Don Hongo

 

Mushrooms for Nicaragua

 

Summary of the idea

In Nicaragua all fresh edible mushrooms are imported airfreight and are sold at far higher prices than in Europe or the United States. Don Hongo (Mister Mushroom) will aim to produce white button mushrooms for the local market and export within Central America. There exists a proven market: i.e. current supermarket sales and there is great potential demand for a lower priced product. The white mushroom is chosen as it is the best commercially known. Conditions also exist for varieties such as Shitake and Oyster Mushrooms. Don Hongo will aim to use 100 % local inputs in contrary to other producers in Central America that base their production on imports of raw materials.  Don Hongo will produce in a region of Nicaragua seriously affected by the coffee crisis and sees itself as a motivator for alternative income generation initiatives.

 

 

The market and the target group

 

A large foreign expatriate community, including Europeans, Americans and Asian are currently the main consumers of imported mushrooms. There is a strong demand among Italian and Asian restaurants for fresh mushrooms, however, due to their extraordinary price, they are often left off the menu. Canned mushrooms are available, but are expensive and not considered very tasty. Local consumers are slowly becoming accustomed through marketing efforts of the competitor as well as through growing links with food consumption habits in the United States.

 

The product will be sold to restaurants and supermarket d. A marketing strategy will aim to increase consumption in local menus through special offers and samples to restaurants. 

 

Export is possible to El Salvador (no producers) and Honduras (1 commercial producer). For larger quantities agreements with vegetable distributors can easily be made. Depending on further cost analysis, supply and developing demand, sales strategies will be developed.

 

Innovative aspects and competitiveness

Mushroom Cultivation is new in Nicaragua. The current supplier of fresh mushrooms is from Colombia and distributes all over Central America. Its prices are very high due to airfreight and import duties. In Central America there are only a few small-scale commercial producers. According to sources there is a single commercial producer in Honduras and a select few in Guatemala and Costa Rica. Our information also shows that these companies are using western oriented and outdated methods. Furthermore, they import a large quantity of seed and growing materials. We are convinced that using tested alternative methods mushrooms can be produced at a fraction of the price.  This includes the local production of seed material and substitution of traditional growing materials with local available substances.

 

Marketing
 

Clients will be informed personally with sample products, price lists and honest information on availability of product. Larger Italian and Asian restaurants will be approached with special offers, depending on volume and transport/delivery agreements will be made. Considerable effort will be made by Don Hongo to not over-extend its reach to ensure quality of the product and a continues supply chain to the customer. Current mushroom consumers are expected to switch readily to the lower priced product. A challenge will remain to introduce mushrooms into the local menus, as diets are still very traditional amongst most Nicaraguans  However the growing obesity problem in the country can increase demand for Mushrooms that contain essential amino acids, are high in protein and are a low fat replacement for meats and fish.

 

Future marketing ideas: increase mushroom variety to existing customers; link other products to the sales chain (possibilities for honey, syrups, chocolate, fruit preserves etc).

 

Profitability
 

According to our sources production costs of our nearest local competitor  (Honduras) is US $3.2 a kilo.  Imported products, disregarding initial production costs, will always be of a higher cost due to airfreight and import duties.  Using our new techniques we estimate a $1- a kilo production cost or lower when producing at a larger scale. We will aim to use only (waste) materials readily available in the area.

 

Our proximity to a number of larger restaurants ensures immediate sales from the first production phase. The big supermarket chains are interested in larger quantities. Foreseen Timeline: 1st production in 6 months from start. Yield sold to Local restaurants and consumed at home. In 12 months: first sales in Managua. Two years: Buyers contacts established in El Salvador and Honduras. 2 years 1 month. First Export Delivery El Salvador and Honduras.

 

Business partners
 

Three partners will finance the upstart of the business.

 

Harm van Oudenhoven (Dutch) Matagalpa, Nicaragua: Experience with small-scale business development including three private enterprises in the Netherlands and Sri Lanka. Excellent reporting skills and identification of alternative production methods. Will manage day to day running of business as well as initial set up. www.chickenstreet.com

 

Milton Fernandez Vargas (Chilean) Matagalpa, Nicaragua.  Long-term consultancy experience in private business and environmental development projects in Nicaragua. Manager of legal terms under which Don Hongo will operate. Good links with owners of food distributors and supermarkets.  Currently employed as SNV advisor ¨economic tools for environmental governance¨.

 

Maurits the Koning (Dutch) Experience with development of community based enterprise in El Salvador and Honduras. Currently employed as financial advisor SNV Netherlands. Will play a financing role for the start up of the project. In future will be responsible for the Honduras and El Salvador markets and eventual replication of production facility in Honduras.

 

Developmental impact and spin-off over time
.

Matagalpa is the region hit most hard by the coffee crisis that continues to resonate throughout the area. Unemployment is rife and investor confidence is at an all time low. Furthermore there are few new ideas even though possibilities are enormous. We see Don Hongo as a core business, around which others can develop in time. We will aim to utilize the core business to stimulate other productive processes through financing, technical advice and marketing services. Amongst others these can be directed towards womens organisations and community groups that show potential.

 

 Enterprises directly related to mushroom cultivation are the production of organic fertilizer, animal feed production and compost production. Eventually we will aim to outsource such activities including the development of small cultivation barns in other communities. Activities of Do Hongo will then be concentrated on marketing and sales as well as to quality control and technical improvements

 

Personal motivation

Having worked in development programmes for many years we have come to conclusion that direct investment in sustainable private commercial enterprise is one of the best way to alleviate poverty. Commercial endeavours show direct results in accordance to performance. Furthermore, suppliers of raw materials (farmers) get a direct income from ones actions and can further be motivated to work better, improve the environment and work conditions through payment of higher prices and setting conditions.The company will work with women producers in order to ensure fairer use of family income and also encourage women to apply for employment especially at higher level of expertise.

 

 We are convinced that we have the technical know how to achieve success. We aim to prove this by investing our own capital and time in this endeavour. Any assistance will be well appreciated.

 

Experience of Investors
 

We have all worked in different fields of development that include aspects of income generation, marketing, logistics and private business development. Experiences range from antique imports, coffee roasting, tree nurseries, an Internet café and a Tilapia farm. Independent from each other we came to a conclusion that mushroom cultivation is a very good niche market to invest in at this moment. Our experiences, professional networks and skills are different and we regard this as a strength for the business. We all have personal characteristics that aim to constantly develop and improve ideas with as final goal to alleviate poverty through employment creation in areas of need. It is further agreed that we will aim to invest only in activities that are environmentaly friendly and to always provide proper working conditions for those involved.

 

 

What can be done with extra funds ?

 

An initial  $8000- investment (including indirect costs) will enable small-scale sustainable production. Any extra funding will be used to improve and increase production, make environmental based investments, marketing of mushrooms and for training of those involved.

 

 

€ 20, 000-

 

(Approximate only) 

 

Improved (Sterile) facilities

Filter devices                                                                        1000

Air system for cultivation area                                          1000

Solar panels for electric ventilation (vital)                       2000

Rain water harvesting system                                          800

Additional Grow Rooms                                                     2000

               

Training of staff on Hygiene and health                         500

Security of building                                                            300

(Solar) 12v Lighting                                                            350         

 

Improvement of work area

Tables chairs                                                                        500

Clothes and shoes for workers                                         500

Showers and washing facility                                           500

Improvement of access road:                                             750

Waste water treatment area                                                               500

                                                                                                              

Diversification and Quality control

Strain Bank Storage area                                                    500

Cool Storage facilities                                                         1500

Shitake Trial for Asian customers. (On sawdust)          250

Oyster mushroom trial (on coffee waste)                        250

Research and Laboratory Material                                   1400

Outside expertise                                                                 2000

                              Training compost production (for Outsourcing)

 

Marketing

Local adverts/pamphlets of product and benefits         1000

Travel to Export Areas                                                       1000       

PC and Printer for admin                                                     1000      

Telephone connection                                                       250                        

 

€ 5000-

Improved Facilities

Filter devices                                                                        600

Air system                                                                            600

New growing rooms                                                            1500

Staff Clothing                                                                       300

Washing area                                                                       250

Building security                                                                 250

Quality Control

Strain bank                                                                           500

Cool Storage                                                                        1000

 

 

 

                

 

Optional

We recommend that you list the names, titles, organisation and contact information of one or two references.

You can upload one or two photos to illustrate your product or service (jpeg, not more than 50kb).

Upload a photo

Upload another photo

If you like, you can upload your curriculum vitae (MS Word or PDF).

Upload your curriculum

Save or submit your entry

You can choose to save your entry as a draft, or submit it as the final version. If you save your entry as a draft, you can still change everything until January 31st 2005.