From Waste to Value-Added: Circular Economy-Based Business Model in Utilizing Rice Straw for Straw Mushroom Cultivation in MSMEs

Research Aims: This study aims to analyze the integration cycle of rice straw waste into the production process of straw mushroom cultivation, with a focus on developing a Circular Economy (CE)-based business model. Oemah Jamur was chosen as a case study to demonstrate the application of sustainability concepts at the MSME (Micro, Small, and Medium Enterprises) scale. Design/methodology/approach: This research employs an exploratory case study method with a qualitative approach. Primary data is collected through direct visits and semi-structured interviews with the founders, employees, and local rice farmers. Data analysis utilizes the source triangulation technique to ensure the accuracy of the information. The business model is analyzed using a modified Social Business Model Canvas framework. Research Findings: Oemah Jamur implements the principles of the CE through a closed business model that transforms rice straw waste into straw mushroom growing media, which is later converted into organic fertilizer to be returned to farmers. This model creates added value from economic, environmental, and social aspects. With a production capacity of 1,500 kg of rice straw per month, the business produces around 400 kg of straw mushrooms while reducing agricultural waste and providing additional income for local farmers. Theoretical Contribution/Originality: This research provides new insights into the application of CE principles at the MSMEs in Indonesia’s agricultural sector, which is still quite limited. The main contribution of this study is the introduction of an innovative agricultural waste management model that is locally relevant and based on CE principles.