PROJECT PROFILE ON
HARICOTBEAN PROCESSING
APRIL2013
DIRE DAWA
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Content
1. Executive Summary ………………………………………………………………………………………..3
2. Introduction…………………………………………………………………………………………………4
3. Background…………………………………………………………………………………………………..5
4. Policy Environment &Incentives……………………………………………………………...........5
5. Project Rationale ……………………………………………………………………………………………7
6. Project Objective…………………………………………………………………………………………….7
7. Project Area Description…………………………………………………………………………………8
7.1 Land Availability…………………………………………………………………………………….8
7.2 Physical Infrastructure and Facility…………………………………………………………9
7.3 Service Facilities…………………………………………………………………………………..10
7.4 Labor Force Potential……………………………………………………………………………10
8. Project Description………………………………………………………………………………………..11
9. Market Situation …………………………………………………………………………….................12
9.1 Past Demand and Current Demand………………………………………………………..12
9.2 Farm Capacity ……………………………………………………………………………………..12
9.3 Raw Materials required ………………………………………………………………………..13
10. Indicative Cost of the project………………………………………………………………............15
11. Conclusion ………………………………………………………………………………………………….20
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1. Executive Summary
The identified investment opportunity is the establishment of a bean processing and
canning plant with an output capacity of 12,000 metric tons per year. This processing
plant will supply a growing domestic and export market that is increasingly
consuming processed foods in greater volumes. The required investment is
3.87millionbirr is expected to run the project.
To date, investor interest in the processed bean industry is growing, due to the fact
that knowledge about the industry and its potential to attract the growing middle-
class consumer base in Ethiopia and East Africa more broadly has increased. These
markets have revenue potential.
This investment is particularly well suited for regional staple-crop processors that
already possess the requisite capabilities and experience to make the opportunity
operational. Global enterprises not presently active in Ethiopia as well as East Africa,
but active in the growing and processing of staple crops are also well positioned. For
both segments, expanding into bean processing in Ethiopia will enable investors to
increase their volumes, build scale, expand their sourcing activities, and extend their
market reach. Operational experience and market linkages might want to serve as
funding partners or even as backers for this venture. Furthermore, investors with
social impact mandates can directly support the smallholder farmer engagement
model and food security goals of these efforts with their investment.
2. INTRODUCTION
The common bean is grown worldwide for its edible bean, popular as dry, fresh and
green beans. Production is expanding slowly,based on population growth, with
highest usage in poor developing countries, wherebeans provide an alternative to
meat as a source of low-cost protein. Beans are wellsuited to low input systems as
they can bestored for long periods without refrigerationand provide an excellent
nutritional complement to maize, which is one of the mostimportant grain cereals.
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The common bean is high in starch, protein and dietary fiber and is an excellent
sourceof minerals and vitamins including iron, potassium, selenium, molybdenum,
thiamine, Vitamin B6, and folic acid. Dry beans will keep for 3–4 years if stored in a
cool, dryplace, but as time passes, their nutritive value and flavor degrades and
cooking timeslengthen as they desiccate and harden. Dried beans are almost always
cooked by boiling, often after having been soaked for several hours. While soaking
step is not essential, it shortens the cooking. Common beans take longer to cook than
most pulses anddepending on the variety cooking times vary from one to four hours.
Common beans are grown throughout Ethiopia and are an increasingly
importantcommodity in the cropping systems of smallholder producers for food
security andincome. The major production areas are in the Rift Valley areas. Farmers
grow a widerange of bean types, in terms of color and size, but the most common
types are thepure red and pure white beans. Most of the beans produced, traded and
consumed inthe domestic Ethiopian bean markets , the medium and small red beans
whereas whitebeans are virtually all exported.
There is a growing domestic and regional demand for red beans. In the future, thereis
potential to expand into new export markets as there are trends for richer
consumersegments in industrialized countries to adopt vegetarian diets. Whereas red
beans are mainly produced for domestic consumption, white beans arealmost
exclusively grown to supply a longstanding export market from Ethiopia. Thismarket
is a valued source of foreign exchange with an annual value in the range of USD25–30
million. There are good prospects for continued growth in this export market withthe
arrival of several major processing companies that are investing in the bean
processing sectors
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3. BACKGROUND
Establishing haricot beanprocessing plants in Dire Dawa will enable to make use of
the available raw material from the neighboring region and will encourage an
increase in production to meetlocal and international demands (especially Africa and
Gulf countries). Theinfrastructure and other means of communication are well
established in the region.Establishing a bean processing and canning facility in
Administration will allow investors to serve local and regional consumers, as well as
public institutional buyers. These markets have revenue potential The market for
processed beans is attractive given the ability to leverage abundant cultivation and
consumption of this staple food. Common beans are the second most cultivated crop
in Ethiopia and serve as an important staple in the community diet. The popularity
and dietary importance of common beans extends to most regions in the country
common beans. The country’s soil and climate conditions are also particularly well
suited to bean cultivation, allowing for the production of two harvests a year.
Demand for canned beans, beans that have been processed and packaged into more
convenient, ready-to-eat form, is rising rapidly. Yet there are no bean canning
facilities established or operating in Dire Dawa
4. Policy Environment &Incentives
The country’s market-oriented economic development strategy entailed wide range of
adjustment and reform to enhance the rapid social and economic improvement of the
country. This includes the substantial reform made on the enhancement of both
domestic and foreign investment initiatives. Following this the Ethiopian government
has taken significant measures to encourage and promote investment in the country.
The private sector is encouraged to invest in almost all areas of the economy. The
expanded effort to realize free market system, liberalization of trade rules,
promulgation of investment rules, the launching of urban development policy and
land development and management policies are some of the cases in the point.
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The newly launched investment rule is the outcome of a series of amendment of the
previous proclamation 1992. Some of the aim of this proclamation is to facilitate
services to the investors, to provide integrated services in one stop-shop, strengthen
institutional mechanisms to fit to the required facilitation works and the other.
A) Free market economy
In contrast to the socialist oriented command economic system pursued by the
previous Derg regime, the government is now following policies, which are in line
with the principles of market economic system. The role of the private sector in the
economic development process of the country is recognized and the government
practically expressed its readiness for dialogues with representatives of the business
community and work hand-in-hand with the private sector. This situation will allow a
timely detection of constraints in the sector and proposal of appropriate remedial
measures and consequently, create a favorable condition for the development of the
trade and industry sector.
B. Industrial Development Strategy
The industrial development strategy of Ethiopia is formulated with the objective of
offering better opportunity for the development of industrial and trade sector
especially for agro-processing and other export-led industrial developments. It has
been found necessary to encourage the integration of domestic and foreign investors
in the industrial development of the country and the involvement of the society for
industrial development.
C. Rules & Regulation
Besides, the various conditions that create conducive atmosphere for the industrial
and trade development, the Proclamation No. 280/2002 i.e. Reenactment of the
Investment Proclamation, is another important stepping-stone to lure investment
opportunities in the city. Council of Ministers Regulations No. 84/2003, i.e.
Regulation of Investment Incentives and Investment Areas Reserved for Domestic
Investors on the other hand also provides incentive by exempting from income tax for
a certain period conditioned on some aspects.
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5. Project Rationale
a) Sector Development: An investment in a beans processing and canning
facility will have apositive impact on the development of this value chain in
terms of capacity, productivity, jobs and incomes. Because farmers will have
the security of a ready buyer for their raw beans, their production volumes are
expected to increase and be more consistent over time. Yields are also expected
to improve through better farming methods and use of inputs. Greater
production and improved yields will help establish beans as a viable cash crop
for smallholder farmers,improving incomes and creating a multiplier effect.
The nucleus-centered out-grower scheme will thus help transform subsistence
farmers into small-scale commercial farmers.
b) Job Creation: Farmers will be involved as out-growers. As demand for
processed beans grows and further capacity is utilized by the plant, more out-
growers will be contracted and further benefits will radiate to the surrounding
communities. The bean processing plants to be established also will be source
of daily bread for jobless segment of the community.
c) Income Improvements: On average, smallholder farmers’ incomes are
exceptionally low, this low income average can be largely attributed to the lack of an
established market in which farmers can sell their beans; in the absence of such a
market, bean farmers typically sell their product to informal traders at low prices
directly after harvest. However, as demand from the processing plant grows and as
yields improve, income increases can be expected.
To develop Haricot Beans processing industry
To create additional job Opportunities in the administration for the Jobless
productive Force
To encourage investment development
To create better market for beans producing community
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To generate additional revenue to the administration through strengthen
income taxesfrom such investments income sources
To encourage industry development in the administration
7. PROJECT AREA DESCRIPTION
7.1. LAND AVAILIABLITY
Dire Dawa Administration has two Industry villages at different sites in which 139
hectare of land is to be managed by the administration, while other 1054 hectare land
is to be handled by federal government .In general total of 1193 hectare of Land is
available for agro-processing industry investment in the administration. The Project
requirement of land for built up total area shall be 450 sq. meter, which is adequate
for production, storage, package facilities use from the industry village of the
Administration.
7.2. INFRASTRUCTURE
The Industry village has access to reliable water supply, Electric Energy, all weather
Road and other infrastructure such as the administration has developed since the
project area is in the city.
7.3. SERVICE FACILITIES
Existence of specialized services related Customs services ,Shipping and logistic,
Conformity assessment, quality inspection ,Quarantine, international air flight, train,
postal,Banking and Insurance services ,available trained and untrained man power.
The strong linkages of the city with the surrounding region and the nearby countries
(Djibouti, Somalia& Somali land) increased access to trade, existence of improved IT
services ,effective health coverage & good practice in health extension service, etc .are
main to be mentioned.
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8. PROJECT DESCRIBTION
The fundamental procedures for haricot bean processing includesselection of the raw
materials manually,trim raw material so as to remove the unwanted parts, Wash the
trimmed raw material with clean water, undertake precooking of the material for few
minutes in a pot to avoid the effect of any contamination, Prepare clean water and
boil it with sterilized salt, Dose/fill the pre-cooked green bean into sterilized cans,
Add the boiled water that was prepared with salt, Seam cans, Sterilize cans in
autoclave,Store the finished product for an incubation period of 21 days, Label, pack
and store the product in finished goods stores.The Haricot bean processing project
has no residual effect as well as negative environmental impact.
9. MARKET SITUATION
9.1 PAST SUPPLY AND CURRENT DEMAND
Common beans are grown throughout Ethiopia and are an increasingly
importantcommodity in the cropping systems of smallholder producers for food
security andincome. The major production areas are in the Rift Valley areas. Farmers
grow a widerange of bean types, in terms of color and size, but the most common
types are thepure red and pure white beans. Most of the beans produced, traded and
consumed inthe domestic Ethiopian bean markets are the medium and small red
beans whereas whitebeans are virtually all exported.
There is a growing domestic and regional demand for red beans. Thereis potential to
expand into new export markets as there are trends for richer consumersegments
industrialized countries to adopt vegetarian diets.Whereas red beans are mainly
produced for domestic consumption, white beans arealmost exclusively grown to
supply a longstanding export market from Ethiopia. Thismarket is a valued source of
foreign exchange with an annual value in the range of USD25–30 million. There are
good prospects for continued growth in this export market withthe arrival of several
major processing companies that are investing in the white beansector. The market
volume for haricot beans, based on production and export figures from CSA (2005) of
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the two bean types in Ethiopia, was approximately 185 thousand tones with a market
value in excess of USD 50 million in 2005. Market trends indicate strong potential for
growth in the regional market for red beans to supply bean deficit countries such as
Kenya and export market for white beans into Europe and other destinations.
Ethiopian bean farmers are supplying three major market types: domestic,
regionaland export. All of these markets provide significant employment and income
tobean growing community this bean production potential will apparently be input
for the bean processing investment in the Administration.
9.2 FARM CAPACITY AND PROGRAMME
Haricot bean processing plant with production capacity of 120,000 tons per year with
2 shift working days is advisable. To install this capacitytrim raw material so as to
remove the unwanted partsstream jacketed kettles 50 Liters. Capacity body
boiler100kgs/hto avoid the effect of any for few contaminations, Seam cansisthe main
to be used.
9.3 Raw Materials required at 100%
No Product Qty Price Ton in Value in birr
. birr
1 Haricot beans 120tons 8000 960,000
2 Salt 0.5ton 2000 1000
4 Additives, Preservatives, Flavors - - 4000
5 Packing Materials 50 3000 150,000
Total 1,115,000
9.3.1 MANPOWER REQUIREMENT
A total of 20 people will join the project getting job opportunity.
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9.3.1 Utilities
Power requirement will be 40 HP, whereas per day water requirement would be 2000
litters for washing of Haricot bean, and sanitation purposes. Seam can of around 50
tons will be required annually for packaging.
9.4.1 REQUIRED MACHINERIES
As to required machineries, some of the equipment and packing machinery suppliers
are;
A uric Techno Services Pvt.Ltd.C.101, Shreenath Hermitage, Banner
road,pune.411008. Tel No.25898072/25899113.Fax no.25899113
PRS technologies Pvt. Ltd. D-26, NDSE Part two New Delhi 110049 Tel
N0 26252176/77,Fax;2540789
SS Engg,B.25, Kanpur Ext. New Delhi.110062. Tel. No.26081475.
Divehi Glass Industry,249,Barajeshwar Road ,LBS Marg,Mulund
(W),Mumbai-400080
DK Barry and Company Pvt. 11/35, West Punjab Baug, New Delhi
110026. Tel N0.251 60363
10. Indicative Cost of the project
The total Investment cost of the project is birr 3,870,210 for details see Table below
NU. Items Amount in Birr
1 Land and building 1,039,410
2 Plant and machinery 1,500,000
3 Miscellaneous Assets 20 ,000
4 Contingencies (10% on land and building and 253,941
plant and machinery)
5 Working Capital 950,000
Total 3,743,351
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11. Conclusion
These new developments inEthiopia offer interesting new market opportunities for
investor smallholderparticularly in the agriculture sector. Ethiopian farmers and they
can also increase production and remain competitivewith other china, Argentina and
India. If this can be achieved, then prospects for increased revenue from this product
appear good. The advantage of Ethiopiain this market is cost and time to market.
Ittakes nine weeks for sea shipment of beansproductfrom China to EU markets
whereas it only takes three weeks from Ethiopia and thisconfers an advantage for
Ethiopia, as long as costs remain low.
This is an area of concernas prices for beans that were trading at Ethiopian birr (ETB)
250–300/quintal in 2005were trading at more than 400 in 2006. If the market
continues to increase or hold highmarket prices, the larger buyers may defer sales to
more competitive regions of the world. Another advantage in Ethiopia is the general
levels of discipline, which infers that farmers can become more organized within a
relatively short timeframe and at low costs. The main competition within the bean
market is from China, which is aggressively exporting beans into countries
throughout the world and is already tied into the canning markets.
Therefore it is important that for the success of the Ethiopian bean subsector efforts
aremade to provide clear information on local and export markets and that
competitivenessof other leading nations are understood. For the Ethiopian farmers,
investments will berequired to ensure that they are in a position to provide a regular
supply of high qualitybeans at a lower cost than the Chinese competition. As both
types of beans are produced by the poorest sectors of the farming community.
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