack of credit (index value 0.94) to the farmers and there is lack of technology and technical knowledge in farmers (index value 0.78) followed by the disease and contamination during crop management and expensive inputs like spawn and paddy straw.

4.6 Market and market information of Button Mushroom in study area

 4.6.1 Main buyer and market of Button Mushroom

The main buyer of the button mushroom in Chapagaun VDC are Wholesalers (67.3%), retailers of Lagankhel (18.4%), road head collectors of Chapagaun (10.2%) followed by 4.1% of farmers collectors.

Table 06: Main buyer of Button Mushroom in study area

N Percentage (%)
Wholesaler 33 67.30
Retailer 9 18.40
Road head collectors 5 10.20
Farmers collector 2 4.10
Total 49 100

Table 07: Major market place for button mushroom produced in study area

N Percentage (%)
Kalimati 25 73.50
Lagankhel 6 17.60
Chhetrapati 2 5.90
Other 1 2.90
Total 34 100

The highest percentage of wholesaler are from Kalimati Fruit and Vegetable Market Development Board, (73.5%) and followed by wholesaler of Lagankhel Tarkari Bazzar (17.6%) and Chhetrapati (5.9%)

4.6.2 Contractual system in study areas

Table 08: Percentage of respondents adopting contractual agreement in study areas

Frequency Percentage (%)
Yes 32 94.10
No 2 5.90
Total 34 100.0

Table 09: Type of contractor for button mushroom business in study area

Contractor N Percentage (%)
Wholesaler 31 94.00
Farmers collectors 1 3.00
Retailer 1 3.00
33 100

94.1% the farmers of the Chapagaun make a contract before the production (88.2%) of button mushroom while 5.90% do not make any agreements. Their main contractor is wholesaler (94.00%) followed by retailer and Farmers collectors each by 3.00%. Wholesaler were to visit every farms and inform the projected price of mushroom for coming season and fix the price and make contract with them by giving 7 to 10 % amount of total sales and latter the agreed amount paid in installments after the harvesting and selling of the mushroom. This similar to research finding [19] who worked in analysis of market chain of mandarin in Lamjung district of Nepal.

4.6.3 Price fixation and profit realizer of button mushroom

The price of the button mushroom in Chapagaun is based on cartelling (47.1%) which is fixed from KFVMDB, however bargaining between sellers and buyer (23.5%) is prevalent while 2.9% farmers decide themselves. 26% of the farmers decide price on the basis of neighbor’s price.

Table 10: Process of price fixation of button mushroom in study area

N Percentages (%)
Cartelling 1 47.10
Bargaining between me and buyer 8 23.50
Myself 16 2.90
Other 9 26.50
Total 34 100.00

 Table 11: Percentage of respondents realizing high profit taker

  Frequency Percentage (%)
Retailer 29 85.30
Wholesaler 5 14.70
Total 34 100.00

85.3% of the farmers said highest profit is for retailers followed by wholesaler 14.7% This showed that traders were taking more profit within short period of time similar to the result obtained by Chet Nath Pokhrel (2011) in mandarin. There are 47.1% satisfied farmers with the price which they are getting, 38.2% of farmers are neither satisfied nor did dissatisfied while 14.7% farmers are completely dissatisfied with the price what they are getting as in table 12 below.

Table 12: Percentage of respondents satisfying with price of button mushroom. 

Frequency Percentage (%)
Satisfied 16 47.10
Neither satisfied nor dissatisfied 13 38.20
Dissatisfied 5 14.70
Total 34 100.00

The above result is similar to [20] who explained farmers have to be satisfied to be price-takers for their produce because they cannot determine the market prices themselves, after enquiries following with the president Jacob Zuma’s Speech.

4.7 Supporting Institution in Study area

Most of the farmers are working with their own experiences without any support (54.00%) while 18.00% of the farmers were getting support of DADO, Lalitpur. There were certain Cooperatives, NGO and training institutes who had supported 18.00% of farmers in their business while CTEVT was helping to train people (10.00%).

Figure 04: Supporting Institution in Study area

Figure 04: Supporting Institution in Study area

They offer technical knowledge and training, provide loan for their business. It seems that most of the farmers were also dissatisfied (64.70%) with the support what they were getting while 35.3% are satisfied. This results contrast with the  which has reported that it has been providing quality spawn produced at the labs of Directorate of Plant Protection (DoPP) at subsidized rate to mushroom farmers and other huge subsidies regarding construction of the tunnels for mushroom production and acquirement of spawn and substrates for mushroom cultivation to selected mushroom farmers. It is also collaborating with the private sector to help them create additional resource centers of mushroom cultivation. This might be because of lack of information to the farmers who have little access to market information (61.80%).

4.8 Access of Market information

61.8% of the farmers of Chapagaun had little access to market information while 32.2% had sufficient. Beside this 5.9% of the farmers were completely unknown about market information. This might be because of education level of the farmers and their interest. On the other hand the means of market information are not reliable as in figure number 05.

Table 13: Access of market information about button mushroom in study area

N Percentages (%)
Little bit 21 61.80
Sufficient 11 32.40
Completely unknown 2 5.90
Total 34 100.0

4.9 Means market information

The main means of market information regarding button mushroom were their neighboring farmers friends (45.5%) either of same VDC and neighboring VDC followed by telephone communication with traders and KFVMDB (43.6%). However radio also broadcast the information about button mushroom (10.9%).

Figure 05: Means of information related to button mushroom

Figure 05: Means of information related to button mushroom

[21] who worked on Analysis of market chain of mandarin in Lamjung district of Nepal also reported that 60.00% of the farmers receive market information through friends and neighbor. In the same way [22] also reported that 35.00 % farmers receive vegetable price information from other farmers (friends) only followed by other farmers and radio (31%) in the Philippines.

4.10 Marketing constraints of Button Mushroom

 Table 14: Marketing constraints of Button Mushroom

N Percentage (%)
Lack of processing 28 27.50%
Lack of storage facility 23 22.50%
Unorganized market 20 19.60%
Lack of market information 16 15.70%
Low price offered by trader 15 14.70%
Total 102 100%

The main marketing constraint of button mushroom was lack of processing knowledge and facilities (27.5%) followed by lack of storage facilities (22.5%). Unorganized market (19.6%), lack of market information (15.7%) were other constraints. Traders linger to offer the best price to farmers (14.7%) of Chapagaun VDC. This is similar to a news report (e-Kantipur, 2014-07-26).  Major production and marketing constraints are: poor quality of inputs, unavailability and variations in the price of inputs, inadequate training on production and marketing methods, lack of financial support, disease/pest problems, lack of market information, and lack of storage facilities and Nepal Bandha (Strike).

4.11 Suggestion for improving Market of Button mushroom

Farmers themselves have suggested certain remedies to overcome the marketing constraints. They had suggested that provision of processing knowledge (24.20%), provision of storage facility (22.20%), good marketing system (20.20%) while 18.20% of the farmers suggested enhancing the group marketing while 15.20% suggest starting cooperative marketing in their area.

Table 15: Suggestion for improving Market of Button mushroom

N Percentage (%)
Provision of Processing Knowledge 24 24.20%
Provision of storage facility 22 22.20%
Good marketing system 20 20.20%
Marketing in group 18 18.20%
Cooperative marketing 15 15.20%
99 100%

SWOT Analysis

Mushroom production and marketing sector in Chapagaun has following Strength, Weakness, Opportunity and Threats.

Strengths Weakness
·         Suitable climatic condition for mushroom production

·         High productivity

·         Good infrastructure – better access to road and transportation.

·         Employment in the sector, qualified and educated labor and the unskilled labors are also experienced.

·         Effective market chain

·         Proximity to major markets

·         Growing demand of button mushroom


·         High input costs and availability of inputs

·         Less social value compared to other business

·         Perishable crop/Lack of storage and processing facility

·          Lack of quality standards of the product

·         Lack of subsidized loan and easily availability of credit facilities

·         Lack of technical knowhow, marketing knowledge and marketing extension services

·         Lack of government subsidy


Opportunities Threats
·         Employment opportunity

·         Growing market demand

·         Increase of competitiveness with the development of cooperatives

·         Favorable agricultural policies

·         Short time to get return


·         Dwindle in productivity due disease and pest problems

·         Risky business and lower profit for farmers

·         Inadequate information on marketing

·         Increasing cost of input

·         Frequent strike because of government instability

·         Lack of coordination between production and marketing sector

·         Threat of competitors

 Value chain Map Analysis of Button mushroom

Figure 06: Value chain Map Analysis of Button mushroom.

Figure 06: Value chain Map Analysis of Button mushroom.

Figure 07: Market channel existing in Study Area.

Figure 07: Market channel existing in Study Area.



Strengthening mushroom production sector is essential in order to enable the rural economy to keep its vibrancy and development, increasing and diversifying business and employment opportunities in the rural areas, and providing income opportunities for disadvantageous groups, small family farms. The mushroom cultivation can be a side occupation for all age group people that require less investment and gives early return and less prone to business loss. The farmers of age group 19 to 50 were involved and mean age of farmers was 35. That shows mushroom production could give employee and business investment opportunities for youth and mid-age people, people who have lower level education in rural areas like Chapagaun in developing countries like Nepal can manage mushroom production. They may need short time training on mushroom production.Average cost of production of a firm is formed by 85.85 % of the variable cost and 14.15% of the fixed cost. This shows that mushroom can be grown up at lower cost so youth and marginalized group of people can also start to deal with button mushroom cultivation and can obtain the maximum return within a single growing season. Even though button mushroom farming is still done mostly in small scale in Chapagaun, Lalitpur, Nepal, there is an increasing trend in national production and consumption of button mushroom. The available natural resources, raw materials, labor force, suitable geo-physical conditions favor for expansion and up scaling of button mushroom production. So it is a proof that if the constraints against button mushroom cultivation are addressed adequately and honestly, this enterprise can become a profitable agro- industry of study area of Nepal covering multidimensional aspects of well being and contributing towards overall development of the country. Estimate of benefit-cost ratio (3.04) suggests that button mushroom cultivation is highly profitable to farmers.


It is recommended that the Ministry of Agricultural Development, mushroom growers cooperatives and associations of Nepal and other related agencies improve co-ordination for marketing of produce and also take initiative to develop the local and the international markets to solve the problem of marketing to ensure that farmers earn lucrative profit for consumption and re-investment.

  • Nepal has not been able to achieve increased market access for non-traditional as well as traditional produce in regional and international markets. Marketing of mushrooms in the regional and international markets can be enhanced by market analysis to understand the needs of the market and even help to create the demand for the produce.
  • Proper programs and policies need to be implemented effectively with the help of private sector and Non-Governmental Organizations to develop, maintain and expand markets for Nepali agricultural produce in the regional and international markets through approved market access promotion activities.
  • Analysis and dissemination of market information to producers of mushrooms in Nepal is very essential. Government can contribute to this cause by funding marketing research and marketing information services.
  • Storage facility and distribution network should be made in such a way that it facilitates marketing of products and mushroom processing plants should be installed with resource centers not only in Chapagaun but all around the country.
  • There should be support from government organizations in order to regulate the spawn quality and mushroom quality and coordinate marketing with national international level. Various subsidies along with crop insurance policy should be developed and implemented in order to minimize the risks associated with button mushroom farming.
  • Farmers themselves coming together under a credit scheme to secure loans to fund their operations at reasonable rates could also solve the difficulty with the funding.
  • Government can enhance farmers’ access to credit from financial institutions catering the agricultural sector by mobilizing domestic and external sources to increase the institutions’ loanable funds and making suitable policy environment.
  • Tax relief to these financial institutions and subsidies to input could also encourage the institutions to lend more to farmers. The bottom line is that the mushroom farmers need to have easier access to credit at reasonable rate of interest.
  • The technical aspect of button mushroom farming is of vital importance for successful mushroom farming and, therefore, needs to be developed in such a way that good quality spawn, disease/pest control and enough technical support is provided to the farmers whenever there is the need for it.
  • There is a need of good research on all aspects of mushroom cultivation. We need more mycologists, mushroom researchers, mushroom farmers and consumers to use mushroom for our general well being.


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Publication History

Submitted: November 03, 2023
Accepted:   November 10, 2023
Published:  January 31, 2024




Mahesh Dutta Chaulagain & Mr. Shiva Chandra Dhakal (2024). Value chain analysis of Button mushroom in Chapagaun Village Development Committee. Dinkum Journal of Natural & Scientific Innovations, 3(01):81-100.


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