Herin are a number of ways your magic item might come into being, apart from something you order from your local wizard.
A standard roleplaying environment: the tavern. This is another easy one to create in your own home, providing you have a large enough group of roleplaying friends. Let us assume your PC group is no larger than five, and that the rest of your friends can be NPCs. Let us also aim for an exceptionally seedy and unscrupulous city tavern.
In a good LARP it is desirable to separate the players out individually at some stage, because they are more suggestible and afraid when they are alone. Some form of individual challenge is probably the best way of doing this. One possible setting for this is a cave system, and it is probably one of the easiest to recreate realistically, and one of the most perfect for playing on fears of claustrophobia and darkness.
These little beetles have heads at both ends of their bodies. This allows them to feed on leaves at twice the rate of their normal cousins, causing great damage to crops. They look like ladybugs more than actual beetles, but have no wings. They have a funny way of moving if one stops to watch them, as both heads seem to vie for picking the direction at any given time. Their favorite nourishment is sugar cane. After feasting on these for some time, they develop short bursts of frenetic energy, and can be seen racing back and forth without purpose, which looks quite comical to onlookers. They are otherwise normal bugs. Of course the pc's might not know that.